- Qantas Airways Ltd v Rohrlach  NSWCA 48
- Mangoola Coal Operations Pty Ltd v Muswellbrook Shire Council  NSWCA 46
Additional content – only available on LSJ Online
- Lahey Constructions Pty Ltd v The State of New South Wales  NSWCA 69
EQUITY, CONTRACT & EMPLOYMENT LAW
Proper scope of jurisdiction agreement in employment contract – Singapore, Japan and NSW – multiple agreements – post employment restraints of trade – anti-anti-suit injunction
Qantas Airways Ltd v Rohrlach is a recent case which answers the question whether a jurisdiction clause in one contract may apply to claims arising under a separate contract in the context of post-employment restraints.
Background facts: Rohrlach was a Qantas employee based in Singapore. The terms of his employment were contained in a written Employment Agreement.
In November 2017, Rohrlach temporarily relocated to Japan. The terms and conditions governing the assignment were contained in an Assignment Letter, annexed to which was a Deed Poll. In December 2020, Rohrlach resigned from his role at Qantas in order to join Virgin.
The Employment Agreement and Deed Poll each contained post-employment restraints. A dispute arose between the parties as to the validity and enforceability of those restraints.
On 1 March 2021, Rohrlach commenced proceedings in Singapore seeking declarations that the restraints were void and unenforceable.
Four days later, Qantas commenced proceedings in the Supreme Court of NSW seeking (i) orders giving effect to the restraints, (ii) an ‘anti-suit injunction’, restraining Rohrlach from continuing his claims in Singapore, and (iii) an ‘anti-anti-suit injunction’, restraining Rohrlach from taking any steps to restrain the continuation of the NSW proceedings.
The Employment Agreement and Deed Poll did not contain the same governing law and jurisdiction clauses. The Employment Agreement was governed by the law in Singapore and the parties agreed to submit to the exclusive jurisdiction of the Courts of Singapore. The Deed Poll was governed by the law in Japan but did not include any jurisdiction clause.
Upon commencing the NSW proceedings, Qantas elected to rely only on the restraints in the Deed Poll.
The issue: The issue was whether the jurisdiction clause in the Employment Agreement captured the dispute in the NSW proceedings in circumstances where Qantas only sought relief pursuant to restraints in the Deed Poll.
First instance: At first instance, Hammerschlag J held that the Deed Poll was ‘one of a coherent and congruently operating suite of three agreements’ (including the Employment Agreement) and the jurisdiction clause captured the NSW proceedings. His Honour stayed the proceedings ( NSWSC 260).
Appeal: The Court of Appeal (Bathurst CJ, Bell P and Brereton JA) dismissed the appeal.
Bell P (with whom Bathurst CJ and Brereton JA agreed) explained that whether the claim under the Deed Poll was caught by the jurisdiction clause in the Employment Agreement was to be determined based on the proper construction of the jurisdiction clause not the Deed Poll. In that context, his Honour noted that the scope of a jurisdiction clause may extend beyond contractual claims arising under the contract in which the jurisdiction clause is contained.
Although the clause was ‘elliptical’ (because it did not spell out what disputes were intended to be submitted to the exclusive jurisdiction of the Courts of Singapore), the Court held that it applied at least to any disputes in connection with or relating to the subject matter of the Employment Agreement.
The Court held that subject matter included Rohrlach’s temporary transfer to Japan, the termination of the Employment Agreement, and Rohrlach’s obligations post-employment.
Brereton JA (with whom Bathurst CJ and Bell P agreed) said (at ):
‘The Employment Agreement provided the overarching architecture governing Mr Rohrlach’s employment – including any temporary assignment, subject only to any express variation made in connection with such assignment. The Japan assignment sat within that architecture. Indeed, the Assignment Letter confirmed the application of the Employment Agreement to the Japan assignment, save to the extent that it was amended by the Assignment Letter (including the Deed Poll). A dispute as to whether Mr Rohrlach would be in contravention of the restraints in the Deed Poll (and whether those restraints are valid and enforceable) is, therefore, a dispute in connection with or relating to his employment under the Employment Agreement.’
In answer to Qantas’ reliance on the fact the Deed Poll was governed by Japanese (not Singaporean) law, Bell P observed that choice of law and choice of jurisdiction are ‘distinct concepts’ and that parties need not select the same country for both.
Accordingly, the Court held that the NSW proceedings fell within the scope of the jurisdiction clause in the Employment Agreement.
Bell P noted that the outcome may have been different if the Deed Poll had included its own exclusive jurisdiction clause or its own entire agreement clause, each of which may have superseded the jurisdiction clause in the Employment Agreement.
LOCAL GOVERNMENT / REVENUE / LAND TAX ASSESSMENT
Rates and charges – categorisation of land for rating purposes – determination of ‘dominant use’ of land
Background facts: Mangoola owned land in the area of Muswellbrook Shire Council, which was previously categorised by the Council for rating purposes as ‘farmland’. For two years (2016/17 and 2017/18) it was re-categorised as ‘mining land’. The land was approximately 6,600 hectares in area and surrounded an open-cut coal mine in the Hunter Valley. It was subject to an access licence agreement with a cattle-grazing business (‘Colinta‘), an easement for the purpose of supplying water and electricity to the adjacent mine, and included some ‘offset areas’ for Aboriginal Cultural Heritage and Habitat Enhancement, which were a condition of the mine’s project approval. The land also had on it some environmental monitoring equipment and mining exploration activities. In the two relevant years, the region suffered from drought, which affected the grazing activities on the land. In those years, the Council re-categorised the land as ‘mining’. Mangoola appealed against that decision to the Land and Environment Court, which rejected the appeal and upheld the decision that the dominant use of the land was for mining. Mangoola then appealed to the NSW Court of Appeal.
The issue: The principal issue on appeal was the determination of the ‘dominant use’ of the land, and the factors that were relevant to that determination as a matter of law.
Decision: The appeal was allowed. The Court of Appeal held that what occurred on the land in the two relevant years could not sensibly be considered in isolation from what had previously occurred, and from what was intended to occur afterwards. The primary judge was required to consider the two years in their context, and his failure to do so led him to misapply the statutory requirements, giving rise to an error of law. On the evidence, it should have been inferred that grazing was intended to be resumed when the drought eased. There was no evidence of abandonment of the prior years’ use for grazing.
As to the easement, its use by the adjacent mine for the purpose of conveying water and electricity was a use of the land for mining purposes. However, the importance of that use in determining the dominant use of the land was another matter. The primary judge focussed on the importance to the mine of obtaining water and electricity via the easement, when his Honour should have focussed on the nature and extent of the mine’s use of the easement and its impact on the landowner’s use of the land. The Court of Appeal held that the mining use was of limited significance in considering the dominant use of the land as a whole.
As to the offset areas, the Court of Appeal held that it was relevant to consider why they existed. Although their existence was a condition of the mine’s operation, their use was actually for purposes antithetical to mining (i.e. Aboriginal cultural heritage and habitat enhancement).
As to the remaining uses of the land, they were of limited significance in determining the dominant use. The placement and servicing of the environmental monitoring devices had little impact on the land. They occupied small areas and their access by mine personnel gave rise to little interference with Colinta’s farming activities. The mining exploration activities were in a similar position.
Finally, the Court of Appeal held that the division of the land into three sections (by the primary judge) may be permissible as an aid to an en globo assessment of the dominant purpose of the land, but such an exercise must not distract the decision-maker from the critical question of what was the dominant use of the whole property.
Comment: This decision will be of interest and relevance to other contexts in which there is a determination of the ‘dominant use’ of land, in particular, for the purposes of land tax assessment. The leading cases in that area were considered by the Court of Appeal in Mangoola as relevant and instructive.
Building and construction contracts – interpretation – expert determination clause – whether expert determination is final and binding – value of determination – Building and Construction Industry Security of Payment Act 1999 (NSW)
Background: Lahey Constructions (‘Lahey’) entered into two contracts with the respondent, the Minister for Education (‘the Department’), to upgrade two public schools by undertaking certain building and construction works. The contracts incorporated the NSW Government GC21 (Ed 2) General Conditions of Contract. The terms of the contracts included identical provisions for the expert determination of issues that were unable to be resolved by the parties. Subject to some exceptions, the expert’s determination was to be final and binding. One exception was where the monetary value of the determination exceeded the threshold amount of $500,000. In that situation, either party was entitled to litigate so as to challenge the expert determination. In assessing whether the threshold amount had been reached, clause 71.8.2 of the contracts required that the amount of the determination be calculated without regard to any amount that had been paid under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the ‘SOP Act’).
The parties referred for expert determination disputes Lahey had raised under the contracts. The Department raised defences, cross – claims and set – offs, as well as its own claims. During the expert determination process, but separately to it, Lahey served SOP Act payment claims on the Department. These included the matters that Lahey had raised for expert determination under the contracts. After adjudication of the payment claims under the SOP Act, the Department made payments to Lahey. The expert determined that the Department was entitled to either ‘set-off’ or to ‘repayment’ of the amount it had paid to Lahey pursuant to the adjudications.
Lahey brought proceedings in the NSW Supreme Court concerning the issues referred to the expert for determination. The Department successfully sought an order for summary dismissal of the proceedings. The primary judge concluded that the expert determination for each of the contracts was final and binding, because on the proper construction of clause 71.8.2, the value of the disputes did not exceed the threshold amount of $500,000 for either contract.
Lahey sought leave to appeal from that decision, claiming that the primary judge erred in her construction of the expert determination clause.
The issue: The principal issue on appeal was whether the proper construction of clause 71.8.2 of the contracts required that any payment made to the builder under the SOP Act be disregarded when calculating the value of the determination, for the purpose of considering whether the jurisdictional threshold amount was exceeded.
Decision: The appeal was allowed. The Court of Appeal held that, applying settled principles for the construction of commercial contracts, clause 71.8.2 required that any payment made under the SOP Act be disregarded when calculating the value of the dispute for the purposes of the jurisdictional provision. This construction was supported by the text of clause 71.8.2 and by the context, which included the nature and purpose of the scheme of the SOP Act. Payments made under the SOP Act are interim or provisional in nature and subject to the parties’ rights under the construction contract. The SOP Act is beneficial legislation that operates in a ‘rough and ready’ way. It is designed not to determine the builder’s liability on a final basis, but to facilitate a provisional cash flow to them in the meantime. The Court of Appeal held that the provisional nature of payments under the SOP Act is the obvious reason for the parties’ agreement to exclude them from consideration when determining whether or not a jurisdictional threshold has been met. If the value of the dispute otherwise exceeds the specified contractual threshold ($500,000), the parties agree that the expert’s determination is not final and binding so as to preclude litigation. That makes perfect commercial sense. It is easy to understand why the parties to a commercial contract would wish to preserve the right to litigate disputes of sizeable monetary value, while precluding litigation over relatively ‘minor claims’.
The primary judge’s construction would create a ‘perverse incentive’ for a party such as Lahey not to resort to making progress claims under the SOP Act, for fear that it would lose the possible right to litigate disputes of significant monetary value.
On the proper construction of clause 71.8.2, the threshold amount of $500,000 had been reached, and Lahey was not precluded from litigating the disputes under either contract.
Comment: This case deals with a question of general importance concerning the proper construction of a standard form contract, which is used widely in the building and construction industry, particularly for public works.
James Braithwaite and Kylie Day are barristers in 12th Floor Wentworth Chambers.