Metrocall Inc v Electronic Tracking Systems Pty Limited

CATCHWORDS : Appeal - Appeal from interlocutory procedural decision - Unfair contract - Joinder of additional applicant - Whether proposed additional applicant a party to a "contract" as defined by s 105 of the Industrial Relations Act 1996 - Construction of s 108 - Whether the word "contract" in s 108 to be given the meaning provided in s 105 - Approach to be adopted with appeals from interlocutory procedural decision - Appeal dismissed

Words and phrases - "Contract" LEGISLATION CITED : Industrial Relations Act 1996 s 105 s 106 s 108 s 188 s 191 Caltex Petroleum Pty Ltd v Harmer (1999) 92 IR 264 CASES CITED : Hyde v Energy Australia (1999) 92 IR 409 Metrocall Inc v Electronic Tracking Systems Pty Ltd [2000] NSWIRComm 136 Norbis v Norbis (1986) 161 CLR 513 HEARING DATES: 12/11/2000 DATE OF JUDGMENT: 12/12/2000

APPELLANT: Mr J V Murphy of Counsel SOLICITOR: Mr Bruce Heddle and Ms Lisa Aitken Minter Ellison LEGAL REPRESENTATIVES: RESPONDENTS: Mr D D Knoll of Counsel SOLICITOR: Mr Dale Kemp Dibbs Crowther & Osbourne

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH CORAM: WRIGHT J, President HUNGERFORD J KAVANAGH J

Matter No IRC 7078 of 1999 METROCALL INC (SUCCESSOR BY MERGER TO PRONET INC) v ELECTRONIC TRACKING SYSTEMS PTY LIMITED AND ANOTHER

Application for leave to appeal and appeal against a decision of Justice Schmidt given on 10 December 1999 in Matter No IRC 6246 of 1998.

1 These proceedings, which were heard by the Court yesterday, involve an application for leave to appeal and, if leave be granted, an appeal against a further interlocutory judgment given by Schmidt J on 10 December 1999. Her Honour's judgment related to proceedings commenced by Electronic Tracking Systems Pty Limited (the respondent) under s 106 of the Industrial Relations Act 1996 (the Act) and was the second interlocutory judgment given by her Honour in the proceedings. The earlier decision which related to issues of some significance and involved some questions of principle was the subject of an earlier, albeit unsuccessful, appeal by the appellant: see Metrocall Inc v Electronic Tracking Systems Pty Ltd [2000] NSWIRComm 136. That judgment delivered on 31 August 2000 is the subject of an application for special leave which was filed by the appellant in the Registry of the High Court on 28 September 2000. 2 The present proceedings arise from a decision made by Schmidt J on 10 December 1999 which related to an application by Notice of Motion by a Mr Glenn Miller for an order he be joined as an applicant to the proceedings. The application was made on two grounds. First, that it was necessary for the efficient conduct of the litigation that all persons having an interest in the litigation have the opportunity to participate in the proceedings. Second, that he "is the managing director of the applicant and was involved in the arrangement the subject of these proceedings, and was required and expected to perform work thereunder, and has been personally affected by matters which are the subject of the proceedings". 3 Her Honour concluded that the Court had jurisdiction to make the orders sought "provided that Mr Miller is a person who falls within the requirements of s 108 of the [Act]". Her Honour also held that the discretion of the Court should be exercised to permit Mr Miller be joined as an applicant in the proceedings on the basis that he was not only employed as managing director of the applicant, but he was also a majority shareholder of it "and personally involved in the negotiations with the respondent prior to the incorporation of the [corporate] applicant". Her Honour's reasons otherwise which led to the conclusion that the applicant in the motion should be joined as an additional applicant to the original corporate applicant in the proceedings were in the following terms: It is not unusual in applications brought under section 106 for individuals in the position of Mr Miller to be joint applicants in the proceedings with the corporate entity. The evidence suggests that the personal involvement of Mr Miller was a factor in the course of the relationship between the present parties to the proceedings. On that material it could not be safely concluded, at this stage, that Mr Miller does not have a sufficient interest in the contract in question in the proceedings to be an applicant in respect of that contract under section 108 of the Act.

In coming to that conclusion, I have taken the view that the use of the term 'contract' in the initiating summons must be understood as having been used in the sense in which that word is defined in section 105 of the Act, namely a contract or arrangement or any related condition or collateral arrangement.

The summons seeks a declaration that 'the contract whereby the applicant performed work made between the applicant and the respondent on 30 August 1991'. I am not certain, given the grounds advanced in the summons, that it would even be necessary to amend the summons in order for relief to be granted to Mr Miller if he were joined as a party in the proceedings.

I have been influenced in the conclusion which I have reached by the fact that Mr Miller had the personal involvement in the relationship earlier mentioned. It is difficult to see that Mr Miller could not now himself initiate proceedings against the respondent in the circumstances presently before me.

Were he to do so inevitably an application for joinder of the two matters would be made. I take the view that there is a public interest in the efficient conduct of litigation before the Court. It is difficult to see in the present circumstances that this public interest would be served by requiring Mr Miller to commence separate proceedings.

I have also been influenced in that conclusion by the early stage which the proceedings have thus far reached. 4 Pursuant to directions given for the preparation of the matter for the appeal the parties filed written submissions. The parties advised the Court they wished to be heard on those submissions although provision had earlier been made in the directions for the matter to be dealt with "on the papers". It should be observed that the appellant has strenuously submitted that the Court should not deal with the application for leave and the appeal until the application for special leave in the High Court has been dealt with. 5 The bases upon which the appellant seeks leave to appeal and appeals are that her Honour erred in the interpretation and application of s 108 of the Industrial Relations Act and also erred in finding that Mr Miller should ". . . be joined as an applicant in the proceedings . . .". Further that the only contract, as defined in s 105 of the Industrial Relations Act , relied upon in the proceedings is the written 'Licence Agreement' of 30 August 1991 made between Electronic Tracking Systems Pty Limited and the appellant; Mr Miller is not and does not claim to be a party to that contract, and no other contract or arrangement, or any other related condition or collateral arrangement, has been identified in the pleadings. Section 108 of the Act sets out who may apply for an order under Division 2 of Part 9 of the Act and relevantly states: An order may be made under this Division on the application of: (a) any party to the contract, or (b) any person, who but for the making of such an order, would be a party to the contract . . . and not otherwise. 6 It is also submitted that the effect of joining the second respondent as an applicant in the proceedings is to permit him to apply for an order under s 106 which is contrary to the limitation on the class of persons who may apply for such an order expressed in s 108. Section 108 does not provide that a person with "sufficient interest in the contract in question in the proceedings" is able to apply for an order under the Division of the Act dealing with unfair contracts. The Court derives its power from the Act. Therefore, given s 108 of the Act, the Court does not have power to order that the second respondent be joined as a party to the proceedings. 7 Further, as to its argument that the matter not be dealt with before the proceedings in the High Court are concluded the appellant submits that if the High Court appeal is successful the proceedings before Schmidt J, to which the Respondent was joined pursuant to the decision of Schmidt J dated 10 December 1999 and which currently stands out of the Court's list, will be stayed and the parties referred to arbitration in accordance with the terms of the Licence Agreement. There is, therefore, no utility in determining the appeal at this time. The issues raised in the appeal only become relevant if the High Court appeal is unsuccessful. As a result, by proceeding with the appeal at this time there is a risk that costs will be thrown away by both parties. The appellant also argues in its submissions in reply on this aspect: [T]he Appellant will be submitting in the High Court proceedings that the Second Respondent, even though not a party to the contract which is the subject matter of these proceedings, is, nevertheless, as an officer and employee of the First Respondent, also bound by the arbitration agreement. This is a further reason why this appeal should be stayed pending the outcome of the application for special leave currently before the High Court. It is clear that the Second Respondent will, if such a stay is not granted and this appeal is dismissed, regard himself at large to continue to agitate the proceedings in his own right prior to and regardless of the outcome of the proceedings currently before the High Court. Such a course should not be permitted. 8 However, it should also be observed the respondent has equally strenuously submitted that this Court should proceed to deal with this matter now. 9 Subject to one consideration to which we will later refer shortly, the decision of her Honour at first instance, the subject of the present proceedings, was a relatively straightforward application for the joinder of an additional party in proceedings commenced under s 106. The decision made by her Honour was not an unusual decision in the context of a procedural application, albeit one of some consequences for the litigation. The decision was one well within her Honour's discretion as the trial judge in the proceedings. As such, the normal principles in relation to discretionary decisions must be applied: see, for example, the judgment of the High Court in Norbis v Norbis (1986) 161 CLR 513 at 518 - 519 per Mason and Deane JJ. In addition, this Court has a statutory mandate to apply the principles thus laid down in appeals such as the present by virtue of s 191(3) of the Act. The only factor which requires us to hesitate as to the respondents' submission that leave to appeal should be refused in this matter is the submission made by the appellant that her Honour erred in holding that Mr Miller should be joined because it could not be safely concluded that Mr Miller "does not have a sufficient interest in the contract in question in the proceedings to be an applicant in respect of that contract under s 108 of the Act". 10 The appellant submits that s 108 of the Act does not, as her Honour appeared to assume, provide that a person with sufficient interest in the contract in question in the proceedings is able to apply for an order under the relevant Division of the Act. Rather, a person must be a party to a contract sought to be impugned under s 106 to be able to make an application. It is, however, to be observed that her Honour approached the matter in the way she did because she concluded that the reference to being a party to a contract in terms of s 108 was to be read on the basis that the word "contract" in the pertinent phrase had to be read in the wider meaning given to that term in s 105. The latter section defines contract as meaning "any contract or arrangement, or any related condition or collateral arrangement". 11 It is thus clear that, apart from issues going to the exercise of the trial judge's discretion and the appellant's submission that this appeal should not be decided pending the outcome of the special leave application to the High Court, the present proceedings involve the determination of a very short and discrete point: that is, whether on the evidence before the trial judge it was open to her Honour to find that the second respondent was a party to a contract in terms of s 108 of the Act. This question in turn involves the consideration of the construction, in relevant respects, of s 108 of the Act. The appellant emphasises the way in which her Honour formulated the issue before her and the respondents focus upon the construction issue. The respondents submit that the term "contract", as appears in s 108, must be understood as it is defined in s 105 and there was no error in her Honour's conclusion that the term "contract" in the summons be understood as having been used in the sense in which the word is defined in s 105. 12 The respondents also submit that there was evidence to indicate that the second respondent to the application was a party to the contract as broadly defined. In that respect reliance is placed on the affidavits of the second respondent sworn 24 November 1988 and 3 December 1999. It is further submitted her Honour properly held the second respondent could have brought his own application, and then sought to have the two applications joined. Her Honour correctly concluded that there was a sufficient public interest in the efficient conduct of litigation for the Court to avoid that circuitous procedure. 13 The fact that the issues which require decision in these proceedings involve, essentially, the question of an exercise of discretion and otherwise a short legal point is a very material consideration to the appellant's application to stay these proceedings pending the special leave application in the High Court. Should the issues requiring determination in the appeal involve matters of great factual or legal complexity a different situation might emerge. Nevertheless, because of the narrowness of the issues to be decided there is a substantial public interest, in terms of the finality and economy of litigation, in determining these proceedings now. If the special leave application in the High Court is successful then both that Court and the parties to those proceedings can determine whether it is appropriate for that Court to deal with all of the issues that have thus far emerged in the proceedings before this Court, or only the matters the subject of the present application for leave to appeal. On the other hand, should the application be unsuccessful then the proceedings can return to the trial judge for determination in the light of appellate consideration of all issues that have to this stage been the subject of application for leave to appeal or appeal. 14 We do not accept that the second respondent will be entitled, if this Full Bench does not grant a stay of these proceedings and this appeal is dismissed, to regard himself as at large to continue to agitate the proceedings in his own way prior to and regardless of the outcome of the proceedings before the High Court. The appellant's submission in that respect assumes this Court will fail to ensure that proceedings before it are conducted in such a way that there is orderly processing of the litigation before it having regard to the steps which have been taken by way of application to the High Court. In any event, the appellant has candidly stated it will be submitting in the High Court proceedings that the second respondent, although not a party to the contract the subject of these proceedings, is nevertheless, as an officer and employee of the first respondent, also bound by the arbitration agreement; that is a factor which clearly points in favour of the issues raised by this appeal being determined at this stage. We therefore deny the appellant's application for a stay of the determination of this appeal, noting that during the course of argument the appellant conceded that a number of the considerations it relied on supported this conclusion. 15 We now turn to the construction of the word "contract" as it appears in s 108 of the Act. The meaning of s 108 was considered by Wright J, President in Hyde v Energy Australia (1999) 92 IR 409 at 423 albeit in relation to an argument somewhat different to that made in these proceedings. In Hyde the respondent's major argument relied upon s 108 in relation to a single summons brought by nine different applicants and submitted that it was significant the summons was brought as an application, not by a party to a contract, but by nine persons apparently acting as a group. The summons, it was said, was therefore brought "otherwise" than in accordance with the provisions of s 108. It was thus necessarily bad and could not be proceeded with. However, each of the applicants was party to a separate, but somewhat similar, contract of employment with the respondent and the applicants also accepted that their summons, as filed, should be read as proposed by the respondent; that is: it was intended to refer to a series of separate contracts, as defined, between the individual applicants and the respondent and not, as literally pleaded, a single contract between the applicants and the respondent. In relation to the respondent's submissions as to invalidity his Honour held, inter alia, that: The submissions of the respondent as to limitations said to arise as to the Court's jurisdiction from the terms and form of s 108 of the Act should not be accepted. Section 108 does not, on its proper construction, preclude the bringing of proceedings such as the present. The intention of the limitations expressed in that section is, in general terms, to limit those who may make an application to the parties to the contract, as defined, or to registered organisations and thus precludes non-parties to such contracts from having standing to commence such proceedings . The origin of s 108 is subsection (2C) of s 88F of the Industrial Arbitration Act 1940, which was included in that section by Act No. l62 of 1985 and which was apparently intended to preclude applications by a non-party of the kind considered in F Sharkey & Co Pty Ltd v Metropolitan Water Sewerage and Drainage Board [1981] 2 NSWLR 824; [1981] AR (NSW) 286 and Metropolitan Water Sewerage and Drainage Board v Judges of the Industrial Commission of New South Wales [1981] AR (NSW) 305. (emphasis supplied) 16 We consider that his Honour's analysis of s 108 is correct and, in particular, that its intention is to limit those who may bring an application under s 106 to the parties to the contract, that word being given the extended meaning provided to it by s 105. It is to be observed that s 105 is a definitions provision for the whole of Part 9 of the Chapter 2 of the Act, which Part includes both s 106 and s 108. Further, s 105 plainly states that the definitions apply to Part 9 without any qualification. There is, therefore, no basis in either the text of s 105 or in the construction of Part 9 viewed as a whole whereby it could be found that a reference to a "contract" in s 108 is to be construed other than by reference to the extended meaning of that term provided by s 105. 17 Her Honour was determining the interlocutory application before her on the basis of the limited evidence filed at that stage by the first respondent in the proceedings proper and the second respondent in relation to his motion. It is unnecessary for us to traverse that evidence. It is, however, sufficient to note the primary ground the first respondent relied on in the summons originally filed was that it performed work in an industry pursuant to a contract from approximately August 1991 whereby the appellant granted an exclusive licence to the applicant to market, lease, operate and maintain a system referred to as the "Pronet Tracking System" in Australia. There was evidence to support that claim. There was also evidence which showed that the second respondent was the managing director of the applicant and personally carried out the significant majority of the work in relation to the grant of the exclusive licence and attempts to market the system and to obtain contracts in relation to it. As such, it was open to the trial judge to find for the purposes of the motion that there was, or was arguably, an arrangement involving the appellant and both respondents to which the second respondent was a party. Accordingly, it was therefore open to the trial judge to find the second respondent could have himself commenced proceedings under s 106 in relation to that arrangement on the basis that he was a party to that arrangement and therefore a party to a contract, in its extended sense, pursuant to s 108. 18 Accordingly, the appellant's submissions that it was not open to the trial judge to exercise her discretion in the way she did because the second respondent was not a "party" to a contract in terms of s 108 should be rejected. 19 The present application for leave to appeal essentially raises two issues. The first is the correct interpretation and application of s 108 of the Industrial Relations Act . The second is the exercise of discretion by the trial judge. 20 We have determined the first issue against the appellant. However, the present appeal, to the extent it raises that issue, does raise an issue which satisfies the statutory criteria for the grant of leave set out in s 188 of the Act. We grant leave as to that issue. 21 It does not follow that leave should be granted as to the other issue involving as it does the question of the exercise of discretion as to the joinder of an additional party to the proceedings. Leave will very rarely be given to appeal against an interlocutory procedural decision: Caltex Petroleum Pty Limited v Harmer (1999) 92 IR 264. Leave in relation to that issue is therefore refused. 22 The respondents applied for the costs of the appeal on an indemnity basis should they be successful. The appellant submitted that costs should be costs in the cause or be reserved. The Full Bench determines that costs should follow the event on the usual basis. 23 The Court makes the following orders in relation to the application for leave to appeal and appeal: 1. Leave granted insofar as the application for leave to appeal raises issues as to the correct interpretation and application of s 108 of the Industrial Relations Act 1996. 2. Leave to appeal otherwise refused. 3. Appeal dismissed. 4. The appellant shall pay the costs of the respondents of these proceedings in a sum or sums as agreed, or in default of agreement, as assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.