Sydney Design and Developments Pty Ltd and Anor v Winter [2008] NSWIRComm 149

Industrial Court of New South Wales

CITATION: Sydney Design and Developments Pty Ltd and Anor v Winter [2008] NSWIRComm 149

FIRST APPLICANT: Sydney Design and Developments Pty Ltd

PARTIES: SECOND APPLICANT: Michael Avinou

RESPONDENT: Andrew Winter

FILE NUMBER(S): IRC 3171 of 2005

CORAM: Schmidt J

CATCHWORDS: Unfair contract - claims settled with first and second respondents at conciliation - orders sought against one remaining respondent - ex parte hearing - termination of original contract without notice - remuneration and notice provisions of new contract found unfair - parties' conduct under relevant contractual terms considered - respondents' culpable association - unfairness found considered - nature of consequential money orders considered - contract varied and money orders made against respondent

LEGISLATION CITED: Industrial Relations Act 1996

CASES CITED: Brown v Rezitis (1970) 127 CLR 157

HEARING DATES: 6 August 2008

DATE OF JUDGMENT: 15 August 2008

APPLICANTS: Mr PW Bates of counsel SOLICITORS: LEGAL REPRESENTATIVES: Autore & Associates

RESPONDENT: No appearance

JUDGMENT:

- 1 - INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: Schmidt J

15 August 2008

Matter No IRC 3171 of 2005

SYDNEY DESIGN AND DEVELOPMENTS PTY LTD AND ANOTHER v ANDREW WINTER Application under s.106 of the Industrial Relations Act 1996

JUDGMENT

[2008] NSWIRComm 149

1 These proceedings were brought in June 2005 pursuant to s 106 of the Industrial Relations Act 1996 ('the Act') the applicants complaining about the unfairness of the contract under which they performed drafting work for Pregard Pty Limited, trading as Armstrong Homes ('Armstrong Homes'). The proceedings were originally brought against Armstrong Homes and two of its directors, Mr Barry Armstrong and the remaining respondent, Mr Andrew Winter. 2 The claims brought against Armstrong Homes and Mr Armstrong were settled, they consenting to the proceedings brought against Mr Winter proceeding. There was no appearance for Mr Winter at the hearing, which proceeded ex parte. 3 Evidence was given by Mr Michael Avinou, the second applicant, and various documents were tendered. 4 The evidence showed that the applicants were conducting a business in Sydney, drawing and designing house plans. Mr Armstrong proposed that the applicants provide such services for Armstrong Homes in Port Macquarie. In August 2002, an agreement was reached, after negotiations involving Mr Avinou, Mr Armstrong and Mr Winter. That agreement required all dealings to be between Mr Winter and Mr Avinou. 5 Mr Avinou then moved to Port Macquarie, with his family remaining in Sydney, to undertake the agreed work. Over the following 18 months, he rented premises there. His family relocating to Port Macquarie was the subject of ongoing discussion between Mr Avinou, Mr Armstrong and Mr Winter. After receiving assurances from them both, as to the security of ongoing work with Armstrong Homes, in February 2004, Mr Avinou and his wife purchased a house in Port Macquarie and his family relocated there. 6 Mr Avinou was given a 5% share in the Armstrong Homes business. In June 2004, Mr Avinou was required to relinquish his share of the business. The applicants were informed that the payments which had earlier been agreed were to be reduced from $120,000 to $60,000 per annum and Sydney Design and Developments Pty Ltd ('Sydney Design') was required to enter a new contract, executed in July. In September 2004, all payments ceased and thereby, the agreement was brought to an end. Mr Avinou and his family later relocated to Sydney, the applicants being unable to find sufficient work in Port Macquarie, to permit them to meet their commitments. Mr Avinou and his wife had difficulty meeting mortgage obligations and eventually sold their Port Macquarie house. At one point, Mr Avinou had to obtain permission to use his superannuation, to meet mortgage commitments. 7 The claim pressed in these proceedings related to the unfairness of the contract entered in July 2004. It had a three year term, but also envisaged that it could be terminated by either party, at any time, for any reason. The applicants sought orders of variation, fixing a period of notice of 12 months; six weeks' redundancy pay and consequential money orders in relation to removal costs, value of plans and interest. 8 At the hearing, orders were pressed in relation to notice and payment under the July 2004 contract. 9 It was conceded that in making any money orders against Mr Winter, account would be taken of the settlement reached with the other respondents. 10 The claims were brought under s 106 of the Act. It provides: 106 Power of 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. (2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. (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. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.