Harding, Peter Alan v Ansvar Australia Insurance
[1998] FCA 1796
•4 December 1998
FEDERAL COURT OF AUSTRALIA
INDUSTRIAL LAW – review of contract for services pursuant to Workplace Relations Act 1996 s127A – balance of convenience favours declining grant of interim relief – Court retains power to review contract pursuant to s 127A and to make consequential orders under s 127B even after the contract in question comes to an end
Workplace Relations Act 1996 s 127A, s 127B
PETER ALLAN HARDING v ANSVAR AUSTRALIA INSURANCE
QG 135 of 1998
SPENDER J
4 DECEMBER 1998
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 135of 1998
BETWEEN:
PETER ALLAN HARDING
APPLICANTAND:
ANSVAR AUSTRALIA INSURANCE
RESPONDENTJUDGE(S):
SPENDER J
DATE OF ORDER:
04/12/98
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
The interim order sought by the applicant be refused.
The costs of the interim application be reserved.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 135 of 1998
BETWEEN:
PETER ALLAN HARDING
APPLICANTAND:
ANSVAR AUSTRALIA INSURANCE
RESPONDENT
JUDGE(S):
SPENDER J
DATE:
04/12/98
PLACE:
BRISBANE
REASONS FOR JUDGMENT
On 26 October 1998 Peter Allan Harding made an application pursuant to s 127A of the Workplace Relations Act 1996 (‘the Act’), and sought consequential orders under s 127B of the Act to review a contract for services as an insurance agent that he had entered into with Ansvar Australia Insurance Limited (‘Ansvar’). That contract is dated 11 February 1998. The basis for the application appears from paragraph 5 of an affidavit of Mr Harding filed on 26 October in support of the application for interim relief. That paragraph reads:
“5. I believe the term in the contract allowing the Respondent to terminate on one month's notice is unfair and/or harsh because:
(a)It enables the respondent to appropriate to itself my agency business without paying for it.
(b)It prevents me from obtaining ongoing commission on renewals of policies.
(c)It enables the Respondent to terminate the contract without cause.
(d)I have been and continue to be a high performing Ansvar agent with many commendations from the Queensland State Manager of Ansvar.”
Section 127A has as its heading, "Unfair Contracts with Independent Contractors: Court's Powers". Section 127A(2) provides:
“Application may be made to the Court to review a contract on either or both of the following grounds:
(a) the contract is unfair;
(b) the contract is harsh.”
The contract that is referred to there is a contract for services that is binding on an independent contractor, and relates to the performance of work by the independent contractor, other than work for the private and domestic purposes of the other parties to the contract.
Subsection 4 of s 127A provides:
“In reviewing the contract, the Court may have regard to:
(a) the relative strength of the bargaining positions of the parties to the contract and, if applicable, any persons acting on behalf of the parties; and
(b) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, a party to the contract; and
(c) (Repealed by No 98 of 1993)
(d) whether the contract provides total remuneration that is, or is likely to be, less than that of an employee performing similar work; and
(e) any other matter that the Court thinks relevant.”
Subsection 5 provides:
“If the Court forms the opinion that a ground referred to in subsection (2) is established in relation to the whole or part of the contract, it must record its opinion, stating whether the opinion relates to the whole or a specified part of the contract.”
Subsection 6 provides:
“The court may form the opinion that a ground referred to in subsection (2) is established in relation to the whole or part of the contract even if the ground was not canvassed in the application.”
Section 127B(1) provides:
“If the Court records an opinion under section 127A in relation to a contract, it may make one or more of the following orders in relation to the opinion:
(a) an order setting aside the whole or part of the contract, as the case may be;
(b) an order varying the contract.”
The present application for interim relief places the court in somewhat of a quandary. That comes about because s 127A contemplates an application to review a presently subsisting contract on the grounds that it is unfair or harsh. At the moment the contract of services between Ansvar and Mr Harding is on foot, and it is competent for the court to make orders under s 127B in relation to it. The difficulty arises if, before this matter proceeds to final relief, the contract for services between Mr Harding and Ansvar comes to an end. It seems to me that the submissions on behalf of Ansvar that the application for interim relief ought be dismissed on the basis that damages will provide an adequate remedy in all the circumstances is an acknowledgment that, even if between now and when the matter comes to a final hearing the contract comes to an end, it is still competent for the court to make orders varying the contract, and to order Ansvar to pay to Mr Harding any sums which, in the court's opinion, ought to be paid pursuant to the contract so varied.
It is acknowledged by Mr Stewart of counsel on behalf of Ansvar, at least implicitly in his submissions, that if the court were, on the ground advanced by Ansvar, to refuse the application for interim relief, the Court would have power to vary the contract, notwithstanding that the contract had been terminated at the time of the final hearing, and also, either pursuant to the Act or in the general jurisdiction of the Court associated with its jurisdiction under the Act, to make orders compensating Mr Harding in conformity with the contract as varied.
I note that s 127B(4) provides:
“An order takes effect from the date of the order or a later date specified in the order.”
And subsection 127B (5) provides:
“A party to the contract may apply to the Court to enforce an order by injunction or otherwise as the Court thinks fit.”
The ordinary powers in contract are available to the applicant in the accrued or associated jurisdiction. The case has been conducted by Ansvar, and my decision in respect of interim relief has been substantially influenced by the stance of Ansvar that on the final hearing of the application it would be competent for the court to order to pay to Mr Harding any moneys properly due to him pursuant to the contract, as varied as the court thinks it should be.
In an affidavit by Mr Harding, filed on 12 November, he indicated that he commenced working as an agent for Ansvar on 24 July 1996. He says:
“The respondent has a practice of renewing the contract with its agents (and resetting commission rates) at the beginning of each calendar year.Pursuant to this practice, my agency was renewed in early 1997 and 1998.”
On 11 February an agency agreement was executed by Mr Harding and Ansvar. That agreement is the agreement that governs the relationship between Mr Harding and Ansvar, and which is the subject of the application under s 127A.
So far as presently relevant, cl 11.4 and 15 ought be set out:
“11.4The Agent shall not be entitled to commission fees or other amounts on any renewal or extra premium arising after the termination of this Agreement or if the insured writes to the Insurer directing that another intermediary is to act for the Insured.”
Clause 15 deals with the termination of the agreement and provides:
“15.1This Agreement shall continue until terminated by either of the parties giving to the other party thirty (30) day (sic) notice in writing of its intention.
15.2This Agreement may be terminated upon a breach by the Agent of any of the terms of this Agreement provided that the Insurer gives the Agent written notice of its intention.
15.3This Agreement can be terminated immediately by the Insurer giving written notice to the Agent if:
(i)in the Insurer’s opinion, the Agent, or any of its officers or employees has been guilty of malpractice or misconduct;
(ii)a petition for winding up is presented against the Agent;
(iii)the Agent makes an (sic) compromise arrangement with its creditors or commits an act of bankruptcy.
15.4Upon termination of this Agreement the agency shall cease without prejudice to the rights of either party in connection with anything which occurred between them prior to the termination.
15.5As soon as this Agreement is terminated the Agent shall immediately:
(i)pay to the Insurer all monies received and owing to the Insurer;
(ii)return (at the Agent’s expense) all material supplied by the Insurer to the Agent.
15.6As soon as practicable after the termination of this Agreement, an account for business outstanding as at the termination date shall be prepared, adjusted and settled by the parties.”
Clause 11.4 is highly relevant to the question of whether the contract is harsh or unfair. It is competent for an agent to transfer to another agent entitlement to payment for renewals. This entitlement will not survive termination of the contract unless there has been a transfer prior to that termination by the operation of cl 11.4. In an affidavit of 24 November 1998, Mr Harding says:
“…
3.The commission paid to me by Ansvar for the 12 month period from 1 July 1996 to 30 June 1997 was $2,224.81.
4.The commission paid to me by Ansvar for the 12 month period from 1 July 1997 to 30 June 1998 was $8,666.06, i e, a 290%increase on the previous year.
5.The commission paid to me by Ansvar for the 12 month period from 1 December 1997 to 30 November 1998 was $12,241.51.
6.For the period July to September 1998 inclusive the average monthly increase in commission from new business and endorsements, less cancellations, was $898.
7.The number of new Policies which I secured for the period January to October 1998 inclusive was 181.This compares with 96 new Policies secured during the same period in 1997 ie an 89% increase.”
The value at which a portfolio may be transferred from one agent to another appears from the material to be of the order of the current annual value of the commission being gained. Notwithstanding the terms of the original application, the interim orders requested by the applicant on this interim application are:
“1.In order to preserve the position of the applicant as a party to the contract, an order should be made broadly along the following lines:
‘That the agency agreement between Peter Allan Harding and Ansvar Australia Insurance Limited is varied so as to provide that, subject to further order or agreement between the parties, notwithstanding the provisions of Article 15 and notwithstanding the notice contained in the letter from the Respondent to the Applicant dated 19 October 1998, the contract may not be terminated by notice or otherwise until the conclusion of the trial of the application for review which initiated this proceeding.’
2.It is submitted that the interim order should provide broadly as follows:
‘That the agency agreement between Peter Allan Harding and Ansvar Australia Insurance Limited is varied so as to provide that, subject to further order or agreement between the parties, the Respondent is required to provide full administrative service and support of a standard and in a manner that is consistent with and equivalent to the support provided to the Respondent’s other agents in Queensland.Without limiting the generality of the foregoing, the Respondent may not restrict the personnel through which such service is provided in a manner different to that applying to other agents nor require that support be provided to the Applicant by the state manager of the Respondent in the first instance.The Respondent may not make decisions with regard to the merits of risks or other substantive insurance decisions in a manner that discriminates against the insurance business of the Applicant.’ ”
It was further submitted by Mr Keim of counsel, who appeared for Mr Harding, that on the final application the applicant intends to seek the following:
“1.That the agency agreement between Peter Allan Harding and Ansvar Australia Insurance, Limited dated 11 February 1998 is varied by deleting paragraph 15 and replacing it with the following paragraphs:
15.2 This agreement shall continue until termination by either of the parties giving to (sic) other at least 90 days notice of his/its intention and provided that, if the agreement is terminated at the behest of the Insurer, it shall pay to the agent within 30 days of the agreement coming to an end a sum of money to be agreed between the parties or, failing agreement, to be determined by a court of appropriate monetary jurisdiction equivalent to a fair market value for the agency as at the day that notice is given; an additional sum of money to compensate the agent for the value of the agency to the agent over and above its market value; and a sum of money equivalent to the damage to the agent’s reputation as an insurance agent arising as a result of the termination;
15.3 This agreement may be terminated by the insurer on 30 days notice to the agent in the event that the agent has committed a serious breach of a fundamental term of the contract provided that the insurer may not give notice to terminate the agreement for such a breach unless and until the insurer has given the agent a proper opportunity to be heard in respect of any such breach.If the insurer purports to terminate under this clause in circumstances where it is not so entitled without limiting the agent’s rights at law, the agent may accept the termination but will be entitled to a sum of money equivalent to and to be calculated in the manner provided in sub clause 15(1) of this agreement;
15.4 This agreement may be terminated summarily by the insurer by giving written notice to the agent on the grounds that:-
(i) the agent has committed serious malpractice or an act of serious misconduct;
(ii) the agent has made a compromise arrangement with his creditors or has committed an act of bankruptcy;
provided that such notice may not be given unless and until the insurer has given the agent a proper opportunity to be heard in respect of the alleged basis for termination.
15.5 (As in existing agency agreement)
That the agency agreement between Peter Allan Harding and Ansvar Australia Insurance Limited is varied so as to provide that the Respondent is required to provide full administrative service and support of a standard and in a manner that is consistent with and equivalent to the support provided to the Respondent’s other agents in Queensland.Without limiting the generality of the foregoing, the Respondent may not restrict the personnel through which such service is provided in a manner different to that applying to other agents nor require that support be provided to the Applicant by the state manager of the Respondent in the first instance.The Respondent may not make decisions with regard to the merits of risks or other substantive insurance decisions in a manner that discriminates against the insurance business of the Applicant.”
It seems to me plain that the contract, no matter how it is varied by the Court could not be for an indefinite period. I think it is accepted by the parties that at best for Mr Harding the period of notice before termination without cause is required to be reasonable notice and it is suggested that three months is a reasonable notice period. That consideration is a very important one although I acknowledge that it is argued on Mr Harding's behalf that the period of notice is merely one aspect of the unfairness or harshness of the contract and that other aspects ought to be viewed in conjunction with the question of what is fair notice.
That consideration, however, focuses attention on the fact that it is most unlikely that a final hearing could be had within 30 days, and in particular 30 days from 19 October 1998 so that the effect of the grant of interim orders would be to give to Mr Harding a longer period of notice than the contract could possibly provide even if it were varied in respect of notice as his counsel seeks. On the basis accepted by counsel for Ansvar, it is competent for the Court on the final hearing to vary the contract as it would be minded to (quite independently of any circumstance that the contract had between now and the final hearing come to an end) and further that it would be competent for the Court to make orders compensating Mr Harding in respect of any sums which he has suffered by way of loss or damage as a consequence of the contract not being conducted or terminated in accordance with its terms as varied.
The affidavit of James Douglas Seymour on behalf of Ansvar recites a number of matters. There is, for instance, duplication in that paragraph 23 is exactly the same as paragraph 35. The contention really is that there was nothing unfair in the formation or the terms of the contract of agency and that Ansvar had cause to bring that agency to an end. On the question of interim relief I am content to proceed on the basis that one ought to have regard to whether there is a serious question to be tried, demonstrated in the material, and if so, where the balance of convenience lies.
I indicate briefly that in my opinion there is a serious question as to whether the contract between Mr Harding and Ansvar is unfair or harsh. In particular, it is arguable, and there is a serious question to be tried as to whether a period of 30 days’ notice without cause is, in the circumstances of the insurance agency contract, unfair or harsh. That question seems to me to be plainly a serious question to be tried when one has particular regard to the circumstance that unless there is something in place in respect of entitlement to renewal premiums, on the termination of the contract the agent loses any such entitlement.
Notwithstanding my conclusion that there is a serious question to be tried, I am of the view that the balance of convenience favours my declining to grant interim relief. I do that simply on the basis, as was urged on me by counsel for Ansvar, that in the circumstances damages will be an adequate remedy should it be demonstrated that Mr Harding is entitled to relief. In the circumstances and for the reasons that I have just published I decline to make any interim order. I think on the application for interim relief I should simply reserve costs. I note that by agreement of the parties the notice in respect of the termination of the contract has been extended until 5 o'clock today.
I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.
Associate:
Dated: 04/12/98
Counsel for the Applicant: Mr S J Keim Solicitor for the Applicant: Harding Lawyers Counsel for the Respondent: Mr M McP Stewart Solicitor for the Respondent Quinlan Miller & Treston Date of Hearing: 4 December 1998 Date of Judgment: 4 December 1998
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