Steinhardt v Sapphire Bioscience Pty Ltd

Abboud v State of NSW (NSW Department of Education) (1999) 92 IR 32 Balsdon v Murray Irrigation Limited [2003] NSWIRComm 251 Beahan v Bush Boake Allen Australia Limited (1999) 47 NSWLR 648, (1999) 93 IR 1 Bell & Berg v Macquarie Bank Limited & Anor [2003] NSWIRComm 363 Costopoulos v Hansen Yuncken Pty. Limited [2003] NSWIRComm 335 Euphoric Pty Limited v Ryledar Pty Limited and Anor (2002) 117 IR 1 Hogan v Employment National (Administration) Pty. Limited [2000] NSWIRComm 47 Lahoud v Joseph Lahoud [2003] NSWIRComm 179 Lipman v A.G. Lifestyle Management Pty. Limited (2003) NSWIRComm 160 CASES CITED : Majik Markets Pty. Limited v Brake and Service Centre Drummoyne Pty. Limited (1991) 28 NSWLR 443, 39 IR 169 McGowan v Australian Broadcasting Corporation [2001] NSWIRComm 49, (2001) 104 IR 244 Nagle (T/as W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8 Reich v Client Server Professionals of Australia Pty Limited (Administrator Appointed) (2000) 49 NSWLR 551, (2000) 99 IR 69 Rothmans Distribution Services Limited v Full Court of the Industrial Court of New South Wales (1994) 53 IR 157 Sinclair v Hawker de Havilland Pty. Limited [2003] NSWIRComm 413 Shop, Distributive and Allied Employees' Association, New South Wales v Librus Pty Ltd, t/as Dymocks Parramatta (2001) 103 IR 394 Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 Walker v Industrial Court (NSW) (1994) 53 IR 121 Western Sydney Area Health Service v Gibson (2001) 109 IR 359 Westfield Limited v Helprin (1997) 82 IR 411

HEARING DATES: 02/20/2004 DATE OF JUDGMENT: 03/08/2004

APPLICANT Mr P Moorehouse of counsel Solicitor: Mr C Parisi LEGAL REPRESENTATIVES: FIRST AND SECOND RESPONDENT Mr I Latham of counsel Solicitor: Mr J A Hunter

JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

IAN STEINHARDT v SAPPHIRE BIOSCIENCE PTY LTD AND ANOTHER

Application under s 106 Industrial Relations Act 1996

1 In these proceedings, Ian Steinhardt ("the applicant") seeks an order pursuant to s 106 of the Industrial Relations Act, 1996 ("the Act") declaring the contract of employment between himself and Sapphire Bioscience Pty. Limited ("the first respondent") and Cayman Chemical, ("the second respondent") ("the respondents") void ab initio, in whole or in part, and orders for the payment of money.

2 By Notice of Motion filed on 16 January 2004, the respondents moved the Court for an order that the Summons for Relief be set aside for want of jurisdiction. The grounds advanced in support of this application were as follows: 1) the contract, or arrangement, between the respondents upon the Notice of Motion and the applicants upon the Notice of Motion alleged to be unfair is a contract for which an application could have been made by the employee under Pt 6 of the Industrial Relations Act ("the Act") or, could have been made but for the provision of s 82 of the Act. 2) S 109A of the Act prevents the application of the unfair contracts jurisdiction being (sic.) to the contract, or, arrangement set out in paragraph 1 above.

3 Leave was sought by the respondents for dispensation from compliance with r 82(2)(c) of the Industrial Relations Commission Rules. The application was not opposed by the applicant. Accordingly, I granted dispensation from compliance with r 82(2)(c).

4 Mr Steinhardt was dismissed from his employment on 13 January 2003 on the grounds of allegedly failing to perform his duties. Mr Steinhardt sought various orders including orders as follows: 1) an order declaring that the contract, or, arrangement, between the applicant and the first respondent and the second respondent whereby the first respondent employed the applicant as a Managing Director and the second respondent employed the applicant as a Regional Manager ('the contract') was unfair, harsh and unconscionable and contrary to the public interest; 2) an order declaring that the contract is void ab initio insofar that it provided that it may be terminated on one month's written notice; 3) an order varying the terms of the contract between the Applicant and the Respondent to the following effect: (a) that termination of the contract shall not be harsh, unjust, or, unreasonable; (b) that the contract may only be terminated upon the payment to the applicant of reasonable compensation in the amount of 12 months' payment of the applicant's total salary; 4) an order that the first and/or the second respondent pay the applicant interest upon such amount of money that is ordered to be paid to the applicant in connection with the contract, until date of payment; 5) an order that the respondents pay the applicant compensation for the loss of reputation and for impairment of employment prospects and reduction in quality of life. 6) an order that the respondents pay the applicant's costs of and incidental to these proceedings. 7) such further, or, other orders as the Commission may see fit to make to provide relief to the applicant.

5 Mr Steinhardt commenced employment with the first respondent on 10 June, 2002 after a meeting with Mr K. Maxey the owner of the second respondent. On 13 January 2003, Ms T French, the Vice-President of the second respondent summarily terminated the employment of the applicant for allegedly failing to perform his duties.

6 Mr I. Latham of counsel appeared for the respondents. Mr Latham's principal contention was that Mr Steinhardt's unfair contracts claim was really an unfair dismissal claim in disguise and therefore, s 109A operated to exclude jurisdiction: see Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1 at 41-42. Mr Latham submitted that the claim was of the kind considered by Boland J. in Balsdon v Murray Irrigation [2003] NSWIRComm 251 at [17 and 30]. It was further submitted that the claim was one for compensation because the termination of the contract was alleged to be harsh, unjust, or, unconscionable and that it was (in reality) a proceeding as to a dismissal claimed to be "harsh, unjust or unreasonable".

7 The respondents also submitted that there was no factual matter required to be established before the jurisdictional objection could be dealt with. The respondents conceded that the applicant was an employee and his contract of employment had been terminated by the respondents.

8 Mr Moorehouse of counsel appeared for the applicant. Mr Moorehouse's principal contention was that while it is desirable for a case to be determined at an early stage, it is only open to do so at an appropriate stage of proceedings. In this request he relied upon Nagle (t/as W D & J L Nagle & Sons) v Tilburg (1993) 51 IR 8 and Euphoric Pty. Limited v Ryledar Pty Ltd (2002) 117 IR 1 at [3] and [4]. Counsel submitted that the facts must be sufficiently established (either by evidence or agreement) for the Court to be satisfied that it has the necessary material to reach a clear and final decision in order for a challenge to jurisdiction to be determined as a preliminary matter. Mr Moorehouse also relied upon Virtue v NSW Department of Education and Training (1999) 92 IR 428 and particularly the relevant principles summarised at 447-448.

9 Mr Moorehouse further submitted that the question posed by s 109A of the Act was not a matter which is likely to be determined solely upon the characterisation of the claim found in the pleadings. What is required is an examination of the substance of the claim; Hogan v Employment National (Administration) Pty. Limited [2000] NSWIRComm 47. It was further submitted that the question of whether an application is, in essence, a claim for unfair dismissal is a question of fact that can only be determined after hearing evidence; Costopoulos v Hansen Yuncken Pty. Limited [2003] NSWIRComm 335 at [79].

10 In addition counsel relied upon the decision of Curtis AJ in Sinclair v Hawker de Havilland Pty Limited [2003] NSWIRComm 413 where his Honour held that a summons which challenged as unfair a term of the employment contract allowing termination on four weeks notice could not be dismissed in reliance on s 109A.

11 It was submitted that in these proceedings the appropriate stage had not been reached for dealing with the motion as all that the Court had before it was a Summons including a verified summary of facts and law.

12 It was further submitted that it is not appropriate to deal with the motion at this stage having regard to the obligation imposed by s 109 of the Act to endeavour to settle unfair contract claims by means of conciliation; McGowan v Australian Broadcasting Corporation (2001) 104 IR 244 at 251 and Balsdon v Murray Irrigation Limited [2003] NSWIRComm 251 at 22.

13 Mr Latham was given leave to file written submissions in reply. Counsel submitted: 2. As to Sinclair , it is respectfully submitted his Honour A/J Curtis is either wrong or has created new law that should not be followed. After commencing with a criticism of the reasoning in Beahan at paragraph 11, his Honour draws a dichotomy between the relief set out in s 84 and that set out in s 106. According to his Honour, an employee who suffers loss greater than six months pay may apply under s 106. Correlatively, an employee who suffers less than six months loss may only apply under s 84. This formulation is at odds with Beahan and should be rejected. 3. As to Bell and Berg, it is submitted that their Honours put forward an unexceptional proposition that s 109A does not exclude any consideration of procedural fairness at paragraph 10. Such a position must be correct since there are many aspects of procedural fairness that do not go to the termination of a contract of employment. The proposition does not stand for a position that says that no consideration of procedural fairness can invoke a s 109A. The reference to Abboud makes no such claim. By way of example, an application under s 106 alleging failure to afford procedural fairness in relation to promotion would not be caught by s 109A while an application in relation to a termination alleging only procedural unfairness would be so caught.

14 In Hogan, Walton J, Vice-President considered a submission to set aside a Summons for Relief pursuant to s 106 of the Act for want of jurisdiction. At paragraphs [10] - [12] his Honour said:

10 As a general rule, it is desirable that a challenge to the jurisdiction of a court to determine a particular application should be heard at the earliest opportunity. Should such an objection succeed, the expense and delay occasioned by a full trial of the matter would thereby be avoided. However, numerous decisions of this and other courts, notably Nagle (t/as W D & J L Nagle & Sons) v Tilburg (1993) 51 IR 8 and the authorities relied upon therein, have indicated that it will only be appropriate to determine an objection to jurisdiction at the appropriate stage in the proceedings. As was said by Kirby P (as he then was) in Majik Markets Pty. Limited v Brake & Service Centre Drummoyne Pty. Limited (1991) 28 NSWLR 443 at 446, the approach of determining jurisdiction at a preliminary stage is a sensible course only "where a party has a substantial threshold argument which, if it succeeds will knock out the claim"; see also Virtue v NSW Department of Education and Training (1999) 92 IR 428 at 447-448. 11 Whether it is appropriate for a question of jurisdiction to be resolved at a preliminary or threshold stage will necessarily depend upon the nature of the challenge to jurisdiction, as well as the amount of evidence which must be examined and the scope of the determinations which must be made in the course of deciding the jurisdictional point. If an objection to jurisdiction of the Court requires the examination of the bulk of the evidence and demands that the Court make extensive factual findings, it is unlikely that it will be profitable from the perspective of the parties or the Court for the matter to be determined on a preliminary basis. To do so would effectively require an applicant to run the case twice should the challenge to jurisdiction prove unsuccessful. 12 It is also relevant to observe that this Court and other Courts have demanded that a particular threshold be satisfied before a preliminary challenge to jurisdiction can be upheld. For the respondent to succeed it must be demonstrated that there is no power for the Court to grant any relief to the applicant : see Virtue at 448 and Federated Municipal and Shire Council Employees Union v Energy Australia (1999) 90 IR 311 at 319. This is a matter which must be considered when assessing whether the respondent has raised a substantial threshold argument which will 'knock out' the claim if it succeeds.

15 The Judgments referred to by his Honour have recently been referred to with approval of the Full Bench in Western Sydney Area Health Service v Gibson (2001) 109 IR 359 at [2]; Euphoric Pty. Limited v Ryledar Pty. Limited at [8] - [14]; and Victor Lahoud v Joseph Lahoud [2003] NSWIRComm 179 at [38].

16 In this case, the only objection raised by the respondents is that the claim is precluded by virtue of the operation of s 109A of the Act.

17 S 109A of the Act provides: 109A Exclusion of certain contracts in connection with unfair dismissals (1) This Division does not apply to a contract of employment that is alleged to be an unfair contract for any reason for which: (a) an application has been or could have been made by the employee under Pt 6 (Unfair dismissals), or (b) such an application could have been made but for the provisions of section 83 that exclude the employee from making an application under that Pt. (2) In this section: "contract of employment" means any contract or arrangement under which work is done by a person in the capacity of an employee, and includes a related condition or collateral arrangement with respect to such a contract. "dismissal" has the same meaning that it has in Pt 6.

18 The relevant statement of principles in relation to this section was authoritatively stated by the Full Bench in Beahan. There it was made clear that this provision is directed at removing from the unfair contracts jurisdiction claims which essentially involve unfair dismissals. The Full Bench said (at 42): In short, our view is that s 109A operates to exclude a contract of employment from the operation of s 106 only where the unfair contracts claim is an unfair dismissal claim in disguise and where essentially it is of the nature of an unfair dismissal (my emphasis). Where a claim challenges the terms, or, operation of a contract of employment by genuine, not superficial or coloured, reasons related to the contract itself then, in our view, it is a claim properly within s 106 and s 109A has no operation in relation to it.

19 Earlier in Beahan, in what, with respect to their Honours, I find an erudite judgment dealing with s 109A and its interaction with s 106, the Full Bench said (at 32): The ability of the unfair contracts provision to operate at the time of termination of an employment contract on the dismissal of an employee but by reference to the contract itself was the subject of two decisions by the Court of Appeal in April 1994 in Walker v Industrial Court (NSW) (1994) 53 IR 121 and Rothmans Distribution Services Limited v Full Court of the Industrial Court of New South Wales (1994) 53 IR 157. In affirming the earlier approach stated in Incitec v Industrial Court , as referred to above, Kirby P said as to the meaning of s 88F (53 IR at 133): "Whatever doubts may have existed earlier, it is now beyond argument that the 'unfairness' referred to in s 88F(1)(b)IAA can arise, not only from positive provisions of the contract or arrangement which offend fairness in the relevant sense, but also from the failure, on the part of the contract or arrangement, to provide in a way that such fairness requires". In determining whether 'unfairness' has been established, His Honour commented that "regard may be had not merely to the terms of the contract or arrangement, as originally negotiated, but also to the manner in which the contract or arrangement has ultimately worked out and operates as between the parties to it." As to the operation of s 88F where alternative remedies may be available, Kirby P said (at 134-135): "The existence of other remedies (such as statutory claims for redundancy payments, statutory claims for reinstatement for wrongful dismissal, or a common law claim for unjust dismissal) do not control or limit the very large language of s 88F(1)." … As it was argued here by Mr Hodgkinson, s 109A excludes from s 106 a contract of employment where a claim could be made for an unfair dismissal; Kirby P expressly acknowledged such an exclusion by statute but, importantly, His Honour noted that "the ingredients of the various entitlements may be different". Therefore, it seems to us, in considering in a particular case whether s 109A will effectively exclude the contract of employment concerned it is necessary to examine those ingredients respectively as to the unfair dismissals and unfair contracts regimes. We will return to this later. In Walker v Industrial Court , Meagher JA agreed with Sheller JA who commented (at 149) "that the contract of employment permitted termination which, in the circumstances, was unfair and discriminatory. By so permitting the contract was or became unfair". It will be seen that Sheller JA, like Kirby P, focused on what the contract itself permitted by its terms. In Rothman's Distribution Services v Industrial Court , the Court of Appeal was concerned with relief which had been allowed under s 275 of the 1991 Act in relation to an employment contract found to be unfair on its termination as to redundancy payments. Priestley JA, with whom Kirby P and Meagher JA agreed, said (at 160): "As to the point that the Full Court, in considering fairness, looked at conduct rather than the terms of the contract, I think that what the Full Court did was to consider how the terms of the contract operated in practice at the time of termination (which necessarily means looking at the conduct of Rothmans) and to conclude that a contract which could so operate was unfair. I see no jurisdictional error in this." Again, it is to be emphasised, the reasoning was directed to the terms of the contract itself and how it operated in practice as distinct from whether the dismissal itself was unfair (harsh, unreasonable or unjust).

20 Mr Moorehouse for the respondents relied on Sinclair v Hawker de Havilland Pty. Limited [2003] NSWIRComm 413 where Curtis AJ held that a Summons which in essence challenged as unfair a term of the employment contract allowing termination on four weeks' notice could not be dismissed in reliance upon s 109A. At paragraph 10, his Honour referred to the passage in Beahan (at 42) set out earlier in this Judgment. His Honour then said at [11]: The words "disguise" or "essentially" are unhelpful. Which of the thirty-six cases cited in the judgment would be struck down by the section? Some practical guidance is necessary. The very word "disguise" illustrates the nature of the problem. If an application for relief pursuant to s 106 looks like an application pursuant to s 84(1), when and why is it not? Later, at [16] his Honour said: Where the justice of the situation demands greater relief than Pt 6 (Unfair Dismissal) affords and it is necessary to vary the terms of the contract of employment to effect that relief, then the entitlement, and the remedy, lie pursuant to s 106. Conversely, where the justice of the situation may be accommodated within the relief available to Pt 6 (Unfair Dismissal), the entitlement and the remedy lie pursuant to that section. Section 106 is not available because of the operation of s 109A. With respect, I do not agree with his Honour's assessment. The examination that is required to be conducted is that set out by the Full Bench in Beahan at 42 which is as follows: Where a claim challenges the terms or operation of a contract of employment by genuine, not superficial or coloured, reasons related to the contract itself then, in our view, it is a claim properly within s 106 and s 109A has no operation in relation to it.

21 To my mind an examination of the operation of a contract of employment will also involve, on occasions, an examination of the conduct of the parties to the contract.

22 Mr Moorehouse also referred the Court to Lipman v A. G. Lifestyle Management Pty Limited (2003) NSWIRComm 160 where Schmidt J, held that a claim alleging unfairness in relation to a notice period was plainly not excluded by s 109A. Her Honour said at [123]: 123 As to the termination of the employment, various complaints were advanced. Firstly, that Ms Gore had acted unfairly in dismissing the applicants for misconduct; that there had, in fact, been no proper basis for her to have done so and that she had failed to afford them procedural fairness in investigating the matters on which the decision to dismiss rested. In addition, it was argued that the two weeks' notice, which the applicants should have been given under the contract was unfair. Six months' notice was claimed. 124 I have recently dealt with the construction of s109A in Bell & Berg v Macquarie Bank [2002] NSWIRComm 235 at para [276] to [280]. I adhere to the views which I there reached in relation to complaints in s 106 proceedings about inadequacies of procedures adopted in dismissing an employee. Nor can the unfairness of the decision to dismiss the applicants be dealt with under the section. (See s 109A and the decision in Beahan v Bush Boake Allen Australia Ltd (1999) 47 NSWLR 648; (1999) 93 IR 1). That the applicants, in fact, pursued s 84 proceedings in relation to these matters is also a factor which would have had to have been taken into account. 125 I take a different view in relation to the notice claim. The summons alleged unfairness in the contract in relation to the period of notice. The letter of employment reserved no right to the employer to dismiss summarily for misconduct. It was not obvious where else that right could have flown from, other than at common law. (As to that right, see the discussion in Labour Law Text and Materials, Second Edition, Creighton Ford and Mitchell at pp 237 - 234).

126 Obviously enough, if the circumstances here in question were not such as to have given Excellence the right to summarily dismiss the applicants from their employment, following upon a repudiatory breach of their contracts of employment, Excellence was obliged to have given them two weeks notice of termination pursuant to their contracts. Failure to do so was a breach of contract on Excellence's part, a factor to which regard may properly be had in proceedings brought under s106 of the Act. (See Reich v Client Server Professionals of Australia Pty Ltd (Administrator Appointed) (2000) 99 IR 69. A claim that such a period of notice was unfair in the circumstances of a particular employment, is also plainly enough within the Court's jurisdiction under the section.

23 The respondents, in order to succeed, must demonstrate that there is no power to grant any relief to the applicant. Where a claim challenges the terms, or, operation of a contract of employment by genuine reasons related to the contract itself, s 109A has no operation in relation to it. Mr Latham relied upon the decision of Boland J, in Balsdon v Murray Irrigation Limited. His Honour said at paragraph 30: The question, therefore, is whether Mr Balsdon's claim challenges the terms or operation of his employment contract by genuine reasons related to the contract itself. Unlike the Summons considered by the Full Bench in Beahan the Summons in the present proceedings did not specify why it was that the contract of employment was unfair. It seems to me, however, that Mr Balsdon was not attacking the terms or operation of his employment contract as being unfair but rather his focus was the unfairness of his employer's conduct in dismissing him from his employment prior to the dismissal of criminal charges against him and prior to any "thorough and proper investigation being undertaken by the respondent into the allegations." In other words, the core of Mr Balsdon's complaint was that he was not accorded procedural fairness by the employer in coming to its decision to terminate his employment. That is, the decision to dismiss was unfair because of a lack of procedural fairness. His Honour went on to determine that although Mr Balsdon sought a variation of his contract of employment, his Honour did not consider this fact reflected a genuine challenge to the terms of the contract. In that matter, the Summons sought an order that Mr Balsdon be "restored to duty and treated as though he had never been dismissed." His Honour observed "this was an order akin to an order for reinstatement and not authorised by s 106 of the Act." Mr Balsdon also sought an order that he "be paid an amount representing lost wages by him on and from the date of his dismissal". His Honour observed that such an order is an order of the type available under s 89(3) of the Act. The final order sought by Mr Balsdon was that he "be paid an amount representing the amount he would have earned if he had remained in employment for a further two years". His Honour found that this was essentially an order seeking to compensate Mr Balsdon for loss of his employment and that s 106 was not concerned with compensating an employee for loss of his or her employment contract; Beahan at 35 quoted with approval in Reich v Client Server Professionals of Australia Pty. Limited (Administrator Appointed) 99 IR 69 at 86.

24 Applying the aforementioned principles the issue in these proceedings is whether Mr Steinhardt's claims for relief under s 106 of the Act, which enables the Commission to make orders voiding or varying any contract which it finds to be an unfair contract, is "an unfair dismissal claim in disguise and essentially of the nature of an unfair dismissal" (Beahan at 42) and by virtue of the operation of s 109A beyond the Commission's jurisdiction to grant. I do not think the claim is caught by s 109A for the following reasons.

25 It is clear that one of the principal claims in the applicant's Summons is that the relevant contract is unfair because it allows termination on one month's notice or payment in lieu. The applicant claims that this provision is unfair and seeks to have it varied by replacing it with a term requiring 12 months' notice or payment in lieu. This aspect of the Summons directly challenges a term of the relevant contract.

26 I observe that the Amended Summons and the challenge to it in Beahan also included a claim that the relevant notice period should be varied. A similar claim is made here and I do not think the Summons can be dismissed on this basis alone.

27 The claim by the applicant in this matter also seeks a variation of the contract so that any termination of the contract shall not be harsh, unjust, or, unreasonable. This claim is also directed to the terms of the contract.

28 The Full Bench in Bell & Berg v Macquarie Bank Limited & Anor [2003] NSWIRComm 363 stated at [10]: The third contention went to her Honour's reliance on s 109A. We consider her Honour erred in finding that a failure to provide procedural fairness "is a complaint not available to be brought under s 106"… Secondly, we do not consider that the introduction of s 109A had the effect of excluding from any consideration under s 106 of the Act whether or not there was procedural fairness. In this respect, we regard the decision by the majority in Abboud v State of New South Wales (NSW Department of Education) (1999) 92 IR 32 at 49-51 as good law.

29 The majority in Abboud (Wright J, President, and Walton J, Vice-President, Schmidt J, not dissenting on this aspect) at 50 said: In relation to contracts of employment there are many examples of cases before this Court where the termination of employment arose in circumstances held to warrant a remedy under s 106: see Westfield Limited v. Helprin (1997) 82 IR 411 at 438-439 and Harcourt Brace & Co. (Australia) Pty. Limited v Cory (1997) 81 IR 321 . That a particular contract, including a contract of employment, permits a situation to occur in which the contract is terminated unfairly may render the contract itself unfair: see, for example, Day v Lumley Life (1999) 90 IR 70 at 93 and Paviour-Smith and PFS-Premium Financial Group Pty. Limited v The National Mutual Life Association of Australasia Limited (1999) 91 IR 8 at 56 at 68. The initial question must be whether the contract permitted the termination of the contract in a manner which was unfair". Later at page 51 the majority said: …The jurisdiction of the Court is to determine whether "the contract is an unfair contract" and to exercise its discretion as to the appropriate remedy. An application under s 106 does not involve an appeal from the decision of the respondent. If the contract permits the respondent to terminate the contract in a manner which is unfair, that contract may be unfair notwithstanding the right of an applicant to bring a claim before this Court alleging the contract is unfair. The finding that this unfairness may have been ameliorated or cured by the fact of the hearing before the Court involves a misapprehension of the function of the court in determining whether or not the contract was unfair.

30 The claim in the applicant's Summons seeking a variation so that any termination of the contract shall not be harsh, unjust, or, unreasonable is also directed to the terms of the contract. As per Berg, s 109A, in my opinion, does not have the effect of excluding from the unfair contract jurisdiction any consideration of whether there was procedural fairness in relation to the termination.

31 The complaint the applicant makes in his application is directed to the operation of the contract. As was observed in Beahan (at 38) "there was no allegation in the Summons that the dismissal per se was unfair". A similar situation exists here. There is no allegation in the Summons that the dismissal per se is unfair but rather a complaint that the contract during its operation, particularly prior to its termination and at the time of termination, operated unfairly and that a contract that could so operate was unfair.

32 Returning to the judgment of Walton J, Vice-President in Hogan his Honour also considered whether to strike out a summons filed under s 106. His Honour states at [16] - [17]: 16 An application will not be excluded merely by reason of the fact that the applicant's dismissal motivated him or her to bring the claim. The question in each case will be whether the relief is, in truth, directed to the unfairness in or arising from the contract itself. 17 As Beahan v Bush Boake indicates, the question posed by s 109A is not a matter which is likely to be determined solely upon the characterisation of the claim found in the pleadings. What is required is an examination of the substance of the claim. I respectfully adopt his Honour's reasoning.

33 On a proper analysis of the grounds specified in the Summons, I do not think the Summons should be set aside by virtue of the operation of s 109A of the Act. The Summons makes allegations of unfairness that permitted the termination of the contract in a manner which denied the applicant procedural fairness and deprived the applicant of legitimate benefits. However, this does not close the issue of s 109A. The determination of whether part of the Summons falls within the operation of s 109A will require a detailed examination of the substance of the claims and the circumstances of the case during the trial.

34 I have come to the conclusion, for the reasons expressed, that I am not persuaded, as a matter of law, that the factual circumstances pleaded by the applicant clearly demonstrate that this application is excluded by s 109A. It is therefore appropriate to dismiss the Notice of Motion.

1 The Notice of Motion filed on 16 January, 2004 is dismissed.

2 The respondents are directed, in accordance with Rule 18A(4) of the Industrial Relations Commission Rules, to file a Reply to the Summons within 21 days of the date of this Judgment.

3 Sapphire Bioscience Pty. Limited and Cayman Chemical shall pay the costs of Ian Steinhardt, as agreed, or failing agreement, as assessed.

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