SW & JD Reilly & Sons Pty Ltd v Australian Co-Operative Foods Limited

Industrial Relations Act 1996 (NSW) ss 105 106 LEGISLATION CITED: Industrial Relations Commission Rules 1996 (NSW) ss 18 18A

CASES CITED: Crowe v UCS Developments Pty Ltd (2003) NSWIRComm 234

APPLICANT Mr A Britt of counsel Solicitor: Mr W H Parsons W H Parsons & Associates

LEGAL REPRESENTATIVES: RESPONDENT Mr P M Kite SC with Ms S Piedade of counsel Solicitor: Ms A Meares Addisons Solicitors & Attorneys

• 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Thursday 21 April 2005

Matter No IRC 2463 of 2002 SW & JD REILLY & SONS PTY LTD v AUSTRALIAN CO-OPERATIVE FOODS LIMITED Application under s 106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT ON APPLICATION TO AMEND SUMMONS [2005] NSWIRComm 113

1 These proceedings are brought by the applicant, SW & JD Reilly & Sons Pty Ltd, against the respondent, Australian Co-Operative Foods Limited, under s 106 of the Industrial Relations Act 1996 ("the Act"). In order to deal with the controversy between the parties, I set out below sections 105 and 106 of the Act:

105 Definitions In this Part: contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. unfair contract means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument.

106 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 a 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. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.

2 The proceedings were commenced by summons filed on 1 May 2002. The summons seeks a finding of unfairness with respect to "…the arrangement or collateral arrangement entered into between the applicant and the respondent on or around June 1997…". It was common ground between the parties that the date referred to should have been on or around June 1998. The summons sought orders for the variation of the "arrangement or collateral arrangement," both generally and in specific terms, as well as consequential orders for the payment of monetary compensation and costs.

3 Paragraph B of the summons contains a "summary of the matters of fact and law". This sets out a narrative by which the applicant was said to be "a supermarket and route trade vendor holding licences to distribute dairy products to various supermarkets and route trade from Narrabeen to Palm Beach". There is reference to the rationalisation of vendors of the respondent's products consequent upon the deregulation of the dairy industry by government commencing 1 July 1998, and a further reference to discussions which took place in around July and August 1997. It is said that those discussions led to "an arrangement and or collateral arrangement," as a result of which the applicant agreed to maintain and purchase additional milk runs, and required two further trucks; and, as part of which, the respondent allegedly made certain representations about its business activities and the work which would be provided for vendors of its products. It is then alleged that there was a failure to honour the representations, that the applicant had suffered loss as a result of acquiring a number of runs and two trucks, and a reiteration that the arrangement and/or collateral arrangement was unfair for the purposes of s 106. An amount of $865,000 was claimed by reference to "value of supermarket runs including pre-existing and addition (sic) runs purchase (sic) plus two trucks acquired prior to July 1998", and by reference to the "Current Value or remaining Supermarket runs and trucks". In addition, interest and costs were claimed.

4 There was filed with the summons for relief a comprehensive affidavit of Stephen William Reilly, a director of the applicant company. That affidavit set out in some detail the history of the trading activities of the applicant as a distributor of milk and other dairy products, and its distribution of Dairy Farmers products, being those which are associated with the respondent. In describing the activities of the applicant, Mr Reilly's affidavit distinguishes between supermarket runs and "wholesale" runs, which, as I understand the agreed position between the parties, is a reference also to "route trade" vendor activity. In other words, the distribution of products included distribution to supermarkets and distribution to all other vendors, such as delicatessens, general stores and the like, of Dairy Farmers products,. The affidavit alleges that the applicant "became one of the biggest distributors for Dairy Farmers in New South Wales" and that this position continued until "the late 1990s". There is then contained within the affidavit a history of negotiations between the applicant, other supermarket and route trade vendors, and the respondent, with respect to the rationalisation of supermarket deliveries and route trade deliveries. The affidavit refers in some detail to representations allegedly made by representatives of the respondent about the nature and extent of the sale of the respondent's products through major supermarkets, including Woolworths, Franklins and Coles. Following these representations, the applicant acquired runs from other vendors, being, as narrated in the affidavit, supermarket runs. There was annexed to Mr Reilly's affidavit a copy of the supermarket delivery contract. There was not annexed to Mr Reilly's affidavit the route vendor agreement.

5 In July or August 1997 the applicant learned that the respondent was experiencing difficulty in honouring representations which it had allegedly made with respect to the distribution of modified milk products. There was a meeting in May 1998, in which representatives of the respondent discussed a further rationalisation of the distribution arrangements. At that stage it appears that the respondent had successfully tendered for the sale of its product in Coles and Franklins stores, but that that would be undertaken in the Nepean and Western Suburbs areas through Perfection Dairies. It appears also that the respondent lost its supply contracts with Woolworths and Flemings Supermarkets.

6 All of this was said to impact on the turnover of the applicant.

7 By notice of motion filed 2 November 2004, the applicant has sought to amend the summons. The summons in the proposed amended form seeks a finding of unfairness directed to "the Supermarket Delivery Contracts, and Route Trade Franchise Agreements… between the Applicant and the Respondent under which the Applicant performed work in the dairy delivery industry in New South Wales…". The proposed amended summons seeks ancillary orders avoiding or varying those documents, including detailed variations making provision for what might occur in the event of the deregulation of the dairy industry.

8 The proposed amended summons contains a summary of matters of fact and law which is much more detailed than that contained within the original summons, and which contains much of the detail to be found in the affidavit of Mr Reilly, to which I have previously referred. There is additional material within the summary of matters of fact and law not contained within Mr Reilly's affidavit. Furthermore, the amount claimed by way of compensation has increased substantially to take account not only of the value of the supermarket runs but also the value of the "route runs".

9 The applicant supported the amendment of the summons, in a general sense, by frankly acknowledging that the existing summons was not sufficiently explicit in its terms to enable the subject matter of the proceedings to be identified with any precision, and that the summons was deficient in its summary of the matters of fact and law upon which the proceedings were based.

10 The respondent resisted the amendment substantially on the basis that it involved, for the first time in the proceedings, the seeking of a finding of unfairness with respect to the route trade agreements; that is, the agreements covering non-supermarket deliveries. Those agreements had come to an end in 1999, and the applicant was therefore time-barred by s 108B from commencing proceedings under s 106 with respect to them.

11 The respondent also sought to resist the amendment on discretionary grounds.

12 It was common ground between the parties that s 108B would be applied in the terms set out in the judgment of the Full Bench of this Court in Crowe v UCS Developments Pty Ltd (2003) NSWIRComm 234. That is, if the amendment embraced a contract as defined in s 105 different to that which was the subject of the proceedings as originally constituted, then it would be caught by s 108B. Accordingly, the substantive dispute between the parties revolved around the subject matter of the proceedings as constituted by the summons, and whether or not that comprehended the seeking of a finding of unfairness directed not only to the supermarket contract but also to the route trade franchise agreements. I am indebted to counsel, Mr A Britt for the applicant and Mr P M Kite SC (with whom Ms S Piedade appeared) for the respondent, for their ready identification of what were the real issues in these interlocutory proceedings, and their concise and precise examination of material relevant only to those issues. Whilst a court should expect no less from counsel, their willingness to focus attention on the real issues and to eschew irrelevant issues is something that does not always occur in proceedings of this kind.

13 I should state at the outset that if I were required to consider the matter by reference only to the subject matter of the original summons, then I would have no hesitation in both allowing the amendment and in finding that s 108B did not apply to it. This is because the original summons is framed in such wide terms that it is capable of embracing the totality of the relationship between the applicant and the respondent. It is directed to, as I have said, "the arrangement or collateral arrangement" between the applicant and the respondent. It does not, in effect, say what that arrangement or collateral arrangement was. It does not seek to differentiate between what part of the relationship constituted an arrangement and what part of it constituted a collateral arrangement. It is, in its terms, almost nonsensical in the manner in which it is framed, there being a failure to identify what it is that is sought to be found unfair (Some clues are, however, found in paragraph B(3) of the summary of matters of fact and law, which refers to an arrangement and/or collateral arrangement under which the applicant agreed to maintain and purchase additional milk runs and acquire a further two trucks, and the respondent undertook to engage in certain conduct).

14 The manner in which the material within the current summons is framed is capable, in my opinion, of extending not only to the supermarket delivery contract but also the route trade franchise agreements.

15 However, this was not the principal reason advanced by the respondent in aid of its submissions. In order to consider the respondent's submissions, it is necessary to set out the provisions of rules 18 and 18A of the Industrial Relations Commission Rules 1996. These are in the following terms: Rule 18 Proceedings under section 106 (Void contracts) and section 111 (Regulated contracts) (1) An application to the Commission to exercise the powers conferred on it by section 106 or by section 111 must be accompanied by affidavits, stating briefly but specifically the facts, matters and circumstances relied upon in support of the application. (3) Unless otherwise ordered by the Registrar, the application, together with a copy of the affidavits in support, must be served on the respondent. (4) Where, within the required period, an appearance has not been entered by a respondent, the applicant may proceed to have the matter determined in the absence of that respondent.

Rule 18A New procedure under section 106 (Unfair contracts) (1) An application to the Commission to exercise the powers conferred on it by section 106 must be in Form 12A and must: (a) specify in summary the matters of fact and law which form the basis of the application, but not the evidence by which those facts are to be proved, and (b) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary. (2) Unless otherwise ordered by the Registrar the application must be served on the respondent. (3) Where within the required period of time, an appearance has not been entered by a respondent, the applicant may proceed to have the matter determined in the absence of that respondent. (4) Within 21 days after the date of expiry of the time limited for the respondent's appearance the respondent must file and serve its reply. Such reply must be in Form 12B and must: (a) answer each of the matters raised in the application, and (b) specify in summary any additional matters of fact and law upon which the respondent will rely in opposition to the application, but not the evidence by which those facts are to be proved, and (c) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary. (5) An applicant must within 14 days of the time of filing of the reply file and serve a response answering each of the matters specified in the reply pursuant to subrule (4). Such response must be in Form 12C. (6) The applicant or respondent, as appropriate, must file and serve with the application, reply and response an affidavit verifying the matters of fact set out therein. If the relevant party is a corporation the affidavit may be sworn by an officer or employee of the corporation who is able to verify the matters of fact relied upon. (7) Nothing in this Rule is to be taken to derogate from or otherwise limit the requirements of or the Commission's powers under Parts 9 and 13 of these Rules. (8) The Registrar must, as soon as practicable after the filing or expiration of the time for filing of the response, whichever occurs first, refer the matter for allocation to a Member of the Commission for conciliation in accordance with section 109 or, if the Registrar considers it appropriate, for directions either before the Registrar or a Judge of the Commission. (9) This Rule takes effect from 31 January 2000. An application to the Commission to exercise the powers conferred on it by section 106 may be commenced and proceeded with pursuant to either Rule 18 or Rule 18A until 6 October 2000 from which time all such applications are to be commenced and proceeded with in accordance with Rule 18A.

16 Rule 18 applied to proceedings brought under s 106 and could be utilised until 5 October 2000. That is, until that date the facts, matters and circumstances relied upon in support of an application under s 106 were to be stated "briefly but specifically" within an affidavit filed with the s 106 application.

17 On and after 6 October 2000 the procedure is governed by rule 18A. That is, the form of summons must "specify in summary the matters of fact and law which form the basis for the applicant but not the evidence by which those facts are to be proved…". It is only necessary for the applicant to file an affidavit verifying the matters of fact which are set out.

18 The respondent submitted that it is obvious from the contents of the summons and the contents of the accompanying affidavit that the applicant incorrectly drafted the summons and accompanying affidavit as though rule 18 applied. Whether through ignorance or error, the applicant's then solicitor (who is not the applicant's current solicitor) clearly had regard to the requirements of rule 18 rather than rule 18A. In my opinion, such a submission must be upheld, having regard to the contents of the documentation. Accordingly, in determining the contract (as defined in s 105) which is the subject matter of the proceedings constituted by the filing of the original summons, and in order to ascertain whether s 108B will apply to the proposed amendment, it is permissible to have regard not only to the summons itself but to the affidavit which accompanied it and which sets out "the facts, matters and circumstances relied upon in support of the application". Any other result would allow the applicant to take advantage of the fact that the manner in which the proceedings were commenced was incorrect and in breach of the relevant rules of this Commission. The applicant would thus be able to rely on facts, matters and circumstances not intended by the applicant to be set out in the summons. Such a result would, in my opinion, be unjust in balancing the respective positions of the applicant and the respondent.

19 It is therefore necessary to examine the affidavit filed in the proceedings to identify the contract sought to be impugned. I have already set out in a summary manner the contents of the affidavit of Mr Reilly sworn 30 April 2002. Whilst the affidavit clearly makes reference to the distribution of the respondent's products to locations other than supermarkets, I agree with the respondent's submissions that the focus of attention, in terms of that which is sought to be found unfair, is the contract by which the deliveries to supermarkets are effected. The representations upon which the applicant relies all relate to the supermarket deliveries. The alleged breach of the representations is again directed to deliveries to supermarkets. As a result of the representations made, the applicant acquired new supermarket runs but not non-supermarket runs. Whilst the non-supermarket runs were discussed, and there were discussions about the sale of non-supermarket runs in general terms, the applicant did not acquire any of them.

20 After relating the history of the dealings between the applicant and the respondent, the affidavit concludes that the applicant had lost a number of outlets which are named, all of which are supermarkets. The applicant's financial losses detailed in paragraph 41 of the affidavit are confined to situations pertaining only to supermarkets. As I have already indicated, it is only the supermarket delivery contract that is annexed to the affidavit.

21 I conclude, from a consideration of the affidavit that, on the basis that it is intended to set out briefly but specifically the facts, matters and circumstances relied upon in support of the summons, that it is directed to allegations of unfairness confined to the supermarket delivery contract. On this basis, any attempt to amend the proceedings so as to direct allegations of unfairness with respect to any contract as defined in s 105, which is outside the supermarket delivery contract, will be time-barred under s 108B, as properly conceded by counsel for the applicant.

22 I conclude, therefore, that the proposed amended summons, to the extent that it purports to apply to contracts as defined in s 105 other than the supermarket delivery contract, is not permitted by s 108B.

23 This leaves for consideration the extent to which the current summons should be amended in any event. It is obvious that any amendment can only improve the current summons. I encourage the legal practitioners acting for both parties to endeavour to reach some sensible agreement about any amendment to the proceedings. If the parties are able to reach a consent position, consent orders may be filed. If the parties are unable to reach consent, the proceedings may be re-listed before me under the liberty to apply which continues.

24 The court must be concerned that, although the proceedings were commenced by summons filed on 1 May 2002 they have not, in effect, progressed very much beyond the conciliation which was carried out by a judge of this court on 18 March 2003.

25 If consent orders, together with a consent timetable, have not been filed within 1 month of this date, or if liberty to apply has not been exercised within that time, the proceedings will be listed for directions by the Court of its own motion. If that is to occur then there must be present at the directions hearing responsible officers of the applicant and the respondent so that instructions may be given as to what necessary steps must be taken to ensure that there are no further delays in the preparation of these proceedings for ultimate hearing.

26 Costs would normally follow the event. Because there may be some special reason why a costs order in the usual form should not be made, I shall reserve costs and grant liberty to apply which must be exercised within 1 month of this date.

27 I make the following orders: 1. The notice of motion filed by the applicant seeking to amend the proceedings is dismissed. 2. Costs are reserved. 3. Liberty to apply with respect to costs, which must be exercised within 1 month of this date. 4. Liberty to apply generally, other than with respect to costs arising out of the dismissal of the notice of motion.

AMENDMENTS HISTORY: 07/03/2006 - Typographical error - Paragraph(s) 10 08/03/2006 - Typographical error - Paragraph(s) 10

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.