Lowe v BEA Systems Pty Ltd [2008] NSWIRComm 108 (10 June 2008)

Last Updated: 13 June 2008

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION :
Lowe v BEA Systems Pty Ltd [2008] NSWIRComm 108



FILE NUMBER(S):
IRC 1645

HEARING DATE(S):
3 April 2006, 14 July 2006, 26 September 2007, 14 February 2008, 19 March 2008, 26 May 2008

DATE OF JUDGMENT:
10 June 2008

PARTIES:
APPLICANT
David Arthur Lowe
RESPONDENT
BEA Systems Pty Ltd

CORAM:
Marks J


CATCHWORDS: S106 unfair contract proceedings -interlocutory application - applicant has proposed further amendments to initial proposed further amended summons - respondent seeks that proposed further amendments be rejected due to s108B - respondent submitted that the further proposed amendment sought to attack a contract which was different to the contract being attacked in the proceedings as currently constituted - lack of specificity which identifies the contract which is sought to be declared unfair - nothing in the amended summons that is indicative of any contract between the applicant and the respondent - r18A requires the applicant to specify the nature of the claim and the contract or arrangement - clear description of arrangement in the proposed further amended summons - application to amend proceedings so as to create a contract or arrangement between the applicant and respondent would constitute an application for an order in relation to a contract that has been terminated - s108B precludes application to amend proceedings by reference to any other contract as defined in s105 - application to amend is dismissed

LEGAL REPRESENTATIVES
APPLICANT
Mr R Goot SC
Mr S Prince of counsel
Solicitor
Lakos & Company Lawyers
Mr J Lakos
RESPONDENT
Mr I Neil SC
Solicitor
Baker & McKenzie Solicitors
Mr M Michalandos

CASES CITED:
BEA Systems Pty Limited v Industrial Relations Commission of New South Wales in Court Session (2005) 63 NSWLR 347
Fish & Anor v Solution 6 Holdings Limited & Ors (2002) NSWIRComm 93
Majik Markets Pty Ltd v Brake ad Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443
Mitchforce Pty Ltd v Starkey (No 2) (2003) 130 IR 378
Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 37 IR 46

LEGISLATION CITED:
Industrial Relations Act 1996 s105, 106, 108B
Industrial Relations Commission Rules 1996 r18A


TEXTS CITED:




JUDGMENT:

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: Marks J

Tuesday 10 June 2008

Matter No IRC 1645 of 2002

Lowe v BEA Systems Pty Limited

Application under s 106 of the Industrial Relations Act 1996

JUDGMENT ON APPLICATION TO AMEND

[2008] NSWIRComm 108

1 In these proceedings, commenced initially in 2002, the applicant David Arthur Lowe seeks certain relief against the respondent BEA Systems Pty Limited pursuant to s 106 of the Industrial Relations Act 1996 (“the Act”). The respondent is a corporation registered in Australia under Australian law.

2 Relevantly, ss 105 and 106 of the Act are in the following terms:
s 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.

s 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.

3 The summons originally filed was amended extensively on 29 September 2003. The proceedings are currently constituted by that amended summons.

4 In 2004, the applicant sought to amend the proceedings by joining as an additional respondent a US corporation, BEA Systems Inc, of which the respondent is a subsidiary incorporated in Australia. The applicant was unsuccessful in those proceedings, which were determined ultimately by the New South Wales Court of Appeal. (See BEA Systems Pty Limited v Industrial Relations Commission of New South Wales in Court Session (2005) 63 NSWLR 347.)

5 In 2006, the applicant sought to further amend the proceedings and in doing so has in turn proposed further amendments to the initial proposed further amended summons. The latest version of the proposed further amended summons, which is the subject of these proceedings, was filed by the applicant on 19 March 2008.

6 In essence, the respondent asked the Court to reject the proposed further amendment to the proceedings on the basis that that amendment was caught by s 108B of the Act, which is in the following terms:

s 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, subject to subsection (3), to accept an application made after the time prescribed by subsection (1).

(3) The Commission may accept an application made within 3 months after the time prescribed by subsection (1) if the applicant satisfies the Commission that there are exceptional circumstances justifying the making of the late application.

7 Expressed in its most basic terms, the respondent submitted that the further proposed amendment sought to attack as unfair a contract, as defined in s 105 of the Act, which was different to the contract that was sought to be attacked in the proceedings as currently constituted and the amendment of the proceedings in this way was therefore time-barred by s 108B.

8 In order to deal with this interlocutory application, it is necessary to identify, firstly, the contract that is sought to be declared unfair in the proceedings as currently constituted and, secondly, the contract that is sought to be found unfair in the proposed amendment and then to determine whether s 108B applies.

The summons as currently amended

9 In considering the summons in its current amended form, I propose to approach its construction taking its meaning at its highest in favour of the applicant. This is because of the interlocutory nature of these proceedings and because they involve, ultimately, consideration of a submission by the respondent that the proceedings in their current form do not seek to have declared unfair any contract as defined in s 105 of the Act between the applicant and the named respondent. Furthermore, in approaching the task of construction I intend having regard to the totality of the content of the document, rather than isolating any particular part of it without reference to the remainder. The consequences of this approach will, I trust, become clear during the course of the discussion which follows.

10 The amended summons filed on 29 September 2003 (“amended summons”) seeks to have declared unfair “the contract or arrangement, and any related or collateral arrangement, between the Applicant and the Respondent....”

11 It will be immediately observed that the subject matter of the amended summons is expressed in an alternative, namely “contract” or “arrangement” and refers also to any related or collateral arrangement which is presumably related to or collateral with the contract or the arrangement.

12 There is no other specificity in that part of the amended summons that identifies the contract which is sought to be declared unfair.

13 Part B of the summons is entitled “Grounds” and sets out “the matters of fact and law that form the basis of this application” stating that they are to be found in a schedule to the amended summons. In a section entitled “The Working Arrangement”, the amended summons narrates how the applicant “joined” a USA corporation in New Jersey known as Information Management Company Inc (“IMC”) which was said to have been later taken over by another US corporation BEA Inc (“BEA”). It was stated that the applicant became a “consultant” working exclusively for BEA after the takeover. The takeover occurred in October 1995.

14 In July 1996, the applicant was “sent from the USA on assignment to undertake work in Australia and New Zealand for clients of BEA. During that time the applicant met the Managing Director of the (then) newly-opened BEA Australia Sydney office. That office was developing a local client base and the applicant was asked if he would like to be located in Sydney. He indicated that he was prepared to be so located.” This material, which is to be found in [26] of Part B of the amended summons, assumed significance for the applicant’s case. I shall return to it.

15 The amended summons then refers to a request made by BEA in October 1996 for the applicant to become one of its employees based in the USA. This offer was ultimately declined. The applicant then signed a consulting services agreement with BEA. I was referred to that agreement by the parties during the course of the proceedings. It is said to be “made” on 4 November 1996. The applicant is described as a consultant and is to be paid at the rate of $750 per day (which I assume is expressed in US currency). Specifically the applicant agreed to “...serve as a business Consultant reporting to Art Nelson at customer locations as needed...”.

16 The amended summons states that the applicant was assigned and relocated to Australia in November 1996 after signing that agreement and “worked out of BEA’s Sydney office. That work took him to BEA’s Australian, New Zealand, Hong Kong and Korean offices and to the offices of various clients wherever located in the Asia Pacific region...Although based in Australia, the applicant continued to be paid on ‘invoices’ he raised and addressed to BEA which were submitted to BEA’s office in California. He also continued to be paid in US currency and to remit US tax using his US tax file number.”

17 In May 1997, “the applicant was requested to thereafter submit his ‘invoices’ to BEA’s Sydney office but otherwise he continued to be paid in US currency and to pay US income tax in the same manner as prior to May 1997.”

18 On 7 May 2000, the applicant received an offer of employment and appointment to the position of “senior consultant” with BEA. He ultimately declined that offer.

19 Thereafter, the applicant’s contract is said in the amended summons to have been terminated by “BEA”.

20 At the end of the amended summons there appears a number of paragraphs under the heading “Contentions”. I set out hereunder [71] to [73] of the amended summons.

“71. The Applicant contends that in law, whether under the laws of California or those of New South Wales, he was at all material times and always had been, an employee of IMC/BEA and not an independent contractor; and as such, he was entitled to the same benefits of employment as BEA’s other employees.

72. The Applicant also contends that notwithstanding, it was altogether unfair of the Respondent to provide to his colleagues and its employee Consultants, the special benefits in relation to the aforesaid share-purchase Plans whilst denying those same benefits to him.

73. Further, it is contended that, the Respondent did unfairly, and wrongly, terminate the applicant’s contract without good reason or cause.”

The proposed further amended summons

21 The proposed amendment seeks to have declared unfair “the contract or arrangement, and any related or collateral arrangement, between the applicant and the respondent, (as defined in Schedule One hereto) whereby the applicant performed work for the respondent...”

22 The Schedule makes reference to both the contract and the arrangement. In connection with the “contract”, the Schedule says:

“1. The Contract is constituted by a contract made orally in Sydney in or about November 1996, between the Applicant and Mr Ruzic on behalf of the Respondent, whereby the Applicant was to perform work in the information technology industry in and of New South Wales (“Industry”) for the benefit of the Respondent.

2. It was a term of the contract that in consideration of the payment by the Respondent to the Applicant of the monies set out in a Consultancy Services Agreement made in writing on or about 4 November 1996 between the applicant and BEA Inc, (“Agreement”), the Applicant would work for the Respondent in Sydney and elsewhere.

3. BEA Inc was at all material times in and after November 1996, the Respondent’s agent and had ostensible authority to bind the Respondent.”

23 In describing the alternative formulation of “arrangement”, the Schedule includes the following:

“4. Further and in the alternative, the Contract comprised an arrangement, in operation from about November 1996, involving the Applicant and the Respondent whereby the Applicant performed work for the Respondent in the Industry on an ongoing basis (“Arrangement”).

5. The Arrangement was constituted, inter alia, by the following:

a. performance of work by the Applicant for the Respondent in the industry (“Work”);

b. the applicant’s residence in Sydney;

c. allocation, direction and control by the Respondent of the Work, including contracting the Applicant out to (NSW and other locations) clients of the Respondent;

d. the Respondent’s independent reporting management and finance structure of which the Applicant and the Work formed part;

e. provision by the Respondent of its property to enable the performance of the Work;

f. supervision and management by the Applicant of other of the Respondent’s employees and consultants;

g. the Respondent’s financial and budgetary responsibility for the Applicant’s remuneration;

h. after May 1997, provision of invoices by the applicant to the Respondent and payment to the Applicant by the Respondent for the Work;

i. payment to the Applicant by the Respondent of a living away from home allowance;

j. reimbursement by the Respondent of the Applicant’s business related expenses;

k. making payment of remuneration to the Applicant, dependent upon the Work;

l. the Respondent not paying the Applicant his remuneration or allowances during periods when the Applicant notified the Respondent that the Work would not be performed by him;

m. generating profit and revenue from the Work for the Respondent’s own account and the Respondent’s accounting for the Work in its budget, revenue targets, margin calculations, profit and loss statements and its other financial and accounting records;

n. making the Work conditional on the Respondent’s need to have the Work performed and its ability to recoup the costs of the Work from its clients;

o. Written representations by the Respondent that the Applicant worked for the Respondent;

p. The respondent’s intention (expressed in writing in April 1998), to terminate the Applicant’s services;

q. The Respondent’s written offer to the Applicant (7 May 2000) of appointment as its Senior Consultant;

r. The nomination in February 2000 and on other earlier occasions to DIMA by the Respondent (Sponsor) to obtain a visa for the Applicant (nominee), as a Principal Consultant for its business and the representations made to DIMA that the applicant was employed by the Respondent;

s. The granting by DIMA of a class 457 Visa to the Applicant with the Respondent as his employer (Sponsor) and the undertakings given by the Respondent thereunder.”

The form of the summons and the requirements of the Rules

24 The relevant provision in the Rules of this Court is Rule 18A which is in the following terms:

18A New procedure under section 106 (Unfair contracts)

(1) An application to the Commission to exercise the powers conferred on it by section 106 must be in Form 12A and must:

(a) specify in summary the matters of fact and law which form the basis of the application, but not the evidence by which those facts are to be proved, and

(b) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary.

(2) Unless otherwise ordered by the Registrar the application must be served on the respondent.

(3) Where within the required period of time, an appearance has not been entered by a respondent, the applicant may proceed to have the matter determined in the absence of that respondent.

(4) Within 21 days after the date of expiry of the time limited for the respondent’s appearance the respondent must file and serve its reply. Such reply must be in Form 12B and must:

(a) answer each of the matters raised in the application, and

(b) specify in summary any additional matters of fact and law upon which the respondent will rely in opposition to the application, but not the evidence by which those facts are to be proved, and

(c) contain sufficient information to allow the Commission to carry out its duty to conciliate under section 109 by a succinct summary.

(5) An applicant must within 14 days of the time of filing of the reply file and serve a response answering each of the matters specified in the reply pursuant to subrule (4). Such response must be in Form 12C.

(6) The applicant or respondent, as appropriate, must file and serve with the application, reply and response an affidavit verifying the matters of fact set out therein. If the relevant party is a corporation the affidavit may be sworn by an officer or employee of the corporation who is able to verify the matters of fact relied upon.

(7) Nothing in this Rule is to be taken to derogate from or otherwise limit the requirements of or the Commission’s powers under Parts 9 and 13 of these Rules.

(8) The Registrar must, as soon as practicable after the filing or expiration of the time for filing of the response, whichever occurs first, refer the matter for allocation to a Member of the Commission for conciliation in accordance with section 109 or, if the Registrar considers it appropriate, for directions either before the Registrar or a Judge of the Commission.

(9) This Rule takes effect from 31 January 2000. An application to the Commission to exercise the powers conferred on it by section 106 may be commenced and proceeded with pursuant to either Rule 18 or Rule 18A until 6 October 2000 from which time all such applications are to be commenced and proceeded with in accordance with Rule 18A.

25 The history of the introduction of Rule 18A and its purpose have been discussed by Schmidt J in this Court in Fish & Anor v Solution 6 Holdings Limited & Ors (2002) NSWIRComm 93. Her Honour noted that the purpose was to reduce costs, particularly in anticipation of the mandatory conciliation process required by s 109 of the Act.

26 The provisions of Rule 18A(1) are expressed in a mandatory form. There is a compulsion to utilise Form 12A and to specify in a summary manner “the matters of fact and law which form the basis of the application...”. The evidence by which those facts are to be proved is not to be contained within the summons.

27 Form 12A requires that the applicant specify firstly the nature of the claim and secondly the contract or arrangement in respect of which the application is made. I apprehend that “specify” is used in accordance with its ordinary English usage meaning. This requires that there be a reference to the particular subject matter in a definite or explicit manner, and a description of it in some detail.

The contract attacked in the amended summons

28 Having regard to these requirements imposed by Rule 18A, which embodies a reference to Form 12A, it is then necessary to identify the contract which is sought to be impugned in the proceedings as currently constituted. The necessary specificity can only be found in the Schedule to the amended summons, the relevant provisions of which I have earlier set out and referred to. There is specific reference made to the consultancy agreement dated 4 November 1996. However, this is an agreement between the applicant and BEA, the US corporation; it is not an agreement between the applicant and the respondent. There is reference in the amended summons to a change in the procedure by which the applicant submitted invoices, which occurred in May 1997. He was required to submit his invoices to “BEA’s Sydney office”. But this is not per se indicative of any change in the nature of any underlying contract.

29 There is a lengthy narration in the amended summons dealing with the circumstances leading up to the termination of the applicant’s relationship with BEA. All of the narration refers to either BEA or “BEA’s Sydney office”. There is not one reference to the respondent as a corporate entity, save that that might possibly be inferred from a reference to “BEA’s Sydney office”. There is nothing that I can see in the amended summons that is indicative of any contract between the applicant and the respondent, the Australian corporation. Indeed, this is consistent with [71] of the amended summons, the provisions of which I have earlier extracted in full. That asserts, as I understand it, that at all times the applicant was an employee of IMC/BEA. This is suggestive of a contractual relationship with BEA, but not a contractual relationship with the respondent.

30 The proposed further amended summons describes the contract as “constituted by a contract made orally in Sydney in or about November 1996, between the applicant and Mr Ruzic on behalf of the respondent, whereby the applicant was to perform work in the information technology industry in and of New South Wales...for the benefit of the respondent.” It was said that a term of that contract was that the remuneration of the applicant for the work performed by him for the respondent was the payment by the respondent to him of the monies referred to in the consultancy agreement made between the applicant and BEA. It was asserted that “BEA Inc was at all material times in and after November 1996, the respondent’s agent and had ostensible authority to bind the respondent.”

31 I have earlier set out, in [14], the provisions of [26] of the current amended summons. It was common ground between the parties that the managing director of the then newly opened BEA Australia Sydney office was Mr Ruzic, the same person who is referred to in the proposed further amended summons. However, I am unable to discern that there is any material in the current amended summons that is capable of being read so as to refer, even indirectly, to any oral contract having been made between the applicant and Mr Ruzic on behalf of the respondent to the proceedings of the kind set out in the proposed further amended summons. [26] refers to events which occurred in July 1996, the contract was said to have been made in about November 1996. The current amended summons in relating events that occurred in November 1996 makes reference to the signed consultancy agreement between the applicant and BEA. There is no reference to any oral contract made at about the same time between the applicant and a person on behalf of the respondent whether that person be described as Mr Ruzic or as the managing director.

32 I reject, therefore, any argument that the current amended summons is capable of being read so that it might be said to seek to impugn a contract between the applicant and the respondent to the proceedings.

The arrangement attacked in the amended summons

33 As I have earlier observed, the amended summons refers in the alternative to an arrangement between the applicant and the respondent to the proceedings whereby the applicant performed work for the respondent. There is also reliance in the proposed amended summons on an arrangement as an alternative basis for the proceedings.

34 That which constitutes an arrangement was discussed by Wright J, President and Walton J, Vice-President, in some detail in Mitchforce Pty Ltd v Starkey (No 2) (2003) 130 IR 378 at paragraph [132] their Honours said:

“[132] What may constitute an ‘arrangement’ insofar as the section is concerned was discussed by the Full Bench in Legal & General Assurance Society Limited v Stock (1993) 49 IR 464 (at 480 - 481):

The authorities make clear that the term ‘arrangement’ where used in the section is a wide one and encompasses transactions or plans which are not legally enforceable agreements. The following principles may be drawn from decided cases in the matter in relation to the ambit and reach of the term ‘arrangement’ where used in the section (Unconscionable Contracts and Economic Duress - Peter M Hall, at 55-56):

(1) The word ‘arrangement’ in its ordinary meaning and particular statutory context is a word of much wider import than the word ‘contract’.

(2) An ‘arrangement’ will be found to exist where there is a bilateral or multilateral plan or concerted action to bring about a particular result.

(3) An ‘arrangement’ may envisage a transaction in the nature of a bargain which may not be legally binding or enforceable, something in the nature of an understanding between two or more persons.

(4) The section speaks of an arrangement of a particular kind, namely, an arrangement whereby a person performs work in an industry, that is, a transaction which directly leads to the performance of work in an industry.

(5) The term ‘arrangement’ possessing a broad and extensive meaning may be found disclosed in a document comprising or specifying its terms, or there may be no document specifying the arrangement in which event resort will be had to oral evidence of discussions whilst in other cases an arrangement may be implied or inferred from the circumstances or the conduct of the parties. An arrangement may be discovered in a combination of documentary or verbal communications and the conduct of the parties. The relationship between the parties may itself manifest an arrangement. (6) There may exist two separate contracts each forming part of a specific arrangement and together constituting the means by which it is effectuated so as to produce particular results and whereby a person performs work in an industry.

(7) The section accordingly comprehends not only the initial plans but all transactions by which the arrangement is carried into effect. It applies to any dealing the purpose or the effect of which is to achieve a situation as a consequence of which or wholly or partly in fulfilment of which a person performs work in an industry.

(8) The term ‘arrangement’ embraces a situation where there exists two or more separate contracts which, notwithstanding their separateness, are, in a particular factual context, so sufficiently associated with each other in a practical sense as together to constitute an arrangement of which each contract is a constituent part.

(9) The arrangement, including the relationship leading to the performance of work and another contract, need not necessarily have sprung into existence at the same time.”

35 Later, their Honours said:

“[135] For an ‘arrangement’ to be one whereby work is performed in an industry, there need merely be ‘a plan or concerted action by a number of persons to bring about [that] particular result’: see Hall v Alison Clint Floral Delivery Pty Ltd at 64; and also Custom Credit Corporation Ltd v Goldsmith at 131, where the Full Bench held:

‘But it must be true to say, we think, that it is significant that Parliament did not see fit to include in the Act any definition of “arrangement”, which is not a term of art and is not a word which has a very precise meaning. Looking at the setting in which it is used in s 88F, we are of the opinion that in one of its meanings “arrangement” embraces transactions which do not give rise to contracts or obligations, that is to say, obligations enforceable at law; but we are also of the opinion that in another meaning it embraces a situation where there exist two or more separate contacts which, notwithstanding their separateness, are, given the facts, so sufficiently associated with each other in a practical sense as together to constitute an arrangement of which each contract is a part’.

[136] It is difficult to speak of an element of a ‘plan or concerted action by a number of persons’ as being a ‘term’ of such an arrangement in the manner with which that word was used by the majority in Production Spray Painting. Whilst such language was clearly appropriate in the circumstances of that matter, in the context of an arrangement, as we have described it, such a word is somewhat misplaced. We agree with the respondent that in such circumstances, a reference to ‘purpose’ will clearly be of greater utility and directs attention to the substance of the transaction between the parties.

[137] What may constitute an arrangement against which the jurisdictional test (as earlier identified by us) is to be measured is clearly a matter of fact to be determined in all the circumstances.

[138] One thing, however, is certain and was emphasised by Mahoney JA in Majik Markets (at 455) ‘it is in principle necessary [to] know what the arrangement in question is so that [the Court] can determine whether the arrangement is one which falls within s 88F’ (our emphasis). This is consistent with observations within the first Full Bench consideration of the section in In Re Becker & Harry M Miller Attractions Pty Limited (No.2) [1972] AR (NSW) 298, where it was stated at 304:

‘Merely reading the contract in vacuo supplies no answer on the issues both jurisdictional and discretionary which will face the single judge’.”

36 Production Spray Painting is a reference to Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 37 IR 46 and Majik Markets is a reference to Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 at 446.

37 For present purposes it is necessary to focus on the essential indicia which must be present before an arrangement may be found to exist. There needs to be a plan or concerted action to bring about a particular result. That is, there must be some mutuality of understanding, or at least some thought process on the part of each of the persons or entities participating in the arrangment which creates some degree of understanding or agreement about something.

38 It was submitted on behalf of the applicant that the amended summons was capable of being read so that it did refer to an arrangement between the applicant and the respondent. When pressed, senior counsel referred me to [26] of the current amended summons, the provisions of which I have earlier set out. As with the case of a contract, however, it is necessary for there to be some reference to a plan or concerted action or a mutuality of understanding of the kind earlier referred to between the applicant and some person who is representative of the named respondent. Again, [26] refers to events that occurred in July 1996. There is no suggestion that at that stage the applicant was in any relationship with the respondent to these proceedings. His relationship as described in the current amended summons was with BEA. Again, the only suggestion contained in the amended summons as to the parties to the relationship whether one of contract or arrangement in November 1996 was between the applicant and BEA. [40] of that summons makes it clear that the work performed by the applicant in Australia after November 1996 was undertaken under the agreement dated 4 November 1996. Certainly, initially and until May 1997, the applicant submitted invoices to the office of BEA in the USA, was paid in US currency and remitted tax under US tax law, all of which are referred to in [40] of the amended summons.

The arrangement referred to in the proposed amendment

39 In the proposed further amended summons, the arrangement was said to be constituted by a number of indicia. The indicia (the list of which is said not to be exclusive) are listed in [5] of Schedule One. I have earlier set these out in full.

40 The above material is of course that which is sought to be substituted for the current amended summons to be relied upon in asserting that there was an arrangement between the applicant and the respondent to the proceedings. None of that material is referred to expressly in the current amended summons.

41 I reject the applicant’s submission that the current amended summons can be read as asserting that there was an arrangement between the applicant and the respondent whereby the applicant performed work in an industry in New South Wales. If there was any arrangement, the current amended summons can only be read as though that arrangement was made between the applicant and BEA.

The contract sought to be attacked in the proposed amended summons

42 I have earlier set out the description of the contract which is sought to be attacked in the proposed further amended summons, at [22] and [30]. The contract is clearly described as one being made between the applicant and the respondent named in the proceedings, that is the Australian corporation. The description contains an assertion that the negotiations, albeit conducted between the applicant and a representative of BEA, the US corporation, were undertaken by that person as agent for the respondent.

The arrangement sought to be attacked in the proposed amended summons

43 I have earlier set out the description of the arrangement as contained in the proposed further amended summons, in [23]. Again, it is clearly described in terms of an arrangement between the applicant and the named respondent in the proceedings.

The impact of s 108B

44 I have earlier set out the provisions of s 108B of the Act.

45 Put shortly, the respondent submitted that the only relationship that was sought to be impugned by the applicant in the current amended proceedings was one between himself and BEA, that is the US corporation. The current amended summons is not capable of being read so as to be directed to any contract as defined in s 105 of the Act between the applicant and the respondent to these proceedings, as I have held. This being the case, the application to amend the proceedings so as to create, as a basis for jurisdiction and the exercise of power, a contract or arrangement between the applicant and the respondent named in the proceedings would constitute an application for an order in relation to a contract that has been terminated and that was now being made later than 12 months after the termination of that contract. (It was common ground that the 12-month time period had expired.)

46 It follows that having concluded that the current amended summons is not directed to any contract as defined in s 105 of the Act between the applicant and the respondent named in the proceedings, s 108B precludes an application to amend the proceedings by reference to any other contract as defined in s 105 of the Act.

A general discretion

47 It is obvious from the observations which I have made that the current amended summons is poorly drafted. I should make it plain that counsel currently retained by the applicant were not responsible for drafting it. As senior counsel said, if there had been no deficiencies in its drafting, there would be no need to seek to amend it. Prima facie, the current amended summons seeks to impugn a contract or arrangement made between the applicant and BEA, which is not a party to the proceedings. Indeed, [71] asserts that there was a contract between the applicant and BEA. I do not comprehend why the applicant chose to initiate proceedings based on a contract with an entity that was not a party to the proceedings. Apart from the difficulty created by the application of s 108B, if the applicant were permitted to amend in the manner sought, it would allow him to rely on a contract that is one other than that upon which the current proceedings are based by reference to the form of the amended summons. If, as now contended by the applicant, the amended summons was inadequately drafted, presumably by mistake, any correction of that mistake would allow the applicant to avoid the application of s 108B and would permit him to rely upon a summons which, as I have held, breaches Rule 18A in that the amended summons did not specify in summary the matters of fact and law which formed the basis of the application. In my opinion, this would be an approach that would not be appropriate in all of the circumstances of the proceedings. The applicant having failed, as I have held, to assert a contractual basis between himself and the respondent as the subject matter of the proceedings, it would be inappropriate in my opinion to allow him to now remedy that situation. Any remedy that he may have may now lie elsewhere.

48 For all these reasons, the application to amend is dismissed by reason of the application of the provisions of s 108B, as they apply to the circumstances of these proceedings.

49 The question of costs was not argued before me and I will reserve costs.



LAST UPDATED:
10 June 2008