Keldote Pty Ltd v Riteway Transport Pty Ltd (No.2)
[2008] FMCA 1623
•16 December 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KELDOTE PTY LTD & ORS v RITEWAY TRANSPORT PTY LTD (No.2) | [2008] FMCA 1623 |
| INDUSTRIAL LAW – PRACTICE & PROCEDURE – Order made without having been sought by the parties or foreshadowed by the Court – order not entered – order interlocutory – application to set order aside – discretion whether to set aside order – matters for consideration in exercise of the discretion whether to set aside order – denial of procedural fairness – order set aside. |
| Independent Contractors Act 2006 Federal Magistrates Court Rules 2001, r.16.05 |
| Keldote Pty Ltd & Ors v Riteway Transport Pty Ltd [2008] FMCA 1167 Blay v Pollard & Morris [1930] 1 KB 628 Smith v New South Wales Bar Association(No.2) (1992) 176 CLR 256 Maritime Union of Australia v Geraldton Port Authority (2001) 111 FCR 434 Yau’s Entertainment Pty Ltd v Asia Television Ltd [2002] FCAFC 378 Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455 |
| Applicant: | KELDOTE PTY LTD |
| Respondent: | RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS |
| File Number: | SYG 2353 of 2007 |
| Applicant: | L & D LOWE TRANSPORT PTY LTD |
| Respondent: | RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS |
| File Number: | SYG 2354 of 2007 |
| Applicant: | TAMBO WATERS PTY LTD |
| Respondent: | RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS |
| File Number: | SYG 2431 of 2007 |
| Judgment of: | Cameron FM |
| Hearing date: | 25 November 2008 |
| Date of Last Submission: | 25 November 2008 |
| Delivered at: | Sydney |
| Delivered on: | 16 December 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr I. Latham |
| Solicitors for the Applicant: | Turner Freeman |
| Counsel for the Respondents: | Mr A. Moses SC |
| Solicitors for the Respondents: | Blake Dawson |
ORDERS
SYG 2353 of 2007
Order 1 made on 22 August 2008 be set aside.
The matter be listed at 10.15am on a date to be fixed for hearing on the question of what orders, if any, the Court should make consequent upon its finding that the contract between the applicant and the respondent was unfair.
SYG 2354 of 2007
Order 1 made on 22 August 2008 be set aside.
The matter be listed at 10.15am on a date to be fixed for hearing on the question of what orders, if any, the Court should make consequent upon its finding that the contract between the applicant and the respondent was unfair.
SYG 2431 of 2007
Order 1 made on 22 August 2008 be set aside.
The matter be listed at 10.15am on a date to be fixed for hearing on the question of what orders, if any, the Court should make consequent upon its finding that the contract between the applicant and the respondent was unfair.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2353 of 2007
| KELDOTE PTY LTD |
Applicant
And
| RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS |
Respondent
SYG 2354 of 2007
| L & D LOWE TRANSPORT PTY LTD |
Applicant
And
| RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS |
Respondent
SYG 2431 of 2007
| TAMBO WATERS PTY LTD |
Applicant
And
| RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS |
Respondent
REASONS FOR JUDGMENT
Introduction
On 22 August 2008 following a three day hearing on the applicants’ claims that their contracts with the respondent (“Riteway”) were unfair, I made the following orders in these proceedings brought under the Independent Contractors Act 2006:
(1)In respect of each applicant’s contract with Riteway, the fourth paragraph of clause 5 of the Riteway-TWU agreement be varied as from the time when the contract was made by inserting after the word “vehicle” where second appearing the following words:
having specifications reasonably equivalent to the vehicle to be replaced.
(2)The matters stand over for consideration of the applicants’ claims for damages and injunctions.
Reasons for judgment were published at that time: Keldote Pty Ltd & Ors v Riteway Transport Pty Ltd [2008] FMCA 1167.
On 25 September 2008 Riteway filed an application in a case seeking orders that order 1 made on 22 August 2008 be set aside. Riteway submits that it was denied natural justice because it had not been provided with an opportunity to address the Court on the making of such an order. It submits that order 1 was neither sought by the applicant nor foreshadowed by the Court during the course of the hearing as being an order under contemplation.
Relevant facts
In the reasons for judgment published on 22 August 2008, I expressed my finding that the contracts between Riteway and the applicants were unfair because they entitled Riteway to impose unilaterally, and without making financial compensation to the applicants, a significant change to the equipment required to service those contracts: Keldote Pty Ltd & Ors v Riteway Transport Pty Ltd at [104].
When considering how the contracts might be varied in order to alleviate that unfairness, I said:
I have concluded that the contracts were unfair because they permitted Riteway to require the applicants to renew their vehicles with replacements which were materially different from the vehicles which had previously been acceptable, and did not require Riteway to make a commensurate increase in payments to the applicants such that the necessary additional expenses would be offset by such increased payments. Having reached that conclusion, and having regard to the principles set out above at [96], it is appropriate that I exercise the power which the ICA confers on the Court to address that unfairness and that I make an order which places the parties on a footing such that the unfairness I have identified no longer obtains. With this in mind, I conclude that clause 5 of the Riteway-TWU agreement should be varied in each of the applicants’ contracts so that Riteway’s power to require the applicants to replace their vehicles is limited to a power to require replacement of like with like.
The applicants suggested or sought various alternative orders which would involve complex and impractical terms providing for the calculation of the cost of any change required under the contracts. In my view, the better approach would be a variation of the contract preventing Riteway from unilaterally imposing a material change in vehicle specifications.
Consequently, in respect of each applicant’s contract with Riteway the fourth paragraph of clause 5 of the Riteway-TWU agreement will be varied as from the time when the contract was made by inserting after the word “vehicle” where second appearing the following words:
having specifications reasonably equivalent to the vehicle to be replaced. (at [138]-[140])
Parties’ submissions
Riteway submitted that order 1 had been neither sought by the applicants nor foreshadowed to it by the Court. Riteway submitted that the Court was constrained to determine the matter in accordance with the various orders sought in the pleadings and, if it determined to depart from the course, then it should have provided Riteway with sufficient opportunity to deal with the issue. Riteway made reference to Blay v Pollard & Morris [1930] 1 KB 628 where Scrutton LJ held, in substance, that cases must be decided on the issues on the record and if it is decided to raise other issues, they must be placed on the record by amendment (comments at 634 paraphrased in headnote at 628).
Riteway submitted that had it been alerted to the possibility that the order could be made, it may have led evidence in relation to the fairness, practicability or otherwise of the order as well as making submissions on these and other matters.
The applicants submit that order 1 was, in substance, the same as aspects of the relief which they had sought. In this regard, reference was made to [7] and [9] of the reasons of 22 August 2008 where it is respectively recorded that, relevantly, the applicants alleged that their contracts were unfair because:
(d)the terms of the contracts provided that Riteway could compel the purchase by the applicants of new equipment without adequate consideration
and sought an order that
(d)the terms of the contracts allowing Riteway to compel the applicants to purchase new equipment be varied to require Riteway to pay to the applicants the net cost of such new equipment.
The applicants submitted that order 1 was “clearly contemplated by the ground of unfairness pleaded. While different in form to the order originally sought; the substance was the same.”
The applicants also submitted that the need for finality in litigation militated against the orders sought by Riteway, particularly in what is generally a no-costs jurisdiction; the matters in question would be better dealt with by way of appeal; any reopening would, in reality, amount to a general reopening; Riteway had had a full opportunity to be heard and make submissions on appropriate orders to remedy any unfairness in the contracts; and this Court’s relatively informal and streamlined procedures suggested that reopening in the circumstances would be inappropriate.
Power to set aside judgments or orders
Rule 16.05 of the Federal Magistrates Court Rules 2001 relevantly provides:
Setting aside
(1) The Court may vary or set aside its judgment or order before it has been entered.
The order in question has not been entered and the Court has power to set it aside.
In any event, the order does not finally dispose of the matter and is thus interlocutory and may be set aside under r.16.05(2)(c) which provides:
(2)The Court may vary or set aside its judgment or order after it has been entered if:
(a) …
(b) …
(c) the order is interlocutory; …
Whether an order will be set aside involves an exercise of discretion and, in the interests of finality of litigation, if reasons for judgment have been given, the power is only to be exercised if there is some matter calling for review: Smith v New South Wales Bar Association(No.2) (1992) 176 CLR 256 at 265. In this case, Riteway submits that the Court should exercise the discretion in its favour.
Principles applicable to the exercise of discretion
In Maritime Union of Australia v Geraldton Port Authority (2001) 111 FCR 434, RD Nicholson J considered the circumstances in which the discretion to reopen might be exercised. His Honour said:
The authorities show that the circumstances in which the High Court will reopen a judgment which it has pronounced are “extremely rare”. A relevant consideration in this regard is the public interest in maintaining the finality of litigation which necessarily means that the power to reopen to enable a rehearing must be exercised “with great caution”: Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 at 684, citing State Rail Authority (NSW) v Codelfa Construction Pty Ltd (1982) 150 CLR 29. It is therefore a matter for the exercise of judicial discretion having regard to the appropriate circumstances as to whether the power in the rule should be exercised: Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at 265; Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 133 ALR 667 at 677 per Lindgren J. The appropriate tests have been formulated with different words and different scope in varying judgments.
The formulations to which regard must be had are as follows:
(1) “Generally speaking, it [the discretion] will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard”: Wentworth at 684 per Mason ACJ, Wilson and Brennan JJ, cited with approval by Mason CJ in Autodesk Inc v Dyason (1993) 176 CLR 300 at 302. In Autodesk Brennan J (at 308) said that a court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue for to do so would be a denial of natural justice.
(2) The power will only be exercised if there is “some matter calling for review”: Smith at 265.
(3) There may be more or less reluctance to exercise the power depending on whether there is an avenue of appeal: Smith at 265, citing Codelfa at 38-39, 45-46 and Wentworth at 394-395.
(4) The power will not ordinarily be exercised “to permit a general reopening”: Smith at 265, citing Ritchie’s Supreme Court Procedure, New South Wales, vol 1, p 2855.
(5) It is necessary for the court to consider whether it has proceeded on a misapprehension as to the facts or the law: Autodesk at 302 per Mason CJ. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to neglect or default of the party seeking the rehearing: Autodesk at 303 per Mason CJ.
(6) The power is not to be exercised for the purpose of reagitating arguments already considered by the Court: Autodesk at 303 per Mason CJ.
(7) Nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put: Autodesk at 303 per Mason CJ.
(8) It will be relevant whether the decision has been given in ignorance or forgetfulness of some statutory provision or of some critical fact: Autodesk at 310 per Brennan J.
(9)What is at issue is the interests of justice and whether they require judgment to be set aside: Autodesk at 322 per Gaudron J, citing Smith and adding that such circumstances will be extremely rare particularly if there has been an opportunity for full argument.
(10)It will be appropriate to consider whether the review of the contemplated order is necessary so that the orders made deal more adequately with the matter as litigated by the parties before the Court: Yenald Nominees Pty Ltd v Como Investments Pty Ltd (1996) ATPR 41-508 at 42,362 per Lee J citing Texas Company (Australasia) Ltd v Commissioner of Taxation (Cth) (1940) 63 CLR 382 at 457 per Starke J. (at 439 [19] – 440 [20])
His Honour’s formulations of the matters to which regard must be had have been referred to with approval by the Full Court of the Federal Court in Yau’s Entertainment Pty Ltd v Asia Television Ltd [2002] FCAFC 378 and Ramsey Butchering Services Pty Ltd v Blackadder [2003] FCAFC 20.
It is with reference to those of the principles identified by his Honour which are relevant to this matter that Riteway’s application will be determined.
Conclusion
Having considered the parties’ submissions, I have come to the view that the Court did deny Riteway procedural fairness, as it submits, and that order 1 made on 22 August 2008 should be set aside. I have
reached this conclusion having regard to the following matters:
a)the relief sought by the applicants, arising out of their allegation that the contracts were unfair because Riteway could compel them to purchase new equipment without adequate consideration, was framed in terms of a variation requiring Riteway to pay the applicants their cost of such new equipment. Order 1 addresses the unfairness found to arise out of Riteway’s contractual power in this respect by limiting that power rather than by providing for compensation in circumstances of its exercise. I accept that, had such relief been sought by the applicants, Riteway might have made additional or different submissions during the course of the hearing as to how any unfairness which was found might have been remedied;
b)the making of an order which had not been sought by the applicants or canvassed in argument during the hearing amounted to a denial of procedural fairness to Riteway. This is based on a conclusion that, as it would be affected by the order, Riteway should have been heard further after being given an opportunity of ascertaining that the Court did not believe that the orders sought by the applicants were appropriate to be made and that an alternative order should be considered: cf. Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576;
c)as the decision on 22 August 2008 did not dispose of the proceedings on a final basis and the Court is not functus officio, it is more appropriate that the issue be dealt with in this Court than go on appeal to the Federal Court at this stage. This is particularly so as leave to appeal would be required and it might be anticipated, in circumstances where this Court is empowered to deal with the issue, that the Federal Court would be reluctant to grant leave before Riteway’s complaints were raised in and considered by this Court. Moreover, the likely result of any successful appeal to the Federal Court would be an order setting aside order 1 made on 22 August 2008 and a further order requiring this Court to determine the matter according to law. Such circumstances suggest that the interests of the administration of justice are best served by dealing with the matter in this Court at this point;
d)the reopening sought by Riteway is not a general reopening but is limited to the question of what relief should flow as a result of the Court’s finding that the contracts between the parties were unfair;
e)Riteway does not seek to re-agitate matters already determined but, rather, to address matters which it has, so far, had no opportunity to address;
f)the interests of justice dictate that Riteway have an opportunity to put to the Court those matters which it wishes the Court to consider when making an order dealing with the contracts’ unfairness, in circumstances where the particular relief sought by the applicants in their amended applications has to this point been considered by the Court to be inappropriate to address that unfairness satisfactorily; and
g)the less formal nature of this Court’s procedures does not permit it to deny parties procedural fairness: O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455 at 462 [16].
Having found that the contract was unfair but not being satisfied that any of the orders sought by the applicants were appropriate to be made, such a finding should have been published and the parties then invited to make submissions, and possibly lead evidence, as to what consequential orders were most appropriate in the circumstances.
Therefore, order 1 made on 22 August 2008 will be set aside and the matter re-listed for hearing on the question of what orders, if any, the Court should make consequent upon its finding that the contracts between the applicants and Riteway were unfair.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Cameron FM
Associate:
Date: 16 December 2008
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