Industrial Relations Commission of New South Wales in Court Session CITATION : Gough & Gilmour Holdings Pty Ltd and ors v Caterpillar of Australia Ltd (No. 12) [2002] NSWIRComm 379 FIRST APPLICANT Gough & Gilmour Holdings Pty Ltd SECOND APPLICANT Harcourt David Gough THIRD APPLICANT Anthony Lansley Gilmour PARTIES : FIRST RESPONDENT Caterpillar of Australia Limited SECOND RESPONDENT Caterpillar Inc. THIRD RESPONDENT Caterpillar SARL FOURTH RESPONDENT Caterpillar Overseas Credit Corporation SA FILE NUMBER: IRC 5227 of 2000 CORAM: Boland J Unfair contract - Joinder application by applicants - Application by respondents to dissolve injunctions - Question of whether injunctions should be dissolved before alternative relief under s 106 of the Industrial Relations Act considered by the Court - Changed circumstances since Court's refusal of primary relief - Parties to be heard on issue of alternative relief - Parties directed to hold discussions on revising injunctive orders in light of changed circumstances - Additional respondents joined CATCHWORDS : Practice and Procedure - Joinder application by applicants - Application by respondents to dissolve injunctions - Question of whether injunctions should be dissolved before alternative relief under s 106 of the Industrial Relations Act considered by the Court - Changed circumstances since Court's refusal of primary relief - Parties to be heard on issue of alternative relief - Parties directed to hold discussions on revising injunctive orders in light of changed circumstances - Additional respondents joined LEGISLATION CITED : Industrial Relations Act 1996 CASES CITED : Gough & Gilmour Holdings Pty Limited & Ors v Caterpillar of Australia Limited & Anor (No. 11) [2002] NSWIRComm 354 HEARING DATES: 12/20/2002; 12/23/2002 DATE OF JUDGMENT: 12/27/2002 APPLICANTS Mr M J Kimber S.C with Mr A B Gotting of counsel Solicitor: Ms E Pritchard Harmers Workplace Lawyers LEGAL REPRESENTATIVES: RESPONDENTS Mr P M Hall Q.C with Mr A Moses of counsel Solicitor: Mr T Gooch Mallesons Stephen Jaques JUDGMENT: - 5 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Boland J Date: 27 December, 2002 Matter No IRC 5227 of 2000 GOUGH & GILMOUR HOLDINGS PTY LIMITED & ORS V CATERPILLAR AUSTRALIA LIMITED & ANOR Application under s 106 of the Industrial Relations Act 1996 Interlocutory Judgment No. 12 1 Judgment on the substantive issues in this matter was reserved on 27 August 2002. On 13 December 2002 the applicants in the substantive proceedings filed a notice of motion seeking the following orders: 1. An order that this notice of motion be heard instanter. 2. An order that Caterpillar SARL be joined as a respondent to these proceedings. 2 An order granting short service was made by the Deputy Industrial Registrar on the day of filing. 3 An amended notice of motion was filed on 17 December seeking to add a further respondent, namely, Caterpillar Overseas Credit Corporation SA ("COCC") and an order for short service was granted on 18 December 2002. 4 The grounds in support of the amended motion stated that the first respondent's rights, interests and obligations under the Sales and Service Agreement and Engine Product Support Agreement, two of the dealership agreements that were the subject of the substantive proceedings and in respect of which the applicants are a party, were to be assigned to COCC and then re-assigned to Caterpillar SARL on 1 January 2003. 5 The amended notice of motion came before the Court on 19 December. Mr P M Hall QC, who appeared for the respondents in the substantive proceedings, entered an appearance for Caterpillar SARL and COCC together with Mr A Moses of counsel. However, in light of the fact that the Court was to hand down its judgment in the substantive proceedings later that day, the motion was stood over to the following day. Judgment in the substantive proceedings (Gough & Gilmour Holdings Pty Limited & Ors v Caterpillar of Australia Limited & Anor (No. 11) [2002] NSWIRComm 354) was duly given with the orders in that judgment being made subject to the outcome of proceedings in the motion. 6 On 20 December 2002 the respondents filed a notice of motion in Court seeking orders that the orders made by the Court dated 24 October 2001 be dissolved. Those orders (arising out of Interlocutory Judgment No. 9 [2001] NSWIRComm 260) had the effect of restraining the respondents from terminating the dealership or otherwise prejudicing the applicants "Until the hearing and determination of the issues being considered by (the Court) in the first part of the split hearing in this proceeding or further order ..." 7 At the hearing on 20 December the applicants sought to extend the restraining orders to the proposed third and fourth respondents (Caterpillar SARL and COCC). Because of the late notice both sides had received of each other's intention the Court adjourned the proceedings to Monday 23 December 2002 for the purpose of receiving further submissions on: 1. The applicants' motion to join the proposed third and fourth respondents. 2. Whether the injunctive orders made on 24 October 2001 should continue to apply in their current form or whether they should be amended. 3. Whether the injunctive orders made on 24 October 2001 in their current or amended form should apply to the proposed third and fourth respondents. 4. Programming for the taking of submissions regarding alternative relief. 8 The respondents' position regarding the applicants' joinder motion and their own motion to dissolve the orders made on 24 October 2001 was, simply put, that because the Court in its substantive judgment of 19 December 2002 had refused the primary relief claimed by the applicants of keeping the dealership agreements on foot and the only alternative relief sought by the applicants was compensation, there was no point in joining the proposed third and fourth respondents because, given the nature of the findings of unfairness, any money orders under s 106(5) would only be made against the first and/or second respondents. 9 Further, it was submitted for the respondents that the injunctive orders ought be dissolved because now that the Court has decided against the applicants' claim that the dealership agreements remain on foot the applicants no longer needed the protection afforded by the injunctive orders. Moreover, it was submitted the injunctive orders are, in effect, self executing in that they no longer apply after the hearing and determination of the issues in the first stage of the split hearing. As those issues have been heard and determined there is no basis for maintaining the orders. It was also submitted that it would be highly prejudicial to the rights and interests of the respondents that having been prevented from proceeding with the sale of the dealership for so long that they should be occasioned further delay when it was not justifiable. 10 For their part the applicants submitted that compensation for unfairness was not the only issue left to be determined. Rather, the question of what might be the alternative relief remained at large. For example, it was submitted, it would be open to the Court to extend the 90 days' notice period in order to give the applicants a proper opportunity to sell the business. This might involve questions relating to whether sale negotiations should be with more than one potential purchaser, the time frame of any sale process and the process for resolving any dispute during the sale process. In such circumstances it was necessary to join the third and fourth respondents because having been assigned the rights under the dealership agreements one, or both, of them may be the subject of orders by the Court in determining any alternative forms of relief available to the applicants. 11 Further, it was submitted, unless the injunctive orders made on 24 October 2001 were extended to the proposed third and fourth respondents it might be open to them, or either one of them, to issue notices to terminate the dealership agreements after 1 January 2003 in circumstances where the question of alternative relief was still an outstanding issue to be resolved. 12 The applicants submitted that the undertaking proposed to be given by Caterpillar SARL, that it would be bound by any variation to the dealership agreements as at and from the date upon which the variation takes effect, was inadequate. Besides, no similar undertaking was being offered by COCC; no explanation was provided by the respondents as to why it was necessary for the first respondent to first assign the dealership to COCC then for the agreements to be re-assigned to Caterpillar SARL, and; it was untenable for the applicants to be put in the position of having to rely on inadequate undertakings when the simple solution was to join the proposed third and fourth respondents. Consideration 13 In its judgment in the substantive proceedings the Court said at pars [8] - [10]: The applicants sought relief at two alternative levels. The primary relief sought was continuation of the dealership agreements, albeit with substantial variations that the applicants contended were necessary to reflect what they considered was the intention of the parties at the time they entered into the dealership agreements. Variations were also sought to what the applicants alleged constituted an "Overall Arrangement". Details of the proposed changes to the dealership agreements are set out later in this judgment. The alternative relief sought by the applicants in the event the dealership agreements are varied by the Court, but not in the manner sought by the applicants, is compensation. In this regard, in Gough & Gilmour Holdings Pty Limited v Caterpillar of Australia Pty Limited (unreported, Boland J, 23 November 2000) the Court acceded to a request by the applicants for a split hearing. That is, the first part of the hearing would deal with the issue of the applicants' claim for variation of the dealership agreements. If it became necessary, for the reason that the Court decided there was unfairness and the dealership agreements should be varied but not in the manner proposed by the applicants, there would be, in effect, a second hearing to determine the nature and extent of any compensation. In light of the decision to split the hearing, and putting aside momentarily the questions of jurisdiction and power, this part of the proceedings is, firstly, concerned with the question of whether the contracts or arrangements between the applicants and the respondents are unfair or became unfair because of any conduct of the respondents. The second question is whether the primary relief sought by the applicants should be granted pursuant to s 106(1) of the Industrial Relations Act 1996. If the Court finds there was unfairness but decides that it does not have the power to grant the primary relief sought by the applicants or, as a matter of discretion, decides not to grant the primary relief, the parties have reserved their right to make further submissions on the question of relief. 14 At par [803] of the substantive judgment the Court said: It is yet to be determined whether, in the light of the findings of unfairness, the applicants should be granted and alternative relief and, if so, what should be the form of that relief. It would seem to me that one of the foremost options available to the Court, if a proper case is made out, is to extend the notice period to terminate the dealership agreements. In those circumstances it would be premature to lift the orders allowing the agreements to remain on foot. However, given that the primary relief has been refused, there is a limit to how long the orders preventing termination can continue to apply. 15 It may be seen from these paragraphs in the substantive judgment that the Court's approach was to consider, firstly, whether there was the requisite unfairness. Secondly, whether the unfairness justified the primary relief sought. The Court found there was unfairness but that it did not justify the primary relief sought by the applicants. The parties indicated in their submissions in the substantive proceedings that I should not proceed to consider the question of alternative relief until they had the opportunity of making further submissions. Accordingly, the Court refrained from addressing the question of alternative relief except to say that "one of the foremost options available to the Court, if a proper case is made out, is to extend the notice period to terminate the dealership agreements." 16 The central issue in these interlocutory proceedings is whether the question of alternative relief is still at large or all that remains to be determined is whether the applicants are entitled to compensation and, if so, on what basis and how much. If the only question that remained to be determined was one of compensation, the respondents would be correct in their submission that the first stage of the split hearing has been determined and the injunctive orders should fall away. They would also be correct in their submission that there would be no point in joining the proposed third and fourth respondents because any money orders would be made against the first and/or second respondents. 17 There is no doubt that in various references to alternative forms of relief during the substantive proceedings, the applicants' focus was on a compensation outcome. However, the pleadings do give scope to the applicants to pursue alternative relief other than in the form of compensation and I do not consider the applicants have foreclosed on that option. In any event, the Court considers that if there is to be any relief granted, compensation may not necessarily be the appropriate remedy in the circumstances and given its discretion in relation to such matters it does not propose at this stage of the proceedings to foreclose on its options. Whether, ultimately, compensation is the appropriate remedy will depend on the Court's view of the parties' submissions on this issue. 18 Of course, any relief alternative to the primary relief sought by the applicants cannot simply be compensation. It is not open to the Court to make some arbitrary assessment of damages suffered by the applicants by virtue of the unfair conduct of the respondents and make a compensatory award of money. Any money orders under s 106(5) must be "in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case." 19 It remains to be determined, therefore, what is to be done in respect of the overall arrangement between the applicants and the respondents which the Court has found to be unfair and which includes the dealership agreements. In light of the findings in the substantive proceedings it is unlikely that the appropriate course would be for the Court to make a declaration that the overall arrangement is wholly or partly void. If there is to be relief it would most likely take the form of a variation, possibly to the dealership agreements. Any variation would thereby determine the nature and extent of compensation, if any, under s 106(5) noting, of course, that it is within the Court's discretion not to make money orders notwithstanding a finding of unfairness. 20 It may be that any variation would be notional in the sense that the real remedy would lie in money orders. I observe in this respect, however, that the overall arrangement, including the dealership agreements, is still on foot. It is not easy to see how the Court could, for example, extend the notice period in order for the applicants to have a proper opportunity to sell their interests in the dealership and, at the same time, make money orders in respect of a variation to extend the notice period. 21 It may be seen that the question of what might be an appropriate variation to the overall arrangement is a very real one and will be determinative of the question of money orders if such orders are to be made. Accordingly, it will be necessary for the Court to complete the first part of the split hearing in order to determine whether the overall arrangement should be varied (or declared wholly or partly void) and, if so, what the variation should be. This will then determine whether there is any need for the second stage of the split hearing to address questions of compensation. 22 The most appropriate course, as foreshadowed in the substantive judgment, is to now proceed to hear the parties on whether any alternative relief is available to the applicants and, if so, in what form. However, the parties should note that given its decision to refuse the primary relief and the reasons for so doing the Court is not prepared to countenance any alternative form of relief that keeps the dealership agreements on foot for a period of time that unfairly frustrates and delays the respondents' right to end its relationship with the applicants and to appoint a new dealer for the New South Wales and ACT Territory. 23 It follows from what I have said that the third and fourth respondents should be joined to the proceedings. Caterpillar SARL is to be the ultimate assignee to two of the dealership agreements and it is, therefore, appropriate that if the Court were to grant relief by, for example, varying the dealership agreements, Caterpillar SARL should be before the Court. As to COCC, no explanation has been provided to the Court as to that organisation's role in the scheme of assignment except that at some point, albeit apparently for a brief period, it will be an assignee. The most prudent course is, therefore, to join COCC to the proceedings. 24 It also follows that the injunctive orders made by the Court on 24 October 2001 should be extended to the third and fourth respondents. If this were not done it would be open to those respondents, or either one of them, to give notice to terminate the dealership agreements after 1 January 2003 and thereby frustrate the Court's process. The Court notes the applicants' usual undertaking as to damages. 25 As to the terms of the injunctive orders, circumstances have changed considerably since those orders were made. In particular, the primary relief sought by the applicants has been refused. In light of the changed circumstances the parties are directed to hold discussions with a view to reaching agreement on revising the terms of the orders made on 24 October 2001 so that the respondents are not unreasonably restrained. The Court will hear the parties on this issue at 2.00 pm on 21 January 2003 as well as on the program of further hearing dates in respect of the alternative relief. Orders 26 The Court makes the following orders: 1. Caterpillar SARL and Caterpillar Overseas Credit Corporation SA are joined to the proceedings in Matter No. IRC 5227 of 2000 as the third and fourth respondents respectively. 2. The orders made by the Court on 24 October 2001 shall apply to Caterpillar SARL and Caterpillar Overseas Credit Corporation SA as the third and fourth respondents in the proceedings in Matter No. 5227 of 2000 and shall continue in force until further order. 3. Paragraph 1. of the orders made by the Court on 24 October 2001 is varied by adding the following words after the word "Respondents," where it first appears: "including Caterpillar SARL and Caterpillar Overseas Credit Corporation SA,". - DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.