FEDERAL COURT OF AUSTRALIA

ATS (Asia Pacific) Pty Ltd v Dun Oir Investments Pty Ltd [2012] FCA 1460

THE COURT ORDERS THAT:

1.    The applicant be granted leave to appeal from the orders made by the primary judge on 13 September 2012.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

1    This is an application for leave to appeal from the decision of the primary judge, striking out the proceedings brought by ATS (Asia Pacific) Pty Ltd against Dun Oir Investments Pty Ltd. The principles that govern the grant of leave to appeal are well established. An applicant for leave must establish that the decision in question is attended with sufficient doubt to warrant the grant of leave and the applicant must also show substantial injustice will result from a refusal of leave to appeal: Bienstein v Bienstein (2003) 195 ALR 225 at 231 [29] per McHugh, Kirby and Callinan JJ.

Background

2    On 18 January 2012, Dun Oir sued ATS in the District Court of New South Wales. That was shortly before ATS commenced these proceedings on 16 February 2012. Dun Oir claimed $275,000. Its claim was based on alleged breaches by ATS to make five monthly payments of $55,000 under an unsigned document that Dun Oir claimed was a contract made between the parties on 28 January 2011. Dun Oir contended that the “services” it had agreed to provide for $55,000 per month consisted of a conditional obligation to be “available” to attend a meeting with ATS for a maximum of 2 hours per month. The condition governing that obligation was that the time and place of the meeting had to be mutually agreed by the parties. ATS had paid about $360,000 to Dun Oir during the period in which Dun Oir contended that the alleged contract was in force.

3    ATS had sought to plead a cause of action seeking relief under the Independent Contractors Act 2006 (Cth) in this Court before the primary judge. Under s 5(1) of the Act a “services contract” was defined as:

“Services contract

General meaning

(1)    A services contract is a contract for services:

(a)    to which an independent contractor is a party; and

(b)    that relates to the performance of work by the independent contractor; and

(c)    that has the requisite constitutional connection specified in subsection (2).” (original emphasis)

4    His Honour construed the connecting factors set out in s 5(1)(b) of the Act by reference to decisions under other differently worded legislation, in particular, the different expression in s 106 of the Industrial Relations Act 1996 (NSW), namely “whereby a person performs work in any industry”. His Honour concluded that that Act did not apply to the contract relied on by Dun Oir because he found that:

“The parties did not contract for the provision of labour by Dun Oir for the benefit of ATS’ business on an independent contractor basis in contradistinction to an employer – employee relationship.”

5     In my opinion, it is arguable that His Honour erred in that approach. Ordinarily, a clause employing the words “relates to” or an expression of that kind should be construed according to its ordinary natural meaning and as giving a wide connecting scope to the factors to which the clause is directed.

6    His Honour concluded, applying decisions under s 106 of the Industrial Relations Act:

“Given that ATS’ obligation to pay Dun Oir arises independently of the performance of work, it cannot be said that this agreement involves the performance of work and thus s (5)(1)(b) excludes the Act’s application.”

7    The word “involves” is not used in s 5(1)(b) of the Act, and is arguably narrower than the scope of the words “relates to” in the expression “relates to the performance of work”. Something can “relate to the performance of work” without the contract requiring any work to be performed. That is unlike the operation of s 106 which required work to be performed.

8    His Honour also considered that:

“… it was not the intention of Parliament to expand the scope of the Act to cover all circumstances where services are provided under an agreement to ‘Party A’ by a person who is independent of ‘Party A’.”

He held that the intention of the Act was to provide protection to persons who enter into independent contracting “as a form of work arrangement”.

9    In my opinion, it is arguable that his Honour may have erred in that regard, as well, bearing in mind that s 4 of the Independent Contractors Act defined “independent contractor” as:

“Independent contractor is not limited to an actual person.”

Conclusion

10    I am satisfied that it is arguable that his Honour’s decision is attended by sufficient doubt to warrant the grant of leave to appeal. Dun Oir argued that no substantial injustice would be done if leave to appeal were refused, because ATS could bring proceedings or a cross claim in the District Court under other legislation, such as the Australian Competition Law in Sch 2 of the Competition and Consumer Act 2010 (Cth). Dun Oir referred to the prohibition contained in s 14 of the Independent Contractors Act against commencing proceedings in this Court, if other review proceedings have been commenced in relation to the services contract.

11    Here, it is common ground that ATS has not commenced any such proceedings. Accordingly, Dun Oir’s argument should be rejected. Substantial injustice would be done to ATS if the decision of the primary judge were wrong since it would lose its right to bring these proceedings in the Court. A claim for relief under the Act could not be brought in the District Court proceedings, because that Court has no jurisdiction under the Act by force of s 12(1).

12    Next, Dun Oir argued that ATS’s draft notice of appeal, attached to the affidavit in support of the application for leave to appeal, failed to specify with sufficient clarity grounds on which his Honour had erred. I cannot accept that argument. The grounds appear to raise, clearly and intelligibly, the controversy which ATS seeks to litigate on appeal. I am satisfied that a grant of leave to appeal should be made.

13    Here the construction of the Independent Contractors Act is a matter of substantial importance. The reasons for judgment of the primary judge raise significant issues concerning the construction of key provisions of the Act. This is the only Court in which ATS can bring its claim for relief. That claim was struck out as an abuse of the process of the Court. In my opinion, substantial injustice would follow if, in fact, ATS had properly invoked the jurisdiction of the Court and his Honour had erred in the construction that he gave to the Act.

14    For those reasons I will order that ATS be granted leave to appeal.

Associate:

Dated:    19 December 2012