FEDERAL COURT OF AUSTRALIA Carr v Blade Repairs Australia Pty Ltd [2009] FCA 764 LUCAS MATTHEW CARR v BLADE REPAIRS AUSTRALIA PTY LTD VID 123 of 2009 GORDON J 14 JULY 2009 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 123 of 2009 BETWEEN: LUCAS MATTHEW CARR Applicant AND: BLADE REPAIRS AUSTRALIA PTY LTD Respondent JUDGE: GORDON J DATE OF ORDER: 14 JULY 2009 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. By 4:00pm on 21 July 2009, the Respondent file and serve an Amended Defence. 2. By 4:00pm on 28 July 2009, the Respondent file and serve any further affidavit material upon which it intends to rely at trial and an outline of submissions. 3. By 4:00pm on 11 August 2009, the Applicant file and serve any affidavit material in reply and an outline of submissions. 4. The proceeding be fixed for trial at 10:15am on 31 August 2009. 5. Costs reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY general division VID 123 of 2009 BETWEEN: LUCAS MATTHEW CARR Applicant AND: BLADE REPAIRS AUSTRALIA PTY LTD Respondent JUDGE: GORDON J DATE: 14 JULY 2009 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 19 February 2009, Lucas Matthew Carr ("Mr Carr") filed a claim under the Workplace Relations Act 1996 (Cth) ("the Act") alleging unlawful termination of employment on the grounds of "age'. The application sought "compensation in respect of remuneration lost – likely to be lost by reason of the termination." The named Respondent was Blade Repairs Australia. It is now apparent that the named Respondent should be Blade Repairs Australia Pty Ltd ("Blade Repairs"). I was informed from the bar table by Counsel for the Respondent that the principal of that entity is a Mr Trevor Van Kempen ("Mr Van Kempen"). 2 In accordance with the usual management of the proceeding, orders were made for the filing of a defence by Blade Repairs. That defence disclosed that it employed Mr Carr from 1 September 2008 at locations in Western Australia and South Australia, that Mr Carr was previously employed by an entity known as Total Blades Pty Ltd ("Total Blades") from 1 April 2008 to 30 August 2008 (inclusive). The defence also stated that Mr Carr's employment was transmitted from Total Blades to Blade Repairs on 1 September 2008. Finally, the defence stated that it had terminated Mr Carr's employment on 26 November 2008, that that termination was advised to Mr Carr by telephone, that Mr Carr was provided with written notice of the termination of employment and that the Respondent denied the grounds for termination alleged by Mr Carr – namely, age – and said that the termination was by reason of operational reasons and redundancy. It will be necessary to return to those facts later in these reasons for decision. 3 A copy of the written confirmation of the termination sent to Mr Carr was annexed to an affidavit sworn by Mr Van Kempen on 26 June 2009. The letter stated: Dear Lucas, As discussed recently we regret that we are having to cease your employment at Blade Repairs Australia P/L as at 28th November 2008, due to reduction of contract work supplied to us by Vestas Australia P/L. All your entitlements have been paid to you (including sick days) and we thankyou for your hard work over the past months. Group Certificate will be posted to the above address at the appropriate time. All the best, Your (sic) Sincerely, Trevor Van Kempen Director 4 The application for breach of the Act continued to progress in the usual manner, including the filing of affidavits by Mr Carr and Blade Repairs dealing with Mr Carr's allegation that his employment had been terminated on the grounds of age, in breach of the Act. The critical issue in dispute concerning the claim under the Act involved, but may not be limited to, an alleged conversation between Mr Carr and Mr Van Kempen at the time of the termination of his employment. Mr Carr contends that Mr Van Kempen told him that "They did not want young blokes working on the wind farms any more," or words to that effect. Mr Van Kempen denies having said that to Mr Carr but does not deny that a conversation took place at or around the time alleged by Mr Carr. 5 On 31 March 2009, the matter was set down for hearing. It came on for final hearing on 14 July 2009. On 10 July 2009, Mr Carr had given notice of an application for leave to amend his statement of claim to raise, for the first time, an allegation of breach of the employment contract dated on or around 1 September 2008, being the employment contract admitted in Blade Repairs' Defence. The proposed amendment alleged that, in breach of the express terms of that written contract, Blade Repairs had failed to employ the Applicant for the duration of the Respondent's contract of supply with an entity referred to as Vestas Australian Wind Technology Pty Ltd ("Vestas") and, accordingly, Mr Carr was entitled to loss and damage he had suffered as a result of the termination of his employment contract prior to the cessation of the supply contract between Vestas and Blade Repairs. Mr Carr submitted he should be granted leave pursuant to O 13, r 2(7)(a) of the Federal Court Rules to amend his statement of claim in the form I have summarised above. 6 Mr Carr accepted that the amendment was to include an additional cause of action and that the additional cause of action is not a claim under the Act but an additional cause of action at common law. Mr Carr submitted that the Court has original jurisdiction to hear applications for unlawful termination of employment under s 659 of the Act and that the grant of jurisdiction in that case is pursuant to s 663 of that Act. However, Mr Carr submitted that the additional claim for breach of contract of the employment contract is a cause of action which arises in the Court's accrued jurisdiction because both the breach of employment contract and the claim for unlawful termination of the employment contract arise out of a "common substratum of facts": see, in particular, Phillip Morris Incorporated v Adam P Brown Male Fashions Pty Ltd (1980) 148 CLR 1157 at 512. In support of the application, Mr Carr relied upon an affidavit sworn by Paul Drew, the solicitor for Mr Carr, dated 13 July 2009. That affidavit discloses that in early July 2009 new Counsel were briefed to appear on behalf of Mr Carr and that that new Counsel had advised him that a cause of action was available to Mr Carr arising out of the contract of employment between Mr Carr and Blade Repairs, and should be pleaded. It is as a result of that advice that Mr Carr sought leave to amend his statement of claim. 7 In addition, Mr Carr submitted that the Court should exercise its discretion to permit the amendments for a number of reasons. First, the effect of the amendment is to add a new claim for the relief originally sought and, as I noted earlier, that amendment arises out of substantially the same facts as those already pleaded to support the existing claim for relief; namely, the employment contract of Mr Carr with Blade Repairs. Secondly, that the employment of Mr Carr and the termination of his employment by Blade Repairs were not in dispute. Thirdly, that the amendment was a relatively straightforward claim for damages for breach of contract. Finally, to the extent that an adjournment was required if leave were granted, there was no prejudice to the Respondents other than to the question of costs. 8 On 13 July 2009, Counsel for the Respondents filed extensive submissions objecting to Mr Carr being granted leave to amend his statement of claim. Those complaints may be summarised under the following headings: First, that there was no formal application to amend; secondly, that the contractual cause of action was entirely new and would require further interlocutory steps; thirdly, that Mr Carr's common law claim lacked merit; and finally, even if none of those arguments were accepted, it was not a matter which arose in the Court's accrued jurisdiction. I will deal with each of those submissions in turn. No formal application to amend 9 That there was no formal application to amend, of course, is not a disentitling factor. In the active management of proceedings before it, the Court no longer necessarily requires formal procedural steps to be complied with so long as the parties are put on notice of the nature of the application to be made and the grounds upon which that application is made. On any view, in this case, those requirements were satisfied. Blade Repairs was given formal notice on 10 July 2009, not only in the form of a proposed amended statement of claim but including a supporting affidavit from Mr Carr's instructing solicitor outlining the reason for the proposed amendment. Entirely new claim required interlocutory steps 10 It is true that the contractual cause of action is new but the fact that interlocutory steps may be required if leave were granted is not in itself a disentitling factor. The question is whether, consistent with the Rules and, in particular, O 13, it is appropriate, having regard to the nature of the respective claims, that this matter be heard and determined at the same time as the claim under the Act. Moreover, it is apparent from the way in which the proposed application is formulated that there are serious issues about the contractual terms between the parties which are matters entirely within the knowledge and understanding of Blade Repairs and which Blade Repairs at this hearing was unable to satisfy completely without obtaining further instructions. New claim in the Court's accrued jurisdiction? 11 As I have said, the question whether or not this new claim should be heard and determined at the same time as the claim under the Act raises serious questions about whether or not the new claim falls within the Court's accrued jurisdiction. Those matters are governed by ss 19 and 22 of the Federal Court of Australia Act 1976 (Cth). Mr Carr submitted that the amendments did fall within the accrued jurisdiction. Blade Repairs contended otherwise. The principles to be applied have been summarised in: Matland Holdings Pty Ltd v NTZ Pty Ltd [2002] FCA 1590, at [16] to [20], per Kenny J, and prior to that in Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585, where Gummow and Hayne JJ stated: The references to "impression" and "practical judgment" [in Fencott v Muller (1983) 152 CLR 570], cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy "depends on what the parties have done, the relationships between or among them and the law which attached rights or liabilities to their conduct and relationships". There is but a single matter if different claims arise out of "common transactions and facts", or "a common substratum of facts", notwithstanding that the facts upon which the claims depend "do not wholly coincide", so too there is but one matter where different claims are so related that the determination of one is essential to the determination of the other as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are "completely disparate", "completely separate and distinct" or "distinct and unrelated" are not part of the same matter. Often, the conclusion that if proceedings were tried in different courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter. 12 Consistent with the way in which the High Court dealt with the question of accrued jurisdiction, it is apparent that the breach of employment contract claim is within the accrued jurisdiction of the Court. To put it bluntly, the common transactions and facts or the common substratum of facts that gave rise to the issues in dispute between these parties relates to Mr Carr's employment with Blade Repairs. To put the matter another way, as the High Court said, the single controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. 13 Here, the relationship between the parties is that of employee and employer. What the parties have done in that relationship has given rise to two related and highly interlinked questions. Was there a breach of the employment contract, and importantly, was that employment contract terminated in circumstances which gave rise to a breach of the Act? Accordingly, to the extent to which Blade Repairs contends that the matter is not within the accrued jurisdiction of the Court, I reject that contention. Lack of merit? 14 The next ground of opposition raised by Blade Repairs concerned the merits of Mr Carr's claim for breach of the employment contract. This is a difficult issue for two reasons. First, it is difficult at a factual level. Secondly, the difficulty in ascertaining the facts raises serious difficulties in assessing the legal merits of Mr Carr's claim. Mr Carr submitted that there is common ground that there was an employment contract, dated 1 September 2008, that that employment contract was terminated, and thirdly, that the basis upon which Mr Carr was terminated according to Blade Repairs was a reduction in work. 15 The difficulty about the facts which underpin this application are this: Mr O'Connor, Counsel for Blade Repairs, informed me from the bar table after obtaining some instructions from Mr Van Kempen, that there were a series of arrangements between Blade Repairs and Vestas commencing as early as 2005 and continuing. So far as appears to be relevant, there was an initial arrangement between Mr Van Kempen through an entity known as Fibre Infusions Technicians Pty Limited and Vestas in 2005 relating to different work, being the making of internal webs to strengthen blades for turbines. Then, in December 2007, Vestas ceased operations in Portland and asked Fibre Infusion Technicians to undertake inspection and repair work in Western Australia for two months. 16 Then, in January 2008, Vestas approached Mr Van Kempen to undertake blade repairs in South Australia for a three-month period. The entity involved in that operation is by no means clear. What is important, though, is that work was known as 1297 repair work, being a requirement to inspect and then repair defective blades. Mr O'Connor then informed me that Mr Van Kempen at some point incorporated Total Blades to provide that performance work in South Australia. When that occurred is not clear. However, in February 2008, Vestas approached Mr Van Kempen again and, through Total Blades, further work was undertaken for Vestas in Western Australia, being 1297 work. 17 According to Mr O'Connor's instructions that work in Western Australia was for three to six months and maybe up to 12 months. As I understood his submission, that qualification to the arrangement between Vestas and Total Blades was to be of some significance in construing the subsequent employment contract between Mr Carr and Blade Repairs. On 1 September 2008, Mr O'Connor said that there was a transmission of Total Blades' business to a new entity, namely the Respondent, Blade Repairs. Mr O'Connor's instructions at this time are that Mr Van Kempen is unsure whether or not the transmission agreement was in writing or oral. It is apparent that there must have been some form of transmission of the business from one to the other, in order to comply with the entities' various statutory obligations. 18 In any event, Mr O'Connor's instructions were that there was a new employment agreement prepared in the name of Blade Repairs on or after 1 September 2008 which employed the Applicant. I will need to return to the terms of that agreement in further detail in a moment. 19 Significantly, in mid-2008 – namely, before the transmission of the employment from one entity to the other – or transmission of the business from one entity to the other – Total Blades obtained further work from Vestas described as "1448 work", namely web flange upgrades in both South Australia and Western Australia which required both the sanding, repairing and gluing of blades. 20 Finally, Mr O'Connor informed me that just prior to the termination of Mr Carr's employment, Mr Van Kempen received a call from Vestas that due to the downturn in work, Mr Van Kempen would be required to lay off a team of workers and that, subsequently, that is what occurred; namely, three employees were terminated, including Mr Carr, although the other two employees were subsequently offered re-employment. To the extent relevant, Mr O'Connor informed me that the 1297 work stopped in South Australia in December 2008, but continues in Western Australia and is expected to cease on 9 August 2009 and that the 1448 work which commenced in June 2008 finished in April 2009 in South Australia, but continues in Western Australia and, finally, on 19 May 2009, further 1297 work was offered by Vestas to Blade Repairs in the Philippines which is ongoing. 21 The reason why these facts are difficult in the context of considering the merits of Mr Carr's breach of contract claim is that the written employment contract, makes no reference to the arrangement which existed prior to 1 September 2008. Secondly, it provides, in cl 2: This Agreement shall remain in force until the termination of the Employer's contract of supply with Vestas Australia Wind Technology Pty. Ltd, which contract the Employee acknowledges may be determined at anytime by Vestas to the Employer. 22 Thirdly, cl 3 provides: 3.1 The employee is engaged in the classification of fibreglass technician. It is a condition of employment that a 3 month probation period applies to all new employees from the date of commencing employment. During the probationary period the employment may be terminated by one hour's notice by either party or payment of one hour's pay in lieu. 3.2 Notice of Termination (i) After the completion of the probationary period the following periods of notice shall be given by either party on termination of service or paid or forfeited in lieu thereof: Period of Continuous Service Period of Notice Up to one year 1 week One year to three years 2 weeks Three years to five years 3 weeks More than five years 4 weeks The company has the right to pay you in lieu of such notice. The Company must provide one additional weeks notice if: · The employee is over 45 years of age: and · Has completed at least two years continuous service. (ii) Further in all other circumstances the Company may immediately dismiss an employee after the employee has received at least 1 verbal and 2 written warning's for misconduct or dangerous, illegal behaviour. (iii) Notwithstanding subclause (i) or (ii) the Company retains the right to dismiss an employee without notice for inefficiency, theft, neglect of duty or misconduct. In such circumstances, wages shall only be payable up to the time of dismissal. 3.3 Abandonment of Employment If the employee is absent from work for 3 consecutive working days without notifying the Company it shall be assumed that the employee has abandoned their employment. If within a further period of 5 days the employee has not satisfied the Company that there was a reasonable excuse for their absence then the employee shall be deemed to have abandoned their employment from the first day of absence. 23 Counsel for Blade Repairs submitted that Mr Carr's contention that he was entitled to be employed for the duration of the supply contract with Vestas lacked merit because it rendered cll 3.1 and 3.2 otiose. In other words, Blade Repairs contended that although the duration of the contract was to extend until the termination of the Blade Repairs' contract of supply with Vestas, Blade Repairs retained the right after a three-month probation period – which contained its own notice provisions – to terminate the employment of Mr Carr on the giving of appropriate periods of notice identified in the contract commensurate with the period of continuous service identified. 24 On its face, that argument appears to have some merit. The difficulty about it is this: Mr O'Connor, in his submissions to the Court, informed the Court that the "supply contract" is limited to the "1297 work". That contention not only raises serious questions about the definition of the phrase "contract of supply with Vestas Australia Wind Technology Proprietary Limited" in the employment contract but also whether or not the employment contract is the entire agreement between the parties given the transmission of business from Total Blades to Blade Repairs and the other arrangements which are set out in summary form above. 25 They are issues which I am presently unable to resolve in the absence of further evidence or accurate instructions about (a) what is the employment contract between Blade Repairs and Mr Carr and whether or not the written agreement is the entire agreement; (b) what is the proper construction of the phrase "contract to start supply" in cl 2 and whether that phrase is limited to the 1297 work in the absence of an express provision in the agreements and (c) depending upon the proper construction of cl 2 – the way in which it is to operate in relation to cll 3.1 and 3.2 as drafted. 26 It may very well be that Blade Repairs is correct in its interpretation but given the way in which it presently seeks to construe cl 2, it is apparent that there is some dispute about its terms. That question of construction is important because it seeks to import into the express terms of the agreement some implied limitation which on its face is not presently open and may well raise prior issues about the conduct which existed between the parties before 1 September 2008. Exercise of discretion 27 That brings me to the last question - whether or not the Court should exercise its discretion to permit the amendment at this time. On any view the amounts involved in this matter are relatively small, given the legal costs incurred. In the circumstances, it is appropriate that leave be granted to amend the statement of claim. However, the question about the terms upon which leave to amend is granted is a live issue. Counsel for Blade Repairs submitted that it is obliged to obtain further instructions. That is abundantly clear given the summary of facts I have outlined above. The question which arises is whether or not those steps can be taken quickly so that the matter can return to Court in the next few days, or within the next week, so as to be ultimately determined. 28 After delivering these reasons for decision, I was informed by Counsel for Blade Repairs that Mr Van Kempen was leaving for the Philippines that evening. In those circumstances, I made the following orders: 1. By 4:00pm on 21 July 2009, the Respondent file and serve an Amended Defence. 2. By 4:00pm on 28 July 2009, the Respondent file and serve any further affidavit material upon which it intends to rely at trial and an outline of submissions. 3. By 4:00pm on 11 August 2009, the Applicant file and serve any affidavit material in reply and an outline of submissions. 4. The proceeding be fixed for trial at 10:15am on 31 August 2009. 5. Costs reserved. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate: Dated: 14 July 2009 Counsel for the Applicant: Ms R Sweet Solicitor for the Applicant: Drew Gleeson Legal Counsel for the Respondent: Mr M O'Connor Solicitor for the Respondent: Maddens Date of Hearing: 14 July 2009 Date of Judgment: 14 July 2009