Hughes, A.G.J v Klockner-Moeller Pty Ltd

"LIMITED DISTRIBUTION"

I N THE FEDERAL L'OIJRT O F

A U S T R A L I A

V I C T O R I A

D I S T R I C T

R E G I S T R Y

GENERAL

DIVI3iON

ALLAN

GEOF'FROI

JULIAN

iIUGHES

and OTHERS

and

XLGCKNER-MOELLER FT1 . LTD.

and OTHERS

MINUTES OF ORDER

THE COURT

ORDERS

THAT:-

1. The statement of claim be struck aut.

2 .

The respondents have leave to move the Court on

notlce

for leave

to f i l e and serve

an amended statement of

clalm; any such motion to be made returnable before the

Court at chc next directions hearlng.

3 .

The dlrections

hearlng

adjourned to Thursday, 5

February 138: at 10.15 a.m.

4. m e motlor, for conaollaation be adlourned ts the next dlrectlm; hearm?.

5. The appllcanta to pay the respsndents' costs of the motlona t c date.

*. '

I- -

IN THE FEDERAL *COUA?T OF AUSTRALId I

VICTORIA DISTRICT REGISTRY

DIVISION	GENERAL	)
EETWEEN :

ALLAN ~GEOFFROI JULIAN

STJGHES

a d OTHERS

dpp1:cantz

and

KLOCKNER-HOELLER PT7

. LTD.

and OTHERS

Respondents

m:	NORTHROP J.

U: 11 DECEMaER 1336

MELBOURNE

REASONS FOR JUDGMENT

Important issues

are raised by motion In these

three proceedlngs relatlng to whether

a corporation under the

Trade Practlces Act 1374 ("the Act"), In trade or commerce, engages In conduct thac 1s mlaleading Er decepEive or i s

llkely to mlslead or decelve when neqotlating condltions of

emplnyment 31th prospective emplc,:;ees or with employees. Three former employees have ach commenced proceedlngs ln the Court agalnst tnelr former employer sesklng rellef based on a contraventlon of 5 . 5 2 of the Act and rellef upon the accrued ~urlsdictlon of the Court, based on breach of contract and on

tort.

In each proceeding, pursuant to 0.20

r.2, the employer

is	moving the Court upon notice that each proceedlng be

There are some dlfferences of fact between each

proceeding, but those dlfferences

do not affect the baslc

issues raised of each motion.

In addltlnn to the appllcatlon

and statement of clam ln each proceedlng, the

rnatrrlal

before the Court comprlse the letters of appomtment of eash of th2 applicants as employees and ths superannuation deed datsd 7 5eptember 1976. The additlcjnal material %as admltted under 0.10 r.2(2).

In matter 'J. No. G 175 of 13i36, the appllzant Huyhes 1 s suing Klockner-Moeller Pty. Ltd. ("the employer"). The statement of c l a n alleges that the zmployer 1s a tradmg corporation under the Act being an importer and marketer of electrlcal swltchgear. It alleges alss that the employer 1s the sole trustee of a superannuation fund ("the Scheme")

established to provide

superannuation

benefits

for its

employees and constituted

a trust deed dated 7 September

1976 entered into

between the ernployer and New Zealand

Vlctorla Life Ltd. That trust deed 1 s before the Court.

The

statepent of claim, by

paragraph 3 , allsues that on 18

J u l y

1380, the

mployer

presented

a r;ropased

contract

employment to Hughes thereby representinq to hlm that ~f

continued in employment

with the employer on the terms

of the

contract. upon termination of h15 emplJyment the employer

would pay

to him under

the Scheme an amount qual to the

contrlbutlons made b7 <?IS zmployer snd hlnnself wl+h

accumulated mtsrest. The proposed concrai-t referred to 111

that paraqraph 15 not In es'ldence before the izurt. There 1s

In evldencz a slmllar pro?osed contract with Huqhes dated 14

December 13-3 from the

aarent

company

af the

employer.

namely, Kiockner-Moeller GMEH, a 2omDan:J Incorporated in Hest Germany. That proposed contract xhlch wa5 accepted by Hughes on 19 Decsmber 1973, cuntarns a term as follows:-

" 2 .

Superannuation

company

employee

superannuation scheme will apply. Membership

will be immediate.

Apparently Hughes was empioyed pursuant

c the terms of that

contract. He ~oined

the Scheme referre6 to m

that contract.

That contract wa5 varled by c h e new contrasr: cf i8 J u l y 1980.

The new contracr; referred

to the Scheme created bjr the deed

dated 7 Septsmber

1976.

Under

that

deed, the employer

contributes 6.5% and the emplcyee

5%.

Paragraph 4 of the statement of claim alleges that Hughes relled upon the representations set out in paragraph 3 and thereby agreed to contlnue hls employment upon the terms set out in the pfioposed contract. Paragraph 5 alleges that the representation was false In that upon the termination of his employment, the employer paid to him the amount of his contributlons together with Interest thereon only. Paragraph

S alleges chat the conduct of the respondent referred to In

paragraphs 3 and 5 of the scatemenr: of clalm conatltutes

conduct by Lhe smployer I n trade or commerce that is misleading or deceptive or likely to mislead or decelve

contrary to sub-sectlon 52(1) of the Act.

Under the terms of the Scheme dated 7 September

1976, the empluyer is required to zontrlbute

an amount

respect of each member equal to 6.5% of the earnlnirs of the

member and tha employee 1s requlred to contribute 5%.

Under

the te2rms of che Scheme, upxi an employee ccaslng h13

employment €zr any

reason other than speclfled reasons not

relevant for present purposei. the entltlement of the member under the Schzme the amount of rrhe contributlons made by

the employee together

wlth mterest chereon.

Paragraph 15 of the statament of claim alleges that in a conversation between Hughes and one Quayle (who is the applicant In proceeding V. No. G 177 of 1986) for and on behalf of the employer, the employer adopted andlor repeated the representation referred to I n paragraph 3 of the statement of clam. Paragraph 16 alleges a further

conversatlon between Hughes and

Quayle for and on behalf of

the emplcjyer In about April

1431 m which the employer

represented to Hughes that the moneys due to Huqhes under the

Scheme would be

.permitted to remain m the scheme after

termlnatlon of employment and vould be paid, together wlth Interest, when requested by Hughes. Paragraph 17 alleges

that Hughes relying upon

the representations set out

- 5 -

paragraph 15, terminated hls emplq-ment ;n April 1381. Paragraph l a alieuss that the repr.?sentatlons conr;a:nsd In para8:rapns 15 xmi 1,; were false lr, char: zhen Hughs.; a;d recelve hls payment under the jcheme In Mav 1485 he received his own contr1ht;sns snly toqether z c h interest thereon.

The statement of claim does not allege that the

conduct referred to

In paragraphs 15 and 16 contravened

sub-section 53(1) of the Act, but the submisslons proceded on

the basls that such an allegation had been made.

The other paragraphs

of the statement of clalm

relate to the claims based

on contract or on tort. Unless a

clam is made out based upon thc Act, the Court has

lurisdiction to hear and determme those other claims.

The

Court has zst lheard argument and has not consldered the questlon of xhetner It should, I n tne exercise af its discretion acd on the assumption thar; trre statement of clalm

discloses a cause of action based

on the Act, exercise its

accrued jurisdlctlon to hear	and determine the claims based
upon contract and tort.

In matter V. No. G 176 of 1986, the applicant

Clencie 1s sulng the employer and Munns and Atzl, the latter

two alleged to be dlrectors and employees of the employer.

The statement of clalm is in slmllar form to that in

matter

V. No. G 175 of 1966.

Paragraph 4 alleges the proposed

contract of employment was dated

February

1381 and

constituted a representation

that lf Clencie

accepted a

. .

continued employment tne terms of employment would include a

term that the employmsr,t would not be termmated otherwlse

than upon three months wrltten notice by elther party and a

term re payment of auperannuation similar to that wlth

respect to Hughes.

Faragraph 5 alleges that Clencle relled

upon that representatlon. The proposed <ontract was accepted

by Clencie on 23 May 1981.

It contalns tht following terms:-

"The agreemen= can be cancellad by either party

upon m-itten notlce of three mcnths being glven.

...

L .

Superannuatlon

A 6.5% by

company

! 5% by

employee

superannuatlon scheme

will apply."

Paragraphs 6 and 7 of the statement of claim arc m

similar form to paragraphs

5 and 6 of the statement of claim

In matter V. No. G 175 of 1986 and need n o t be summarised.

Paragraphs 15, 17 and 18 are simllar to paragraphs 15, 16, 17 and 18 of ths statement of claim in matter V. No. G 1 7 5 of 1986. The differences are that the second set of representations were made by Munns and Atzl for and on behalf of che employer In March 1985 and zere to the effect that If

Clencle accepted lmmedlate

termmation SI

employment. the

employer would pay to Clencle under the Scheme an amount equal to the contrlbutions made by the employer and Clencle

together with Interest, that Clencle relied

upon

those

representations and

accepted immediate termination but

was

paid his own contrlbutions together wlth interest thereon

only. Faragraph 13 alleges :ha:

che condu:c

rcfzrred to I n

paragraphs 185 and 13 consclcutss conduct by the ernployer ;n

contra-Jentlzn of sub-sectlon 52!1!

of the k c . T k r e 1s

separace clalrn agalnst Munns and Atzl. The acirsr

paragraphs

of the scaternenr; of clalm relate to matters

which rnlght come

wlthln the accrued ]urisdlctlon

of the Court.

In matter V. No. G 177 of 1386, the appllcant Quayle is sulng Klockner-Moeller GMMEH.

the employer, Munns

and Atzl.

The statement of slalm is slmilar

to that in

matter V. No. G 176 of 1986. The date of the proposed

contract was i4 December 1973. It

contalned

the

term

enabling elther party

to ternxiate the employment

three

months wrltten noti:e and t>.e superannuatlon pro-nslon was on

a 6.5% company l 5% emplqree bas1.s. Wich necessary

alterations as to dates, paragraphs 5, 6 , 7 and 8 correspond

to paragraphs 4, 5, 6 and 7 of the statement of clalm in

matter V. No. G 176 of 1936. The allegatlsns are that the

employer terminated Quayle‘s employment by letter dated

March 1985 with effect from 2 3 March 1985 and pald under the

Scheme the amount of

the contrlbutions paid by Quayle to

March 1385 together with interest thereon. Paragraphs

17,

18, 13 and 20 correspond to paragraphs 16, 17, 18 and 13 of

the statement of claim in matter V. No. G 176 of 1386. The

allegatlons are that the representatlons were made by

Munns

and Atzl for and qn behalf of the employer I n ?-larch 1385

and

were

the

ffect

hat

lf Quayle

accepted

immediate

terminatlon of employment, the employer would make certaln

payments to Quayle,

that

Quayle

accepted

the

Immediate

payments, that the representations were false and constltutrd

conduct In contraventlon of suh-sectlon 57(1) uf the Act.

termlnation of employment but the employer did not make those paragrapns nf the statement of cla:m relate to matcsrs xhlch mlqht come wltiiln -,he accrued jurlsdictlon of the Court.

Leavmq azlde f o r

the moment dlfflcultles arislnq

from the question

of whether the zmployer

1 s belna sued in

its capaclty as employer or In Its capaclty as trustee of the

Scheme, the questlsns of law raised by thz motions are:-

1. In making an offer of employment to the

appllcant in each

proceeding, was the employer

engaglng In "trade or commerce'' withln 5 .5 ; :

the Act?

2 . Where zhe conduct

alleged

constitutss

represencatlon and that representatlon relates

to future conduct whlch ia not fulfilled, does

that representatlon disclose a zause of actlon

In the absence of an allegation that at the

time

the

representatlon

was

made

the

representor's bellef was different from what was stated o r that the representor did not

believe what was stated

was recklessly

lndlfferent as to what was stated?

3 .

Where

ths

conduct

alleqea ronstltutes a

representaclon and thac representatlon becomes

a term oZ the agreement, doe:

a subsequent

breach of

that

term

the

agreement

conszltute a contraventlon

of s.52 of the Act?

Before conalderlng these

questions, it should be

noted

that

in the proceeding in whlch Quayle 1 s the

appllcant, the relevant contract

of cnplcyment: was entered

lnto m December

1373 and that

ch2 alleued representatlons

took place before that date. At t1hat date, the Ac% was nut ln operation. Llxewise, the contract of employment entered. lnto by Hughes was dated September 1'376 but was varled m

July 1390

and that the alleged reprcsentatlons took place

before those dates and that the cmtract of employment entered into bp Ulencle was dated May 13#31. At present, no defences have been filed but If the proceedlngs contlnue, it is anticipated that these matters wlll be raised by defence

including defences based

upon sub-sectlon 82(3) of the Act.

I consider first, question

2 .

In Bill Acceptance

Corporation Ltd.	- J . GWA Ltd. (1983) 50 A.L.R. 242 at	p.250,
Lockhart J. salad :	-

"The mere fact that representatlons as to

future conduct or events do not come to pass	does
not	make

them misleading or deceptive, notwithatandlng that the applicant has relied on them and has altered his posltlon on the faith of

them.

...

the

respondent

had

m e

representations or statements

wlth knowledge of

their

falsity

or wlth reckless

indifference to

their accuracy the applicant's case may then

fall

within what I believe to be the present

law on thls

- 10 -

sub~ect

as expressed by Fltzqerald J. an Stack's

m to whlch I t.-,a-Je already referred.

Xowever,

the appllcant has not &leaded

any lntent on the

part of the respozaent to mlslead o r deceive, nor

has It pleaded azy reckless lndlifer+ncs as t a the

acrurac-q of the ztatzments made.

' I

That prlnclpls

has been appllea tlme

and

time

agaln. in my opinlon, lt 1s a correcr: statement of princlple and should be applled to the facts of this case. None of the statements of c l a m contaln allegatlons ~f the type lndicated

and to that extent, none of the statements of claim disclose a cause of a c t l o n under s . 5 2 of the Act. However, If this was the only question ralsed, the statements of clalm, If proper instructions were obtalned, could be amended to disclose a cause of actlon. For thls reason, it 1s necessary to conslder the other ,question;.

Questlon 1 raises

an issue of general Importance.

There 1s no doubt

that ths employer and l t s parent

company,

Klockner-Moeller GMBti, are each corporatlons. Each 1 s engaged In trade or commerce. The lssue, however, 1s whether, when engagmg m negotiations n t h prospective employees, are they engaged In trade or commerce? They are

not engaging in the busmess of an employment agency.

They

are seeking employees

to enable them to engage

in trade or

commerce.

I do not find It necessary to form

any flnal view

on thls questlon.

- 11 -

Question 3 must be considered

m con~unctlon wlth

questlon 1.

substance, the conduct alleged consisted of

representations

that If the appllcants

enterpd Into the

contract of employment, they would be required to enter Into

the Scheme and thus become entitled to

the beneflts conferred

upon them under the Scheme.

Each

applicant accepted

that

obligatlon and Jolned the Scheme.

The terms of c h e Scheme

became blnding upon each

applicant and the emplGyer. Under

the deed cunstltuting the Sckeme, the employer ;S both the

employer and the

trustee.

As ernployer,

the employer

requlred to mace payments

Into the Zcheme.

As trustse, the

employer 1s required to make

payments, the amount of which is

determined in accordance with the Scheme. If an employee seeks to enforce payment of moneys due under the Scheme, he

must sue the employer,	as	trustee, and must rely upon the
terms of the Scheme.

In the present cases, each applicant, upon enterlny into his employment, became a member of the Scheme.

As a

result, each applicant made contributlons

to the fund. Upon

termmation of his employment.

each was entitled to payment

under the Scheme. The obligatlon to make that payment was imposed upon the employer in its capacity a s truster of the Scheme.

In each

proceedlnq,

the applicant alleqes a

representatlon by the employer, ~n I Z ~

,:apacltjr as smplajrer,

wlth respect to the entrclement cjf thz spgl-cant ~~t-~der

tihe

Scheme. Hughes alleges an agreement +nth che zmployer that If he terminated hl; empioyment, the moneys due to h m under the Scheme could be kept in the Scheme and would be pald to

him upon request wlth accumulated Interest.

He alleges that

this constituted a representatlon ghich was false slnce the amount paid to him was calculated m accordance with the

terms of the

Scheme; it dld not include

the contributlons

made by the employer. Clencle alleqes an agreement with

the

employer that If

he termmated

hls smployment immedlat?ly,

the moneys due

to h m under the Scneme

would, contrary to the

terms of the Scheme, constitute bcth the contributions made

by the employer and by himsslf together wlth accrued

interest. In fact he recelved h15 own contrlbutlons and

interest only. A slmllar sltuatlon arlaes as with respect to

Clencie. These allegations have all the

appearances of

agreement and clams for damages for breaches of

contract.

The alleged representations are alleged to	be terms of the
agreements.

As was said at the beglnning of these

reasons,

important issues are ralsed by the motlons

before the Court.

The statements of clam have been drawn without adequate conslderation belng glven to the law applylng to the facts glving rise to the clam. The duties of the trustee under

the Scheme have not been adverted

to in

the statements

claim.

The effect of a representatlon being made a term

of a

- 13 -

contract has not been adverted

to.

Representations as to

future conduct have not been

fully consldered. Neither has

the question af whethet- tne conduct complamed of is In trade

or commerce. X number of these matters were not araued fully

on behalf of the

appllcants at the hearinq of the motlons.

The statements of c l a m should be sec	aside based on the
answer to question 2 .

Having regard to all the c1rcumscance3, this is not a case where each appllcatlon should be dlsmissed. Rather,

In each appllcatlon the statement of claim should be struck

out and leave be given to each applicant to move the Court

f o r leave to

file and serve

an amended statement of

claim.

I f , after proper consideration of the matters, the applicants

desire to adopt that course, they could prepare

amended

statement of c l a m and,

on notice, move the Court for leave

to flle and serve that amended statement

of claim.

the

hearing of that motion, flnal consideration could be glven

the

matters

ralsed

In these

reasons.

In additlon, any

questlon of the applicatlon of sub-sectlon	8 2 ( 2 ) could be
ralsed and declded.

- 1 4 -

1. The statement of clalm be struck out.

The respondents have leave to move the Court amended statement of clalm; any such motlon to be made returnable before the Court at the next directlons hrarlng.

3. The directions hearlng bz adlourned to Thursday, 5 February 1387 at 10.15 a.m.

4. The motion for consolldation be adjourned to the next dlrections hearlng.

The applicants to pay the

respondents’ costs

of the motions to date.

[1986] FCA 597

12 Nov 1986