Ojeh Pty Limited and Ors v Primus Telecommunicatins Pty Limited

Industrial Relations Commission (NSW)|1999-05-17|Before: Schmidt J, Schmidt JJ, Peterson J

Industrial Relations Commission of New South Wales in Court Session

CITATION : Ojeh Pty Limited and Ors v Primus Telecommunicatins Pty Limited [2001] NSWIRComm 276 FIRST APPLICANT: Ojeh Pty Limited (ACN 070 235 657)

SECOND APPLICANT: Graham Hoar

FOURTH APPLICANT: David Vaughan

PARTIES : FIFTH APPLICANT: Clarke Warnock

SIXTH APPLICANT: David Walker

SEVENTH APPLICANT: Rebecca Turnbull

EIGHTH APPLICANT: Dianne Turnbull

RESPONDENT: Primus Telecommunications Pty Limited (ACN 071 191 396) FILE NUMBER: IRC 3954 of 2001 CORAM: Schmidt J CATCHWORDS : Unfair contract - pre-paid phone card and internet services industry - jurisdiction - respondent company incorporated and headquartered in Melbourne - agency contracts - agencies located outside New South Wales where agency work performed - some management work performed in New South Wales by a contractor - other work performed in Victoria - choice of law Victoria - no requirement under the contracts for the performance of any work in an industry 'in and of' New South Wales - application dismissed LEGISLATION CITED : Industrial Relations Act 1996 Interpretation Act 1987 Bartolacci v Permanent Custodians Ltd (1992) 44 IR 388 Bell & Anor v Macquarie Bank Limited & Anor [1999] NSWIRComm 52 Chevron Breeders and Producers of Australia Pty Ltd and Anor v Fast Food Service Development Pty Ltd and Anor (1984) AR 576 Chrysler Jeep Automotive Distributors Australia Pty Limited v Canberra Star Motors Pty Limited (1997) 79 IR 452 Cosgrove v International Opal Pty Ltd and Ors [1977] AR 751 Englebrecht v Cordukes Ltd & Anor [2000] NSWIRComm 52 CASES CITED : Ex parte Richardson, Re Hildred & Ors (1972) 2 NSWLR 423 Maloney v Hoffman [1980] AR 318 Masters v Cameron (1954) 91 CLR 353 Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366 Nagle v Tilburg (1993) 51 IR 8 Perrott v XcelleNet Australia Ltd (1998) 84 IR 255 Savage v Digital Corporation (Australia) Pty Ltd (Glynn, Hungerford and Schmidt JJ, unreported, 17 May 1999) Stevens Pty Ltd and Ors v WTH Pty Ltd trading as Avis Australia & Ors (unreported, Peterson J, 7 May 1993, CT 207 of 1992) HEARING DATES: 10/25/2001 DATE OF JUDGMENT: 11/02/2001

APPLICANTS: Mr Temby QC with Mr Higgins of counsel SOLICITORS: Hassett Dixon

LEGAL REPRESENTATIVES: RESPONDENT: Mr Goot SC SOLICITORS: Abbott Stillman & Wilson AGENTS: Cutler Hughes & Harris

JUDGMENT: - 20 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J

OJEH PTY LTD AND OTHERS v PRIMUS TELECOMMUNICATIONS PTY LIMITED Application under section 106 of the Industrial Relations Act 1996

1 This judgment deals with a notice of motion filed by the respondent, Primus Telecommunications Pty Ltd ('Primus'), seeking a declaration that the Court has no jurisdiction to entertain the claims brought by the applicants under s106 of the Industrial Relations Act 1996 ('the Act'); an order dismissing the application and an order for costs.

2 The originating summons was filed on 13 June 2001. It concerns a number of agency contracts between the respondent and various of the applicants, which were each terminated by the respondent by the giving of notice in April 2001. The agreements had been entered at different times, between September 2000 and March 2001. The relief claimed in the summons included money orders for bounties in the 90 day notice period and commission payments for up to 23 months after termination, in varying amounts ranging up to $173,000.

3 The summons made a number of serious claims, including amongst other things, that the respondent had acted pursuant to a 'dishonest and fraudulent plan'; had made promises of commission payable during the life of a 2 year agreement with each applicant, but had intended the inducement to be of a temporary nature, in order to achieve market penetration.

4 The motion was supported by an affidavit sworn by Mr Richard Kemp, the respondent's General Manager - Card Services at the relevant time and by Ms Paula Heinink, the respondent's Administration and Retail Distribution Manager. The applicants relied upon affidavits sworn by the applicants Mr Graham Hoar, Ms Dianne Turnbull, Ms Rebecca Turnbull, Mr Clarke Warnock and by Mr Paul Sengos, a director of Associated Products Pty Limited ('AP'). AP, and through it Mr Sengos, had been engaged by the respondent as a consultant, with the role of recruiting agents for the respondent's pre-paid phone card and internet services business. None of the witnesses were required for cross examination.

5 The parties agreed on a statement of facts, for the purpose of the hearing of the motion. There was agreement on a variety of factual matters including: - Primus, incorporated in Victoria, has its head office in Melbourne, where it employs over 700 employees. It operated its pre-paid phone card and internet services business from Melbourne with the employment of 6 permanent staff, including Ms Heinink, under Mr Kemp's control. It also has branch offices in the ACT, New South Wales, Queensland, South Australia, Western Australia and Tasmania. 14 sales and administrative staff are employed by Primus in its New South Wales branch office in Sydney and 60 technical staff are employed in network operations in New South Wales.

Primus' pre-paid products were sold to retail outlet customers under written agreements which it entered with them. Stock ordered was despatched direct to customers from Kalamazoo Pty Ltd in Melbourne, upon receipt of instructions from Primus' Melbourne head office, where Primus maintained a database of customer data, sales figures, commission reports and debtor information.

AP, incorporated in New South Wales where Mr Sengos lived, was appointed to act as a consultant in the capacity of 'Card Services Territory Sales Manager' for 12 months from June 2000. It was Mr Sengos who performed the contracted work. Mr Sengos visited Primus' branch office in Sydney, which was his business address for the work performed for Primus, only once. He worked from AP's office at Strathfield. His business card recorded his private telephone, fax and email details.

In September 2000, Primus also appointed AP as Card Services Territory Sales Manager responsible for Queensland under an oral agreement on the same terms as the first agreement. In December 2000, Primus and AP entered a further oral agreement whereby Mr Sengos was appointed 'National Sales Manager Card Services'. His responsibilities then were to establish and manage a team of sales agents in New South Wales, Queensland, the ACT, Western Australia, South Australia and the Northern Territory. The applicants were thereafter recruited by Mr Sengos. - Mr Sengos recruited others as agents for New South Wales' territories and performed work in New South Wales in relation to those agencies. Such other agents are not parties to these proceedings.

Mr Sengos recruited agents for Primus, including the applicants, who each themselves entered standard form contracts with Primus. Mr Sengos trained each of the applicants.

All of the applicants resided in other States except Mr Vaughan, who resided in New South Wales before he executed the agreement, which however noted that he had a South Australian address. Only one of the agency agreements was executed in New South Wales. Each of these contracts provided for agency work to be performed in a specified territory, each of which was located outside New South Wales, in either Perth, Adelaide, north Queensland or Brisbane. The agency work was performed by applicants in those territories and not in New South Wales.

The agency agreements imposed various obligations upon both the agent and upon Primus. The law of each contract was expressed to be that of Victoria and also identified Mr Sengos as the manager. - "AP and Sengos performed work in New South Wales and Sengos travelled to and performed work in each of the States and Territories where the applicants resided, for the purposes of and associated with the Consultancy Agreement, the Second Agreement and the Final Agreement." - "The work done in New South Wales was done on behalf of Primus in relation to the Agents' operations outside New South Wales." - Ms Heinink calculated and prepared the commission payable to each agent, generated the necessary statements which were forwarded to Mr Sengos for distribution. Ms Heinink would make payment after each agent had faxed an invoice to Mr Sengos, who would cross check them.

6 The evidence demonstrated that each applicant was responsible for introducing Primus' products to retailers who conducted businesses in the agent's territory, by attending at such retailers' premises and demonstrating the products and services to the retailers. The aim was to engage the retailer to on sell Primus' products to their customers, under Primus' standard terms and conditions.

7 Each of the applicants was recruited by Mr Sengos, some of them having earlier been acquainted with him and having been approached by him about the agency opportunity which he was marketing to potential agents. Others responded to advertisements placed by Primus in local papers. One was introduced through her mother, who was herself an agent. Each applicant executed a standard form contract, a territory having been agreed and thereafter worked in the territory. Mr Sengos conducted training for each agent in their own territory. Payments in accordance with each agreement were made, until it was terminated. Those payments were made in response to sales reports provided by agents to Mr Sengos, which he in turn provided to Ms Heinink for processing. Mr Sengos provided the agents with regular information such as a newsletter and commission statements and also conducted performance appraisals. The applicants' main point of contact with Primus was Mr Sengos, although there had been some contact with Ms Heinink in some cases, but relatively little contact between individual agents and Mr Kemp. Some of the applicants' evidence was that they regarded Mr Sengos as their boss.

8 Mr Sengos' evidence concerned steps he had taken to recruit agents, produce promotional material, forms to be used by agents to record their activities, commission statements and performance appraisals for agents, as well as tax invoices as part of the agency system he devised. Agencies were established across Australia, where he travelled. He was located in Sydney, where he principally performed his work, but only once visited the Primus office there.

9 While there was an issue between the parties as to the real extent of Mr Sengos' interaction with the agents, it was not in issue that Mr Sengos operated as the liaison point between the agents and Primus.

10 When AP was asked to take up the consultancy in Queensland, Mr Kemp told Mr Sengos that Primus was already operating its business there, but was dissatisfied with the performance of the person performing the management work for it there. It was also dissatisfied with the management work being performed in the other States, in respect of which AP agreed later to extend Mr Sengos' operations. Mr Sengos later taking on Victoria and Tasmania was also discussed.

11 The evidence was not, however, that this business had been commenced by Primus in New South Wales and extended into other States after AP was engaged. The extent of Primus' operation in any State, either before or after the various arrangements with AP were agreed, was not dealt with in the evidence.

12 In April 2001, without warning, Mr Sengos' contract was terminated by Primus, like that of the agents.

The parties' cases 13 Mr Goot SC, appearing for the respondent, submitted that none of the challenged contracts were contracts 'whereby a person performs work in any industry', so as to bring them within the purview of s106. The authorities demonstrated that the section strikes at a contract, not the work performed under it. Here, the contracts in question required all work to be performed by the applicants to be done in States other than New South Wales. None of the work was to be performed in New South Wales. It was submitted that the proper inference from all of the evidence and the agreed facts, was that none of the applicants performed any work in an industry 'in and of' New South Wales, that being the necessary jurisdictional connection.

14 It was submitted that while AP's office was located in Sydney, where Mr Sengos resided, the fact that certain work and services were provided to the applicants by the respondent from Sydney, rather than from Melbourne, did not relate the contracts here in question to the performance of work in a New South Wales industry. That work, which it was agreed by the parties was performed by Mr Sengos in New South Wales, but only in relation to the applicants' operations outside New South Wales, was not a sufficient basis upon which to ground jurisdiction. It would be found, so it was submitted, that the industry in which each applicant was engaged, was confined to the places specified in the relevant contract. Each such industry lay outside New South Wales.

15 It was further argued that even if any of the contracts had required any of the applicants to perform work in New South Wales from time to time, such work would have been so insignificant as not to ground jurisdiction.

16 These submissions were developed by reference to a detailed analysis of the decisions of the Court of Appeal in Ex parte Richardson; Re Hildred & Ors (1972) 2 NSWLR 423; Watson J in Cosgrove v International Opal Pty Ltd and Ors [1977] AR 751; Watson J in Maloney v Hoffman [1980] AR 318; Glynn J in Chevron Breeders and Producers of Australia Pty Ltd and Anor v Fast Food Service Development Pty Ltd and Anor (1984) AR 576; Peterson J in Stevens Pty Ltd and Ors v WTH Pty Ltd trading as Avis Australia & Ors (unreported, 7 May 1993, CT 207 of 1992); and the Full Court decisions in Chrysler Jeep Automotive Distributors Australia Pty Ltd v Canberra Star Motors Pty Ltd (1997) 79 IR 452 and Perrott v XcelleNet Australia Ltd (1998) 84 IR 255.

17 As to the express choice of law made in each contract, namely the law of Victoria, it was submitted that this was another factor to be taken into account in determining that the necessary jurisdiction did not exist. The evidence was that this aspect of the contract which the applicants had accepted, had not been given any real regard by either the applicants nor Mr Sengos. That, however, it was submitted, did not alter the fact that it was an express provision of each contract, which had been agreed and in respect of which no relief was sought in these proceedings. It followed that it was a factor to which some regard must be had.

18 Mr Higgins of counsel, appearing with Mr Temby QC, submitted for the applicants that the fundamental jurisdictional question which had to be determined, was whether the contracts in issue had the necessary connection with New South Wales. This required consideration of all competing factors and could be established, it was submitted, even if the contracts had a greater connection with another State, than that which existed with New South Wales (per Chrysler Jeep).

19 Here, the necessary connection flowed from the applicants' relationship with Mr Sengos, who recruited them. The contracts were executed in New South Wales, either actually in one case or as the result of the 'instantaneous communications rule', upon receipt of the faxed signed contracts in Sydney by Mr Sengos, or upon the rule in Masters v Cameron (1954) 91 CLR 353.

20 The evidence was that Mr Sengos controlled the agents from Sydney. The applicants were under a contractual obligation to report to him, their appointed manager. He created the administrative system under which they operated, he trained them and also supervised their work.

21 The respondent's activities in Melbourne did not obviate or affect these factors. The respondent operated on a nationwide basis and could not, it was submitted, for the sake of avoiding the operation of s106, attempt to sheet home to its Melbourne head office, activities which took place in other States. Any comparisons between the work performed in Melbourne and Sydney, which were not valid in any event, led to the conclusion that the more substantial work was performed within New South Wales. Those parts of the business which operated from Melbourne were not parts with which the applicants and Mr Sengos were concerned in any event.

22 It was also submitted that here the presence of the contract in the jurisdiction must be recognised. It was relevant that in Bell & Anor v Macquarie Bank Limited & Anor [1999] NSWIRComm 584 the Full Bench had concluded that 'Relevantly, for present purposes, the place where work is performed under the contract or arrangement is also one factor, albeit not a decisive factor, which must be considered. As was said in Perrott (at 267), "the place work is performed … is but one factor in assessing the relevant connection of the contract with New South Wales and in that assessment the nature, quality and extent of the performance in the context of all the relevant circumstances of the contract will be material considerations." We are satisfied, however, that work may be performed in an industry "in and of" New South Wales notwithstanding that the majority of the work is not physically performed in the State. This may be the case so long as there are other factors present which establish, or assist in establishing, a relevant connection with New South Wales. Factors which may indicate such a connection include that the contract or arrangement was negotiated or made in the State by New South Wales residents or that the contract or arrangement involves the performance of work overseas in furtherance of a New South Wales industry.'

23 Here, it was submitted, the industry was the sale of pre-paid phone products, carried on by Primus at its Sydney office and also from APs' office there. The business was expanded from there into other States. The end result was no different to the theatrical industry considered by the Court of Appeal in Hildred, where theatrical productions were performed in other countries, as a part of the New South Wales theatrical industry.

24 The most relevant factor, it was argued, was the weight of day to day activities conducted by Mr Sengos, in New South Wales. How could the interaction between the applicants and Mr Sengos be severed or divided from their selling activities?

25 As to the proper law of the contract, it was submitted that this was not sufficient to oust jurisdiction. The evidence suggested that the applicants had never intended to adopt Victorian law in respect of their contracts. The result of the instantaneous communications rule was, in any event, that the contracts in question in most cases were made in New South Wales "and therefore the law of New South Wales is the applicable law".

26 In reply, it was argued by Mr Goot that the applicant's case was fundamentally flawed. The performance of work by Mr Sengos in New South Wales was not sufficient to provide a foundation for the conclusion that the applicants' contracts required the performance of work in an industry in and of New South Wales. In any event, it was agreed between the parties that the work performed by Mr Sengos in New South Wales for Primus was in each case performed in connection with the applicants' agencies in other States. The applicants performed no work in New South Wales.

27 It was further submitted that the circumstances were akin to those considered by Peterson J in Avis, where, unlike here, the applicants had in fact performed work in New South Wales under the contracts in question, as had the respondent, but the conclusion reached was still, that the work was performed in the relevant Victorian industry. The nature of that work performed in New South Wales was not such as to lead away from the conclusion that the work of the applicants was performed in an industry in and of Victoria and that the work performed by the respondents in New South Wales had been performed in connection thereto and not in an industry in and of New South Wales. It was argued that similar conclusions, for even stronger reasons, would here be reached.

28 As to the arguments in relation to the claim that some of the contracts had been executed in New South Wales, as a result of the instantaneous communications rule, it was not accepted that this was correct on the facts, but even if it were, it was submitted that it would not assist the applicants. Where the contract had been executed was but one of the considerations which arose in determining whether the necessary connection with New South Wales existed. Furthermore, it would not, as was submitted for the applicants, properly lead to the view that the law of New South Wales was the proper law. Here there was an express agreement as to that matter which prevailed and could not be ignored.

29 Even if it did not, the ordinary tests as to the determination of the proper law of the contract, as discussed by Rogers J in Mendelson-Zeller Co Inc v T & C Providores Pty Ltd [1981] 1 NSWLR 366 at 369, would not lead to the conclusion that the proper law of these contracts was that of New South Wales. These tests require consideration of factors such as where the contract was made, the place of performance, the place of residence or business of the parties respectively and the nature and subject matter of the contract. Here, of course, the contracts in question were between Primus and the applicants and not with AP or Mr Sengos.

30 The circumstances in which an application brought under s106 of the Act might be dismissed at an early stage in the proceedings have often been considered by the Court and its predecessors (See Nagle v Tilburg (1993) 51 IR 8). Where the complaint made is that the Court lacks jurisdiction, while it is desirable to deal with that issue at an early stage, it is only open to do so at an appropriate stage of the proceedings, where the facts are sufficiently clear so that the Court may be satisfied that the necessary material has been put before it, in order for the question of jurisdiction to be finally determined.

31 Here I am satisfied, on the material which is before the Court, that in this case, the appropriate stage for that issue to be determined has been reached. That being the case, it is important that the question be determined now, particularly having in mind the considerable costs which litigation such as this inevitably involves parties in.

32 The jurisdictional basis of the section has also been often considered by the Court and its predecessors, in the authorities to which the parties referred in their submissions, as well as in other cases. Determination of the jurisdictional question can be problematic. However, in this case, I am satisfied that the answer is relatively clear on the evidence.

33 Here, the agreed facts and the other evidence demonstrated that Mr Sengos performed work in New South Wales, for AP in connection with its various agreements with Primus. It was, however, not any of those agreements which were brought before the Court for consideration in these proceedings. It is the agency agreements which the various applicants entered with Primus which are the subject of the challenge brought under the section by the applicants. The Court's jurisdiction to deal with those contracts is here in issue.

34 In their express terms, none of the challenged agreements required the performance of any work in New South Wales. They each specify that the proper law of the contract is to be that of Victoria, where Primus was incorporated and had its headquarters. On their face, the only connection which any of the contracts had with New South Wales, was that one of them was signed there, but it too related to work to be performed in South Australia.

35 In the cases of the other contracts, the way in which some of them came to be executed was that they were executed by the applicants outside New South Wales in Mr Sengos' presence. In other cases they were executed by the applicants in the State where they each resided. Copies of the execution page was then faxed to Mr Sengos in Sydney and the original contract was also sent to him. When Mr Sengos received these documents was not in evidence. The original was, however, then sent by him to Melbourne, where it was executed by Primus and returned.

36 I am in some doubt that in the latter cases, the 'instantaneous communication rule' properly applied to the circumstances described, so as to have the result that those agreements were made in New South Wales. It is unnecessary, however, to decide the point, given that it must be accepted that the applicants' argument that the result of the making of the contract in New South Wales was that the law of New South Wales governed those contracts, is not correct. That does not necessarily follow, as the judgment in Mendelson-Zeller makes plain. In any event, the argument overlooks the fact that the parties here expressly agreed that the proper law of the contract was to be that of Victoria, a provision of the contracts not challenged in these proceedings and one which must therefore be given effect. While not conclusive of the question of jurisdiction, it is a factor to be taken into account.

37 It follows that even were the argument as to the proper law correct, it too would establish but one factor to be taken into account in determining whether the necessary connection with New South Wales here existed with the contracts in question. The faxing of a copy of the execution page of a contract to Mr Sengos in Sydney, is, after all, but a very small part of the matrix of circumstances which here arises for consideration.

38 In none of the authorities in which the jurisdictional question which here arises has been considered, has the view been taken by the Court that any connection between the contract in question and New South Wales will be sufficient to ground jurisdiction under s106. That flows of necessity from the interaction between the definition of contract in s105 of the Act and the provision of the Interpretation Act 1987 ( See XcelleNet at p266).

39 So it is that the view has been taken that a contract for the performance of work in an industry in and of New South Wales, will have the necessary connection with New South Wales, even if the work, or part of it, is performed outside of New South Wales. The decisions in Hildred and Chrysler Jeep and XcelleNet, all provide examples of such circumstances.

40 The converse situation may, of course, also arise. Namely, that a contract for the performance of work in an industry in and of another State, which requires the performance of work in New South Wales, will not thereby result in a position where the Court has jurisdiction to deal with the contract in question (see XcelleNet at p267). In a sense, that is what the contest here boils down to, albeit somewhat indirectly. Namely, whether the work performed by Mr Sengos in New South Wales for AP under its contract with Primus, in connection with each of the applicants' agencies in other States, properly leads to the conclusion that the agency contracts here challenged under s106, were for the performance of work in an industry in and of New South Wales. That question must be determined in circumstances where none of the applicants themselves ever performed any work under these contracts in New South Wales and where it was agreed that all of the work performed for Primus by Mr Sengos in New South Wales, was performed in connection with these agencies in other States.

41 On the evidence the irresistible conclusion was that the agency contracts did not require the performance of work in an industry in and of New South Wales.

42 Primus was in the business of selling pre-paid phone cards and internet services. It was incorporated and headquartered in Melbourne, where the administrative work of the business was performed, as well as the despatch of its products. It operated a national business and appointed a number of managers to operate that business in various States, including in New South Wales AP and through it, Mr Sengos. Primus employed other people to perform similar work in other States. On the evidence Mr Sengos performed well and his area of responsibility was broadened, by later agreement between AP and Primus, to include Queensland and subsequently, the other States earlier mentioned. In the performance of that new aspect of his work, Mr Sengos then recruited the applicants as Primus' agents, to operate in their own geographical territories in States other than New South Wales. Mr Sengos performed work in New South Wales, as well as in the other States in which those agencies were located, in relation to the agencies. For example, he conducted local training of the agents there. The applicants themselves only ever worked in their own territories, even though they often spoke to Mr Sengos by telephone and communicated with him in Sydney by other means.

43 It was common ground that Primus directly employed other staff in Victoria to perform other work in connection with the applicants' agencies. It was there that the majority of its workforce was located. The applicants, however, had little direct contact with those Victorian employees, their main point of contact being Mr Sengos. Mr Sengos reported to Mr Kemp, also located in Victoria and dealt with other Primus staff there. The agents had little and, in most cases, no direct contact with Mr Kemp.

44 Each applicant executed a standard form contract which had an express choice of law clause, specifying the law of Victoria. That was hardly surprising in the circumstances, given that Primus had supplied Mr Sengos with its standard contract, to be used when appointing its agents. On the evidence of Mr Sengos and the applicants, that provision was not a matter to which they gave any thought prior to the initiation of these proceedings. Their failure to pay attention to the provision, does not, however, alter the fact that it was one of the agreed aspects of each of the contracts here in question.

45 Here it was argued for the applicants that despite these circumstances, the necessary connection with New South Wales existed, having in mind observations such as those of Hungerford J in Bartolacci v Permanent Custodians Ltd (1992) 44 IR 388 and Marks J in Englebrecht v Cordukes Ltd & Anor [2000] NSWIRComm 52.

46 I take the view, however, that this application falls into that class of cases which includes Maloney per Watson J, where the industry was found to be confined to the ACT (at p323); Chevron per Glynn J, where the industry was found to be a Victorian one (at p579) and Avis, per Peterson J where again, the industry was found to be a Victorian one (at p12). The same conclusion must here be reached. Namely, that the necessary connection with New South Wales did not exist and that the contracts in question did not provide for the performance of work in an industry in and of New South Wales, but rather that of another State.

47 The industry here in question and the State with which each contract had the closest connection was plainly that in which each of the applicants' territories was located. Given the choice of law provision in the contract, as well as the work performed in Victoria by Primus employees in respect of each of these agency agreements, it must be concluded that even the State of Victoria had a closer connection with each agreement than did the State of New South Wales, where Mr Sengos performed the bulk, but not all, of his work in connection with the agencies.

48 On the evidence, the only real connection which each contract had with New South Wales, was the work which Mr Sengos there performed. Undoubtedly Mr Sengos performed important work there. However, given the evidence of the nature of Mr Sengos' work for AP, the connection between New South Wales and the agencies here in question would have disappeared completely, had Mr Sengos relocated to another State, or had AP's contract come to an end and someone in another State been appointed to perform the work performed by Mr Sengos. That, after all, was how he came to perform work in connection with these agencies, because Primus terminated its prior arrangements with others who had earlier been engaged to perform that work. There was no evidence that it had earlier been performed in New South Wales.

49 The evidence did not suggest that there was anything particular about the work which Mr Sengos performed in connection with these agencies, which required its performance in New South Wales. It was, for example, not even performed at Primus' office in Sydney, but rather at the offices of AP. Primus even operated a 1800 telephone number, which diverted agents' calls to Mr Sengos' mobile phone, wherever he was, hence making it entirely irrelevant as to whether or not he was in New South Wales, when attending to such work. Indeed, given the evidence of his travels, it must be inferred that some of this work was performed in States other than New South Wales or the State where the agencies were located.

50 It seems to me, in these circumstances, that the connection of each of these agency contracts with New South Wales was of a tenuous kind. The agency work itself was performed entirely outside New South Wales. The connection of these contracts with New South Wales depended entirely upon the location there of one individual, Mr Sengos, when he performed some, but not all, of the work Primus required to be performed by AP in connection with these agencies. That simply is not a sufficient basis upon which the necessary jurisdictional connection with New South Wales could rest. Nor was the fact that when Mr Sengos was in New South Wales, the applicants communicated with him there by telephone or facsimile, or indeed by other means of communication, sufficient to give rise to the conclusion that thereby the applicants became involved in working in an industry in and of New South Wales.

51 The evidence suggests that it was Mr Sengos' personal attributes, rather than the fact that he happened to live in New South Wales, or to work in the relevant New South Wales industry, which led Primus to engage him to perform work for it in other States. This ultimately led to the applicants' engagement by Primus. The work which they thereafter performed in other States under these contracts was plainly work performed in connection with the industries of those States where their territories where located.

52 While it was sought to be argued that Primus had a business which it operated in an industry in and of New South Wales, which it developed there through the work of Mr Sengos and then extended into other States, the evidence did not leave that conclusion properly open. On Mr Sengos' evidence, AP and Mr Sengos were recruited by Primus at a time when it was already operating this business in a number of States apart from New South Wales. AP was engaged in order to improve the New South Wales business which Mr Sengos set about doing, including recruiting agents. Primus was undoubtedly satisfied with the work which Mr Sengos performed in relation to its New South Wales business. Mr Kemp was not similarly satisfied with the work being performed by those Primus had already engaged to do similar work for it in other States. It thus approached AP and Mr Sengos and it was agreed that he would take on a similar role in Queensland. Primus then terminated its arrangement with the current manager and AP was appointed in relation to Queensland. Subsequently in the other States here in question, after the two other managers in other States had resigned, it was agreed that Mr Sengos would also take up that work. He then performed the work, partly in New South Wales and partly in those other States and indeed elsewhere. Mr Sengos later taking over that role in Victoria and Tasmania was also discussed, but ultimately not implemented.

53 That sequence of events does not properly leave open the conclusion that Primus established a business in New South Wales, was then engaged in an industry in and of New South Wales and that it then entered into contracts with the applicants in other States, as a part of its expansion of its New South Wales business in that industry, into those other States.

54 The evidence rather suggested that when AP entered its first agreement with Primus, Primus was operating its business in the industries of a number of States, including New South Wales and those in which the applicants later took on their agencies. Its later offers to AP involved Mr Sengos in working in those industries in the other States concerned, where he recruited the applicants and where he worked from time to time, as well as continuing to work in New South Wales.

55 On the evidence the only work performed in New South Wales for Primus in connection with each of the applicants' agencies, was that performed by Mr Sengos. All of the other work performed by Primus in connection with these agencies was performed in Victoria. It cannot be concluded that such work was not substantial. While Mr Sengos was each applicants' direct point of contact with Primus, was closely involved with them day to day and in developing the systems operated by the agents, Primus also directly employed 6 employees in Victoria to service the agencies in relation to matters such as marketing, calculation of commission, payment, despatch of product, production of debtors lists and so on. That is where the relevant database was kept and operated and where Mr Sengos had recourse to information about customers, debtors and so on.

56 It follows that these circumstances are quite unlike those considered in Hildred, or Chrysler Jeep or XcelleNet, where at least some work was performed in New South Wales by the applicants in each case or even those which were considered in Savage v Digital Corporation (Australia) Pty Ltd (Glynn, Hungerford and Schmidt JJ, unreported, 17 May 1999). There, the applicant's work in New South Wales, after working for some years in Victoria under a Victorian employment contract, was found to have given rise to a sufficient connection with New South Wales, he having been required by his employer to work in the computer industry in and of New South Wales and that work not having been performed there on but a casual or transitory visit.

57 Here, by way of contrast, there was never any work performed by any of the applicants in New South Wales. While Mr Sengos performed some work for Primus in New South Wales in connection with the agencies, he also performed some of that work elsewhere and other substantial work was performed in connection with the agencies by Primus' employees in Victoria. None of the parties to the contracts in question resided in New South Wales. Only one of the contracts was physically executed in New South Wales by one of the applicants, the others all being executed interstate, with the execution page of some of those being faxed to Mr Sengos in Sydney. All of them were executed in Melbourne by Primus and the proper law of each of them was agreed to be that of Victoria. It follows that no necessary connection existed between these contracts and New South Wales, nor was there any requirement under the contracts for the performance of any work in an industry in and of New South Wales.

58 As a result, it must be concluded that the application must be dismissed, the contracts not falling within the Court's jurisdiction under s106 of the Act.

59 For all of these reasons, I order that the application be dismissed, with the applicants to bear the respondent's costs, as agreed or 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.

[1999] NSWIRComm 584

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Judgment (80 paragraphs)

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Cases Cited (9)

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