Industrial Relations Commission of New South Wales in Court Session CITATION : Henry v Global Switch Australia Pty Ltd & Anor [2003] NSWIRComm 307 APPLICANT Michael Henry PARTIES : FIRST RESPONDENT Global Switch Australia Pty Ltd SECOND RESPONDENT Global Switch S.a.r.l FILE NUMBER: IRC 3437 of 2002 CORAM: Marks J CATCHWORDS : Unfair contract proceedings - Application to vary by adding a respondent - Held s 108A did not apply so as to preclude variation. LEGISLATION CITED : Industrial Relations Act 1996 s106 s108A s108B Brown v Rezitis (1970) 127 CLR 157 CASES CITED : Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 310 Crowe v UCS Developments Pty Ltd (2003) NSWIRComm 234 HEARING DATES: 09/22/2003 DATE OF JUDGMENT: 09/26/2003 APPLICANT Mr A R Moses of counsel SOLICITORS Blake Dawson Waldron LEGAL REPRESENTATIVES: RESPONDENTS Mr P J Newall of counsel SOLICITORS Workplace Law JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Friday 26 September 2003 Matter No IRC 3437of 2002 MICHAEL HENRY v GLOBAL SWITCH AUSTRALIA PTY LTD & ANOR Application under s 106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT 1 By summons filed 14 June 2002 the applicant Michael Henry sought certain relief under s 106 of the Industrial Relations Act 1996 ("the Act") against the first respondent Global Switch Australia Pty Ltd and the second respondent Global Switch S.a.r.l. The proceedings arose out of the termination of the applicant's employment by the first respondent and an alleged arrangement pursuant to which the applicant was to become entitled to share options in the second respondent. The summons alleged that the applicant's employment was terminated with effect on 31 August 2002. 2 By notice of motion filed on 18 July 2003 the applicant sought leave to amend the summons by adding a third respondent, Robert William Kelly who it is alleged was at all material times the Managing Director of the first respondent and had made certain misrepresentations to the applicant. In addition it was alleged that Mr Kelly was "culpably involved in the circumstances giving rise to the unfairness" set out in the proposed amended summons for relief. 3 In justification of the proposed joinder of Mr Kelly the applicant alleged in the notice of motion that he could "reasonably be thought to have a real connection with the making, variation or avoidance of the contract or arrangement" to be varied or avoided, relying on the decision of the High Court of Australia in Brown v Rezitis (1970) 127 CLR 157. It was further asserted as a ground that it was desirable that the proposed third respondent be joined in the proceedings so as to avoid "a multiplicity of litigation". 4 There can be no doubt that persons who are not necessarily parties to a contract sought to be avoided under s 106 may be the subject of orders for the payment of compensation. See, generally, Barwick CJ in Brown v Rezitis. In addition, this Court is empowered by reason of s 170 of the Act to make any amendments to proceedings which are considered necessary "in the interest of justice". 5 In considering applications of this kind it must firmly be borne in mind that in determining whether to allow an amendment to proceedings to join additional parties, it is not necessary to debate or consider in any substantive way the merit of any claim. An obvious exception to this general approach is circumstances where the variation of the proceedings would constitute an abuse of process in some way. (See the judgment of Jordan CJ in the Full Court of the Supreme Court of New South Wales in Horton v Jones (No 2) (1939) 39 SR (NSW) 305 at 310.) 6 In opposing the amendment sought Mr Newall of Counsel who appeared for the respondents relied firstly on the provisions of s 108A of the Act, which are in the following terms and which came into operation on 24 June 2002: 108A Employment contracts in respect of which applications cannot be made (1) An application cannot be made for an order under this Division if the application relates to a contract of employment under which: (a) a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination), or (b) a remuneration package is paid or received (or is payable or receivable) during a period of less than 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) that would, if the remuneration package had been paid or received (or been payable or receivable) for a period of 12 months, have exceeded the remuneration cap. (2) An application cannot be made for an order under this Division by a person who is a partner carrying on a business if: (a) the application relates to a contract between that partner and the other persons carrying on that business in partnership, and (b) the share of the net profits, or payments contingent on the net profits, of the business that are paid to or received by (or payable to or receivable by) the applicant during the period of 12 months immediately before the application is made (or, if the application relates to a contract that has been terminated, immediately before the termination) exceed: (i) $200,000, or (ii) if an amount is prescribed for the purposes of paragraph (b) of the definition of "remuneration cap" in subsection (3)--that amount. (3) In this section: contract of employment means any contract or arrangement under which work is done by a person in the capacity of an employee, and includes a related condition or collateral arrangement with respect to such a contract. employment benefit means a benefit provided to an employee at the cost of his or her employer (being a benefit of a private nature) and, without limitation, includes: (a) contributions payable to a superannuation scheme by an employer in respect of the employee, including any liability of that employer to make any such contributions or to pay costs associated with that scheme, or (b) the provision by an employer of a motor vehicle for private use by the employee, or (c) any other benefit prescribed by the regulations for the purposes of this definition. monetary remuneration includes any performance-related bonus or incentive payment. remuneration cap means: (a) $200,000, except as provided by paragraph (b), or (b) any greater amount prescribed by the regulations (being a regulation that increases the amount by reference to increases in the amount referred to in section 83 (1) (b)). remuneration package means the total value of monetary remuneration and employment benefits payable or receivable under a contract of employment. 7 It was submitted for the respondents that that the summons related to a remuneration package that exceeded the remuneration cap. It was further submitted that s 108A did not apply to the summons for relief originally filed on 14 June 2002 but now impacts upon the proceedings in the form proposed by the amended summons so as to preclude the amendment being made having the effect of adding Mr Kelly as a third respondent. 8 In resisting the application of s 108A Mr Moses of counsel who appeared for the applicant relied by analogy on a judgment of a Full Bench of this Court in Crowe v UCS Developments Pty Ltd (2003) NSWIRComm 234 which applies to the provisions of s108B of the Act. Section 108B is in the following terms: 108B Time for making application (1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. (2) The Commission does not have jurisdiction to extend the time for making any such application or to accept an application made after the time prescribed by subsection (1). 9 In Crowe the Full Bench dealt with an application of an applicant to amend proceedings brought under s106 of the Act by adding additional parties. In essence the Full Bench concluded that in the particular circumstances of those proceedings an application for an order under the division as referred to in s 108B(1) was made at the time that the original summons was filed, the proceedings were therefore in time, and there was nothing in s 108B in the circumstances of those proceedings which precluded an amendment by adding additional parties. The Court said: 52 Clearly, the original summons filed constitutes an application for an order under s 106(1) in respect of a particular contract or arrangement. It was filed well before the commencement of s 108B and the original summons and the orders sought therein are therefore not affected by the limitation period created by that section. What then, is the effect of the amendment sought to the summons? Does it constitute a separate application for an order under the Division or should it be characterised as being an amendment to an application for an order already made and with respect to which s 108B has no effect? Or, to put the matter in a slightly different way, does the amendment, in substance rather than in mere form, give rise to an application for an order declaring wholly or party void or to vary the same contract or arrangement as that identified in the original application, or does it amount to an application for an order in respect of a different contract or arrangement? 53 The summons currently names UCS Developments Pty Ltd as first respondent and Unified Communications Systems Pty Ltd as second respondent. The summons claims relief with respect to contracts of employment between the applicant and the second respondent. The first respondent is said to be specified as the applicant's employer on the applicant's 2001 group certificate. The summons alleges employment with the second respondent commencing in July 1999, the acquisition by a third party of the second respondent and a process by which the applicant came to be employed by another entity. 54 The proposed amended summons alleges that the first and second respondents "were spun out of" the fourth respondent and that the third respondent was employed by the fourth respondent. It is alleged that the fourth respondent purchased the assets of an entity within which the applicant worked and which commenced paying the applicant's salary. It is further alleged that the applicant reported to the third respondent whilst employed by the second respondent. However it is not alleged in the summons that the applicant became employed by the fourth respondent. The summons proceeds on the basis that the applicant's employment continued with the second respondent and that the fourth respondent brought about the termination of his employment with the second respondent which occurred through the actions of the third respondent as a director of the fourth respondent. The proposed amended summons still has as a substantial focus the contract of employment between the applicant and the second respondent and his employment by the first and second respondents. 55 While the proposed amended summons seeks to join additional respondents, the joinder is based upon their alleged participation in the circumstances which gave rise to the initial application for an order under s 106 constituted by the original summons. In these circumstances, the conclusion is available that the application to amend the summons and the proposed amended summons do not constitute a fresh application for an order, but are in substance an amendment to an application for an order made under s 106(1) prior to s 108B coming into effect. The amendment sought and, if granted, the resulting amended summons are therefore not precluded by s 108B. 56 There may be circumstances in which an amendment to an original application may be so substantial or its nature such as to warrant the conclusion that it could be characterised as an application for an order caught by s 108B. That is not the situation here. 10 In the course of the judgment the Full Bench made reference to s 108A(1) in the following terms: 50 Similarly, s 108A(1) prohibits "an application [being] made for an order under this Division if the application relates to a contract of employment " with certain specified features. Section 108A(2) again refers to a prohibition against "an application [being] made for an order under this Division by a person who is a partner carrying on a business", if " the application relates to a contract between that partner and the other persons carrying on that business in partnership" (emphasis added) where certain specified conditions are met. Section 108B(1) similarly identifies an application by reference to the relevant impugned contract as: " an application for an order under this Division in relation to a contract that has been terminated". 11 In my opinion there is justification for applying the same approach to construction to the provisions of s108A as was applied by the Full Bench in Crowe to s 108B having regard to the factual circumstances relevant both to these proceedings and relevant also to the proceedings before the Court in Crowe. 12 Accordingly, I conclude for the purpose of this interlocutory application, that s 108A is not an impediment. 13 Mr Newall also submitted that this application should be rejected on discretionary grounds. Firstly, it was said that the avoidance of multiplicity of litigation was not of itself a sufficient ground for the exercise of discretion. I reject this submission on the basis that proceedings arising out of the same factual circumstances and involving, at the least, related parties should preferably, if convenient, be dealt with together so as to avoid undue waste of costs and court resources. 14 The next basis relied on was the asserted undue delay between the issue of the initial proceedings and the application to join Mr Kelly as an additional respondent. Associated with this point Mr Newall relied on correspondence between the applicant's solicitors and his instructing solicitor which seemed to question the financial viability of the first and second respondents. I should add that any assertion of this kind was strenuously resisted by the respondents' solicitors. Whilst it might be thought that the application to join Mr Kelly into the proceedings was taken at a relevantly late stage, there is no evidence in my opinion of such undue delay as would allow this Court to apply any principles in the nature of laches. Indeed, the proceedings are based, as I have said, on purported termination effective on 31 August 2002. I also reject this submission. 15 Accordingly, I propose to grant leave to the applicant to amend the proceedings in the manner set out in the proposed amended summons for relief which is annexed to the affidavit of Mr Woodland, solicitor sworn on 18 July 2003 for the purpose of these interlocutory proceedings. It will be necessary for the applicant to file and, presumably serve, the amended summons and the parties will need to confer about the necessity for any further conciliation. 16 I should add for completeness that the amendment made does not preclude the third respondent or indeed the first or second respondents from making any interlocutory application at an appropriate stage of the proceedings based on jurisdictional or other grounds. 17 The question of costs was not argued before me and I shall reserve costs. ORDERS 18 I make the following orders: 1. The applicant is granted leave to amend the summons in the form annexed to the affidavit of Todd Woodland sworn 18 July 2003. 2. Costs are reserved. 3. Liberty to apply with respect to costs and with respect to the further progress of the proceedings. ___________________________ 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.