Sutton v Be Australia WD Pty. Ltd (No 2)

[2015] NSWIC 9

Industrial Court

New South Wales

Medium Neutral Citation:

Sutton v BE Australia WD Pty. Ltd (No 2) [2015] NSWIC 9

Hearing dates:

25 May 2015

Date of orders:

11 August 2015

Decision date:

11 August 2015

Before:

Kite AJ

Decision:

The Court makes the following orders:

 

(1) Leave is granted to the applicant to file a Further Amended Summons in the form included as part of Annexure DAL15 to Exhibit 3.

 

(2) Philip James Davidson is joined as second respondent.

 (3) The respondents are to pay the applicant’s costs of the motion.

Catchwords:

AMENDMENT – joinder of additional respondent - jurisdiction – beyond limitation period prescribed by Industrial Relations Act 1996 (NSW) s 108B – distinction between substantive and ancillary relief - discretion – delay – prejudice – costs thrown away – effective date of commencement against additional respondent – effect on costs orders – condition of granting amendment

Legislation Cited:

Industrial Relations Act 1996 (NSW) ss 106, 108B, 109, 170
Uniform Civil Procedure Rules 2005 (NSW) r 6.28

Cases Cited:

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175
Australian Coastal Shipping Commission v Curtis Cruising Pty Ltd (1989) 17 NSWLR 734
BEA Systems Pty Ltd v Industrial Relations Commission New South Wales in Court Session [2005] NSWCA 227; 143 IR 111
BE Australia WD Pty Ltd (Subject to a Deed of Company Arrangement) v Sutton [2011] NSWCA 414
Burden v Walgett Shire Council [2006] NSWIRComm 169
Cochran v Sutton [2014] NSWCA 185
Commonwealth v State of Queensland [1920] HCA 79; 29 CLR 1
Container Terminals Australia v Xeras (1991) 23 NSWLR 214
Crowe v UCS Developments Pty Ltd [2003] NSWIRComm 234; 130 IR 266
Davies v Kyogle Shire Council [2007] NSWIRComm 9
Fairclough v Swan Brewery (1912) AC 565
GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710
Hagans v UnitedGlobalCom, Inc [2004] NSWIRComm 164
Ketteman v Hansel Properties Ltd. [1987] 1 AC 189
R v Gough; Ex parte Australasian Meat Industry Employees' Union [1965] HCA 52; 114 CLR 394
Toohey v Gunther [1928] HCA 19; 41 CLR 181
Unitedglobalcom, Inc v Industrial Relations Commission (NSW) in Court Session [2005] NSWCA 131; 142 IR 204
Visali v Southwell (1988) 12 NSWLR 502

Texts Cited:

D K Singh, “What Cannot be Done Directly Cannot be Done Indirectly: Part I”, (1959) 32 ALJ 374

Category:

Procedural and other rulings

Parties:

Mary Sutton (Applicant)
BE Australia WD Pty Limited (formerly Bearing Point Australia Pty Ltd) (Respondent)

Representation:

Counsel 
A Britt of counsel (Applicant)
P Ginters of counsel (Respondent and Philip James Davidson) 

  Solicitors 
JH Law (Applicant)
Ashurst Australia Lawyers (Respondent and Philip James Davidson)

File Number(s):

IRC 5584 of 2005

Interlocutory Judgment

1. By a summons for relief filed on 1 November 2005 the applicant, Mary Sutton, sought orders for relief under s 106 of the Industrial Relations Act 1996 (NSW) (IR Act). The named respondent was BearingPoint Australia Pty Ltd.

2. In the summons the applicant pleaded that she was employed by a company called Roland Jackson Group Pty Ltd (“RJ”). RJ contracted with a labour hire firm, Link Recruitment, to provide her services to the respondent. She began to provide services as a senior taxation specialist to the respondent under these arrangements on 3 August 2004. From 1 August 2005 RJ contracted directly with the respondent for the provision of the applicant’s services.

3. It was alleged that throughout her time providing services to the respondent the applicant was treated, in all respects save for the level of remuneration, as an employee.

4. The applicant pleaded that, in the course of her engagement, she raised concerns about the skills, ability, performance and professional ethics of Mr Philip Davidson, an Associate Director of the respondent. As a result of raising those concerns she alleged that she was subjected to bullying and harassment by Mr Davidson.

5. In turn she complained to senior officers of the respondent about the bullying and harassment. That led to the cessation of payments to RJ. When she complained about that, her employment was terminated on 7 October 2005. The application for relief was filed shortly thereafter - well within the time prescribed by s 108B of the IR Act.

6. Ms Sutton now moves for leave to file a Further Amended Summons in which she seeks to make changes in light of the decision of the Court of Appeal in Cochran v Sutton [2014] NSWCA 185 and correspondence between the parties. More controversially she seeks to join Mr Davidson as a second respondent.

7. To understand the lapse of time between the commencement of proceedings and the current application, it is useful to refer to a chronology helpfully set out in the submissions filed on behalf of Mr Davidson:

7 October 2005 - the “contract or the arrangement” said to found the proceedings (Proceedings) is terminated.

1 November 2005 - applicant commences the proceedings by way of Summons, claiming that the contract or arrangement whereby she performed work in the taxation consultancy industry for BearingPoint Australia Pty Ltd – now BE Australia WD Pty Ltd ACN 093 054 623 – was unfair.

23 February 2006 - respondent files a Reply to Summons for Relief.

7 July 2006 - applicant files a Response to Reply to Summons for Relief.

6 September 2007 – Mr Davidson, in his capacity as an employee of the respondent, files an affidavit in the Proceedings.

13 June 2008 - applicant files an Amended Summons for Relief. The matters underpinning the alleged unfairness are said to have occurred in the period from about August 2004 to about October 2005.

24 October 2008 - respondent files a Reply to Amended Summons for Relief.

18 December 2008 - applicant files a Response to the Amended Reply to the Amended Summons for Relief.

2 April 2009 - respondent files an Amended Reply to Amended Summons for Relief.

19 May 2009 - the Proceedings were fixed for hearing before Haylen J in the week commencing 23 November 2009.

8 October 2009 – Industrial Court advised that the respondent had been placed in voluntary administration on 1 October 2009.

30 October 2009 (approx.) – applicant provides her solicitors with instructions to make an application to join Mr Davidson to the Proceedings.

22 June 2012 – applicant’s application for special leave to appeal the decision in BE Australia WD Pty Ltd (Subject to a Deed of Company Arrangement) v Sutton [2011] NSWCA 414 is refused.

29 June 2012 – The proceedings are relisted before Haylen J.

15 May 2013 – applicant files a Notice of Motion and supporting affidavit seeking leave to file a Further Amended Summons joining, amongst others, Mr Davidson as a second respondent to the proceedings (applicant’s motion).

8. In addition to these events it is necessary to note developments since the filing of the applicant’s motion. As noted in the chronology the motion sought to join persons other than Mr Davidson. The “others” referred to, included Mr Charles Cochran, a resident of the United States. The chronology of these events was summarised in the Judgment of Basten JA (with whom Bathurst CJ and Ward JA agreed) in Cochran v Sutton. Basten JA noted at [3]-[7]:

[3] On 15 May 2013 the applicant sought to join Mr Charles Cochran to the proceedings as a further respondent. Mr Cochran was then (and still is) resident in the United States of America. Ms Sutton obtained an order for substituted service on Mr Cochran, to be effected by emailing documents to an email address or posting documents to one of two identified addresses in Dallas, Texas. It is common ground that substituted service was only available if it were open to Ms Sutton to effect personal service on Mr Cochran in the United States.

[4] On 25 October 2013 Mr Cochran sought orders setting aside the service of the originating process on him and discharging the order of the Industrial ] Court made on 21 October 2013 giving leave to serve him outside Australia.

[5] By a judgment delivered on 5 December 2013, the Industrial Court (Boland J, President) dismissed Mr Cochran's notice of motion: Sutton v BE Australia WD Pty Ltd ACN 093 054 623 (subject to deed of company arrangement) [2013] NSWIRComm 104.

[6] On 20 December 2013 the Industrial Relations Act was amended so that an appeal from a decision of the Commission in Court Session (the Industrial Court) no longer lay to a Full Bench of the Commission in Court Session but to this Court: Industrial Relations Amendment (Industrial Court) Act 2013 (NSW), Sch 1 [19] and [29], inserting a new Ch 7A in the Industrial Relations Act.

[7] A summons seeking leave to appeal was filed in this Court on 20 December 2013. No appeal had been lodged in the Commission on or before that date and it is accepted by the parties that the summons seeking leave to appeal in this Court was valid and effective. The matter has proceeded in this Court on the basis that the application for leave and the appeal be heard concurrently.

9. The court held that the Commission in Court Session did not have power to require service of its process outside Australia. As a result, as Mr Cochran could not be served, the applicant no longer moves to join him but does seek to join Mr Davidson as a second respondent

The Submissions

Submissions on behalf of Mr Davidson

10. Counsel for Mr Davidson submitted that:

1. any power of joinder was to be found in one or more of three sources: as a matter of practice - Visali v Southwell (1988) 12 NSWLR 502 at 510E per Kirby P, McHugh JA agreeing at 512E-G; in the incidental power of the court - Visali per Priestley JA at 511C – 512B and Hagans v UnitedGlobalCom, Inc [2004] NSWIRComm 164 (“Hagans”) at [42]; and/or s 170 of the IR Act;

2. an application for relief under s 106 of the IR Act must be made within 12 months of the termination of the contract under challenge – s 108B(1) of the IR Act;

3. in exceptional circumstances the Commission may extend time by up to 3 months – s 108B(3);

4. in this case, the latest an application could be made was 7 January 2007;

5. the applicant seeks to avoid the limitation prescribed by s 108B by seeking to join Mr Davidson as second respondent in these proceedings;

6. the applicant should not be permitted to do indirectly that which she cannot do directly – Container Terminals Australia v Xeras (199)1 23 NSWLR 214 at 217E.

11. Counsel for the respondent acknowledged the authorities (Crowe v UCS Developments Pty Ltd [2003] NSWIRComm 234; 130 IR 266 (“Crowe”); Unitedglobalcom, Inc v Industrial Relations Commission (NSW) in Court Session [2005] NSWCA 131; 142 IR 204 (“Unitedglobalcom”); and BEA Systems Pty Ltdv Industrial Relations Commission New South Wales in Court Session [2005] NSWCA 227; 143 IR 111 (“BEA Systems”), which hold that the application referred to in s 108B is the application to exercise the substantive power to vary or avoid a contract and is to be distinguished from an application to join additional parties which is an application to amend. Mr Ginters seeks to distinguish these authorities however, on the basis that they did not determine the issue of doing indirectly what one cannot do directly.

12. It was submitted, in the alternative, that there were powerful discretionary reasons as to why the Court would not order the joinder of Mr Davidson. They were:

1. there would be a delay in hearing the matter and additional costs incurred because;

1. the first respondent (BE Australia) would need to file and serve of a further amended reply;

2. the second respondent (Mr Davidson) would need to file a reply;

3. the requirements of section 109 of the IR Act would warrant the need for a conciliation conference to take place; and

4. it is inherently likely that further evidence would need to be filed in the proceedings.

2. an order that the applicant pay the costs thrown away by reason of a further amended summons does not constitute complete compensation for the grant of an amendment;

3. granting the applicant leave to further amend the summons would, for the reasons set out above, delay the final hearing of the matter. The interests of justice do not require that cases be heard and re-heard until every conceivable factual pattern or every conceivable legal principle of relevance that finally occurs to a party has been litigated;

4. it can be presumed that Mr Davidson will suffer prejudice as a result of the belated attempt to join him with a delay of “some 9 ½ years after the alleged contract or arrangement said to found the [p]roceedings was terminated” .

13. Counsel for the respondent submitted that, if leave to amend to join Mr Davidson were granted it ought be made clear “that any liability for costs as between the Applicant and Mr Davidson in the amended proceedings only arises in relation to costs incurred on and from the date of joinder.” It would be incongruous for Mr Davidson to be left in a state of uncertainty on the issue of costs. Finally, the applicant should be ordered to pay costs thrown away by the respondents arising from or incidental to the filing of a further amended summons.

Submissions for the Applicant

14. Mr Britt submitted that the power to amend:

1. is very wide;

2. should be exercised as considered necessary in the interests of justice;

3. will be exercised so as to enable the real issues to be determined;

4. will be exercised unless the amendment would be futile or cause substantial injustice to the other party; and

5. involves an exercise of discretion.

15. Counsel submitted that in the circumstances of this case those factors support granting leave to amend.

16. In response to Mr Davidson’s submissions the applicant submitted:

1. there is no time limitation in respect of an application to join Mr Davidson, distinguishing the substantive application from the amendment orders now sought;

2. the applicant does not rely on any contract or arrangement between her and Mr Davidson but the powers of the Commission, reflected in s 106(5) of the IR Act, to make ancillary orders;

3. the applicant, in that sense, is not seeking to do indirectly what she cannot do directly because she does not seek to vary or avoid another contract or arrangement by these amendments;

4. Mr Davidson does not have a limitation defence;

5. there is no basis to distinguish Crowe, Unitedglobalcom or BEA Systems which all dealt with the issue of whether s 108B of the IR Act prevented an amendment to join additional parties;

6. there is clear jurisdiction to grant the amendment;

7. although there will be a “slight” delay because of the need for further conciliation, the delay will not be material and can be easily accommodated in the timetabling for further hearing of the matter;

8. delay is not of itself a reason to refuse an amendment;

9. there will be a need to file an amended reply even if the amendment in relation to Mr Davidson is not permitted given there is no opposition to the other amendments sought;

10. Mr Davidson could file a reply at the same time as the first respondent thus avoiding any additional delay;

11. although additional evidence may possibly be required the applicant notes that Mr Davidson has already filed a “comprehensive affidavit”;

12. Mr Davidson would not have any costs thrown away;

13. the presumption of prejudice “would have more weight if Mr Davidson had not already filed a comprehensive affidavit in the proceedings”; and

14. the question of costs to be borne by Mr Davidson should be determined at the conclusion of the hearing.

Consideration

Jurisdiction

17. I am satisfied that the Court has jurisdiction to grant the amendment. Mr Davidson accepted that, but for s 108B of the IR Act, jurisdiction exists. The authorities referred to by counsel, Crowe, Unitedglobalcom and BEA Systems, each provide authority that s 108B does not prevent the joinder of additional parties to proceedings which have been regularly commenced notwithstanding the passing of the limitation period specified in it, at least provided the parties are joined for the sole purpose of seeking consequential relief in relation to the original contract.

18. No new contract is pleaded in relation to the joinder of Mr Davidson. Rather the applicant has sought to join him for the purposes of seeking relief pursuant to s 106(5) of the IR Act. The applicant will, if the amendment is permitted, allege that Mr Davidson’s participation in the circumstances constituting the alleged unfairness is sufficient to justify compensatory orders being made against him.

19. Mr Davidson submitted that the applicant would not be able to make an application naming Mr Davidson as a respondent now if there was not already an application on foot. Therefore, he argues, the applicant should not be able to do by amendment what she cannot do substantively.

20. To support that proposition Mr Ginters relied upon an authority of the New South Wales Court of Appeal, Container Terminals Australia v Xeras (1991) 23 NSWLR 214 and authorities referred to in that decision.

21. In Xeras an order had been made against a claimant for workers’ compensation, in effect requiring any future costs order in his favour to be reduced by the costs thrown away as a result of his application for an adjournment. The relevant legislation contained a prohibition against orders for costs by claimants (except in limited extraordinary circumstances not applicable to the particular case). Having determined that, on its proper construction, the order was an order for payment of costs by the claimant and accordingly contravened the prohibition Handley JA went on to observe at 217E-G:

“It is a well-established principle that what cannot be done directly cannot be done indirectly: see Commonwealth v State of Queensland (1920) 29 CLR 1 at 15; Toohey v Gunther (1928) 41 CLR 181 at 195 and R v Gough; Ex parte Australasian Meat Industry Employees' Union (1965) 114 CLR 394 at 422; see, also, D K Singh, “What Cannot be Done Directly Cannot be Done Indirectly: Part I”, (1959) 32 ALJ 374 and D K Singh, “What Cannot be Done Directly Cannot be Done Indirectly: Part II”, (1959) 33 ALJ 3.

However the principle does not add to the language in which a statutory prohibition is expressed or enlarge its meaning. As Kitto J said in R v Metal Trades Employers' Association; Ex parte Amalgamated Engineering Union, Australian Section (1951) 82 CLR 208 at 261:

‘… The inclusion of the words ‘directly or indirectly’ serves to make plain the completeness of the prohibition, but makes no difference to its operation.’

See also Trade Practices Commission v Australian Iron & Steel Pty Ltd (1990) 22 FCR 305 at 316 and compare Law Society of New South Wales v Ramalca Pty Ltd (1988) 12 NSWLR 34.

The principle therefore does not give rise to a second prohibition independent of and cumulative upon that expressed in the statute but draws attention to the true width and legal effect of the statutory prohibition when properly construed.”

22. Accordingly, while the principle is recognised by his Honour and supports his construction, it is not itself part of his decisive reasoning. The authorities and articles referred to by his Honour provide some indication of the genesis and application of the principle.

23. Mr Singh’s first article, “What Cannot be Done Directly Cannot be Done Indirectly: Part I”, (1959) 32 ALJ 374, in particular identifies the genesis of the principle, as near as can be traced, in two maxims identified by Lord Coke in his Institutes and Coke on Littleton. His article then notes the application of the principle in a number of areas of law and equity, all of them aimed at revealing and preventing subterfuges.

24. R v Gough; Ex parte Australasian Meat Industry Employees' Union [1965] HCA 52; 114 CLR 394 concerned a statutory body in the meat industry which sought to join a federation of meat industry employers. The High Court held that there was authority for the body to join such a federation provided the activities of the federation did not extend beyond the scope of what the statutory body was authorised to do.

25. Owen J expressed it as follows at 422:

“Under The Abattoirs Acts, however, the Board may expend the moneys coming into its hands only for the purposes of carrying out its statutory functions. It has no power to utilize any part of its funds for the purpose, to take two examples only, of establishing a club for the accommodation of members of the Federation and their friends or of lending money to or acquiring shares in associations or companies having objects similar to those of the Federation. And, if it cannot expend its funds directly for such purposes it cannot do so indirectly by entering into a contract imposing upon it an obligation to contribute to the funds of an association with power to do these things. The powers of a statutory corporation are to be found in the statute law under which it is established and operates. It may do what its charter authorizes it to do and "whatever may fairly be regarded as incidental to, or consequential upon, those things which the legislature has authorized", to use the words of Lord Selborne LC in Attorney-General v Great Eastern Railway Co (1880) 5 AC 473, at p 478 Further than that it cannot lawfully go or contract to go.”

26. In this context the principle is applied to construe the powers of the statutory body and ultimately to determine that the function was ultra vires. Similarly, in Commonwealth v State of Queensland [1920] HCA 79; 29 CLR 1 the principle was used as an aide to construction of a taxing statute. In Toohey v Gunther [1928] HCA 19; 41 CLR 181 it was recognised that equity will not permit a device or contrivance to overcome that which is not permitted, in that case the imposition of an obligation by way of a side agreement to a mortgage, which would have been unenforceable were it contained in the mortgage. Isaacs J cited at 195 the decision of Lord Macnaghten in Fairclough v Swan Brewery (1912) AC 565 in support of that proposition.

27. The application of the principle in this case can only be as an aide to the construction of the statute. There is no apparent suggestion that it operates as a stand-alone principle of law or equity so as to prevent the amendment sought if the statute otherwise permits it. As the authorities have determined that such a joinder is permitted by the statute the principle has no work to do.

28. Moreover, as the argument was raised in Crowe, it must be taken to have been, at least implicitly, rejected by the Full Bench. I see no basis to distinguish this case from the decided authorities.

Discretion

29. Mr Davidson submits there are powerful discretionary reasons for refusing the amendment. I will deal with these in turn.

Delay

30. On the face of events there has been a substantial lapse of time between the termination of the contract and the pressing of this application. I do not consider it can be said that the applicant has been dilatory in prosecuting her claims. The chronology provides ample explanation for the lapse of time in particular the decision by the respondent in 2009, just prior to the scheduled trial, to enter voluntary administration, required the applicant to take a number of procedural steps to be able to continue the prosecution of those claims. Those reactive steps have been opposed and, necessarily, litigated. That has taken time.

31. The incidental delays as to filing amended responses (or in Mr Davidson’s case a response) will occur in any event because of the various unopposed amendments to the application. Further conciliation may be required, but that will not unduly delay proceedings and one must admit of the possibility that it may well be successful in resolving the matter. There may be a need for further evidence but, as Mr Britt has submitted, Mr Davidson has already filed a comprehensive affidavit. No substantive change in the factual allegations has been identified and no indication has been advanced as to the nature or extent of the evidence submitted to be necessary. There would not appear to be any substantial delay resulting from the additional evidence.

32. As Mr Britt submitted, delay is not of itself a reason for reusing the application. I do not regard delay itself as a persuasive factor in this case.

Prejudice

33. No particular prejudice has been identified. Mr Davidson submits it can be presumed. The prejudice must flow from the amendment or the delay in making application to amend. Given my observations above as to the factual issues and Mr Davidson having already filed a comprehensive affidavit I see no basis to presume prejudice.

34. I am not persuaded there is any discretionary reason not to allow the amendment. In my view the interests of justice fall in favour of the applicant in this instance.

Costs

35. There are two aspects to the respondent’s and Mr Davidson’s submission on this topic. The first is whether Mr Davidson and the respondent should have their costs “thrown away” as a result of the amendment. The second is whether Mr Davidson should have his liability for costs limited to the period from the date of his joinder.

36. As to the first, I accept Mr Britt’s submission that Mr Davidson will not have any costs thrown away as a result of the amendment. As for the respondent, the cases cited in support of its submission for such an order or condition, Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 and GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710, do not suggest that such an order should be made in every case of amendment. I do not regard the proposed amendments as flowing from any want of care by the applicant in preparing for the matter. The amendments ultimately flow from the respondent’s decision to enter voluntary administration. I am not prepared to make that order at this time. Those costs should be costs in the cause.

37. The second aspect presents greater difficulty.

38. Mr Davidson submits that the amendment, if made, will mean that proceedings against him are commenced no earlier than the date of amendment. Mr Ginters cites in support Ketteman v Hansel Properties Ltd. [1987] 1 AC 189, Australian Coastal Shipping Commission v Curtis Cruising Pty Ltd (1989) 17 NSWLR 734 at 743C – 744C per Mahoney JA and, by way of analogy, r 6.28 of the Uniform Civil Procedure Rules 2005. Those authorities (and the rule) are concerned with the date of commencement of proceedings against a party joined by amendment for the purpose of the application of limitation periods. For the reasons given above that is not an issue in this case.

39. Equally the cases cited by Mr Britt in response can be distinguished. Hagans and Burden v Walgett Shire Council [2006] NSWIRComm 169 were cases which concerned substitution of an applicant rather than joinder of an additional party. Moreover, Hagans preceded the change to the rules applicable in the Supreme Court – the rules being a factor which Haylen J considered a relevant guide. In Davies v Kyogle Shire Council [2007] NSWIRComm 9 Schmidt J refused the application to amend for reasons unrelated to the date of commencement of the proceedings.

40. None of the authorities cited specifically deals with the question of costs. On that question Mr Ginters simply submits that:

“Where proceedings are initiated against a party in a costs jurisdiction that party can be taken to know their prima facie costs exposure going forward.”

41. The point may be a relevant consideration in the ultimate exercise of discretion but many factors will need to be weighed in the balance and those factors are not yet known. I am not satisfied that I should make such an order at this stage.

42. The applicant, having succeeded on the motion, is entitled to an order for costs of the motion.

Orders

43. The Court makes the following orders:

1. Leave is granted to the applicant to file a Further Amended Summons in the form included as part of Annexure DAL15 to Exhibit 3.

2. Philip James Davidson is joined as second respondent.

3. The respondents are to pay the applicant’s costs of the motion.

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Decision last updated: 11 August 2015