Premier Sports Aust. P/L and Ors v. Dodds [2001] NSWSC 707

1 On 29 May 2000 the present defendant, whom I will call Mr Dodds, commenced proceedings in the Industrial Relations Commission ("IRC") seeking relief under s.106 of the Industrial Relations Act , 1996 ("IRA") , in respect of a contract of employment said to have been entered into between himself and the present plaintiffs, whom I will compendiously refer to as Premier. On 10 October 2000 Premier filed a reply to those proceedings and on 31 October Mr Dodds filed a response. 2 On 27 February 2001 Premier commenced proceedings against Mr Dodds in the Federal Court of Australia. It will be necessary to return to the content of the pleadings in the IRC and in the Federal Court in more detail later in this judgment. 3 On 2 March 2001 conciliation was conducted by Justice Peterson in the IRC proceedings, but the parties were unable to reach a compromise. 4 On 14 March 2001 a Summons was filed in the Supreme Court of New South Wales by Premier seeking an order under s.8 of the Jurisdiction of Courts (Cross-vesting) Act 1987 ("the Act") that the IRC proceedings between the parties be removed into the Supreme Court with the intent that the Federal Court proceedings between the parties also be removed into this Court pursuant to s.5(4) of the Commonwealth Jurisdiction of Courts Cross-vesting Act 1987 . 5 It is this Summons that has come before the Court today for hearing. Mr Walker SC appears with Mr Kidd for the plaintiffs and Mr Shaw QC with Mr Hatcher appears for Mr Dodds. 6 There is no issue between the parties that where proceedings are sought to be removed from the IRC into the Supreme Court so that related proceedings in the Federal Court can be removed into the Supreme Court, the Court has jurisdiction to make the order for removal of the IRC proceedings under s.8(1)(b)(i) of the Act. It is now sufficiently well established in the authorities that the essential questions involved in the exercise of the court's discretion under s.8(1) are: what is the most appropriate forum for the case and where do the interests of justice lie: see, for example, Bankinvest AG v Seabrook (1988) 14 NSWLR 711; Johnston v Becker (1999) NSW SC 310; Heath v Hanning (1999) NSW SC 719. 7 The primary submission of Premier is that in the light of all the issues between the parties raised in the IRC proceedings and the Federal Court proceedings the appropriate Court to determine the whole of the controversy between the parties is the New South Wales Supreme Court because that is the only Court clearly and unarguably capable of giving all the relief which may be appropriate. 8 It is now necessary to examine with more particularity the issues raised on the pleadings in the Commission and in the Federal Court. In his Summary of Matters of Fact and Law filed in the IRC on 17 August 2000, Mr Dodds alleges that pursuant to a contract in writing dated 28 August 1994 he was employed by the first and second plaintiffs, which are wholly owned subsidiaries of the third plaintiff. The scope of his duties was to set up and operate a pub/club commercial channel of entertainment on pay television in Australia. He claims that in October 1995 that contract was varied by the addition of a provision to the effect that on cessation of his employment he would be paid a lump sum equal to the product of 10% of the gross pre-tax profits of the pub/club channel for its most recently completed financial year, multiplied by a factor of 20. 9 He says that on 4 October 1999 his employment was terminated and that he has not been paid any of the money to which he is entitled under his contract. It is of note that the amount to which he claims to be entitled under the profit share provisions of his contract is $5,406,808. 10 In paragraph 18 of the Summary of Facts and Law Mr Dodds claims that his contract of employment was harsh and unfair "in the requisite statutory sense" , unconscionable, and contrary to the public interest. He claims to have the contract varied in a manner not clearly specified on grounds particularised with great generality. Some of the grounds, it is fair to say, smack of the boiler-plate. However, the relief claimed by Mr Dodds seems to be primarily the amounts to which he claims entitlement under the existing terms of his contract of employment. 11 At least at this stage of the matter, my impression from the pleadings in the IRC is that there is much to be said for the criticism made by Premier that the claim in the IRC is really a claim to enforce a contract dressed up as a claim to vary a contract on the ground of unfairness. This is so, it is said, because the IRC has no jurisdiction under s.106 IRA to order performance of an unexceptionable contract. The IRC has jurisdiction only to avoid or vary contracts which are found to be unfair. 12 In their Reply filed in the IRC, Premier put in issue the existence of the alleged contract of employment and do not admit the variation said to have been made in October 1995. They say that that variation, if made, was unlawful and contrary to the provisions of the Corporations Law (now the Corporations Act 2001 ) in a manner which is not amplified by particulars. They say further that Mr Dodds falsified profits of the pub/club channel while an employee, by reason of which he has been paid substantial commissions to which he was not entitled. 13 They say also that in breach of his fiduciary duties as an employee and contrary to the provisions of the Corporations Act , Mr Dodds procured payment of excessive and unearned commissions and otherwise acted contrary to the interests of his employer in circumstances which are particularised. 14 They say that Premier and Sports Investment, the second plaintiff, were misled and deceived by Mr Dodds' deliberate failure to inform them of the terms of the profit share variation to his contract allegedly made in October 1995. 15 In their Statement of Claim in the Federal Court proceedings Premier repeat, with some greater elaboration, the factual allegations made in their Reply in the IRC proceedings. They claim that the alleged non-disclosure by Mr Dodds of the 1995 contract variation was misleading and deceptive conduct within the meaning of s.52 of the Trade Practices Act 1974 whereby they suffered loss and damage entitling them to orders under s.87 varying that contract, if it is found to have been made, or to damages under s.82 of the Act. They make similar claims for relief under the Fair Trading Act 1987 . In addition, Premier seek damages and an accounting for breach of Mr Dodds' duties as a director of the first and second plaintiffs pursuant to s.232 and s.1317HD of the Corporations Act . They seek damages for breach of Mr Dodds' contract of employment and damages for breach of an alleged tortious duty of care. 16 It is quite clear that there is a common substratum of fact which underlies all claims between the parties in the IRC and in the Federal Court. 17 Section 106 IRA provides: " Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case." 18 As I have noted, Mr Walker SC for the plaintiffs submits that the Supreme Court is the only Court which is clearly able to give all appropriate relief to resolve the whole controversy. He says that if it were found by the IRC that Mr Dodds' contract of employment were fair, then the IRC would have no jurisdiction under s.106(1), (3) or (5) to enforce it according to its terms either against Premier or against Mr Dodds. 19 In my view, this submission is correct. Under s.106(1) the Commission may only make a declaratory order in respect of a contract which it finds to be unfair. Likewise, under ss.(5) the Commission may make an order for payment of money only "in connection with" a contract found to be unfair and declared wholly or partly void, or varied. Absent a finding of unfairness, the Court has no power to make any declaration or order at all. If the IRC found that Mr Dodds' contract was not an unfair contract then Premier would have to litigate their claims against Mr Dodds elsewhere. 20 Mr Walker concedes that if the contract is found to be unfair and Mr Dodds is held entitled to some payment in consequence thereof the Court might, in the exercise of its discretionary jurisdiction under s.106(5), offset against that payment any amounts for which Mr Dodds might be found liable to Premier. But, he says, if the amount for which Mr Dodds is found liable to Premier for any of the causes of action founded on fiduciary duty, the Trade Practices Act , the Fair Trading Act , the Corporations Act or in tort exceeds the amount for which Premier are liable to Mr Dodds, then the IRC would have no jurisdiction under ss(5) to order Mr Dodds to pay that excess to Premier. Premier would have to resume their proceedings in the Federal Court to recover that excess. 21 Mr Shaw QC submits that the IRC would have jurisdiction under ss.(5) to order Mr Dodds to pay the excess in such circumstances but he has not been able to refer me to any authority to that effect. As a matter of construction of ss.(5), I am not persuaded that there would be any such jurisdiction. 22 Section 106(5) IRA does not confer upon the IRC an independent head of jurisdiction to adjudicate upon all disputes between parties to an employment contract, howsoever arising. The making of an order for payment of money under ss.(5) is ancillary to the making of an order under ss.(1). The payment must be "in connection with" a contract in respect of which an order is to be made under ss.(1). It must be in aid of such order, that is, in aid of rights and obligations which the parties are to have under the contract as varied under ss.(1) or which the parties would have had, or should have had, under the contract wholly or partly avoided under ss.(1). 23 The claims which Premier have against Mr Dodds under the Trade Practices Act , the Fair Trading Act , the Corporations Act and in tort do not arise out of their rights under Mr Dodds' employment contract. They depend upon statutory rights or common law rights. If the IRC found that the amount to which Premier were entitled in respect of those claims exceeded the amount to which Mr Dodds was entitled then it might refuse to order Premier to pay any amount to Mr Dodds, but it could make no order in favour of Premier. If Premier wished to secure a judgment against Mr Dodds in respect of those claims they would be compelled to go to the Federal Court or to the Supreme Court to obtain that relief. There would, in that circumstance, clearly be a multiplicity of proceedings in different Courts. 24 Mr Shaw submits, however, that there is no viable or ascertainable cause of action which can be tried in the Federal Court, so far as is presently pleaded, so that the removal to the Federal Court would be inappropriate. 25 The claims of Premier which are pleaded in their Statement of Claim in the Federal Court appear to be sustainable on their face. In my view, the causes of action as pleaded could not be struck out. No evidence has been adduced by Mr Dodds to support any assertion that the claims are vexatious, frivolous or without foundation. In general, in my view, it is inappropriate on an application such as this to enter into the question of whether the causes of action pleaded in another Court are likely to succeed. It is sufficient, for the purposes of an application such as this, for the Court to be satisfied that on the face of the pleadings there is a serious issue to be tried. 26 Mr Shaw then submits that the causes of action pleaded by Premier in the Federal Court proceedings are predicated upon Mr Dodds' success in the IRC under s.106 IRA. He says that if Premier succeed in the IRC in defending Mr Dodds' claims, then the allegations raised by them in the Federal Court proceedings do not arise and there is no loss and damage. 27 In my view that is not so. Quite apart from the issues raised by Premier as to the existence and terms of the contract relied upon by Mr Dodds, Premier allege causes of action dehors that contract, founded upon the general law of fiduciaries, the Trade Practices Act , the Fair Trading Act , the Corporations Act and the law of tort. As I have noted earlier, if Mr Dodds failed completely in his cause of action in the IRC, Premier would still be compelled to litigate their causes of action for recovery of sums said to have been improperly paid to Mr Dodds by continuing their proceedings in the Federal Court or in this Court. 28 Third, Mr Shaw submits that it can be seen from the course of events so far that the commencement by Premier of the proceedings in the Federal Court was nothing more than what he terms a forum-shopping ploy by them to extricate themselves from the proceedings in the IRC. He draws attention to the fact that proceedings were filed in the Federal Court on 22 February 2001, shortly before the matter was listed for conciliation in the IRC, and nine months after the initiation of proceedings in the IRC. 29 In my view, particularly in the light of the limited availability of remedies in the IRC to which I have earlier adverted, there is nothing to sustain that submission. There is no evidence which could support an allegation of mala fides on the part of the plaintiffs and mere delay of some nine months after the commencement of proceedings in the Commission before initiation of proceedings in the Federal Court is not, in my view, sufficient to ground a justifiable suspicion of forum-shopping. 30 Finally, Mr Shaw relies upon statements of authority in the cases to which I have been referred, including BHP v Zunic (SCNSW 5 July 2001, Sully J.) and Heath Group v Hanning (supra), to the effect that the IRC is a tribunal with particular experience and facility in dealing with a specialised area of the law, namely industrial disputes and, in particular, employment contracts. Mr Shaw submits that such specialised knowledge, experience and jurisprudence should not lightly be withdrawn from Mr Dodds in the litigation of a claim based upon his employment contract. 31 For the reasons above noted, I am of the view that Mr Dodds' claim, as appears from his pleading, is essentially one for the enforcement of the existing terms of a contract between himself and his employer. It is a contract between a highly paid executive and substantial corporations; many of the issues in the proceedings will depend upon questions of financial accounting and commercial negotiation. There is no element in the proceedings involving industrial awards or conditions of employment pertaining generally in the entertainment industry. 32 On the other hand, the claims made by Premier are based upon jurisprudence which is within the everyday experience both of the Federal Court and of the Supreme Court, namely, the Trade Practices Act , the Fair Trading Act the Corporations Act , the law of fiduciaries and the law of tort. It would seem to me, at least as a matter of impression from the pleadings so far, that the major areas of dispute between the parties will, in fact, be focused upon these areas of jurisprudence and not upon an area of expertise peculiar to the IRC. In the particular circumstances of this case, I am not persuaded that the special experience and the expertise of the IRC should weigh heavily in the exercise of discretion. 33 For all of the above reasons, I am satisfied that the interests of justice require that the whole of the controversy between the parties be determined in the one Court, either the Supreme Court or the Federal Court. It weighs most heavily with me that there may well be limitations on the jurisdiction of the IRC to make all of the orders in favour of Premier to which they may be found entitled. 34 Accordingly, I am satisfied that the IRC proceedings should be removed into this Court. I do not wish to pre-empt the Federal Court in any way in the exercise of its jurisdiction under the Commonwealth Act from determining whether or not it will remove the Federal Court proceedings into this Court. That will be a matter for the Federal Court to determine when an application is made to it under the corresponding Commonwealth cross-vesting Act. 35 In the circumstances, therefore, I propose to make the orders suggested in the Short Minutes of Order submitted by the plaintiffs to the effect that the proceedings in the IRC will be removed into the Supreme Court, but that that order will be stayed until an order is made by the Federal Court to the effect that the Federal Court proceedings are transferred to the Supreme Court. 36 I am satisfied that the costs of this Summons should be costs in the cause. It is not appropriate to make a costs order until determination of the proceedings demonstrates where the merits lay and, as Mr Hatcher says, whether this application was necessary. 37 The formal orders of the Court will be in terms of the Short Minutes of Order initialled by me and placed with the papers.

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