Unterlechner v Interface It Operations Pty Ltd
[2019] VSC 109
•21 February 2019 (given ex tempore, revised)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S ECI 2018 01826
BETWEEN:
| KARL UNTERLECHNER | Plaintiff |
| v | |
| INTERFACE IT OPERATIONS PTY LTD (ACN 146 555 017) | First Defendant |
| INTEFACEIT (US) INC | Second Defendant |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 February 2019 |
DATE OF RULING: | 21 February 2019 (given ex tempore, revised) |
CASE MAY BE CITED AS: | Unterlechner v Interface IT Operations Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2019] VSC 109 |
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PRACTICE AND PROCEDURE – Application for permanent stay of proceedings under r 23 of the Supreme Court (General Civil Rules) 2015 – Whether Supreme Court of Victoria inappropriate forum for proceeding brought by plaintiff – Voth v Manildra Flour Mills Pty Ltd [2005] NSWSC 1098 – Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 – Where contract of employment purports to be governed and construed by laws of Australia and a foreign jurisdiction – Supreme Court of Victoria not a clearly inappropriate forum.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C R Northrop | Scammell Black Mileo Pty Ltd |
| For the First Defendant | Mr L Howard | Sparke Helmore |
HER HONOUR:
This ruling concerns an application by the first defendant for permanent stay of a proceeding on the grounds that this Court is not the appropriate forum. The plaintiff is a former employee of two companies; one is Australian and one is an overseas company. Both are wholly owned by another company and part of the Geo Group. In this proceeding the plaintiff makes claims against both his former employer companies following the termination of his employment.
The first defendant made the application by way of summons filed on 20 December 2018. The application is made under r 23 of the Supreme Court (General Civil Rules) 2015 (‘the Rules’), which is the appropriate rule. It is for a permanent stay of proceeding on the ground that this Court is not the appropriate forum. Alternatively, the application was for a conditional stay: that a permanent stay be conditional upon the first defendant allowing the plaintiff to pursue a statutory claim for long service leave in Australia. I accept there are legal principles that would permit that if appropriate. See, for instance: McGregor v Potts.[1] However, for the following reasons I must reject this application for a permanent stay of proceedings.
[1][2005] NSWSC 1098, [43].
Applicable Principles
The principles are not in dispute between the parties. The High Court enunciated the principles in Voth v Manildra Flour Mills Pty Ltd.[2] It applied the principles outlined by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay:[3]
… [i]t is possible to identify in summary form what I see as the modern content of the traditional principles governing the power of a court in this country to order that proceedings which have been regularly instituted within jurisdiction should be dismissed or stayed on inappropriate forum grounds. That power is a discretionary one in the sense that its exercise involves a subjective balancing process in which the relevant factors will vary and in which both the question of the comparative weight to be given to particular factors in the circumstances of a particular case and the decision whether the power should be exercised are matters for individual judgement and, to a significant extent, matters of impression. The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a for their determination that their continuation would be oppressive and vexatious to him.
[2](1990) 171 CLR 538, 564–6 (per Mason CJ, Deane, Dawson and Gaudron JJ).
[3](1988) 165 CLR 197, 247–9 (bold added).
Pausing there, for the reasons below, I do not consider this to be a ‘clear case’ for the exercise of the stay power. Returning to Deane J:[4]
Ordinarily, a defendant will be unable to discharge that onus unless he can identify some appropriate foreign tribunal to whose jurisdiction the defendant is amenable and which would entertain particular proceedings at the suit of the plaintiff. Otherwise, that onus will ordinarily be discharged by a defendant who applies promptly for a stay or dismissal if he persuades the local court that, having regard to the circumstances of the particular case and the availability of the foreign tribunal, it is a clearly inappropriate forum for the determination of the dispute between the parties. The reason why that is so is that, once it is accepted that the adjectives “oppressive” and ”vexatious” are not to be narrowly or rigidly construed and are to be applied in relation to the effect of the continuation of proceedings rather than the conduct of the plaintiff in continuing them, the continuation of proceedings in a tribunal which is a clearly inappropriate forum would, in the absence of exceptional circumstances being established by the plaintiff…, be oppressive or vexatious to such a defendant if there is some available and appropriate tribunal in another country.
[4](1988) 165 CLR 197, 248 (bold added).
Pausing again, in this case, the first defendant submits that the State of California is the appropriate jurisdiction. Returning to Deane J:[5]
Admittedly, that approach to the ”vexatious” and “oppressive” test is less stringent and less rigid than would have been accepted in the nineteenth century. Under it, the applicable test pursuant to traditional principles can, in the ordinary case, properly be seen as an “inappropriate forum” test. It cannot, however, properly be seen as a “more appropriate forum” test since the mere fact that a tribunal in some other country would be a more appropriate forum for the particular proceeding does not necessarily mean that the local court is a clearly inappropriate one.
[5](1988) 165 CLR 197, 248.
The question then is whether this Court is a ‘clearly inappropriate forum’. The three categories of factors relevant to that question were addressed by the first defendant and are summarised by the learned authors of Nygh’s Conflict of Laws in Australia as follows:[6]
a) Any significant connection between the forum selected and the subject matter of the action and/or the parties, such as the domiciles of the parties, their places of business and the place where the relevant transaction occurred or the subject matter of the suit is situated, and other factors affecting convenience or expense, such as the availability of witnesses.
b) Any legitimate and substantial juridical advantage to the plaintiff, such as greater recover, more favourable limitation period, better ancillary procedures, or assets within the jurisdiction against which any judgment can be enforced.
c) Whether the law of the forum will supply the substantive law to be applied in the resolution of the subject case or whether the matter is governed by foreign law.
[6]M Davies, AS Bell and PLG Brereton, Nygh’s Conflict of Laws in Australia (LexisNexis Butterworths, 9th ed, 2014) 193 (citations omitted).
Turning now to consideration of the above factors.
Does the law of the forum supply the substantive law raised by the dispute?
I will begin with the law of the dispute. This is a contractual dispute with a statutory element. Focusing first on the contractual dispute: both parties say there is a written employment contract that applies to the plaintiff’s employment. It is an employment agreement dated 5 June 2016 and forms exhibit ALW-2 to the affidavit of Amy Louise Woods, the first defendant’s solicitor, affirmed on 20 December 2018 (‘the contract’).
The contract states it is with Interface IT Pty Ltd and InterfaceIT (US) Inc, wholly owned by GeoOp Ltd. It is common ground both the defendants are wholly owned by Geo Group. It is common ground that the contract was executed in circumstances where the plaintiff was moving from Australia to the United States of America (‘US’) for work purposes. He had earlier worked in Australia with the first defendant.
Clause 25 of the contract is titled ’Governing Law’. It is as follows.
This Agreement will be governed by and construed in accordance with the laws of the State of California & Australia as specified in Schedule A & B.
Unhelpfully, Schedules A and B do not specify which laws of those jurisdictions apply.
The first defendant submits that the contract should be construed in a manner such that the plaintiff’s employment, from after the time that he transitioned to work in the US, should be construed in line with laws of the State of California. And, for the transition period, it should be construed in line with Australian laws. The first defendant refers to Schedules A and B in support. Schedule A refers to the plaintiff’s position in the USA. Schedule B refers to transitional arrangements. That may be an argument that the first defendant wishes to proceed with at trial.
In Toll FGCT Pty Ltd v Alphapharm Pty Ltd,[7] the High Court stated:
The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That normally requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
[7](2004) 219 CLR 165, [40] (citation omitted).
At this stage, applying these principles on the material before me, I cannot accept the first defendant’s interpretation. There is a real and significant argument that Australian law may apply to the plaintiff’s employment after his transition to work in the US.
I must consider the text of cl 25 in the context of the entire contract. On its face, cl 25 refers to both Australian and Californian law. As discussed above, it unhelpfully refers to the Schedules.
There are a number of clauses that appear to refer to Australian law in the contract. In particular the termination clause, which forms cl 20 of contract, seems to refer, at least in part to Australian law. Clause 20.4 refers to ‘applicable legislation’, as does cl 20.5. The substance of cl 20.4 indicates it may be a reference to the Fair Work Act 2009.
Clause 23.1 ‘Set Off’ states:
You acknowledge that the remuneration and benefits provided under this Agreement are the full benefits payable to you in respect of the employment and are paid in full satisfaction of any obligations to make payments for overtime, allowances or other monetary benefits to you under any legislation, award or agreement, including any statutory minimum hourly rate. You agree that the Company may set off any amount paid to you under this Agreement against any entitlement you may otherwise have to receive any such benefits, whether of a different character or not. [bold added]
Clause 23.1 appears to contain a reference to industrial awards. Industrial awards are a feature of the Australian workplace laws, not US law. This clause appears to be for the purpose of setting off remuneration and benefits (paid above minimum standards) against any such entitlements arising under Australian law.
There is also an express reference to Australian legislation in cl 18.5.2 which concerns moral rights. This clause appears to apply during and post-employment.
The suggestion that only Californian law applies post the plaintiff’s transition to work in the US is not consistent with the contractual wording above.
The first defendant sought to confine the references to Australian laws in two ways. In relation to the moral rights cl (18.5.2), it said this was simply definitional. That is, using a definition from Australian law. That may be so, but it may also not be so; it depends on how the clause is construed. That is an issue for trial, if relevant. The second way that the first defendant sought to confine the references to Australian legislation was by saying that it is open for the parties to make a contractual agreement for entitlements that arise from statute. The parties are free to contract about those matters. If they do, the language in the contract may reflect the language in the statute. That may be so, but it does not obviate the issue that the contract refers to Australian law.
A question for trial will be what law governs this contract. At this point, I am not satisfied that the answer is the law of the State of California.
Further, even if Californian law applies, there is no reason that this Court cannot make a determination about the contract. This Court regularly deals with application of overseas laws. I accept the first defendant’s submission that both laws cannot apply over all of the contract simultaneously. Also, that perhaps some Californian law applies over some parts of it and Australian law over others. But that is not evident on material before me.
As for the long service leave claim, it is made under Victorian law.
Given the above, I am not satisfied that this Court is a clearly inappropriate forum on the question of the applicable law.
Turning next to the issue of significant connection.
Significant connection between forum and subject matter and/or parties
The plaintiff transitioned from work in Australia with the first defendant to work in the US with both defendants. As discussed above, the contract is with two companies, the first and second defendant. The first defendant conducts business in Australia and the second defendant conducts business in the US. In terms of the employment, there is evidence that duties were performed while the plaintiff resided in the US.
In respect of termination of employment, I am informed that it occurred over the telephone and was then confirmed by letter dated 4 May 2018. That letter forms Exhibit ‘MAM6’ to the affidavit of Mark Anthony Mileo, the plaintiff’s solicitor, sworn on 19 February 2019. It is common ground that the signatory of the letter, Ms Kylie O’Reilly, CEO of Geo Group, resides in Sydney.
There is accordingly links with both Australia and the US in terms of employment.
Turning to witnesses, potentially none are in California. They are spread between Australia, Canada and Washington DC. As stated above, Ms O’Reilly is in Sydney. The plaintiff currently resides in Washington DC on a US visa that expires in 2020. His home and family are in Australia. Mr Cleveland is in Canada. None of the witnesses are in California nor in Victoria. I assess the location of witnesses to be a neutral factor in this issue.
Juridical advantage
In terms of the next issue, juridical advantage, the first defendant says the plaintiff will have an advantage by issuing in California. The suggestion is that Australian law does not recognise dual employers whereas US law does. Firstly, the plaintiff’s counsel rejects there is a juridical advantage in the US. Secondly, this proceeding has been brought against the defendants, and at least one of the claims relates to long service leave which may relate to first part of employment prior to transition to the US, and therefore there is an argument about whether the entitlement continued to accrue in the US. What is to be explored at trial is whether they are responsible as consecutive or joint employers. There is not necessarily an advantage because of the US doctrine in relation to the dual employer issue.
The first defendant submitted that the Magistrates’ Court is the more appropriate jurisdiction for the long service leave claim. It is a matter for the plaintiff as to where he brings this claim. An application for a stay of proceedings on grounds of inappropriate forum is not the place for arguments about which Australian court is the appropriate forum where proceedings should be brought. That is a matter for either cross-vesting legislation or case transfer legislation.
Conclusion
For the reasons above, I find that the first defendant has not established this Court to be a clearly inappropriate forum for the proceedings brought by the plaintiff. Orders will be made dismissing the first defendant’s application.
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