Industrial Relations Commission of New South Wales in Court Session CITATION : Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2001] NSWIRComm 168 FIRST APPLICANT Ryledar Pty Ltd PARTIES : SECOND APPLICANT Azir Magar Sidhom RESPONDENT Euphoric Pty Ltd FILE NUMBER: IRC 5411 of 2000 CORAM: Marks J CATCHWORDS : Interlocutory strike out motion hearing - Subsequent unsuccessful conciliation - Application to decline to determine strike out motion refused in absence of allegation of apprehended bias - Contract whereby work performed in an industry not confined to work performed by or on behalf of applicant - Whether appropriate time to consider strikeout motion - Motion dismissed LEGISLATION CITED : Industrial Relations Act 1996 s105 s106 Ainsworth v Wilding (1900) 2 Ch 315 Production Spray Paiting and Panelbeating Pty Ltd v Newnham (1991) 27 NSWLR 644 CASES CITED : General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Nagle v Tilburg (1993) 51 IR 8 Vaughan v O'Meara (1989) 31 IR 221 Murray Grey Breeders (Aust) Pty Ltd v Higgins (1987) AILR 423 HEARING DATES: 03/09/2001; 03/22/2001; 06/15/2001 DATE OF JUDGMENT: 08/02/2001 APPLICANTS Mr F Lever of counsel SOLICITORS Philip Goldman & Co LEGAL REPRESENTATIVES: RESPONDENT Mr B Coles QC with Mr M Ashhurst of counsel SOLICITORS Cowley Hearne JUDGMENT: INDUSTRIAL RELATIONS OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J 2 August 2001 Matter No IRC 5411 of 2000 RYLEDAR PTY LTD & ANOR v EUPHORIC PTY LTD Application under s106 of the Industrial Relations Act 1996 JUDGMENT ON INTERLOCUTORY APPLICATION 1 By summons for relief issued under s 106 of the Industrial Relations Act 1996 ("the Act") the applicants Ryledar Pty Ltd and Azir Magar Sidhom sought certain relief against the respondent Euphoric Pty Ltd. The summons was directed to a "supply agreement" whereby it was alleged that the second applicant and other employees of the first applicant performed work. The summons alleged that certain provisions of the supply agreement were unfair and sought consequential orders under s 106. 2 The supply agreement was described in the summons as having been entered into on 18 May 1998. I shall return to its terms shortly. 3 The respondent filed a Notice of Motion seeking an order that the summons be struck out on the basis that the supply agreement was not asserted to be a contract whereby a person performs work in any industry. 4 Subsequent to the filing of written submissions, the strike out motion came on for hearing on 9 March 2001. On this occasion Mr Coles QC appeared for the respondent, the applicant in the Notice of Motion and Mr Lever of counsel appeared for the applicant to resist the Notice of Motion. At the conclusion of the submissions made by Mr Coles I indicated to him without making any formal orders that I was not persuaded that the relief sought in the Notice of Motion should be granted. 5 Following this there was a discussion concerning the conciliation of the proceedings which, by arrangement with the parties I commenced on 22 March 2001. At the conclusion of the proceedings that day the conciliation was stood over to enable the parties to consider their respective positions and to attempt to reach some concluded agreement. 6 On 8 June 2001 my Associate was advised that the parties had not reached agreement. A copy of a letter from the respondent's solicitor addressed to the applicants' solicitor which accompanied the notification to my Associate indicated that his client wished to make further submissions on the Notice of Motion prior to any decision being handed down by me and indicated that I "may be precluded from now handing down any decision or completing the hearing of the Notice of Motion" because I had subsequently participated in the conciliation process. 7 Further written submissions have been received from counsel covering firstly whether I should decline to consider the interlocutory application further and secondly going to the substance of the strike out motion. This judgment deals with both these issues. DISQUALIFICATION 8 Mr M Ashhurst of counsel made written submissions on this issue on behalf of the respondent. Mr Ashhurst commenced his submissions by conceding that there was no express provision in the Act prohibiting a judge who attempted to conciliate a s 106 matter from dealing further with it. He emphasised that the basis of the application was not related to anything that had occurred during the conciliation process or any demonstration of any apprehended bias. He said: The reason why a judge who hears a conciliation should not take any further part in the substantive proceedings is because there is a risk that the trial judge's assessment of the proceedings may be perceived to be based on information that was privileged. This is the same reason why a trial judge will avoid reading privileged documents in a dispute over legal professional privilege. This basis for disqualification is often described as being based on policy considerations to encourage the conciliation process and has nothing at all to do with the issue of apprehended bias. 9 Whilst there are a myriad of cases dealing with disqualification for bias, Mr Ashhurst did not point to any authority in support of the proposition which I have set out verbatim above. 10 Mr Ashhurst relied in his proposition by way of analogy to the position pertaining to the reading of privileged documents. Whilst in most cases it would be inappropriate for a trial judge to read documents that were privileged, it will be necessary in many cases to read documents about which a claim for privilege is raised in order to rule as to whether privilege may properly apply. For example in Ainsworth v Wilding (1900) 2 Ch 315 Sterling J inspected certain documentation in order to rule whether legal professional privilege applied. It is my practice to do so, and I have not heard of any different practice being pursued by judicial officers. Sometimes a claim for privilege will be upheld. I do not understand how, having read material which a judge rules should not be admitted into evidence can create any risk that his or her assessment of the proceedings may be perceived to be based on information that was privileged and excluded from the proceedings. 11 I would reject the proposition as formulated by Mr Ashhurst as being a principle which should be applied in the absence of any assertion based on apprehended bias. 12 There is a further reason why, in the circumstances of these proceedings, the submission made by the respondent should be rejected. That is, the substantive submissions with respect to the interlocutory application had been made and dealt with in principle, albeit not to finality, prior to the conciliation process being undertaken. As my view of the fate of the interlocutory relief sought by the respondent has not altered, based solely on the reasoning which emerged during the course of debate with Mr Coles at the hearing, there can, in my opinion, be no policy reason why I ought not to proceed to determine this issue to finality. Indeed, there are policy reasons why the contrary view should be taken not the least associated with the questions of convenience to the parties and costs. 13 For these reasons I decline to disqualify myself from dealing with the interlocutory relief. THE STRIKE OUT APPLICATION 14 In order to deal with this matter it is necessary firstly to have regard to the terms of the supply agreement. The first applicant Ryledar Pty Ltd is referred to as the customer and the second applicant as the guaranteeing director. The recitals to the supply agreement refer to the customer carrying on or proposing to carry on business as a reseller of petroleum products at sites which are defined to mean petrol retailing facilities at a number of locations. The schedule refers to sites in the State of New South Wales owned and/or leased and/or operated by the customer as "volume plus" branded sites 15 I was told that there were 63 service stations which were so branded. The recitals further go on to relate that the customer wished to purchase Mobil Petroleum products from the respondent to be resold at those sites and that "Euphoric has agreed to supply and customer has agreed to purchase Mobil Petroleum products on the terms and conditions set out in this agreement." 16 Clause 2.1 provides that Euphoric shall sell to the customer and the customer shall purchase from Euphoric during each month of the term of agreement not less than the minimum quantity and not more than the maximum quantity of the customer's requirements of petrol and automotive distillate for resale at or from the sites together with other Mobil Petroleum products. 17 Clause 5 deals with delivery. Euphoric is obliged to deliver Mobil Petroleum products to the customer at the sites within a reasonable time of receipt of the customer's order. Clause 5.3 provides in part that "Euphoric shall not be obliged to deliver Mobil Petroleum products in a load of less than one truck load (tanker or rigid) to any one site….". 18 The term of the agreement was expressed to be for two years. 19 It was the respondent's principal submission that the supply agreement did not fall within the provisions of s 106 of the Act. 20 Sections 105 and 106 of the Act are in the following terms: 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. 21 Put shortly, it was the respondent's argument that the supply contract was not a contract "whereby a person performs work in any industry". There was no obligation on any person employed by the first applicant or the second applicant to perform any work in any industry. I agree with this submission. From the applicants' point of view this is an agreement for the purchase of petroleum products. 22 However, this does not, in my opinion, dispose of the matter. In order to come within s 106(1) the contract needs to satisfy the requirement that it be one whereby a person performs work in an industry. The performance of work does not necessarily need to be on the part of a person who is the applicant or associated with the applicant in the proceedings. So long as a person performs work in an industry and that work is performed in circumstances having the necessary nexus with the contract required by s 106(1) the contract will be one coming within s 106. The work may be performed by anyone, whether associated with the applicant, the respondent or, theoretically, anyone else. If authority for this proposition is needed, it is provided by the decision of Glynn J in the Industrial Commission of New South Wales inVaughan v O'Meara (1989) 31 IR 221. Her Honour cited and followed a decision of a Full Bench of the Commission in Murray Grey Breeders (Aust) Pty Ltd v Higgins (1987) AILR 423. The Full Bench decision was to the effect that provided there was a contract which was one whereby work was performed in an industry, it came within the relevant statutory provision and the tribunal had jurisdiction and power to deal with it. It mattered not whether or not the work was performed by persons associated with the applicant to the proceedings or the respondent. 23 There are many authorities which deal with the proper approach to the construction of the words used in s 106(1) and its predecessors, s 275 of the 1991 Act and s88F of the 1940 Act. 24 A convenient starting point is the decision of the NSW Court of Appeal in Production Spray Painting and Panel Beating Pty Ltd v Newham (1991) 27 NSWLR 644. In discussing the meaning of the word "whereby" Priestley and Handley JJA contrasted work done in an industry "in consequence of" the making of the contract and work to be done "in fulfilment" of the contract. Their Honours concluded: The impugned contract, etc therefore must directly, that is under or pursuant to its terms, provide for the performance of work in an industry. Accordingly the contrast …. is between a contract which leads directly to the performance of work in an industry on the one hand, and on the other a contract which does so only indirectly or in a remote or consequential manner. (at 657). 25 Mahoney JA approached the matter in a different way, but with the same practical result. His Honour said: In my opinion the section looks to the purpose of the transaction itself and to whether the purpose of the transaction was that relevant work be performed. In the terms of the section, it is the transaction, that is, the "contract or arrangement or …" that is to be the cause of ("whereby") the work being performed. This suggests, I think, that what is in question is not merely an accidental consequence of the transaction but that which was its purpose to bring about. If this be so, then, in my opinion, the purpose must be that of both of the parties. If, for example, X a car dealer sells Y a motor vehicle, it may be the purpose of Y that it be used as a taxicab and so that a person be employed to drive it in the transport industry. Y's purpose in buying the car was that such work be done and in that sense the performance of the work was a consequence of the sale of the car. But, in my opinion, it is not to that kind of transaction that the section is directed. It is the transaction which, in the contemplation of the section, is to be seen as having as its purpose the performance of the relevant work and, in that sense, it is to be the purpose of both of the parties which leads to the work being performed. (at 649-50). 26 The question, thus posed, is whether or not the supply agreement is one whereby in the sense that it had as its purpose the performance of work in an industry. Or, put in terms utilised by Priestley and Handley JJA, is it necessary for any work to be done in fulfilment of the supply contract. 27 As I have indicated the obligation of the respondent was not only to sell petroleum products but to effect delivery of those products to some 63 service stations throughout New South Wales. 28 During the course of submissions Mr Coles argued that the delivery of the petroleum products was an incidental part of what he characterised as a contract for the sale of goods where delivery was the seller's obligation. He sought to characterise each separate delivery as giving rise to a discrete individual debt. However, it seems to me that the delivery of the petroleum products throughout the term of the agreement in response to purchase orders made from time to time during the course of the agreement by the first applicant was an obligation which the respondent undertook throughout the course of the supply agreement and pursuant to its terms. In other words, the contractual obligation to make delivery was not created on each and every occasion that a purchase order was made by the first applicant. The obligation to deliver was created by the supply agreement itself and triggered on each occasion that a purchase order was made. Seen in this way there was a continuing obligation during the two year term of the supply agreement on the part of the respondent to make delivery of petroleum products to those 63 sites specified from time to time by the first applicant. As was clear from the recitals to the supply agreement those sites were not necessarily operated by the applicant in its own right 29 I would accordingly characterise the supply agreement as being one whereby the respondent was, by its terms, required to effect delivery of petroleum products to 63 sites situated within New South Wales by taking steps to have those petroleum products physically transported to those sites. The act of physical transportation of the goods arguably involves the performance of work in an industry. Accordingly I would conclude this point against the respondent. 30 It is necessary that I deal with a further matter in connection with the strike out application. It is well established that such an application should only be dealt with at the appropriate stage of the proceedings. See General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and the decision of the Full Bench of the Industrial Relations Commission in Court Session in Nagle v Tilburg (1993) 51 IR 8 esp at 11-12. The question arises as to what is the appropriate stage of the proceedings. During the course of his submission Mr Coles complained that the summons filed by the applicants did not describe the supply agreement as being one whereby work was performed in an industry other than on behalf of the second applicant and other employees of the first applicant. There was no reference within the summons to any assertion that work was performed by the respondent pursuant to the terms of the supply agreement. Mr Lever said that he would prepare an amended summons for relief on behalf of his clients which would remedy this suggested defect. Indeed, an amended summons for relief was prepared by Mr Lever and forwarded to counsel appearing for the respondent. The amended summons for relief has not been filed in the proceedings, but a copy has been forwarded to me annexed to supplementary submissions of Mr Lever. In the context of the professed intention of the applicants to file the amended summons for relief, about which I have not heard argument, I am concerned whether this is the appropriate time in which to consider the strike out application if the respondent proceeds solely on the basis that there is no allegation contained within the summons which would found such an entitlement. It would seem that it would be more appropriate to consider the fate of the proposed amended summons for relief before determining this matter on this basis. 31 Accordingly, I propose to determine the matter at this stage on the basis confined to whether or not the supply agreement is one falling within the description of a contract for the purpose of s 106(1), whatever assertion might or might not be contained within the summons. Confined in this way the respondent's motion is dismissed. Given the circumstances which may or may not pertain to any further consideration of this issue by this Court consequent upon any filing of an amended summons, or at any further stage, I shall reserve costs. 32 As I have issued a certificate of failed conciliation to the President, the matter will now be returned to the President for allocation to another judge. ORDERS 33 I make the following orders: 1. The respondent's application that I decline to deal with the Notice of Motion is dismissed. 2. The respondent's Notice of Motion is dismissed. 3. Costs are reserved. __________________________ 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.