Tana v Baxter [1986] HCA 69; (1986) 160 CLR 572 (25 November 1986)

HIGH COURT OF AUSTRALIA

TANA v. BAXTER [1986] HCA 69; (1986) 160 CLR 572
F.C. 86/070

Service and Execution of Process

High Court of Australia
Gibbs C.J.(1), Mason(1), Brennan(2), Deane(1) and Dawson(1) JJ.

CATCHWORDS

Service and Execution of Process - Relief in respect of or affecting a contract - Application to avoid agreements or arrangements - Relief sought against persons not party to agreement or arrangement - Consequential order for payment of money sought against person not party to agreement or arrangement - The Constitution (63 & 64 Vict. c. 12), s. 71 - Service and Execution of Process Act 1901 (Cth), s. 11(1)(b) - Industrial Arbitration Act 1940 (N.S.W.), s. 88F(1).

HEARING

1986, March 13; November 25. 25:11:1986
APPEAL from the Industrial Commission of New South Wales.

DECISION

GIBBS C.J., MASON, DEANE AND DAWSON JJ.: The question for decision in this appeal is whether the Industrial Commission of New South Wales ("the Commission") had power under s.11 of the Service and Execution of Process Act 1901 (Cth), as amended, to order that Paul Matthew Baxter and others, the first respondents to this appeal, be at liberty to proceed against the appellant in proceedings brought in the Commission for relief under s.88F of the Industrial Arbitration Act 1940 (N.S.W.), as amended. Sub-sections (1) and (2) of s.88F provide as follows:

"(1) The commission may make an order or award
declaring void in whole or in part or varying in
whole or in part and either ab initio or from some
other time any contract or arrangement or any
condition or collateral arrangement relating
thereto whereby a person performs work in any
industry on the grounds that the contract or
arrangement or any condition or collateral
arrangement relating thereto -

(b) is harsh or unconscionable, or

(c) is against the public interest. Without
limiting the generality of the words
'public interest' regard shall be had in
considering the question of public
interest to the effect such a 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, or

(d) provides or has provided a total
remuneration less than a person
performing the work would have received
as an employee performing such work, or

(e) was designed to or does avoid the
provisions of an award, industrial
agreement, agreement registered under
Part VIIIA or contract determination.

(2) The commission, in making an order or
award pursuant to subsection (1), may make such
order as to the payment of money in connection with
any contract, arrangement, condition or collateral
arrangement declared void, in whole or in part, or
varied in whole or in part, as may appear to the
commission to be just in the circumstances of the
case."

The proceedings in the Commission were commenced by a notice of motion which bears two dates - 22 March 1985 and 3 May 1985 - both of which were before the Industrial Arbitration (Further Amendment) Act 1985 (N.S.W.) took effect, and the amendments made by that statute to s.88F of the Industrial Arbitration Act do not apply to the present case. The applicants were Paul Matthew Baxter, John Newton Baxter, P. & S. Baxter Pty. Limited and Tunstall Investments Pty. Limited (the first respondents to this appeal) and two other persons, Donald William Rampling and Thermidair Engineering Pty. Limited. The respondents to the application were Nick Tana (the appellant) and W.B.H. Investments Pty. Limited, Gurri Pty. Limited and Polona Pty. Limited (the second respondents to this appeal). The relief sought was an order or award declaring void in whole ab initio each of the following agreements and arrangements which related to stores known as "Big Rooster", which sold cooked chickens:

(1) The franchise agreement relating to the Umina "Big
Rooster" made in or about May 1981 between P. & S.
Baxter Pty. Limited and W.B.H. Investments Pty.
Limited and the collateral arrangement relating
thereto involving the payment of $39,996 for
goodwill to Gurri Pty. Limited and the collateral
arrangements relating thereto involving the lease
of the premises from Polona Pty. Limited;

(2) The franchise agreement relating to The Entrance
"Big Rooster" made in or about 1982 between W.B.H.
Investments Pty. Limited of the first part and P. &
S. Baxter Pty. Limited, Tunstall Investments Pty.
Limited and Thermidair Engineering Pty. Limited of
the second part and Paul Matthew Baxter, John
Newton Baxter and Donald William Rampling of the
third part; and

(3) The franchise agreement relating to the Gosford
"Big Rooster" made in or about 1982 between W.B.H.
Investments Pty. Limited of the first part and P. &
S. Baxter Pty. Limited, Tunstall Investments Pty.
Limited and Thermidair Engineering Pty. Limited of
the second part and Paul Matthew Baxter, John
Newton Baxter and Donald William Rampling of the
third part.

The application further sought "such order or orders as to the payment of money as may appear to the Commission to be just in the circumstances of the case" and an order for costs. According to the affidavit filed in support of the application, the three franchise agreements and the collateral arrangements were entered into as a result of representations made to Paul Matthew Baxter by the appellant who, at the time when the representations were made and the various agreements and arrangements were entered into, was said to be "the principal behind 'Big Rooster'", and who then was a director of each of the three companies which are the second respondents. Each of those companies is incorporated in New South Wales. We were informed that the appellant is no longer a director of any of those companies. At the time when the proceedings were commenced the appellant was in Perth in Western Australia and he was served with the application there on 13 May 1985.

2. The appellant entered a conditional appearance in the proceedings in the Commission, and applied to have the originating process in those proceedings, or the service thereof, set aside on the ground that the matter did not fall within the description of any of pars.(a)-(f) of s.11(1) of the Service and Execution of Process Act 1901 (Cth), as amended. The Commission held that the case fell within s.11(1)(d) of that Act and found it unnecessary to rule upon an alternative submission that the case also fell within s.11(1)(b) of the Service and Execution of Process Act. It was accordingly held that the proceedings against the appellant may be continued. Before this Court the respondents sought to uphold this decision by relying on pars.(a) and (e), as well as on pars.(b) and (d), of s.11(1).

3. Section 11(1) of the Service and Execution of Process Act, so far as it is material, provides as follows:

"When no appearance is entered or made by a
defendant to a writ of summons served on him under
this Act, if it is made to appear to the Court from
which the writ was issued or a Judge thereof -

(a) that the subject-matter of the suit, so
far as it concerns such defendant is -

(1) land or other property situate or
being within the State or part of
the Commonwealth in which the writ
was issued; or

(2) shares or stock of a corporation or
company having its principal place
of business within that State or
part; or

(3) any deed, will, document, or thing
affecting any such land, shares,
stock, or property; or

(b) that any contract in respect of which
relief is sought in the suit against such
defendant by way of enforcing,
rescinding, dissolving, annulling, or
otherwise affecting such contract, or by
way of recovering damages or other remedy
against such defendant for a breach
thereof, was made or entered into within
that State or part; or

...

(d) that any act or thing sought to be
restrained or removed, or for which
damages are sought to be recovered, was
done or is to be done or is situate
within that State or part; or

(e) that at the time when the liability
sought to be enforced against the
defendant arose he was within that State
or part;

...

such Court or Judge may on the application of the
plaintiff order from time to time that the
plaintiff shall be at liberty to proceed in the
suit in such manner and subject to such conditions
as such Court or Judge may deem fit, and thereupon
the plaintiff may proceed in the suit against such
defendant accordingly."

It was not disputed by the parties before us that the Commission (which by s.14(1) of the Industrial Arbitration Act is declared to be a superior court of record) is a court within s.11(1) of the Service and Execution of Process Act or that the proceedings in the Commission were a suit, which is defined by s.3 of that Act to include "any ... original proceeding between parties". Further, no question was raised as to the procedure which has been followed by the appellant.

4. For the purpose of deciding whether the case falls within s.11(1) it is necessary to consider the nature of the claim made against the appellant. The notice of motion does not expressly state against whom the relief which it seeks is sought. The appellant was not a party to any of the agreements or arrangements which it is sought to declare void and counsel for the first respondent stated in argument before us that the relief sought against the appellant is that he be jointly or severally liable with the second respondents for the payment of such money as the Commission may order to be paid, and for costs. That statement may correctly describe the substance of the relief which the first respondents hope to obtain from a practical point of view, but in legal theory the description is too narrow. It is clear that an order made under s.88F(2) cannot be made unless an order is also made under s.88F(1). In other words, relief cannot be obtained against the appellant under s.88F(2) unless an order or award is made declaring void the agreements and arrangements (or some of them). In Brown v. Rezitis [1970] HCA 56; (1970) 127 CLR 157 this Court held that the Commission may make an order under s.88F(2) for the payment of money by a person who was not a party to the contract or arrangement declared void under s.88F(1), provided that the order has a sufficient connexion with the making, variation or avoidance of that contract or arrangement. The Court rejected a submission that the only persons who can be made parties to a proceeding under s.88F are persons who are parties to the contract or arrangement which the Commission is asked to vary or declare void. Barwick C.J. (with whom McTiernan, Windeyer and Owen JJ. concurred) gave as an example of a case in which the parties to the proceedings might not be limited to the parties to the contract or arrangement a matter in which "the avoidance of the contract or arrangement may be a step in uncovering the real transaction benefiting at the expense of the worker parties other than those in whose name the contract or arrangement was apparently made": see at p.164. He continued, at p.165:

"Whilst it can be said that the expression 'in
connection with' is of wide import, it does
emphasize the need for a close connexion between
the order made and the contract or arrangement
varied or avoided. In my opinion, the power to
make an order for the payment of money is at best
no more than a power to make such an order as can
reasonably be thought to have a real connexion with
the making, variation or avoidance of the contract
or arrangement which has been varied or avoided.
It may in truth be limited to a power to make an
order for payment of money which has in fact a real
connexion with the making, variation or avoidance
of the contract or arrangement."

Menzies J., at p.170, said that "a payment of money in respect of (1) work done, or (2) money spent, or (3) obligations incurred, under the avoided contract or arrangement, is properly to be regarded as a payment in connexion therewith so long as the person who is ordered to make the payment is a person who was connected in some way with the making of the contract, or the work done, or the expenditure made, or the obligation incurred thereunder".

5. In the present case it is claimed that the appellant participated in the making of the agreements and arrangements which it is sought to avoid, and it may also be intended to be suggested that he benefited from those agreements and arrangements. It is of course quite unnecessary to decide whether what is alleged will be sufficient to entitle the first respondent to succeed before the Commission. What is important, however, is that the claims against the appellant necessarily include the claims to declare void the agreements or arrangements, because it is only if those agreements and arrangements (or some of them) are declared void that an order under s.88F(2) may be made against the appellant.

6. Once this is understood, it will be seen that the case answers the description contained in par.(b) of s.11(1). The agreements and arrangements mentioned in the notice of motion were of course contracts and they were made within the State of New South Wales. Relief is sought in the suit "by way of ... affecting" such contracts. Section 11(1)(b) does not refer to an action "upon" a contract, but to a contract "in respect of which relief is sought", and as Miles J. correctly held in Nominal Defendant v. Motor Vehicle Insurance Trust of Western Australia (1983) 3 NSWLR 309, at p 314, the terms of the paragraph are wide enough to cover a claim for relief by a third party in respect of a contract made between other parties, provided that the relief is "by way of ... affecting such contract". Equally, par.(b) covers a claim for relief by one party to a contract against a third party, if the relief is "by way of ... affecting such contract". Plainly enough, an order or award declaring the agreements and arrangements to be void will affect those agreements and arrangements within the meaning of the paragraph: see Gosper v. Sawyer (1985) 59 ALJR 429, at p 437; 58 ALR 13, at p 26. It has already been demonstrated that an order or award of that kind is sought against the appellant in the present case, as well as against the second respondents.

7. The question remains whether the consequential order for the payment of money which is sought against the appellant also falls within the description of s.11(1)(b). Such an order must, as s.88F(2) expressly provides, be "in connection with" any of the agreements and arrangements declared to be void. It will affect such agreements and arrangements, in that it will have an effect on the benefits and detriments which have resulted from the agreements and arrangements - not only to the parties to them but also to the appellant. It has been held that other words in s.11(1)(b) should receive a wide construction (Gosper v. Sawyer, at p 437; p 26 of ALR; Victoria v. Hansen [1960] VicRp 90; (1960) VR 582, at p 586 and cases there cited) and the words "otherwise affecting such contract" in the paragraph should similarly be understood in a wide sense and as including practical as well as direct legal effects. So understood, the claim against the appellant for an order under s.88F(2) falls within the description of s.11(1)(b). This conclusion receives support from the decision of Kerr J. in B.P. Exploration Ltd. v. Hunt (1976) 1 WLR 788; (1976) 3 All ER 879 where it was held that a claim for "such sum or sums as the court considered just in respect of valuable benefits obtained by the defendant under (certain) agreements pursuant to the Law Reform (Frustrated Contracts) Act 1943 (U.K.)" was a claim within the meaning of the words "or otherwise affect a contract" in O.11 r.1(f) of the Rules of the Supreme Court (U.K.): see particularly at p.796; p.886 of All E.R. An additional reason for giving the words of the paragraph this wide construction is that a contrary construction would produce the undesirable, and presumably unintended, result that the Commission would in the present case have jurisdiction to make an order against the appellant under s.88F(1) but not under s.88F(2).

8. For these reasons we conclude that the case fell within s.11(1)(b) of the Service and Execution of Process Act and that the Commission had power to order that the first respondents should be at liberty to proceed in the suit. It becomes unnecessary to consider whether the case also fell within the other paragraphs of s.11(1) on which reliance was placed, although it seems doubtful whether it did.

9. The appeal should be dismissed.

BRENNAN J.: The argument on this appeal proceeded on the common understanding that the notice of motion by which proceedings were commenced in the Industrial Commission of New South Wales and which was served on the appellant in Western Australia satisfies the definition of "writ of summons" in the Service and Execution of Process Act 1901 (Cth) ("the Act"). Liberty to proceed in a suit commenced by a writ of summons may be ordered pursuant to s.11 of the Act by the Court from which the writ was issued. A tribunal is not a "court" for the purposes of s.11 unless the jurisdiction to order liberty to proceed is vested in it. Originating process issued out of a tribunal which is not a court cannot attract the operation of s.11, for a tribunal which is not a court cannot be vested with jurisdiction to order liberty to proceed. That jurisdiction is federal. As federal jurisdiction can be vested only in State tribunals which are "courts" for the purposes of s.71 of the Constitution, the writs of summons to which s.11 applies are writs of summons issued from a tribunal which is a "court" for the purposes of s.71.

2. It was assumed in argument that the Industrial Commission is such a court and counsel pointed to s.14(1) of the Industrial Arbitration Act 1940 (N.S.W.) which provides, inter alia:

" The commission shall be a superior court of
record, and its seal shall be judicially
noticed."

As at present advised, I should not think that such a provision necessarily establishes that the tribunal to which it relates is a court for the purposes of s.71 of the Constitution, albeit such a provision is an important indicium of a tribunal's character. The Commission's character as a court was not contested in these proceedings and I should wish to reserve consideration of that question until it is argued.

3. In this case it is appropriate to assume that, for the purpose of exercising the jurisdiction invoked by the making of the applications, the Commission is a court. Making that assumption and the cognate assumptions that the proceedings commenced by the notice of motion is a "suit" and that the notice of motion is a "writ of summons" as defined by s.3 of the Act, I would hold that the relief sought against the appellant falls within s.11(1)(b) of the Act. I agree with and have nothing to add to the reasons given by my brothers for that conclusion.

4. I too would dismiss the appeal.

ORDER

Appeal dismissed with costs.