Industrial Relations Commission of New South Wales in Court Session CITATION : Finemore AO v Resarta Pty Ltd & Ors [2002] NSWIRComm 143 APPLICANT Ronald Stanley Finemore AO RESPONDENTS First Respondent Resarta Pty Limited PARTIES : Second Respondent Toll (FHL) Limited formerly called Finemore Holdings Limited Third Respondent Toll Holdings Limited FILE NUMBER: IRC 7532 of 2001 CORAM: Marks J CATCHWORDS : s 106 proceedings - Concurrent proceedings involving same parties in Supreme Court of Victoria - Application by respondents for s 106 proceedings to be cross-vested to Supreme Court of New South Wales and thence to Supreme Court of Victoria - Application by respondents to stay s 106 proceedings - Stay refused - Application by respondents to stay interlocutory proceedings concerning whether certain documents be subject of privilege - Stay refused. LEGISLATION CITED : Industrial Relations Act 1996 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Victoria) HEARING DATES: 05/21/2002 DATE OF JUDGMENT: 06/26/2002 APPLICANT Mr J J E Fernon of counsel SOLICITORS Atanaskovic Hartnell LEGAL REPRESENTATIVES: RESPONDENTS Mr R F Crow of counsel SOLICITORS Clayton Utz, Melbourne Victoria JUDGMENT: INDUSTRIAL RELATIONS OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Wednesday 26 June 2002 Matter No IRC 7532 of 2001 RONALD FINEMORE AO v RESARTA PY LTD & ORS Application under s106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT ON STAY APPLICATION 1 This judgment deals with two interlocutory applications made in the course of these proceedings which have been commenced under s 106 of the Industrial Relations Act 1996 ("the Act"). 2 It is convenient to set out the provisions of ss 105 and 106 of the Act. 105 Definitions In this Part: contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. unfair contract means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. 106 Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. 3 The applicant Ronald Stanley Finemore AO commenced these proceedings by summons filed in this Court on 19 November 2001. The first respondent is Resarta Pty Ltd, the second respondent Toll (FHL) Ltd, formerly called Finemore Holdings Ltd and the third respondent Toll Holdings Ltd. The first respondent is a wholly owned subsidiary of the second respondent. The second respondent is a wholly owned subsidiary of the third respondent. The applicant established a trucking business as an owner/operator in 1964 which grew and became known as Finemores Transport Pty Ltd ("Finemores"). The ownership of the Finemore group ultimately resided in the second respondent and the applicant was appointed Managing Director of that company in about 1986. The continued involvement of the applicant in the second respondent was considered by its Board of Directors during the course of the calendar year 1999. In February 1999 the Board resolved to approve certain arrangements which included in particular the foreshadowed appointment of the applicant as Executive Chairman later that year and the financing of the purchase of a property for use by the applicant at no cost to him. The Board resolved to utilise the first respondent to purchase the property which was to be used by the applicant. Through its accountant, the second respondent had obtained legal advice concerning the acquisition of the property utilising the first respondent for this purpose. 4 On 25 November 1999 the applicant entered into a service agreement and a call option deed which had been prepared on the advice of solicitors to give purported effect to the arrangements earlier made. 5 In December 1999 there were discussions between a solicitor retained by the applicant and an internal lawyer employed by the second respondent about the service agreement and call option deed pursuant to which a further arrangement was made said to be evidenced by a letter dated 20 December 1999. As a result of these further arrangements the applicant entered into an employment agreement with the first respondent. 6 Following negotiations between representatives of the second and third respondents a scheme of arrangement was entered into pursuant to which the third respondent acquired all of the shares in the second respondent. The share acquisition was completed on 2 March 2001. There was an arrangement that the applicant would continue to carry out work to assist in the integration of the Finemore operation within the Toll Group's operations. From early July 2001 the applicant asserts that he had endeavoured to negotiate the basis of his departure from the second respondent with representatives of the third respondent. Whilst these negotiations were proceeding it is alleged that the first and second respondents instituted proceedings against the applicant in the Supreme Court of Victoria relating to his employment arrangements and to certain other matters which, for present purposes, are irrelevant. 7 Particulars filed by the plaintiffs in the Supreme Court of Victoria, who relevantly include the first and second respondents in these proceedings attacked the service agreement as being an uncommercial contract for the benefit of the applicant and to the detriment of the second respondent and referred to the resolutions of the Board of that company passed on 19 February 1999 and the approval of the service agreement by the Board on 25 November 1999. It was alleged that the directors concerned breached their duties as directors. Similar attacks were made with respect to the Resarta arrangement by which a property was made available for the use of the applicant. 8 Whilst I have not seen the summons which has been issued by the plaintiffs in the Supreme Court of Victoria I have been told by Mr Fernon of counsel who appears for the applicant in these proceedings that the allegations contained in that summons closely mirror allegations made by the respondents in a reply filed by them in these proceedings. The reply asserts that each of the directors of the first respondent owed a fiduciary and/or statutory duty to it to exercise their powers and discharge their duties in good faith and in the best interests of the first respondent, to ensure that the first respondent complied in all respects with the provisions of the Corporations Law and the listing rules of the Australian Stock Exchange and to conduct themselves in certain similar respects. The reply contains the same assertions with respect to each of the directors of the second respondent. The reply attacks the arrangements made in November and December 1999 pursuant to which the first and second respondents and the applicant entered into a service agreement and call option deed and an employment agreement and refers to advice given to the first and second respondents and to the applicant by legal practitioners. It is asserted that the applicant and each of the respondents breached certain provisions of the Corporations Law, the listing requirements of the Australian Stock Exchange and that the directors breached their duties and obligations by reason of the arrangements and documentation entered into and that the applicant is liable to compensate both the first and second respondents (who are plaintiffs in the Supreme Court proceedings) by reason of any losses sustained. Damages are also sought for breaches of the Trade Practices Act and the Fair Trading legislation of Victoria and New South Wales. 9 On 21 November 2001 the applicant in these proceedings being the defendant in the Victorian proceedings sought an order from the Victorian Supreme Court transferring the proceedings commenced in that Court to the Supreme Court of New South Wales pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Victoria). That application was declined. On 21 December 2001 the respondents in these proceedings as plaintiffs filed a summons in the Equity Division of the Supreme Court of New South Wales seeking to have these proceedings transferred into the Supreme Court of New South Wales pursuant to the Jurisdiction of the Courts (Cross-Vesting) Act 1987 and sought further they in turn be transferred to the Supreme Court of Victoria pursuant to the same Act. The intention was that by reason of that application both sets of proceedings namely those commenced in the Supreme Court of Victoria and these proceedings could be determined by the one tribunal. The application to the Supreme Court of New South Wales was heard by Einstein J who referred the application to the New South Wales Court of Appeal where it is due to be heard on 24 July next. 10 The proceedings in this Court underwent the mandatory conciliation process on 30 January 2002. The conciliation was ultimately unsuccessful. These proceedings were then allocated to me for the purpose of issuing directions in connection with the case management of the proceedings. On 27 March 2002 I made orders by consent in terms of short minutes of orders which were filed in Court that day. The orders were made on the basis that they may be overtaken by an application to stay the proceedings depending upon the fate of the application to transfer them to the Supreme Court of New South Wales. 11 Pursuant to the orders made the applicant was required to file and serve all affidavit material upon which he proposed to rely on or before 17 April 2002. However in order to do so and to secure affidavit evidence from certain other persons, it was necessary that there be shown to these other persons certain documentation which he had in his possession and which had been discovered to the respondents in these proceedings as part of a discovery process undertaken in the proceedings in the Supreme Court of Victoria. In that Court and in this Court the respondents to these proceedings took the view that the documents in question were privileged and could not be shown to any other persons. The applicant took the view both in these proceedings and in the Supreme Court of Victoria that some of the documents were not privileged and with respect to those documents to which privilege attached, privilege had been waived. 12 There were some fifteen documents in all in issue in the proceedings in this Court. Arrangements were made during the case management process for that controversy to be the subject of a hearing before me on 21 May 2002. On 20 May the respondents filed a notice of motion (of which they had given warning to the applicant) seeking that these proceedings (including the interlocutory application to be heard on 21 May 2002) be stayed pending the hearing of and determination of the application brought in the Supreme Court of New South Wales and the hearing and determination of any transfer application to the Supreme Court of Victoria. The notice of motion also sought specifically that I not determine the issue of privileged documents because the same issue had arisen in the Victorian proceedings with respect to a larger group of documents namely 46 in number to be heard by a Master in the Supreme Court of Victoria on 24 June 2002. 13 On 21 May 2002, after hearing submissions, I declined to stay the proceedings and the hearing of the interlocutory application concerning the discovered documents. I stated that I would publish my reasons later. I had intended that I would deliver reasons at the same time as I dealt with the more substantive issues concerning the privilege claim. However the respondents have sought to appeal my decision of 21 May 2002, and I now deliver my reasons for dismissing the stay application. 14 Mr Crow of counsel who appeared for the respondents as applicants on the notice of motion relied on three principal arguments. The first was that the question of privilege with respect to all of the documents was to be decided in the Victorian Supreme Court in proceedings to be heard on 24 June 2002. The second argument was that there was a possibility these proceedings would ultimately be transferred to the Victorian Supreme Court, and that it was preferable a uniform approach be taken. The third was that his clients were not ready to deal with the privilege question because the applicant had not provided particulars of the manner in which it was alleged that privilege had been waived. 15 Because it is necessary to balance all of the circumstances in determining whether to grant or decline a stay application of this kind it is necessary that I refer to some additional factual material. I was advised by Mr Crow whose instructing solicitor was from the Melbourne office of Clayton Utz and who also had the carriage of the proceedings in the Victorian Supreme Court that there was a possibility that the substantive proceedings in that Court could be heard in about October this year. 16 The assertions of failure to provide particulars of waiver of privilege excited Mr Fernon of counsel appearing for the applicant to develop the history of the case management of the proceedings. A convenient starting point is proceedings before me on 2 May 2002 in which the question of privilege was first raised before the Court, although it had been the subject of lengthy correspondence between the solicitors for the parties. Mr Fernon made it clear that the applicant put in issue whether legal professional privilege attached to the documents. He said that the respondents bore the onus of demonstrating that privilege attached. After discussions with Mr Fernon and with Mr Robson of counsel, who then appeared for the respondents, agreement was reached on a number of steps to be taken to allow the issues to be determined by the Court. 17 The first step was the listing by the applicant of each document sought to be relied upon over which privilege has been claimed by the respondents and the names of the witnesses to whom the documents are to be shown. That was to occur before 5pm 3 May 2002. Within seven days thereafter the respondents were to identify the documents over which privilege continued to be claimed, the nature of the claim and the reasons why the documents were not to be disclosed. Because of some internal communication difficulty from within the respondents' camp, those advising the respondents did not appreciate that one of the orders made was that the respondents were required to stipulate in addition to the identification of the specific documents the nature of the claim for privilege and the reasons why the documents should not be disclosed. This led to correspondence between the solicitors for the respective parties which focussed in part on the controversy as to whether or not the respondents were obliged to indicate the basis for the claim for privilege and the refusal to allow disclosure. This controversy overtook the timetable which had been set for the preparation of the respective cases of the parties in connection with the interlocutory hearing. 18 Mr Fernon complained that the question of privilege in the context of the release of the documentation to the proposed witnesses for the purpose of preparing affidavit material to be relied upon by the applicant dated back to February 2002. Correspondence between the solicitors concerning this issue, to which I was referred during the course of the hearing, indicates that each of the legal practitioners took a diametrically opposed view about the ability of the applicant's solicitors to show the documents in question to the proposed witnesses. This controversy exists to the present time and obviously the lack of a resolution has delayed the applicant in the preparation of his case for the purpose of these proceedings. 19 On balance, there were two principal reasons which motivated me to dismiss the stay application. The first is that whether these proceedings ultimately are heard before this Court, the Supreme Court of New South Wales or the Victorian Supreme Court, it is contemplated by all parties that they will be determined, presumably concurrently with the proceedings in the Supreme Court of Victoria. There being no question that the proceedings will not be dealt with by a court, and the applicant being anxious to proceed, there is no reason to stay them. In addition, there is no reason why the applicant should not be given an opportunity of having these proceedings heard and dealt with at the earliest most appropriate opportunity. The second motivating factor is that there must be some uncertainty as to which court will ultimately deal with these proceedings. This is dependent upon the outcome firstly of proceedings currently before the New South Wales Court of Appeal and secondly the determination of an appropriate application brought before the Supreme Court of Victoria. This uncertainty is another reason why the applicant should not be precluded from developing his case in these proceedings. I am mindful that if ultimately these proceedings are to be heard concurrently with the proceedings before the Supreme Court of Victoria, and the Victorian proceedings may be heard in about October this year it will be necessary for these proceedings to be prepared by all parties with some expedition. 20 For these reasons I determined to dismiss the motion to stay the proceedings generally. 21 The matter is somewhat more finely balanced in connection with the application by the respondents to stay the determination of the contention between the parties as to whether the disputed documents may be shown to the proposed witnesses. I am conscious that the hearing of the same controversy has been scheduled before a Master of the Supreme Court of Victoria on 24 June next, and that that hearing will deal with inter alia the same documents which are the subject of these proceedings. Those interlocutory proceedings were commenced by summons dated 3 May 2002. That summons was filed one day after the directions hearing which I heard on 2 May 2002 when I fixed 21 May for the hearing of the privilege issue. In the context where the same partners of the law firm Clayton Utz who act for the plaintiffs in the Supreme Court of Victoria proceedings also act for the respondents in these proceedings, I cannot see any good reason for deferring the consideration of this particular issue as part of the case management process where the application before the Supreme Court of Victoria was filed one day after a date was fixed by this Court for the determination of the same issues, albeit with respect to a smaller number of documents. All of this has to be considered against the background of the delay which has been occasioned to date in the preparation of the applicant's case by reason of this controversy. Whilst, at the end of the day, there may be some expenditure of additional costs by reason of the duplication of proceedings, and, perhaps, the corresponding proceedings in the Supreme Court of Victoria may overtake the proceedings in this Court, the additional cost will surely be minimised in terms of the necessity to prepare in any event for argument before a court. 22 I was given no information as to the likelihood that the proceedings before the Master of the Supreme Court of Victoria would be completed to finality on 24 June next and there is no information that would indicate, for example, that this would be the only matter fixed for hearing on that day before that particular Master. Whilst on one view it might be easy to defer consideration of what could conceivably be a difficult legal issue to allow it to be determined by another court, my understanding of the responsibility of this Court is that prima facie it should deal with matters before it at the earliest possible opportunity unless there is good reason to do otherwise. I am advised that no directions have been issued by the Supreme Court of Victoria in connection with the hearing to be conducted by the Master save that written submissions are to be filed two days prior to the hearing. As the applicant was ready to commence submissions about the privilege matter on 21 May 2002 I was not prepared to accede to such part of the notice of motion that sought to have the hearing of this discrete matter stayed in this Court and the motion was dismissed accordingly. _______________________ 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.