Holmes v Balance Water Inc
[2013] FCCA 1787
•4 December 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HOLMES v BALANCE WATER INC & ORS | [2013] FCCA 1787 |
| Catchwords: PRACTICE AND PROCEDURE – Leave to serve originating process outside Australia. |
| Legislation: Fair Work Act 2009 (Cth), ss.14, 42 |
| Glenn Gardner v Milka-Ware International Ltd [2010] FWA 1589 In the matter of C&T Grinter Transport Services Pty Ltd (in liquidation) (ACN 004 205 887) & Grinter Transport Pty Ltd (in liquidation) (Controller Appointed) (CAN 100 583 551) [2004] FCA 1148 Jones v QinetiQ Pty Ltd T/A QinetiQ Australia [2013] FWC 3302 New South Wales v Commonwealth (2011) 229 CLR 1 Vella v Integral Energy [2011] FMCA 6 |
| Applicant: | KIERAN HOLMES |
| First Respondent: | BALANCE WATER INC |
| Second Respondent: | PETER JOHN MAHER |
Third Respondent: BALANCE WATER COMPANY PTY LTD
Fourth Respondent: BALANCE WATER COMPANY LLC
| File Number: | SYG 1363 of 2013 |
| Judgment of: | Judge Driver |
| Hearing date: | 1 November 2013 |
| Delivered at: | Sydney |
| Delivered on: | 4 December 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr I Latham |
| Solicitors for the Applicant: | Toomey Pegg |
| Counsel for the Second and Third Respondents: | Mr G Hatcher SC, with Mr M Easton |
| Solicitors for the Second and Third Respondents: | Terrett Lawyers |
INTERLOCUTORY ORDERS
The applicant has leave, pursuant to rule 10.43 of the Federal Court Rules 2001 (Cth) to serve her originating application on the first and fourth respondents outside of Australia.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1363 of 2013
| KIERAN HOLMES |
Applicant
And
| BALANCE WATER INC |
First Respondent
| PETER JOHN MAHER |
Second Respondent
BALANCE WATER COMPANY PTY LTD
Third Respondent
BALANCE WATER COMPANY LLC
Fourth Respondent
REASONS FOR JUDGMENT
Introduction and background
By an Application in a Case filed on 12 September 2013, the applicant (Ms Holmes) seeks leave, pursuant to rule 10.43 of the Federal Court Rules 2001 (Cth) (Federal Court Rules), to serve her originating application on the first and fourth respondents outside of Australia. The second respondent (Mr Maher) and the third respondent (Balance Water Company Pty Ltd) filed an Application in a Case on 3 October 2013 seeking leave to intervene in Ms Holmes’ application. I granted that leave. They oppose the granting of leave to Ms Holmes to serve her originating process outside the jurisdiction.
Ms Holmes’ application is supported by her own affidavit made on 9 September 2013, and the affidavits of Paul Andrew Chapman made on 10 October 2013 and 31 October 2013. Mr Maher and Balance Water Company Pty Ltd rely upon the affidavit of Peter John Maher made on 2 October 2013 and the affidavit of Peter Anthony Terrett made on 3 October 2013.
I also have before me the following exhibits:
·A1 – Balance Water financial records;
·R1 – Application for Unfair Dismissal Remedy – Fair Work Australia.
Consideration
The Federal Circuit Court Rules 2001 (Cth) (Federal Circuit Court Rules) make no provision in relation to leave to serve process outside the jurisdiction. Rule 1.05 of those Rules provides relevantly that the provisions of certain Federal Court Rules set out in Part 2 of Schedule 3 to the Rules apply with necessary changes in general federal law proceedings in this Court. Those applied Federal Court Rules include rules 10.41 - 10.52.
Under rule 10.43(2) of the Federal Court rules:
A party may apply to the Court for leave to serve an originating application on a person in a foreign country in accordance with a convention, the Hague Convention or the law of the foreign country.
Under sub rule (4), the party must satisfy the Court that:
a)the Court has jurisdiction in the proceeding;
b)the proceeding is of a kind mentioned in rule 10.42; and
c)the party has a prima facie case for all or any of the relief claimed in the proceeding.
The Court has jurisdiction under the Fair Work Act 2009 (Cth) (Fair Work Act) to deal with claims under that Act involving a national system employer and a national system employee[1]. A national system employer is defined in s.14 to be a constitutional corporation, so far as it employs or usually employs, an individual. “Constitutional Corporation” in turn is defined to mean a corporation to which [51(xx)] of the Constitution applies. Paragraph 51(xx) in turn refers to foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.
[1] Section 42
The power to deal with foreign corporations is directed to their activities within Australia[2]. To fall within the Fair Work Act, such a corporation must be a foreign corporation within the meaning of s.51(xx) and therefore, to the extent that it employs employees to perform work in Australia, it is a national system employer as defined in s.14 of the Fair Work Act[3].
[2] New South Wales v Commonwealth (2011) 229 CLR 1 at [178], [188], [181]
[3] Glenn Gardner v Milka-Ware International Ltd [2010] FWA 1589 (25 February 2010) at [24]. See generally Jones v QinetiQ Pty Ltd T/A QinetiQ Australia [2013] FWC 3302 (14 June 2013) at [8]-[12]
Rule 10.42 of the Federal Court Rules provides as follows:
Subject to rule 10.43, an originating application, or an application under Part 7 of these Rules, may be served on a person in a foreign country in a proceeding that consists of, or includes, any one or more of the kinds of proceeding mentioned in the following table.
ItemKind of proceeding in which originating application may be served on a person outside Australia
1 Proceeding based on a cause of action arising in Australia
2 Proceeding based on a breach of contract in Australia
3 Proceeding in relation to a contract that:
(a) is made in Australia; or
(b) is made on behalf of the person to be served by or through an agent who carries on business, or is resident, in Australia; or
(c) is governed by the law of the Commonwealth or of a State or Territory;
in which the applicant seeks:
(d) an order for the enforcement, recission, dissolution, rectification or annulment of the contract; or
(e) an order otherwise affecting the contract; or
(f) an order for damages or other relief in relation to a breach of the contract
4 Proceeding based on a tort committed in Australia
5 Proceeding based on, or seeking the recovery of, damage suffered wholly or partly in Australia caused by a tortious act or omission (wherever occurring)
6 Proceeding in Australia seeking the construction, rectification, setting aside or enforcement of:
(a) a deed, will or other instrument; or
(b) a contract, obligation or liability
affecting property in Australia
7 Proceeding seeking the execution of a trust governed by a law of the Commonwealth, or of a State or Territory, or associated relief
8 Proceeding that affects the person to be served in relation to the person’s membership of a corporation that carries on business in Australia or is registered in a State or Territory as a foreign company
9 Proceeding in relation to an arbitration carried out in Australia
10 Proceeding for an order under Division 28.5 in relation to an arbitration under the International Arbitration Act 1974
11 Proceeding in which the Court has jurisdiction, seeking relief in relation to the guardianship, protection, or care, welfare and development of a person under 1 years (whether or not the person is in Australia
12 Proceeding based on a contravention of an Act that is committed in Australia
13 Proceeding based on a contravention of an Act (wherever occurring) seeking relief in relation to damage suffered wholly or partly in Australia
14 Proceeding in relation to the construction, effect or enforcement of an Act, regulations or any other instrument having, or purporting to have, effect under an Act
15 Proceeding seeking any relief or remedy under an Act, including the Judiciary Act 1903
16 Proceeding in relation to the effect or enforcement of an executive, ministerial or administrative act done, or purporting to be done, under an Act, regulations or any other instrument having, or purporting to have, effect under an Act
17 Proceeding seeking contribution or indemnity in relation to a liability enforceable by a proceeding in the Court
18 Proceeding in which:
(a) the person to be served is domiciled or ordinarily resident in Australia; or
(b) if the person to be served is a corporation--the corporation is incorporated in Australia, carries on business in Australia or is registered in a State or Territory as a foreign company
19 Proceeding in which the person to be served has submitted to the jurisdiction of the Court
20 Proceeding properly brought against a person who is served, or is to be served, in Australia, if the person to be served has been properly joined as a party
21 Proceeding in which the subject matter, to the extent that it concerns the person to be served, is property in Australia
22 Proceeding seeking the perpetuation of testimony in relation to property in Australia
23 Proceeding seeking an injunction ordering a person to do, or to refrain from doing, anything in Australia (whether or not damages are also sought)
24 Proceeding affecting the person to be served in relation to:
(a) the person's membership of, or office in, a corporation incorporated, or carrying on business, in Australia; or
(b) the person's membership of, or office in, an association or organisation formed, or carrying on business, in Australia; or
(c) the person's conduct as a member or officer of such a corporation, association or organisation
The parties agree that in order to obtain the leave she seeks, Ms Holmes must demonstrate a prima facie case in relation to one of the matters set out in rule 10.42 of the Federal Court Rules. There is no dispute between the parties about the relevant principles.
I considered the authorities relating to the establishment of a prima facie case in Vella v Integral Energy[4] at [6]-[7]:
In Bulong Nickel at [34] Lee J said:
It appears to be accepted that the requirement that there be a prima facie case does not require assessment of an applicant's case as if a determination were being made at trial. As stated by Heerey J in Merpro Montassa Ltd v Conoco Specialty Products Inc (1991) 28 FCR 387, at this stage the Court might draw inferences more readily in favour of an applicant than at trial. In Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110 French J said: “a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed”. As I said in Century Insurance Ltd (NL) v New Zealand Guardian Trust Ltd [1996] FCA 376, the applicant must show that a case supporting the claim for relief can be found in the material presented to the court and it is assumed that the facts pointed to by that material will be proved.
[4] [2011] FMCA 6
Further, in Caterpillar at [19] the Full Federal Court stated:
The requirement to show a “prima facie case for the relief sought” was considered in Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. The Full Court said:
In addition to bringing a case within one of the paragraphs of r 1, an applicant must show a `prima facie case for the relief which he seeks'. In Merpro Montassa Ltd v Conoco Specialty Products Inc [1991] FCA 70; (1991) 28 FCR 387 at 390, in a passage which has been cited with approval on many occasions, Heerey J said:
`the requirement of O 8, r 2(2)(c) has to be met at the outset of the proceedings. It does not suggest the kind of scrutiny that would occur in a submission of no case to answer following the closure of an applicant's case at trial ... It may be therefore that a court at this stage might draw inferences more readily in favour of an applicant, bearing in mind, amongst other things, that the applicant will not have had the advantage of discovery, subpoena and other procedural aids to the making out of a prima facie case at trial.'
In Western Australia v Vetter Trittler Pty Ltd (In liq) (1991) 30 FCR 102 at 110, after setting out this passage, French J said that `a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed'. In WSGAL Pty Ltd v Trade Practices Commission [1992] FCA 510; (1992) 39 FCR 472 at 476 Beaumont J said:
`Such a preliminary question [... whether a prima facie case exists] should not call for a substantial inquiry. The kind of evidence adduced on a preliminary inquiry of this kind should be in proportion to the nature of such an interlocutory issue ... [The] purpose is to determine by way of a mini rather than a mega trial whether the applicant has a prima facie case.'
After referring to that passage, the judge at first instance added:
It only needs to be added that in the present case Caterpillar obtained on subpoena from Deere Australia a large number of documents concerning dealings between Deere Australia and Deere US. Thus the readiness of a court to draw inferences might be pro tanto less, given that Caterpillar has already taken substantial advantage of one procedural aid. In any event, I think the documents tend against the finding of a prima facie case.
…
The parties are in dispute as to whether a prima facie case has been demonstrated.
In short, Mr Maher and Balance Water Company Pty Ltd contend that Ms Holmes cannot demonstrate a prima facie case because:
a)while the evidence discloses that Ms Holmes was probably employed by the fourth respondent (Balance Water Company LLC) in 2012, that employment has no connection with Australia;
b)there is no persuasive evidence that Ms Holmes was ever employed by the first respondent (Balance Water Inc); and
c)the proceedings can otherwise be dealt with by Mr Maher and Balance Water Company Pty Ltd.
I have had regard to relevant guidance provided by Finn J in In the matter of C&T Grinter Transport Services Pty Ltd (in liquidation) (ACN 004 205 887) & Grinter Transport Pty Ltd (in liquidation) (Controller Appointed) (CAN 100 583 551)[5] where his Honour said at [20]:
[5] [2004] FCA 1148
The principles to be applied in the identification of the employer of an employee where there are two or more possible employers, are reasonably well settled. For present purposes I would note the following:
(1)A contract of service cannot be transferred by one employer to another or novated as between them without the employee’s consent: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; Re Coogi Nominees Pty Ltd (Administrators appointed); McCluskey v Karagiosis [2002] FCA 1137; (2002) 120 IR 147. Questions of estoppel apart: Smith v Blandford Gee Cementation Co Ltd [1970] 3 All ER 154; the employee’s consent must be a real one whether express or implied and is “not to be raised by operation of law”: Denham v Midland Employers Mutual Assurance Ltd [1955] 2 QB 437 at 443.
(2)The totality of the circumstances surrounding the relationships of the various parties including conduct subsequent to the creation of an alleged employment relationship is relevant to the assessment to be made: Romero v Auty (2001) 19 AGLC 206 at [10] and [42]-[44].
(3)Documentation created by one or more of the parties describing or evidencing an apparent employment relationship will be relevant to, but not necessarily determinative of, the true character of that relationship: Pitcher v Langford (1991) 23 NSWLR 142; Marrs Fabrics Pty Ltd & Nathan Wholesale Fabrics Pty Ltd v Whipps (1991) 33 AILR 167. In determining the identity of a disputed employer, the Court is entitled to consider “the reality of purported contractual arrangements”: Dalgety Farmers Ltd t/a Grazcos v Bruce, NSWCA, 3 August 1995. The documentation may have been brought into existence for other purposes, for example, tax minimisation or the reduction of insurance premiums, without reflecting the reality of the parties relationship: ibid; Pitcher v Langford, at 149; Sharrment Pty Ltd v Official Trustee in Bankruptcy [1988] FCA 179; (1988) 18 FCR 449 at 454.
(4)Conversations and conduct at the time of the alleged engagement of the employee is of considerable significance: Romero, at [9]. The beliefs of the employees as to the identity of their employer is admissible and is entitled to weight: Pitcher v Langford.
(5)In cases of the engagement of new employees to work in a business in which a number of separate corporate entities participate otherwise than as partners:
“…it was open to those controlling the business to select which company should be the employer provided that the selection was consistent with the financial and administrative organisation of the business and was not otherwise a sham.”
See Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd, FCA, Ryan J, 19 November 1998.
The evidence discloses that Ms Holmes has had a working relationship of some kind with one or other of the respondents between 2007 and 2012. There is evidence of her receiving remuneration of various kinds over that period from the three corporate entities. The parties are in dispute as to whether there was an employment relationship before 2012 and, if there was, whether it was a continuous employment relationship from 2007 to 2012.
It is certainly arguable that Ms Holmes was employed by Balance Water Company Ptd Ltd (an Australian company) in 2007 and that that employment was not definitively terminated prior to 2012. There is an issue whether that employment (if it was an employment arrangement) was transferred to either Balance Water Company LLC or Balance Water Inc, which are both foreign corporations. Mr Maher and Balance Water Company Pty Ltd argue with some force that there could be no transfer of employment without Ms Holmes’ agreement. I accept that but it is not clear whether the apparent employment arrangement with Balance Water Company LLC instituted in 2012 was a transfer of employment or a new employment arrangement. There is evidence that the parties intended that the employment arrangement with Balance Water Company LLC in 2012 would be subject to USA law and that Ms Holmes would be paid in American currency and be subject to American taxation. That, however, does not exclude the possibility that other terms of Ms Holmes’ prior employment relationship with Balance Water Company Pty Ltd (if there was one) continued in whole or part in relation to her employment with Balance Water Company LLC.
Ms Holmes is an American citizen who has maintained residences in both Australia and the USA. She has travelled extensively and made regular visits to both countries. The work that she has performed for the respondents has been performed in both countries at various times and, given the ability nowadays to conduct work electronically from any location, the physical location of Ms Holmes does not seem to have been particularly important to the parties.
A further complicating factor is that according to Exhibit R1, Balance Water Inc appears to have represented itself as Ms Holmes’ employer in earlier proceedings in the Fair Work Commission. This was probably a factor of significance leading Ms Holmes to identify Balance Water Inc as her employer in her statement of claim.
The reality is that Ms Holmes is at present unclear as to who her employer was at various times between 2007 and 2012. The available evidence is inconclusive. Mr Maher, as the controlling mind behind the three corporate entities is probably in a better position to know. In his defence filed on 14 August 2013, he contends at [22] that Ms Holmes and Balance Water Company Pty Ltd agreed that she would be employed by Balance Water Company LLC commencing in July 2012. At [33] he:
a)denies that Ms Holmes was ever employed by Balance Water Inc;
b)states that Ms Holmes was employed by Balance Water Company LLC between 1 July 2012 and 7 December 2012;
c)states that Ms Holmes was employed by Balance Water Company LLC while residing in the United States of America under US employment law;
d)denies that Ms Holmes was employed by Balance Water Company LLC either under US law or Australian law;
e)further, and in the alternative, states that Ms Holmes was paid salary by Balance Water Company LLC between 1 July 2012 and about 20 August 2012 at a time when she was continuously in the United States but not providing her services to any of the Balance Water entities. Such paid leave constituted annual leave taken in advance of entitlement.
In my view, it is arguable that Ms Holmes was employed by one or other of the corporate respondents in 2007 under Australian law and that that employment continued until 2012, although the terms and conditions of that employment were modified in 2012. That is, in my view, sufficient to satisfy the requirement for a prima facie case for the purposes of rule 10.43 of the Federal Court Rules in relation to a proceeding identified in rule 10.42 of the Federal Court Rules. It is probable that Ms Holmes will wish to amend her statement of claim in the light of additional evidence as to her employment provided for the purposes of this present Application in a Case. The three corporate entities associated with Mr Maher have been involved to some extent in the working relationship between him and Ms Holmes between 2007 and 2012. Ms Holmes should have the opportunity to call upon Balance Water Inc and Balance Water Company LLC, being foreign corporations, to defend the proceedings in addition to Mr Maher and his Australian based company. Given the relationship between the respondents, there is no reason to suppose that they could not have common legal representation. If it should in the future transpire that one of the respondents is an unnecessary or inappropriate respondent, Ms Holmes will have the opportunity to discontinue the proceedings against them.
I will grant the leave sought by Ms Holmes.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Judge Driver
Associate:
Date: 4 December 2013
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