State of Victoria v Commonwealth of Australia M46/1994 [1995] HCATrans 299 (6 September 1995)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M46 of 1994

B e t w e e n -

THE STATE OF VICTORIA

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Office of the Registry

Adelaide No A18 of 1994

B e t w e e n -

THE STATE OF SOUTH AUSTRALIA

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Office of the Registry

Perth No P16 of 1994

B e t w e e n -

THE STATE OF WESTERN AUSTRALIA

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

BRENNAN CJ

DAWSON J

TOOHEY J

GAUDRON J

McHUGH J

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 6 SEPTEMBER 1995, AT 10.18 AM

(Continued from 5/9/95)

Copyright in the High Court of Australia

____________________

BRENNAN CJ: Yes, Mr Solicitor?

MR GRAHAM: May it please the Court, could I just deal with one brief matter which was raised by your Honour the Chief Justice and by Justice Toohey yesterday. That concerned the question whether section 166A might be open to challenge on the ground that it conferred judicial power upon the Commission. Upon reflection it has occurred to us that whatever the strength of such a challenge might be, it is not open in the absence of notices under section 78B having been given. It seems, therefore, that although section 166A is challenged on other grounds, it would not be appropriate in these proceedings for that point to be raised. It will simply have to await decision on another day and nothing that this Court would say in the present case would bear upon that issue one way or the other. It simply can be left to one side. I note, however, there is clearly an argument there and say no more about it.

Before going on with the remainder of our argument, may I return to the questions concerning the external affairs power which were the subject of debate yesterday. We have given further and, indeed, anxious consideration to the way in which our submissions on this topic should be presented and the way in which our submissions may best help the Court in a resolution of the issues which this case has raised.

What we have done is to prepare a short written submission, which we would seek to hand to the Court and distribute to the parties, indicating our reformulation of the submissions which we desire to put on that topic.

BRENNAN CJ: Should we read these now, Mr Solicitor, or is it a recapitulation of what you have said yesterday?

MR GRAHAM: The Court should read them or, otherwise, I shall read them, whichever is convenient.

BRENNAN CJ: We could probably read more quickly than you can speak.

MR GRAHAM: I am content with that, if the Court pleases.

DAWSON J: What is the difference between the power to make law with respect to external affairs and a power to make law with respect to international relations on this submission?

MR GRAHAM: Probably very little, your Honour, but - - -

DAWSON J: And yet, international relations is not the same thing as external affairs.

MR GRAHAM: The purpose of the submission is to focus attention not upon the treaty or convention which is the subject matter of the statute, but upon the statute itself, so as to focus the inquiry on the question of whether that statute is a law with respect to external affairs. Now, the inquiry then - - -

DAWSON J: And it is a law with respect to external affairs if it affects international relations.

MR GRAHAM: If the statute affects international relations. That, we would submit, is different from saying that it is sufficient if the law is a law with respect to a matter of international concern. Now, in putting the matter this way we were endeavouring to pick up a concept which your Honour Justice Dawson put forward that one is looking for an aspect of the law which indicates that he is dealing with a matter which is international in character. A matter is international in character if it affects or is likely to affect Australia's relations with other States, otherwise it is not a law with respect to external affairs.

DAWSON J: That seems to be going further than you were going previously. I can understand the argument which says, "Look, there has to be an element of externality in relation to the particular law", and one can see that with the world heritage legislation, for instance, because what the law is talking about there is the position of the whole world, these treasures. You can see it in relation to race relations. You can say that necessarily races are things that are external to Australia and for that reason racial discrimination is something which has a truly external aspect to it. I can understand that, but I find it difficult to understand just because someone has an interest in the matter and they happen to be overseas and, therefore, relations maybe affected, that that makes the matter an external affair.

MR GRAHAM: It may be that the choice of words remains unsatisfactory so far as we have advanced the submission, but what we are endeavouring to put is very much what your Honour Justice Dawson is putting, that one is looking for the element of externality. If one looks at the element of externalit, one then is asked, "Well, what will provide a basis for a finding that that element exists?" and an effect on Australia's external relations seemed to be an appropriate formulation which would be both relatively precise but not unsatisfactorily broad. Your Honour, I cannot put the matter higher than we have here, that one must look for something which is a law which genuinely has a capacity to affect external relations, external affairs, in order to give it the quality of the law with respect to external affairs.

McHUGH J: Mr Solicitor, do your submissions not lead to the conclusion that the existence of the treaty is itself irrelevant?

MR GRAHAM: No, your Honour, not necessarily. It has to take account of the fact that there may be a valid law with respect to external affairs in the absence of a treaty, but it does not lead to the conclusion that the treaty itself is irrelevant.

McHUGH J: But the fact of making it is not itself sufficient.

MR GRAHAM: We say not, your Honour.

McHUGH J: Does that mean then the courts have asked the wrong question when they say whether or not the legislation is reasonably appropriate and adapted to giving effect to the treaty? It cannot be a correct question to ask, can it?

MR GRAHAM: With respect, your Honour is right. Our submissions really cannot accommodate an inquiry along those lines.

BRENNAN CJ: I am afraid it is at that point you have lost me, Mr Solicitor. If it is the undertaking of an international obligation, which is likely to affect Australia's relations with other international States, and if the performance of that obligation is thus a matter of international concern, why is it that the question whether the law is appropriate and adapted to discharge that obligation is not the right inquiry?

MR GRAHAM: Your Honour, perhaps because one has not made an inquiry at an earlier point, in the way that your Honour put the matter to me. One must ask whether what one is looking at is truly an international obligation. The fact that it is found in a treaty does not necessarily, in our submission, give it the quality of an international obligation, save in a superficial sense of saying that it is in an agreement between nations. But, in our submission, merely because it is found in a treaty does not lead to the conclusion that the obligation is an obligation as between nations, binding in the sense of possessing some quality of mutuality.

McHUGH J: Do you insist that the obligation must be to achieve some international purpose?

MR GRAHAM: We would, your Honour, although there are still some difficulties about the expression "international purpose".

McHUGH J: I appreciate that.

MR GRAHAM: The answer is yes, subject to considering what might be entailed in that phrase.

McHUGH J: So an obligation entered into by Australia and owed to another country is not itself sufficient to attract section 51(xxix)?

MR GRAHAM: Yes I think it might depend upon the nature of the obligation, your Honour. In the case of air navigation, clearly yes, in the sort of obligations one can conceive in that context, but an obligation in the sense of saying, we propose to do this and we note that you propose to do the same thing domestically, we would say it does not involve an international obligation in any relevant sense.

McHUGH J: I see.

MR GRAHAM: The only international quality is that two nations have pledged to do it by means of an international instrument. May I move on to our outline at paragraph 48, dealing with constitutional limitations and what we, as I hope a convenient shorthand, call the Melbourne Corporation principle. Now, firstly in the context of Division 1 of Part V1A, minimum wages, the Commonwealth accepts that that division is beyond power in so far as it may authorise the Commission to make an order applying to employees at the higher levels of State government. It also contends that that division can be read down, and we take issue with the Commonwealth on that contention.

We should emphasise that our principal ground of attack in relation to Division 1 does not rest upon a prohibition against discrimination between the States as geographic entities, and that is what the Commonwealth entreats us as saying in paragraphs 6.12 to 6.14.

Indeed, if there is such a prohibition to be found by implication in the Constitution, as is suggested in the State Employees Case, the submission that Division 1 is in breach of that prohibition is really only our second alternative. Our principal submission is that the division is invalid because its effect is to require a State to maintain a system of compulsory arbitration for employees within that State. The consequence of non-compliance by a State is that employees within that State will be subjected to the power of the Commission to impose a common rule for fixing minimum wages for all employees.

What our submission is, is that the division discriminates against States because it imposes a requirement upon them which it does not impose upon other persons and which bears no rational and relevant connection to the imposition of the common rule setting minimum wages. We say that it thereby imposes a special burden upon the States contrary to the Melbourne Corporation limitation. The fact is that the industrial relation systems currently in operation in many of the States comply with the requirements of Division 1 in the sense that they provide for the fixation of minimum wages by a system of compulsory arbitration under State law. Indeed, we would note that recently in Victoria such a system has been introduced by the Employee Relations Amendment Act 1894 .

However, if any State which currently does maintain a system of compulsory arbitration were to cease to do so, it would become exposed to the powers of the Commission under Division 1. At the time when Division 1 was enacted it singled out the States of Western Australia and Victoria because they alone had no system of compulsory arbitration whereby minimum wages could be fixed.

BRENNAN CJ: Is this argument based on the proposition that the States are discriminated against because the States amongst all employers are the only ones with legislative power to create their own system?

MR GRAHAM: No, your Honour, it is said that the States are discriminated against because within certain States the whole of the workforce is subject to the powers of the Commission under Division 1, because there is absent the system in that State of minimum wage fixation by compulsory arbitration.

TOOHEY J: But I thought the primary argument was that the legislation did not discriminate between States, but discriminated between States on the one hand and non-State employers on the other.

MR GRAHAM: That is the other argument, your Honour. There are two arguments that we put in this part of the case. I put the first branch and your Honour just put the second.

BRENNAN CJ: Well, in relation to the first branch, it is a discrimination as among the States.

MR GRAHAM: Yes, that is right.

BRENNAN CJ: And the ground of discrimination is among those States which have and those States which have not seen fit to enact a provision which satisfies the requirement of Division 1.

MR GRAHAM: That is right, your Honour.

BRENNAN CJ: And in relation to the second ground, it is as between the employers which have the power to enact such a provision and those which have not.

MR GRAHAM: That is right, your Honour.

BRENNAN CJ: How is it that the possession of constitutional power and the exercise of a choice whether to exercise it or not can be a ground of invalid discrimination when the power exercised by the Commonwealth is to create a regime of the kind which Division 1 creates in relation to minimum wages?

MR GRAHAM: Because it disables the State from choosing the method of minimum wage fixation which it might otherwise choose to put in place in its own jurisdiction. Because there are other methods, apart from compulsory arbitration, whereby minimum wages may be fixed; by wages board, by regulation and so forth.

BRENNAN CJ: Is that not merely to say that State powers of that kind must be preserved against incursion by valid Commonwealth laws?

MR GRAHAM: If that is so, your Honour, then our argument must fail. But, if there is a limitation upon Commonwealth power which inhibits the Commonwealth from legislating in a manner so as to disable the State from legislating or maintaining such a regime, then the Commonwealth power has not validly been exercised.

TOOHEY J: But, for the purposes of that argument, is the regime to be found in section 117AE(3)? Because if it is, there is a choice of regimes.

MR GRAHAM: There is, in a sense, a choice, your Honour, but each of those regimes is a regime which involves a fixation by either compulsory arbitration or - - -

TOOHEY J: Or by agreement.

MR GRAHAM: - - -by a State employment agreement, but not by the other methods that I mentioned a moment ago.

DAWSON J: As I understand your argument, what is you are saying is, is it not, that the Commonwealth legislation does not establish a regime itself. It purports to preserve a choice to the State but effectively, it says the choice can only be exercised in this particular way. And that is an interference with government in a way which was found to be impermissible in the Queensland Electricity Case.

MR GRAHAM: That is the point, your Honour, yes. That is our primary point. In order to abbreviate this part of the submissions, the points that I am seeking to make have been quite clearly exposed in the recent discussion. The only point that remains to be considered in this connection is whether what this Court had to say in the State Employees' Case in relation to section 111(1A) and section 111(1)(g) forecloses this argument so far as we now seek to put it. If I could just remind the Court very briefly what that aspect of the case was about. Section 111(1)(g) gives to the Commission a power to refrain from making an award in various circumstances that are set out in that paragraph, perhaps the most significant for present purposes being that in subparagraph (iii):

that further proceedings are not necessary or desirable in the public interest -

Section 111(1A) denies the Commission the power to refrain under section 111(1)(g)(iii) if, in substance, there is no State industrial authority capable of making orders or awards resulting in industrial disputes or other mechanisms. The argument was in that case that the provisions of section 111(1A) singled out States in rather the same way as we now complain that section 170AE does. The majority, at page 636 of the report in the Australian Law Reports, in considering that matter, appears to have accepted that the first limb of the implied limitation on Commonwealth powers might incorporate a prohibition upon legislation which is aimed at a particular State or States in a discriminatory way.

Our first argument for invalidity of section 111(1A) was based on the contention that, as a matter of fact, the subsection was limited in its application to Victoria alone. The Court said:

The fact that Victoria is the only State presently affected by s 111(1A) is not a compelling consideration, though it could conceivably be so in the absence of a rational and relevant connection between the basis on which that provision denies access, the application of s 111(1)(g) and the exercise of the powers conferred by the last-mentioned provision.

The majority went on to say that the question of:

Whether s 111(1A) discriminates against Victoria, its employers and employees in the sense of being aimed at them is not a question to be determined by reference to the subjective motives of the legislators; rather, it is a question of determining what was the purpose of the enactment, a matter which is to be ascertained by reference to the substance and actual operation of the law in the circumstances to which it applies.

And your Honours, in the majority, went on to consider the Queensland ElectricityCommission Case and considered it to be authority for the correctness of the approach which considers the substance and actual operation of the law when determining whether legislation discriminates against a particular State in the sense of being aimed at it. In doing so, the Court, we submit, recognised that the nature and efficacy of the federal system demands that the Commonwealth is not authorised to make a law aimed at the restriction or control of a State in the exercise of its executive authority. The last phrase comes from Sir Owen Dixon's judgment in the Melbourne Corporation Case.

Now, as we say in paragraph 53 of the outline, the majority in the State Employees' Case rejected the argument that section 111(1A) was aimed at Victoria because it saw a rational and relevant connection between the power of the Commission to refuse in the public interest to make an award to cover employees in a State pursuant to section 111(1)(g), and the absence of a system of compulsory arbitration in that State. Section 111(1A) provides that the power the Commission enjoys pursuant to 111(1)(g) to dismiss a matter or to refrain from resolving it in the public interest, does not apply in the circumstances in 111(1A), and the majority took the view that there was a logical connection between restricting the power of the Commission to refuse to make an award in the public interest and the circumstances in which there was no system of compulsory arbitration in the State.

That connection was based on the observation that if Parliament believed that the public interest was best served to the resolution of all industrial disputes by compulsory arbitration then it was logical for it to conclude that the power to refrain from proceeding when it is in the public interest to do should only be exercisable when an alternative system of compulsory arbitration is available. Now, we say that that logic does not apply in the case of Division 1 of Part VIA.

What the Commission does under Division 1 of Part VIA is to, on application, establish a common rule, to use the language of the jurisdiction, an order which applies generally not by virtue of its being an award to resolve a dispute but simply because an application has been made to the Commission to make such an order. So it is not an order in the nature of an award in a compulsory arbitration context. That common rule made by the Commission is to operate, and will operate, even where in a State there is an equivalent mechanism such as a wages board or a system of wage fixing by regulation which provides for the establishment of minimum wages, so that the concept which underlaid the majority's view in the State Employees' Case of a presence of analogous provisions under State legislation does not apply under Division 1 or Part VIA.

The competing jurisdictions or sets of mechanisms are, on the one hand, the Commonwealth system for a common rule and, on the other hand, a State system of setting minimum wages by compulsory arbitration. So that the logical connection which the Court saw in the State Employees' Case we say is simply not present. In the ensuing paragraphs of our outline of argument, paragraphs 55, 56 - - -

TOOHEY J: Before you leave that, Mr Solicitor, I am not sure that I follow the alternative argument that there is a discrimination not only as between States but as between all States on the one hand and non-State employers on the other. If the regime or one of the regimes that is contemplated by section 170AE(3) is in force, then the Commission is excluded, as I understand it, from setting a minimum wage in respect of employees whether those employees are State employed or privately employed.

MR GRAHAM: Yes, that is right.

TOOHEY J: If there is a regime in force within the contemplation of the subsection then - I am sorry, if there was no such regime in force then the position is the same as between State employed employees and privately employed employees.

MR GRAHAM: In the sense that the Commonwealth regime will operate indifferently in respect of all employees, State employed or otherwise.

TOOHEY J: Yes, well either the Commission can set minimum wage for all employees, whether State employed or otherwise, or it cannot, depending upon the operation of subsection (3), but I just do not, for the moment, see how there is a discrimination between State employed employees and privately employed employees.

MR GRAHAM: I think your Honour has exposed a difficulty in our argument, and I will not press that branch of it.

TOOHEY J: Well, it seems to be a little more than a difficulty, perhaps it is just a lack of understanding of the position.

MR GRAHAM: I think your Honour has exposed a difficulty which we had not perceived, and we would, with respect, say your Honour is right. It does not provide a proper ground of challenge on a Melbourne Corporation argument.

BRENNAN CJ: Mr Solicitor, can I delay you a little further on a problem that I confess is troubling me. Why is it that the Commission cannot make an order by way of common rule under the conciliation and arbitration power, and how is it that it can make it under the foreign affairs power?

MR GRAHAM: Your Honour, the legislation, as I understand it, has contained a power enabling the Commission and its predecessors to make common rules for a very long time. This Court decided in R v Kelly, I think in 1950, that the power of the then court did not extend to the making of a common rule, and that was because the power of the court, and now the Commission, extends only to make an award binding upon those who are parties to the relevant dispute which is resolved by the award, and it cannot give its award a reach beyond the persons who are in some way brought in to the net of the dispute, even by means of process of logs of claims.

BRENNAN CJ: That I can understand, but if there is no objection to the reposing of a power - and I am not for the moment dismissing your argument, but assuming your argument were to fail on this, on your main advanced propositions - if it be right that this power could be conferred on the Commission, it could be conferred on any repository, could it not?

MR GRAHAM: Yes, it could, your Honour, under the minimum wages provisions.

BRENNAN CJ: Yes.

MR GRAHAM: There might be difficulties having regard to the terms of the convention, as to your Honour's proposition, any body, but - - -

BRENNAN CJ: Why not?

MR GRAHAM: What is required is a system of fixing minimum wages.

BRENNAN CJ: The system can be that the minister should fix.

MR GRAHAM: And the minister could fix, that would clearly answer the requirements of the convention. I am in some difficulty here, your Honour.

BRENNAN CJ: Yes, I mean, it is not your problem in a sense but it just does raise the question that I raised with you yesterday about the nature of the power that is thus conferred.

MR GRAHAM: I was going to say something about that, your Honour, but now is a convenient moment. Obviously, the Commission has the power and does exercise it to fix wages across the board, as it were, by means of a common rule in respect of persons who are within the Commonwealth's sphere in the exercise of other powers than section 51(xxxv) and the reports during the Second World War abound with examples of cases involving wage fixing which was undertaken under the defence power. There is, obviously, no reason why the Commonwealth is confined to section 51(xxxv). However, when it comes to an exercise of the power under section 51(xxix) the question then arises does the law constitute an implementation of the convention which the Commonwealth has invoked. I believe that is the area where your Honour the Chief Justice's concern arises.

We would certainly perceive a difficulty in a system created by Commonwealth legislation which, in substance, delegated the function of establishing a minimum wage regime to a body which was not the Commonwealth in any of its guises, either the Parliament or the executive or a minister, because then it would not be possible for this Court to see whether the regime which eventually came out of the mechanism that the Commonwealth had established and relied on was one which answered any of the tests of validity under section 51(xxix) and that would be a problem, but the answer that I would anticipate my learned friend for the Commonwealth would give, would be to point to Schedule 5, Article 1 of the convention, and to the provision which simply contains an undertaking to:

establish a system of minimum wages which covers all groups of wage earners whose terms of employment are such that coverage would be appropriate.

My learned friend says that one should refer to Article 4:

Each Member which ratifies this Convention shall create and/or maintain machinery adapted to national conditions and requirements whereby minimum wages for groups of wage earners covered in pursuance of Article 1 hereof can be fixed and adjusted from time to time.

So their argument would go along the lines that the treaty is capable of being implemented simply by establishing a system and maintaining machinery and the Court's inquiry does no more than to see whether something has been brought into existence or maintained in existence which would answer those requirements.

It was those sort of generalised provisions which attracted part of our earliest argument in relation to Division 1 because it left matters so far at large, so far as the assumed international obligation was concerned.

DAWSON J: It highlights the real problem of section 51(xxix), does it not?

MR GRAHAM: Yes, it does, your Honour.

DAWSON J: Obviously those who framed the Constitution intended the Commonwealth's entry into the field of industrial relations to be severely limited by the requirement that there be, for instance, an interstate dispute. This means that is set at nought and obviously that is quite inconsistent with the original intention and that must suggest that an interpretation of (xxix) which allows that result is suspect, it must.

MR GRAHAM: We can only agree, your Honour, and highlight it by looking at this legislation.

DAWSON J: Because you achieve exactly what was not intended.

MR GRAHAM: Yes.

McHUGH J: That is why I said yesterday frankly I do not like it because it does distort what was - - -

DAWSON J: It does more than distort, it obliterates all the other paragraphs.

MR GRAHAM: A point, your Honour, which we can only echo and we made at the forefront of our first written submissions, but struggle as we may, it is difficult to articulate a proposition or an interpretation or, indeed, even an approach to section 51(xxix) which is going to answer these concerns.

DAWSON J: I do not think it is difficult.

McHUGH J: Does not the real problem arise because the founders or those who framed the Constitution just did not see the scope that the external affairs power would have in the last decade or so of the 20th century?

MR GRAHAM: Your Honour, that, with respect, plainly must be so, at the time when the concept of Australia separately entering into a treaty with a foreign country probably never crossed anybody's mind because it was not the way things happened in 1900.

DAWSON J: But why, when we are in the field of implications in these days, can you not see an implication arising from section 51(xxxv) which restricts the ambit of section 51(xxix) in this area?

MR GRAHAM: Your Honour, we would be offering a very novel submission since it has been said so many times that the powers conferred by the various subsections of section 51 cannot be read as if they each contained a separate and exclusive grant and there could not be - - -

DAWSON J: But surely it is not very novel to say that one power shall not be read so as to obliterate the limitations which were intended to be imposed and are to be seen in other paragraphs.

MR GRAHAM: Certainly, your Honour, the line of authority dealing with section 51(xxxi) could be called in aid in support of that proposition.

DAWSON J: You are going to come to that and that emphasises the problem, of course.

MR GRAHAM: Yes.

McHUGH J: The difficulty with the arbitration power is that the trade and commerce power has been used for a long time to bypass the conditions imposed by section 51(xxxv) from the air pilots tribunal - there are numerous aspects of the jurisdiction of the Commission which do not rely on section 51(xxxv).

MR GRAHAM: And the defence power as well.

McHUGH J: In the wartime the defence power of course just gave a nationwide coverage.

DAWSON J: But the defence power stands in a very special situation.

MR GRAHAM: Certainly, your Honour, one could quite legitimately derive a limitation on section 51(xxix) by reference to limitations found in other provisions of the Constitution, as one must from section 51(xxxi), and we would not shrink from putting the proposition that one finds equally limitations on section 51(xxix) by reference to the specialised scope of the power given by section 51(xxxv).

BRENNAN CJ: That argument would confine section 51(xxix) only to those areas which are not otherwise covered by section 51.

MR GRAHAM: Yes, your Honour, subject to perhaps the defence power.

DAWSON J: Or one could put it: such areas as are not covered by express limitations, which are to be found in the other parts.

MR GRAHAM: Yes, and in those circumstances one finds very few powers in section 51 which contain their own internal limitations. Perhaps section 51(xxxi) and 51(xxxv) are the only two.

DAWSON J: But that is a very literal way of looking at it to say there are not internal limitations, for instance, in section 51(xxxv); there clearly are.

MR GRAHAM: Yes.

BRENNAN CJ: Why would you restrict it to express limitations on other powers conferred by section 51 such as, perhaps, banking in section 51(xxxi)?

MR GRAHAM: Obviously one cannot do that, your Honour, because implied limitations apply all through section 51, including - - -

BRENNAN CJ: Then how does your general proposition that section 51(xxix) is to be read down to be accommodated to the notion of the powers in section 51 being cumulative?

MR GRAHAM: Your Honour, perhaps by resort to the opening words "subject to the Constitution" that the limitations are brought in, both express and implied.

BRENNAN CJ: I see.

MR GRAHAM: That is always, I think, from the basis upon which the implied limitations upon the express powers have been justified, and we do not have any quarrel with that.

BRENNAN CJ: Yes.

McHUGH J: But you accept the principles interpretation enshrined in the Engineers' Case; you are not asking us to create some new doctrine of original intent or some other theory of constitutional interpretation?

MR GRAHAM: I sincerely hope not, your Honour. Every time counsel for a State does that they seem to attract comments in the judgment which one sometimes would wish had not been made.

DAWSON J: But recent decisions must throw some doubt upon the scope of the Engineers' Case, must they not?

MR GRAHAM: Well, with respect, yes, your Honour, and indeed the State Employees' Case itself would be a recent example.

DAWSON J: And we have not got to the stage where the exercise is other than attempting to discern an intention from the words used in the instrument we are interpreting, have we?

MR GRAHAM: No, your Honour, and indeed implied limitations seem to be flourishing.

McHUGH J: Well, one commentator says Engineers is dead.

MR GRAHAM: Yes, I had read that too, your Honour; it seemed to be a bold statement.

BRENNAN CJ: Well I think we are all familiar with this line of - - -

MR GRAHAM: I do not believe, however, your Honour, that the Engineers' Case will ever be said to have been fully exploded. If I can abbreviate part of the rest of the submissions because the outline is somewhat repetitious; we have dealt in paragraph 55 with the question of employees at the higher level of government in the context of Division 2, and in outline paragraph 56 we had dealt in that paragraph and in the following paragraphs with the problems which arise in relation to the termination of employment provisions in the context of the Melbourne Corporation limitation and particularly what this Court said in the State Employees' Case.

If the Court would simply allow me to adopt what is said in the outline in those paragraphs which go on to paragraph 63, it would be sufficient for our purposes to indicate how we put our case in that regard. I can simply content myself with the general observation that all of the provisions of Division 3 of Part VIA impose limitations of a considerable significance upon the State's ability to deal with the size and make-up and regulation of its own workforce.

Likewise, in the interests of brevity, where we deal, commencing at paragraph 64, with the subject of certified agreements, we make a number of points in the outline in that paragraph and on to paragraph 70 in relation to the effect of Part VIB, Divisions 2 and 4 and we simply emphasise the points which we make in the outline that those provisions have the capacity of inhibiting a State from choosing the make-up, management and organisation of its own workforce. I simply adopt those paragraphs without developing them in any detail.

The final topic dealt with in our outline of argument commences at paragraph 71, which is concerned with the topic of discrimination between States and that is covered by paragraphs 71 to 75 of the outline. A good deal of that ground has been covered in the course of discussion earlier this morning and, again, I shall not seek to develop what we say in those parts of the outline which the Court has no doubt had an opportunity of perusing. I will simply take the course of adopting those parts of the outline without developing them further.

The remaining matter to which I desire to draw the Court's attention are the suggested answers to questions which we provided to the Court last week. The only point that I think would remain about our proposed answers, if the members of the Court can lay a hand on them, is to indicate that the answers are not merely simple but unqualified, and we contend, finally, that the Commonwealth is unable to rely upon any severance provision to server any of the provisions of the Act which we challenge. If the Court pleases, unless there are any further matters upon which we may assist the Court, those are the submissions for the State of Victoria.

BRENNAN CJ: Thank you, Mr Solicitor. Mr Solicitor for South Australia.

MR SELWAY: May it please the Court, the State of South Australia has prepared an outline of written submissions some time ago. The State adopts the submissions of Victoria and Western Australia respecting those provisions of the Act that are challenged by South Australia. There is one qualification on that: in Victoria's submissions in reply, the written submissions, paragraph 74 makes reference to a principle of the quality arising out of the decision of Justices Deane and Toohey in Leeth's Case. South Australia does not rely upon that proposition.

McHUGH J: It was a minority judgment.

MR SELWAY: I might say, your Honour, that that matter - - -

TOOHEY J: It is very flattering to have it described as a decision, Mr Selway.

MR SELWAY: I apologise, your Honour - the comments of your Honours. That decision will be discussed, as I understand it, in some more detail in McGinty's Case next week and South Australia would put detailed submissions at that time but for the moment it is sufficient for us merely not to adopt that submission. South Australia also adopts the submission of New South Wales respecting section 7A of the Act.

South Australia's submissions will be directed to four aspects of the matter. Firstly, that the provisions within Part VIB, Division 2, dealing with certified agreements, cannot be supported under the conciliation and arbitration power; secondly, that the provisions within Part VIB, Division 4, granting immunities in respect of industrial action, cannot be supported under the conciliation and arbitration power. The learned Solicitor for Victoria has dealt with the question of whether that part can be supported under the external affairs power, and we deal with the arbitration power aspects of that division. Thirdly, that the provisions within the Act, in particular section 152, in its operations upon Part VIB, Division 3, the enterprise flexibility agreements: we say that provision cannot be supported under the corporations power. And fourthly, that the provisions within the Act purporting to apply to State employees, in our submission, need to be read down in light of the decision in the Education Union Case.

If I could take the Court firstly to the conciliation and arbitration power. In our submission, the Commonwealth Parliament does not have a general power to deal with the prevention and settlement of interstate disputes. Its power is restricted to a particular means, namely conciliation and arbitration. That proposition, in our submission, is self-evident enough but cases dealing with it are at paragraph 3.1 of our written submissions.

To determine the extent of the power it is necessary to define the meaning of "conciliation and arbitration". It is our submission that that phrase had a clear meaning in 1901 and that meaning identified a particular system of dealing with industrial disputes, which system was unique to Australasia. We have provided to the Court historical materials in support of that submission, and I will take the Court to that in a moment. We will refer to that material for the purpose of identifying the mischief to which section 51(xxxv) is directed, but before going to it it may be helpful to give some idea to the Court of where we expect to go from that historical material. It will be our submission that "conciliation and arbitration" bore a specialised meaning and, in particular, that "conciliation" involved the reaching of an agreement after a process of mediation. In our submission, reconciliation and agreement by the parties alone was not encompassed within the meaning of "conciliation and arbitration".

The importance of that can be seen by comparison of the South Australian submissions with those of the Commonwealth, particularly at paragraphs 2.4, 2.17, 2.19 and 2.24 of the Commonwealth's written submissions. It is our understanding that the Commonwealth puts that conciliation does include the reaching of agreements by the parties themselves. In due course, we will submit that the Commonwealth Parliament can only provide that an agreement reached between the parties can be treated as if it were an award and, in particular, in respect of section 152, if that agreement is reached through a process of conciliation, as we define it, or if the agreement only provides for conciliation and arbitration.

If I could take the Court to the materials and, in particular, volume 2. We think the Court will find that sections 13 and following of the materials are the more important aspects of it, or perhaps the easiest aspects to use. The remainder of the material is, more or less, to support the analysis contained within section 13. Section 13 contains a number of papers relating to the development of the Australasian system of conciliation and arbitration. They were published under the title, "Foundations of Arbitration" in 1989. There are various authors for various of the chapters. If I could take the Court, first, to page 2 of the introduction chapter. At about point 2, the authors say that:

The distinctive quality of the Australian system lies not in its consequences but rather in the means whereby these matters are dealt with - in form and practice, arbitration distinguishes Australian patters of dispute settlement from those employed in other countries. It is therefore hardly surprising that from its inception the arbitration system has been the subject of controversy and debate, and the target of reform. Critics seize on its peculiarity and use it as the explanation for a host of economic and industrial relations problems.

If I could then take the Court to pages 6 and 7 under the chapter heading, "What is arbitration?". The authors say:

The term "industrial arbitration" is used generally to describe the many different formal systems of state regulation of industrial disputes in Australia. There are seven major jurisdictions of industrial regulation - those of the Commonwealth and the six States.

Going to the next paragraph:

Nevertheless, the most common form of Australian industrial arbitration is found in the systems of compulsory conciliation and arbitration that were established in the Commonwealth and four of the States (New South Wales, Queensland, South Australia and Western Australia). Within these systems are found the elements which characterize the Australian system - state tribunals with compulsory powers to settle disputes, with powers to enforce the decisions, bans and limitations upon direct action by the parties to disputes, and the registration and regulation of trade unions.

The authors then discuss the wage board systems of Tasmania and Victoria and at about point 5:

Although the processes of the wages boards owed more to collective bargaining and conciliation than they did to arbitration, the chairman retained a casting vote which resulted in a compulsory determination of the dispute in the absence of agreement between the representatives of the industry on the board. Thus the wages boards systems, though technically not systems of arbitration, were systems of industrial regulation which were compulsory, as are the conciliation and arbitration systems,

BRENNAN CJ: Well, where is this leading us, Mr Selway?

MR SELWAY: What we are trying to put to the Court is that the system was unique, that the system had served various elements and that those elements were well understood as at 1890 and at 1900.

GUMMOW J: Mr Selway, I have been looking at Lansell v Lansell (1964) 110 CLR, particularly at 363 what Mr Justice Kitto says:

this method -

that is to say, of looking at legislation on a particular subject in the colonies before 1900 -

is more likely to assist in establishing the minimum content of a power -

rather -

than its outside limits.

Is that not what you are inviting us to - - -?

MR SELWAY: With respect, no, your Honour. What we are trying to put to the Court is that the words "conciliation and arbitration" had a meaning and they were understood in that - - -

GUMMOW J: They were talking about matrimonial causes too.

MR SELWAY: I understand. The proposition that we put, we say, stands behind much of the analysis by this Court of the conciliation and arbitration power. For example, if "conciliation" does include the entering of agreements outside of a conciliation process, then the Commonwealth's power to regulate trade unions in their dealings directly with employers is much greater than has hitherto been thought. The cases do not deal with the matter in any detailed fashion, primarily because the cases that have been put to this Court seem to us to have been directed to the question of dispute, but we say that this forms the understanding with which this Court has, since 1900, dealt with the issue of conciliation and arbitration.

The importance to the matter is that if it is true that the Commonwealth can legislate to make agreements entered into outside of a conciliation process in effect awards, in particular having the effect to which section 152 of the Industrial Relations Act can apply, then the consequences to the States become quite significant. It is one thing to have agreements entered into as a result of a conciliation process involving, if you like, an umpire having an effect to exclude State laws. It is another thing entirely to do it through the agreement of the parties without such mediation.

BRENNAN CJ: Mr Selway, are you able to take us to some passage which indicates that the concept of conciliation and arbitration did not include bilateral agreements?

MR SELWAY: Your Honour, not as such. What we can take your Honour to is a process of description of what the system was which shows that the system involved the establishment of tribunals, that the tribunals carried out that function of mediation and that is what was understood to be the Australian system of conciliation and arbitration. We can say to your Honours that the statutes that were actually introduced in the 1890s to give effect to that system contained within them two elements which we say were incidental to it, the elements being, firstly, the registration of trade unions, it being an incidental aspect of this system of conciliation and arbitration that agreements and awards could be enforced and entered into by a collective union; the second element of it was an element of registration of agreements which were then enforceable as awards. Our submission is that is an incident of the creation of trade unions, that is to say to give the trade unions the power to enter into an agreement.

GAUDRON J: Why does one not approach certified agreements in much the same respect as one does section 111(1A), for example? You have a dispute and then if certain things happen in that the Commission does not exercise its conciliation and arbitration powers, one of them being if there is an agreement which the Commission certifies.

MR SELWAY: Your Honour, we for our part have no concern, no problem with the certification of agreements once the dispute has been notified to the Commission. Our understanding of the way Part VI of the Act works is that once the dispute is notified to the Commission, the Commission is under a duty to determine whether there is a dispute and, if there is a dispute, is then under a duty to proceed to determine whether it should exercise conciliation.

In that regard, our submission would be that the Commission is, if you like, in control of the dispute. If the parties then enter into an agreement, that can be seen as ancillary to that function of mediation, which we say is conciliation. What we say is that has been the feature of the Act until 1993. What the new provisions do is avoid or provide a capacity to avoid that happening. They do it because section 170MA(2) - in the CCH copy that is at 32,154 - makes provision for certified agreements for the preventing of a situation rather than a dispute. So that is to say, given that a situation is a broader concept than dispute, the duty that would otherwise exist under section 99 to notify the Commission of a dispute does not arise, in that circumstance of a dispute.

The other concern, which was adverted to yesterday, arises out of section 170PP - that is at page 32,552. Subsection (2) of that section, referring to the Commission's role in facilitating agreements, talks about the Commission immediately beginning to exercise its powers under this Act to prevent or settle the dispute, and may carry an implication that Division 2 is not applicable to certified agreements, at least until section 170PP comes into play. It is unclear how those sections fit together, but there is certainly an appearance that the ordinary conciliation powers of the Commission under Division 2 of Part VI are not called into play if there is a certified agreement going through the bargaining processes under that Act.

Our submission is that if the provisions of Part VI Division 2 are used, that is to say the dispute is notified and so forth, then there is no problem with certifying an agreement. That process is necessarily ancillary to the conciliation and arbitration process. The dispute we raise is that the provisions currently contemplate that an agreement can be certified and given the force of an award where the Commission has no notification of that matter at all until it is presented for certification.

GAUDRON J: What is the notification section again, Mr Solicitor?

MR SELWAY: Your Honour, section 99 - - -

GAUDRON J: Section 99, thank you.

MR SELWAY: The obligation is in section 99(1).

GAUDRON J: And industrial dispute is defined, is it not, as a situation likely to give rise to an industrial dispute?

MR SELWAY: Yes, your Honour.

GAUDRON J: So, when one comes back to 170MA(2), one is talking presumably about a situation likely to give rise to a dispute. When it is talking about an industrial situation, is that defined as a situation likely to give rise to an industrial dispute?

MR SELWAY: Yes. If I could take your Honour to that definition - - -

GAUDRON J: And that has to be notified?

MR SELWAY: Yes. What we have is a wider concept, which is an industrial situation; it is wider than industrial dispute. If I could take your Honours to - - -

GAUDRON J: Is it wider than a situation likely to give rise to an industrial dispute?

MR SELWAY: Yes, your Honour - well, I think it is. It is in section 4(1) at page 30,553. Industrial dispute is defined two definitions ahead of it:

"industrial situation" means a situation that, if preventive action is not taken, may give rise to:

(a) an industrial dispute -

I thank my learned friend, the Solicitor for the Commonwealth. To go to paragraph (b) of the definition of "industrial dispute" is:

a situation that is likely to give rise to an industrial dispute -

All we say is that "industrial situation" is a broader concept than "industrial dispute".

GUMMOW J: But, you do not say it is invalid?

MR GRAHAM: No, your Honour, but what we say is that there is no procedure to seize the Commission of an industrial situation unless it is an industrial dispute and it is not clear, given the provisions particularly of 170PP, that the ordinary provisions of section 99 are intended to apply in respect of certified agreements. The attack we make upon these provisions is relatively narrow. The attack we make is because of the use of industrial situations and the possibility that the Commission is not seized of the matter at the time that the agreement is made and presented for certification. What we say is - - -

GAUDRON J: Well, presumably, the Commission would have to be satisfied that there was a situation that might give rise to an industrial dispute.

MR SELWAY: Yes, it would have to be satisfied of that before certifying it.

GAUDRON J: Yes. Well, why would that not be sufficient?

MR SELWAY: Only that the agreement is reached - and it may appear to be a mere matter of form - but the agreement is reached before the Commission has a power of mediation.

GAUDRON J: The Commission's powers do not depend on notification in any event, do they? The Commission can exercise its powers, or it used to be the case, that they could exercise their powers of their own motion.

MR SELWAY: Yes, your Honour, and they still can in respect of an industrial dispute. They cannot do so in respect of an industrial situation. And again, if the Commission has exercised its powers, we would have no concern with the certification of agreement. Our concern is that what has happened is that the Act has moved a step; it has moved from being an Act dealing with the certification of agreements where the Commission has control over them to the certification of agreements where the Commission has no role. In our view, that is one step too far.

It is necessary, in putting that submission, to make the point that "conciliation and arbitration", as it appears in the Constitution, does not include the agreement between the parties by themselves. That is to say, "conciliation and arbitration" cannot include collective bargaining. The two systems are different. If that were not the case, the Commonwealth could enact a law dealing with industrial relations, making no provision for arbitration at all, but only for collective agreements. Our submission is that that was not what was intended; what was intended was a particular form of industrial dispute resolution, which had been developed in Australasia in the 1890s and was well known at the time of the convention debates. The development, in our submission, was made primarily by Kingston from South Australia, who was also the draftsman of the 1904 Act.

Your Honours, I do not think it is necessary for me to take the Court further through section 13. I think the propositions we would wish to draw from it we have made, but I would ask the Court to note the references within that part and that article to the specific and special nature of the Australian system and the way it developed.

BRENNAN CJ: What is the clearest statement of the role played by the mediator in the system?

MR SELWAY: Your Honour, I think I can get a better reference to that from the convention debates themselves, which I will take the Court to very shortly. I think the purpose of that article was to give a broad background and I was only going to take the Court to another three or four references within it.

BRENNAN CJ: What you wanted to indicate was that this is the Australian system and now you are going to tell us what the Australian system is.

MR SELWAY: Yes, your Honour, that is what I am now to do. In volume I of the materials we set out a number of Acts and bills, which were introduced into the Australasian Parliaments in the decade before federation. The set is not complete. For example, there was a New South Wales bill of 1891 and a New Zealand bill of 1891, both of which were not passed, which are not in the material. If I could ask the Court to particularly note though that the bills and Acts that we say are reflective of the Australian system is the Industrial Unions Bill, 1890; The Conciliation Act, of South Australia, that is set out in section 5; in section 6, the Trade Disputes Conciliation and Arbitration Act, (No 2), 1892 of New South Wales; in section 7, Industrial Conciliation and Arbitration, 1894 of New Zealand; in section 8, the Industrial Conciliation and Arbitration Bill, 1894 of Queensland; in section 9, the Industrial Conciliation and Arbitration Bill, 1900 in Tasmania; in section 10, the Industrial Conciliation and Arbitration Act, 1900 in Western Australia, and finally in section 12, the Industrial Arbitration Act, 1901 in New South Wales.

We have also included in there the Councils of Conciliation Act 1891 . That sets up a scheme of conciliation basically by the agreement of the parties. It is our submission - and we will take the Court to the references in the convention debate - that that scheme was understood as a different scheme to the scheme of conciliation and arbitration. It did not provide for compulsory reference of disputes. It did not have any compulsory powers and it also did not provide for registration of unions. It was similar, in that respect, to some of the English schemes that existed at that time.

If I could take the Court very quickly to section 7 of those materials, which is the New Zealand Act of 1894 just to show to the Court some of the elements of these schemes. That Act provided for the establishment of boards of conciliation and courts of arbitration. The boards of conciliation consisted of equal numbers of employee and employer representatives with an independent chair who was appointed by the other representatives. That appears from section 32 of that Act.

The court consisted of employer and employee representatives and a presidential member who was a judge of the Supreme Court. That appears from section 48. Each of the court and the boards had administrative officers, being a clerk and a registrar. There were detailed provisions for the registration of unions, and that is in section 3. There were specific powers in respect of the unions, eg, a power to enforce their rules upon the members and collect fees, and that appears from section 3(h). Registration under the Act rendered the union subject to the Act. That appears from section 10. The Act does provide power for registered unions to enter into industrial agreements and that those industrial agreements can be filed in the Supreme Court.

GUMMOW J: That is section 20.

MR SELWAY: Yes, your Honour, and section 21 for the enforcement of them with penalties for breach, and that is generally in Part II of the Act. The industrial dispute was defined in section 2 and included future conditions and, again, that was something of a distinction from the systems that had existed previously. Such a dispute could be referred to a conciliation board by either party under section 42. The board, having been referred the dispute, had authority to carry out inquiries under section 43, to make suggestions to the parties and to adjourn the proceedings to permit the parties to reach agreement. That is section 44.

The board could also refer any matter to the Court at section 45(2) and if the board was unable to settle the dispute it was required to refer the matter to the Court under section 46. The Court then determined the dispute and made an award which was enforceable in the Supreme Court by civil proceedings, and that was in sections 46 and 74. The scheme of the Act, with respect, is similar to the scheme that has been understood in Australia as conciliation and arbitration since 1901.

The point to be made, though, is that this scheme and this arrangement was a very new scheme in 1894 and was seen as a significant development on what had happened previously both in Australia and overseas. The other Acts that are referred in the material differ to an extent from the New Zealand Act. Some had one tribunal, rather than two. Some had greater or lesser powers of compulsion. The fundamental features of the system are, in our submission, detailed in paragraph 2.2 of our written submissions and as we have just explained.

To paragraph 2.2 must be added the fact that in each of the relevant Acts there is power for unions and organisations to register and enforce industrial agreements without need for the processes of the tribunal or tribunals. We would also make reference to the provisions in the South Australian legislation to provision for registering agreements for private conciliation and arbitration, and that is in section 35 of the Conciliation Act 1904

of 1894 of South Australia. We make that point because it gets picked up in some of the cases subsequent to Federation.

The features that we identify as integral to the Australian system are, in our submission, consistent with the general thrust of the recommendations of the New South Wales Royal Commission on Strikes of 1890. I will not take the Court to it, but those recommendations are set out at section 2 of the material.

Of some interest is Kingston's evidence to that Royal Commission where he discusses the nature of the scheme as he had formulated it in South Australia and, again, if I could give the Court the references without taking the Court to it. Kingston's evidence at 147 point 7 where he describes what he sees as the basic features of the scheme. He deals with registration of unions and the role of unions in the scheme at 149 point 7. At page 150 point 4 he deals with the registration of agreements and makes the particular point that the registration of agreements is essentially involved in the process of unions being registered. At page 151 he deals with strikes and lock-outs.

BRENNAN CJ: Mr Selway, all of this establishes elements of the scheme which fall within the concept of conciliation and arbitration.

MR SELWAY: Yes, your Honour.

BRENNAN CJ: You are seeking to establish that those terms do not go any further than what was in the scheme at that time.

MR SELWAY: What we are putting to the Court - and I do not think I am putting it that narrowly I trust, your Honour - what I am putting to the Court is that the word "conciliation" does not include the conciliation of the parties by themselves.

BRENNAN CJ: Let that be understood as your submission. What is the material which establishes that negative proposition as distinct from material which barely enough establishes the positive propositions of what is included in the term?

MR SELWAY: I cannot take your Honour to a specific line or specific sentence. What I am putting to the Court is that there is a system which was clearly understood, that the system had these features and that one part of the feature involved a particular process of conciliation. Now, I acknowledge the difficulty I have in going from that step to the next and saying you cannot go back and say that what was intended was to exclude some further process of conciliation, but we will go from this material to the cases of this Court where that issue is discussed and the conclusion is reached that conciliation means mediation in the power of conciliation and arbitration. Now, the material, it seems to us, is necessary to put because unless there is an understanding of that background it is difficult to see how in the words themselves you would reach that conclusion.

BRENNAN CJ: Do you need to go any further than what you have got in the written material to refer us to it?

MR SELWAY: Maybe not, your Honour. No, I think I can leave the matter at that point then. What we say, and we have already said it, is that the hallmark of both conciliation and arbitration is that the relevant tribunal, body or person remains in control of the relevant process for the settlement or determination of the dispute. It is in that sense that we would say that the word "mediation", which was used in some of the royal commissions, would be a more appropriate term than the word "conciliation" except that the word "conciliation" was used historically to describe that process.

In our submission, the resolution of industrial disputes by means other than conciliation and arbitration, however defined, is beyond power even if those means are effective in resolving the disputes. We just simply refer the Court to Reg v Kelly; Ex parte State of Victoria [1950] HCA 7; (1950) 81 CLR 64, at page 80 point 2. I do not need to take the Court to it, if I could just give the Court that reference.

The general position that we put is, in our submission, confirmed by the approach of the Court in the case of J C Williamson v Musicians Union [1912] HCA 89; (1912) 15 CLR 636 and I might take the Court to that case, if I might.

McHUGH J: But was this case not overruled?

MR SELWAY: If it was, your Honour, we have been unable to find a reference to the overruling of it.

GUMMOW J: [1913] HCA 41; 17 CLR 261.

MR SELWAY: Your Honour, it may be that on some aspects of the matter it has been overruled. On the propositions we wish to take the Court to, so far as we are aware, it has not been overruled. That case concerned the retrospective validation of the registration of a union and the effect of that validation upon registered agreements made by the union before the validation. The particular issue in dispute was the enforceability of a clause that the union would not make any further claim for a specified period.

In the course of the decision, each of the three Justices discussed the question whether the registration of agreements outside of the involvement of the then court was valid. At that time section 73 of the Act provided - it is set out at page 642 of the judgment:

"Any organization may make an industrial agreement with any other organization or with any person for the prevention and settlement of industrial disputes existing or future by conciliation and arbitration."

If you like, a specific power to enter into private conciliation and arbitration arrangements. There was also a provision within the Act, section 24, for the registration of agreements without those limitations, if that is what they were, about conciliation and arbitration which were in section 73.

The Chief Justice at page 643 at about point 2 deals with the power of registered unions and says at line 4:

The conditions, which are set out by Schedule B, include a condition that the rules of an association seeking registration as an organization must provide, inter alia, for the mode in which industrial agreements and other documents may be executed by or on behalf of the association, and may provide for any other matter not contrary to law. Amongst such matters is, I think, included a power to make a collective agreement on behalf of the members of the association. It does not appear whether the rules of the defendant association formally include such a power, but it is not suggested by the case stated that they do not.

Having regard to all these considerations, and remembering that the words of sec. 73 are in form enabling and not exhaustive, I am strongly disposed to think that it ought to be construed, not as limiting the prima facie meaning of the term "industrial agreement," but as making clear that there should be included in that term an agreement for the prevention or settlement of future disputes by conciliation or arbitration. Then it is said that, if this construction of the Act is adopted, legislation as to agreements for any other purpose than that mentioned in sec. 73 would not be within the federal power.

As at present advised, I am loth to think that the Federal Parliament may not, as ancillary to the prevention and settlement of industrial disputes by conciliation and arbitration, make provisions authorizing the parties to come together out of Court and agree to terms of settlement, and declaring that an agreement so made shall be binding upon them. The coming together of delegates for such a purpose followed by such an agreement seems to me to be not inaptly described as "conciliation."

With respect, the Chief Justice there has adopted the wide formulation of conciliation, which we say is not open.

TOOHEY J: But the Chief Justice was in dissent, was he not, on that aspect of the matter?

MR SELWAY: Yes, your Honour, that is correct. If I could take the Court then to Justice Barton at page 647 point 5, where his Honour says:

The difficulty is as to the construction of Part VI of the Act, and particularly sec.73.

His Honour then just discusses that and discusses the Jumbunna Case, and about six lines from the end:

I admit the weight of the considerations which he has adduced -

that is to say, the Chief Justice -

but I cannot say that they have altered the inclination of my opinion. In the view I take of this case it is not necessary to decide the point, and for this I am not sorry, as the more literal view to which I have been inclined is not one to be finally adopted with any alacrity, seeing that a construction which gives the assistance of the Act to comprehensive agreements between employer and employee is conducive to industrial peace. There is, however, in addition to other difficulties, an obstacle to the more liberal construction, if it is open, in the danger that legislation for industrial agreements not subject to the limitations of sec. 73 may be beyond the power to make laws for conciliation and arbitration granted by the Constitution. The agreement between the present parties deals very extensively with the terms and conditions of employment, but does not purport to provide for the prevention of industrial disputes by conciliation or by arbitration. So that if the observance of sec. 73 is a condition precedent to its validity as an industrial agreement, it will derive no force from the Statute.

His Honour then goes on and says:

But that does not prevent it from being a valid and subsisting agreement at common law, and I see no legal obstacle to its being effective and binding in that way.

I make that point because I will deal with the issue of common law powers in due course.

Justice Isaacs deals with the issue, firstly at page 657. Could I just take the Court quickly to the first full paragraph on that page where his Honour says:

I would add that I have grave doubts whether such an organization as the defendant has any capacity to contract at common law, that is, apart from the agreements mentioned in the Statute, to bind its members present and future to fixed industrial conditions.

At page 658, he deals with the argument about the meaning of section 73. The first full paragraph:

That supposes there is a valid industrial agreement within the meaning of the Act. But, in my opinion, the present is not one. There can be no doubt, in fact it has been emphasized over and over again by every member of this Court, that the only power of the Commonwealth Parliament under sub-sec xxxv of sec 51 is to legislate for conciliation and arbitration in relation to industrial disputes. On this ground the common rule provisions were declared invalid.

He then considers whether they come within the Act as an industrial agreement and at the bottom of the page says:

In other words, where industrial conditions are fixed in accordance with the industrial agreement previously mentioned, they bind those who have agreed. That the industrial agreements intended by the Act are those referred to in sec 73, is supported by the words of the learned Chief Justice, of Barton J, and of O'Connor J, in the Jumbunna Case.

He then says:

Then arises a novel contention that, where employers and employees discuss terms, first dispute about them, and then calmly debate them and agree, that is "conciliation" within the meaning of the Act, because the parties have become reconciled, and the final agreement made is an agreement made by means of conciliation.

There are many strong reasons for refusing to accept that. First, it is opposed to the general sense of the term. "Conciliation" in this sense, means, according to the Oxford Dictionary - "Court (tribunal) of conciliation: a court for composing disputes by offering to the parties a voluntary settlement, the case proceeding to a judicial court if this is not accepted." And a quotation from Sydney Smith is given referring to "The Tribunal of Conciliation." Therefore, its ordinary meaning in this connection is, some person or persons - they may be selected by the parties, even from among their own ranks - acting, however, not as disputants themselves, but as mediators, who may avert the necessity of a formal reference to some compulsory tribunal, by inducing the parties to come to some amicable agreement. An amicable agreement so made would, in my opinion, come under the head of industrial agreement.

His Honour then says it is opposed to the intent of the Act itself. At page 660, his Honour says, in the first full paragraph:

It is needless to discuss whether, if by any inadvertence it were within the Act, it would be covered by the terms of the constitutional power. Strong expressions can be found by several Judges that it would not.

With respect, his own comments in that case would seem to fall within that category.

The same issue of the meaning and effect of section 73 arose in the later case - and, again, I do not have to take the Court to this, I do not think - of FederatedEngine Drivers and Fireman's Association of Australasia v BHP [1913] HCA 42; (1913) 16 CLR 715. In that case the issue of the meaning and effect of section 73 was discussed by all of the judges as a matter of statutory interpretation. But at least some of the Judges - and it would appear a majority - refer back to the comments of Justice Isaacs and Justice Barton in the Musicians' Case as to the interpretation of section 73 and, as we understand Justiced Isaacs, his interpretation was based, in part, upon his analysis of the constitutional power.

The issue of the power itself, the constitutional power, was squarely raised as can be seen by submissions at page 720 point 5. The references in the judgments we would give the Court, page 726 point 4 and page 728. On the same point, if I could take the Court to the Reg v Bain, Ex parte Cadbury Schweppes [1984] HCA 9; (1985) 159 CLR 163. Your Honours, this is a case relied upon by the Commonwealth in paragraph 2.14 of their written submissions, as it were, to counter the propositions that we have been putting. In that case, there had been an award made in respect of an industrial dispute and the award expressly reserved the question of redundancy.

An agreement was later made between the union and the employer on that question. The employer took out judicial review proceedings to prevent the certification of the agreement and those proceedings came to this Court. The case was fought on the basis of whether the agreement formed part of the original dispute and, in that context, can be seen as a case about ambit. In our submission, it was assumed by the parties and by the Court that if the agreement did not relate to the original dispute, then it could not be registered.

Justice Murphy at page 168, about point 2, deals with the question of the process of arbitration and the extent of the dispute. In the last sentence of that paragraph says:

But in conciliation parties may settle the dispute by an agreement which goes beyond the ambit of the dispute. It may well be that such an agreement can be given force by s. 28 of the Act (see also s. 55 of the Act).

Our submission is that, properly understood, his Honour there is talking about the conciliation process arising out of the Commission already being seized of this dispute. Justices Dawson and Wilson deal with the question at pages 172 to 173. Again, the discussion is about the nature of ambit and whether it was part of the original dispute. Your Honour the Chief Justice and Justice Deane dealt with the matter at page 176. Again, in the context of ambit, your Honour says at the end of the first line:

The distinction reflects the difference in nature between conciliation and arbitration. The Commission's conciliation functions involve and are directed to assisting the prevention or settlement of industrial disputes by "amicable agreement" between the prospective or actual parties to the particular dispute. Its arbitration functions are directed to preventing and settling industrial disputes not resolved by amicable agreement and involve the making of binding awards which are not consensual in their nature. The powers of the Commission to certify a memorandum or make an award under s. 28 of the Act are part of its conciliation powers. They are exercisable only where the parties to an "industrial dispute" have reached "agreement on terms for the settlement of all or any of the matters in dispute" before the "industrial dispute has been referred to arbitration". Under the general scheme of the Act, they are exercisable before the stage of arbitration has been reached (see Act, ss. 26, 27, 28(1), 29(1)(a) and 30(1)).

At the bottom of the page, your Honours, it refers to the limits of the ambit doctrine applied to conciliation. Our submission is that the reference by your Honours to the exercise of these powers before the state of arbitration has been reached, and in particular the references to sections 26, 27, and following, is a reference to the scheme of the Act as it then was which required that there be a dispute finding and that the powers of conciliation arise before there could be certification of an agreement.

Our submission is that that is the way the scheme then worked. That is what your Honours are referring to. So considered, what appears at first blush to be comments that are against our proposition are, in our submission, in fact, in favour of it. And the case itself, given that it has been fought on the assumption that there was some need to fall within the original dispute is itself support for the proposition we put. If there was no need to show an involvement of the Commission in the dispute to certify the agreement, there was no particular point in arguing about whether this was the original dispute or a new dispute.

Your Honours, it is our submission that those cases and the historical material stand for two propositions in their application of this case. First, is that the Commonwealth Parliament can legislate for the enforcement of agreements which prevent or settle disputes so long as those agreements are affected by means of conciliation and arbitration. In our submission they are affected by such a procedure so long as the conciliator remains in control of the mediation.

The second proposition is that the Commonwealth Parliament can legislate to authorise parties to agree as to private conciliation and arbitration, that that falls within the power. Subject to one necessary qualification, it is also our submission that the converse proposition also applies. That is that the Commonwealth cannot legislate for the settlement of disputes by agreement where the agreement is not affected through conciliation and arbitration.

BRENNAN CJ: If there is a finding of a dispute, is it then possible for the parties to agree and for the agreement to be certified without any other intervention on the part of the Commission?

MR SELWAY: Yes, your Honour, we think it is. At the end of the day, your Honour, it is our submission that it is a factual issue. However, the Act itself provides various obligations and the Court, it seems to us, can assume that those obligations have been met. If I take the Court again to section 99 of the Act. That is at page 31,154.

BRENNAN CJ: But we are talking here about power, are we not?

MR SELWAY: Yes, your Honour. What we are saying is that the certification of the agreement must arise out of the process of conciliation and arbitration.

BRENNAN CJ: But, as I understand it, you say that that provision is within power provided only there be a finding of a dispute beforehand.

MR SELWAY: Your Honour, we say that because the Act itself imposes an obligation for conciliation once that finding is made.

BRENNAN CJ: Then absent a finding, if there were an obligation for conciliation tied to the definition of "industrial situation" without the necessity of notification and without the necessity of a finding, would that be valid?

MR SELWAY: We would think not, your Honour. It may be that if, in fact, the Commission on some other basis had been exercising conciliation powers, and it is difficult to imagine how it could, but if it had, then we would say that the agreement can be said to arise out of that conciliation process. That is the essence of the test, that is to say it arises out of the conciliation process. What we say is that the way the Act was arranged whereby under section 99 there was a duty to notify upon an industrial dispute, that if there was notification, then under section 100 the Commission had a duty to conciliate unless it decided that it would not and under section 101 there was a duty to make findings of dispute.

Now, in a circumstance where those duties necessarily arose the Court was probably at liberty to assume in the absence of anything to the contrary that an agreement had arisen out of a process of conciliation where the Commission was exercising its functions. At the end of the day we would say it is still a factual test, but it is a factual test against a statutory background which requires various things to occur and one can assume that they have occurred. We say, as we understand it, that is the reality of how the situation in fact operated, that in the ordinary course there was an industrial dispute, the union or the employer notified of the industrial dispute and the parties then had discussions which may or may not resolve the matter.

There is a necessary qualification to the negative proposition we put, that is to say that those are the only means by which the Commonwealth Parliament can legislate in respect of industrial agreements. That necessary qualification relates to the incidental power of the Commonwealth to establish registered organisations. It is clear that the Parliament has the power to establish those organisations and if I could just refer the Court to the cases in paragraph 3.23 of our written submission without taking the Court to them. It is also clear, in our submission, that the establishment of registered organisations was a necessary incident to the conciliation and arbitration system as it was understood in 1901. Put bluntly, and the historical material will show, that system would not operate without the registration of organisations and the capacity to enforce collective awards, collective agreements collectively. The union spoke for the individuals.

The Commonwealth can legislate in respect of registered organisation, including in respect of their powers. The Parliament can legislate to further the purposes for which they were created. If I could take the Court to Reg v Bowen; Ex parte Amalgamated Metal Workers & Shipwrights [1980] HCA 42; (1980) 144 CLR 462. In that case the Court was considering, amongst other matters, the question of what sort of legislation the Parliament could make in respect of registered organisations. Justice Gibbs, at page 472 line 2, says:

Such an organization is not brought into being by the Act to do whatever it wishes. It can only be created to further the purpose stated in s 51(xxxv). The Parliament can validly prevent organizations formed for the purpose from engaging in activities alien to or unconnected with it. It is neither necessary nor desirable to attempt to define the limits (if any) to the power of the Parliament to regulate organizations of this kind. Clearly however the Parliament has power to prevent them from engaging in industrial activity which does not conduce to the prevention and settlement of industrial disputes by means of conciliation and arbitration.

If I could also take the Court to page 478, point 7, judgment of his Honour Justice Murphy, where his Honour said:

In regard to all the challenged provisions but especially in support of this aspect, the Attorney-General of Australia intervening by the Solicitor-General contended that the Parliament had virtually unlimited legislative powers with respect to organizations. This also should, in my opinion, be rejected. It would mean, for example, that Parliament could legislatively control the contents of logs of claims, and of the submissions to arbitral tribunals by organizations, and, by similar reasoning those of unorganized employees and employers. If Parliament can, under the conciliation and arbitration power, effectively prevent organizations pursuing safety or other industrial issues (which have not been and are not being dealt with by conciliation and arbitration), then, by logical extension, it can determine the permissible content of wage claims, and generally what can be done by organizations (and also by logical extension, of unorganized persons in industry) and therefore by the limits it imposes attempt to determine terms and conditions of work. Again the logical consequence of this contention is that under the conciliation and arbitration power Parliament could prohibit an organization (or unorganized persons) from initiating or engaging in an industrial dispute extending beyond the limits of one State. The departure from the constitutional limitation is obvious; the limitation in s 51(xxxv) introduced by the words "conciliation and arbitration" would be read out of the Constitution.

GUMMOW J: That is a dissenting judgment, is it not?

MR SELWAY: It is, your Honour, but, in our submission, not on that aspect. Sorry, your Honour, I will rephrase that. His Honour did dissent about the extent of the Commonwealth's power to deal with registered organisations, however, our submission is that his Honour's comments there are similar to comments of Judges in the majority and in any event are sound law. How he applied those comments may not have been recorded with the views of the majority.

If I could also refer the Court to page 488 point 7 where his Honour Justice Wilson, at the bottom of the page, also discussed the issue and also referred to the necessary restraints upon the Commonwealth's power to legislate in respect of registered organisations. Perhaps we could also, without taking the Court to it, refer the Court to the comments of Justice Mason in Reg v Sweeney; Ex parte Northwest Exports Pty Ltd [1981] HCA 22; (1981) 147 CLR 259, at page 273.

As an example, it would be our submission that the Commonwealth can legislate to enable a registered union to enter into a lease for the purpose of establishing an office but, in our submission, that incidental power in respect of unions must extend to enable the Commonwealth to legislate so as to enable a registered organisation to enter into agreements to resolve industrial matters. It would be absurd, in our submission, if the union had power to serve a claim on behalf of its members but could not accept the claim if the employer, rather than dispute it, merely agreed it.

McHUGH J: But once the Commonwealth creates a union and gives it legal personality, surely the union itself can then do anything that a legal personality can do, can it not? In Williams v Hursey Justice Fullagar said the idea of qualified legal personality was, to him, incomprehensible.

MR SELWAY: Your Honour, that may be the answer. It may be that the Commonwealth has, in fact, already done so merely by establishing the registered organisation. We do not dispute that if the Commonwealth did legislate to specifically confer power for unions to enter into, if you like, collective agreements on unions that that would be valid. Our concern is whether they can take the next step and say, not only do they have the power to do it but having done so, that agreement is protected by section 152.

We say that that is a separate step. One of them is a question about the empowerment of an organisation that is its own creature and we do not dispute its right to empower, but what we say is they cannot take the next step. It is, perhaps, worth making the point though, your Honour, given your Honour has raised it, that it is not clear to us that registered organisations at present have that power. The analysis may be as your Honour put it but there are the comments of Justice Isaacs in the Musicians' Case which I have already referred to where he raises some doubts about the power. I might also refer - - -

McHUGH J: I think that dictum of his was disapproved in a case that went to the Privy Council in (1980)AC. I am not sure that it was disapproved; it was certainly doubted, I think. That is that dictum.

MR SELWAY: There is another comment by Justice Higgins in Australasian Agricultural Co v Federated Engine Drivers [1913] HCA 41; (1913) 17 CLR 261 at 281 point 8 to the same effect, that is to say, doubting the power of the union to enter into agreements outside of an expressed statutory power. As I say, it is not part of our submission of whether the Commonwealth is granted the power or not. We acknowledge its power to empower a union to enter into industrial agreement. What we say, though, is that that power to empower a union is, nevertheless, a limited power.

In our submission, the power cannot be exercised so that, in effect, you are legislating beyond conciliation and arbitration. In our submission, to legislate, as the current Act does, cannot be justified on the basis of an analysis of the incidental power in relation to unions. What the current Act does is, firstly, significantly limit the sort of agreements that can be entered into and secondly, provides, most importantly, that once entered into, those agreements have the force, in effect, of Commonwealth law.

McHUGH J: Do you deny that the Commonwealth could direct the parties to an industrial dispute within the meaning of the Constitution to negotiate a settlement, or to enter into negotiation to settle a matter?

MR SELWAY: We do not deny that the Commonwealth could empower the Commission to direct them to do so as part of its conciliation powers. It may be that the Court would come to the view that such a direction to negotiate was sufficiently ancillary to the conciliation function that it itself was valid as an exercise of Commonwealth power.

McHUGH J: Yes, I am talking about in the context where, if there is a failure, they settle it but then - - -

MR SELWAY: Yes. I think I would have to say we would probably say that that was valid. What we put here, though - and as I say, I do not have concern per se with unions or registered organisations having the power to negotiate agreements with employers. The submission we put is that they cannot take the next step and tell the union, in effect, what must be discussed in those negotiations or what sort of agreement must be reached or, in this context, take the next step and say that section 152 applies to that agreement reached as a result of the incidental power attaching to the union. That is, in our submission, too remote.

We come and deal with section 152 and its remoteness outside of, as it were, the core of conciliation and arbitration in our submissions in respect to the corporations power, and I will not take the Court's time with that now. We would give the example: acknowledging that the Commonwealth has power to authorise a registered organisation to enter into a lease, eg, for its union premises, it will be our further submission that it could not exempt that registered organisation or that lease from State stamp duty.

One of them is ancillary to the power of conciliation and arbitration, the second is not, and we would say section 152 in its application in that circumstance goes too far. That argument about the incidental power as it attaches to unions is, if you like, a qualification upon the general proposition we put that the Commonwealth can only legislate in respect of industrial agreements in two circumstances. First, where the industrial agreement comes out of conciliation and arbitration or, second, where it is an industrial agreement providing for conciliation and arbitration.

Given that whatever the power may be in respect of the incidental issue relating to unions and unions entering into agreements outside of conciliation, they do not apply, on our submission, in this case because all relevant agreements in this case attract section 152. I am not proposing to deal with that qualification again except to make the point that the qualification exists. Your Honours, the limited power of the Commonwealth to legislate in respect of the settlement of disputes by agreement, on our submission, has not previously caused inconvenience in practice.

It is our submission that since the 1904 Act and until the amendments effected in 1993, the provisions of the Commonwealth Act have consistently required that the Court or Commission be informed of the dispute, that it make a finding of a dispute and that it then proceed to conciliate the dispute, and in that context it could be assumed that the agreement arose out of the conciliation process. We have prepared some written materials going through the sections of the Commonwealth Act and how they have varied over the time and if we could hand them up and simply incorporate them into our submissions rather than taking the Court through the various changes that have occurred over the period. Your Honours, I think you may already have those materials. They are headed History of Agreements under the Conciliation and Arbitration Act and the Industrial Relations Act 1988 .

BRENNAN CJ: Yes, we have them.

MR SELWAY: Basically it simply goes through the way the sections have changed over the period. It also contains references to some of the cases where the point is made that those provisions, that is at page 2 "judicial analysis of section 24 and section 73", where there is a discussion about the fact that section 24 certified agreements arose out of conciliation and the section 73 agreements were in respect of agreements for conciliation and arbitration.

BRENNAN CJ: Mr Selway, if one looks at the purpose of this power when it was inserted into the Constitution, one can see that it was designed to ensure that there would be industrial peace across State boundaries. Now certainly industrial organisations have been created as an instrument of achieving that through the conciliation and arbitration process.

MR SELWAY: Yes, your Honour.

BRENNAN CJ: It seems to me that the real problem about the personalities of the organisations is, not what they can do, but whether what they do can bind their members, so that there will be industrial peace. If you have got agreements reached by industrial organisations and you have got a provision which prima facie allows them to bind their members by these agreements and you have got a supervisory function performed by the Commission in relation to the agreements that are brought before them for certification, why is that not sufficient to amount to conciliation?

MR SELWAY: Perhaps I will say two things about that, your Honour. Firstly, in our submission, that is not what the current scheme is, in any event, because under the current scheme the powers of the Commission to supervise, if you like, are at best limited; on one view their function is almost clerical. So even if your Honour was right about that, we would still say that the current scheme does not fall within it. But the second issue is - and it comes back to the fact of what conciliation is and how it operates.

If, for example, on being presented with an agreement the Commission could then go ahead and deal with it in a conciliation process, one might be able to argue that it was ancillary. The difficulty with conciliation, whether it is called mediation or whatever, is that once presented with an agreement to a certain extent the conciliation function is over.

BRENNAN CJ: But only to a very limited extent, is it not, having regard to the requirements of Division 2? There are certainly active things for the Commission to do, are there not?

MR SELWAY: The process of conciliation, as we understand it, set out in the Act is to result in an agreement, though it may be, for example, that the Commission is presented with an agreement about part of a dispute, still leaving the Commission with part of the dispute to deal with, but once they are presented with an agreement then their function to a greater or lesser extent is complete. Now, that is not suggesting that they do not still have a function. They can look at the agreement in respect of the public interest, they can look at the agreement in respect of whether there is, in fact, an industrial dispute upon which their certification should attach, but the process of conciliation is designed to result in an agreement. If your Honour has a look at section 103(1) of the Act at page 31,201:

A conciliation proceeding before a member of the Commission shall be regarded as completed when:

(a) the parties have reached agreement for the settlement of the whole of the industrial dispute and the agreement has been certified under Division 2 of Part VIB -

what we say is that there is then an issue of whether Division 2 of Part VIB is conciliation and our submission is it is not, and I will come to that division in a moment, but that is what we say is the role of the Commission in respect of that process is not conciliation. It may carry out some aspects of conciliation in the course of it, but the process there is a different process from conciliation and arbitration.

Your Honour, it is our submission that the provisions for the certification of agreements under the current Act have varied the previous provisions such that agreements can be certified when the Commission is not exercising its functions of conciliation and arbitration. The learned Solicitor for Victoria has taken the Court through a number of the sections and will avoid the need for me to do so. If I could, however, take the Court to section 3 of the Act which sets out the objects; that is at page 30,501 of the CCH version. Section 3 says:

The principal object of this Act is to provide a framework for the prevention and settlement of industrial disputes which promotes the economic prosperity and welfare of the people of Australia by:

(a) encouraging and facilitating the making of agreements, between the parties involved in industrial relations, to determine matters pertaining to the relationship between employers and employees, particularly at the workplace or enterprise level -

leaving (b) for the moment -

(c) providing a framework of rights and responsibilities for the parties involved in industrial relations which encourages fair and effective bargaining and ensures that those parties abide by agreements between them; and

(d) enabling the Commission to prevent and settle industrial disputes:

(i) so far as possible, by conciliation; and

(ii) where necessary, by arbitration.

To put it bluntly, it is our submission that the Commonwealth Parliament has been successful in achieving objectives (a) and (c) and, in doing so, has established a system of collective bargaining that operates outside of the conciliation and arbitration under objective (d). Your Honours will recall that section 170MA of the Commonwealth Act provides that the parties may reach an agreement, and I have already taken the Court to the reference to "industrial situation".

That has the effect that section 170MA(2) will apply in circumstances where the parties have not notified an industrial dispute under section 99 and where there are no dispute findings under section 101 and where the Commission is not exercising its conciliation functions under section 100.

TOOHEY J: Well, that would be true of subsection (1) too, would it not?

MR SELWAY: Your Honour, if there is an industrial dispute - this is save for the question about whether section 170PP sets up an entirely different system - but if you were just reading this by itself, if there is an industrial dispute, then our submission would be that under section 99 there is an obligation to notify of the industrial dispute and if that obligation arises there is then an obligation under section 100 for the Commission to proceed to conciliation.

TOOHEY J: But the subsection does not suggest, does it, even read with section 99, that the parties cannot proceed to make a memorandum of the terms agreed upon?

MR SELWAY: No, I would be the first to admit that it is not at all plain how Division 2 of Part VIB actually fits in with Part VI, Division 2; it is not clear, apart from the hints one takes from section 170PP to which we have already referred, but apart from that, on the face of it, if there is a matter arising under section 170MA(1) the Commission should be seized of it and dealing with it under section 100.

Your Honour, section 170MC provides for the certification of agreements and uses the formula:

must certify an agreement if, and must not certify an agreement unless, it is satisfied that -

and there are set out various matters. Our submission is that the exercise of that certification could not be considered conciliation itself. That function cannot involve mediation per se.

GAUDRON J: If you look to those conditions, it presupposes that there has been a dispute which has been settled by arbitration. If you look to condition (a): for that situation to have come about there must have been an industrial dispute which was settled by arbitration.

MR SELWAY: At some time, your Honour.

GAUDRON J: Yes.

MR SELWAY: But it does not require that that be a continuing dispute - that dispute may well have been resolved completely and finally years ago when the award was made. In the normal course, there would need to be another industrial dispute before the Commission could proceed to arbitrate.

TOOHEY J: I must say I read paragraph (a) really as doing little more than identifying the persons, be they employees or employers, for the purposes of certification. In other words, they must be employees or employers whose conditions are governed by the terms of an award.

MR SELWAY: That is how, with respect - - -

TOOHEY J: The subject matter of the agreement, it would seem, does not have to fall within any of the existing terms of the award, nor be made the subject of an award.

MR SELWAY: Yes, I take your Honour's point, but as I understood her Honour Justice Gaudron was not making the point - was concerned with awards per se, but the mere existence of an award which paragraph (a) certainly - - -

TOOHEY J: I think her Honour and I were making different points, Mr Solicitor.

MR SELWAY: Yes, I take your Honour's point.

GAUDRON J: Yes, well let us be quite clear about it. If the parties have been in dispute and an award has been made and there is either another dispute or a situation that might give rise or may give rise to a dispute, it brings it very, very close to the conciliation and arbitration power if an agreement is then certified in respect of that additional matter.

MR SELWAY: I take your Honour's point. What we would submit in respect of it is that there has to be an industrial dispute to which the conciliation and arbitration attaches, but what your Honour is putting to me, in effect, is that there has been an industrial dispute, conciliation and arbitration has attached; the dispute has been resolved by those processes.

GAUDRON J: Well not necessarily; resolved in part, perhaps.

MR SELWAY: And, certainly, your Honour, I would have no problem at all in acknowledging that if it is resolved in part, the agreement can attach to the part left, if you like. The problem is, can you, in respect of a new industrial dispute or new industrial situation, have it resolved without proceeding through a process of conciliation and arbitration?

Your Honours, what we say is that the process set out in section 170MC is essentially, at least as far as that section is concerned, a clerical process. It does not involve a conciliation process itself. Nothing is mediated. There is provision in 170MD relating to public interest, but again, in our submission, that is not a mediation or conciliation process.

GUMMOW J: That has been conciliated to the extent that they made an agreement.

MR SELWAY: That is only true, your Honour, if your Honour takes the view - - -

GUMMOW J: Which then has to go through the steps involving the Commission, it appears to me.

MR SELWAY: Our submission, your Honour, is that conciliation involves a process of mediation.

BRENNAN CJ: If the Commission had given the directions contained in 170MC(1) to parties who were in dispute, and at the end of the time the parties had then come back to the Commission with an agreement, it would have been conciliation?

MR SELWAY: It may have come close, your Honour.

BRENNAN CJ: Why would it not have been conciliation?

MR SELWAY: If it merely gave a direction that your agreement has to contain these provisions, that may have been helpful to the parties. That may have been viewed, as a matter of fact, as a mediation. I would not resile from that, per se.

BRENNAN CJ: Then if the Commission can certify only if those steps have been taken, this is, as it were, a pro forma of what the parties are to do and the Commission then has to supervise that they have done it.

MR SELWAY: Except it is a pro forma by the Parliament, not a pro forma by the Commission and the Parliament does not have power to itself carry out the conciliation and arbitration function. Your Honour, is this a convenient time?

BRENNAN CJ: Yes. How much longer do you expect your argument to take, Mr Solicitor?

MR SELWAY: I would think half an hour to three-quarters of an hour, your Honour.

BRENNAN CJ: Mr Cock, can you give us an estimate of your time?

MR COCK: About - - -

BRENNAN CJ: Yes. The Court will adjourn until 2.15.

AT 12.48 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

BRENNAN CJ: Yes, Mr Solicitor.

MR SELWAY: Thank you, your Honour. Two quick matters from this morning. Your Honours Justices McHugh and Gummow raised with me the question of whether the Musicians' Case had been overruled. It has been overruled in Australian Agricultural Company v Federated Engine Drivers [1913] HCA 41; (1913) 17 CLR 261, but only on the question of whether an injunction will lie to enforce a common law agreement preventing access to the Commission. On that point, of course, we raise no issue, but the matters that we refer the Court to that case for are, so far as we are aware, still good law.

The second issue was the matter that your Honour Justice Gaudron raised immediately before the break about the effect of there already being awards in place before the powers in respect of certifying agreements applied. Just to clarify our position in respect of that, we accept that if the dispute is still subject to conciliation and arbitration, then there is power to certify, constitutional power. So we would say that if an award is made in part settlement of a dispute, then there may still be subsisting power, if you like, in respect of conciliation and arbitration, but if an award did settle the dispute and settle it finally, then there is no power. There is a new dispute and, in that regard, the mere fact that an award is in existence does not assist in the constitutional power to certify.

GAUDRON J: Why would it not be fairly incidental to the power to provide that once conciliation or arbitration has taken place, then the parties may agree as to other matters, whether or not they are in the original dispute, with the consequences that the Act has? Because if that is so, that is at least conducive to the prevention of disputes, whereas your argument is conducive to the creation of disputes.

MR SELWAY: With respect, your Honour, what we say is that the power is not a power to prevent disputes. The power is a power to prevent disputes by a particular means - conciliation and arbitration.

GAUDRON J: Yes, but why is it not conducive to conciliation and arbitration, to the prevention and settlement of disputes by conciliation and arbitration if those processes, having been gone through, there is then an additional procedure for the parties to agree about matters over and beyond those that have been conciliated or arbitrated?

MR SELWAY: What we would say as to that, your Honour, is that if that position is taken, then the making of an award is an unnecessary step. If you take the position that it is sufficient to make the prevention of disputes effective to have power to register agreements, then there is no point in having an award in the first place. An award that settles a dispute either settles it finally or it does not. If it settles it finally, it is merely an historical fact. If there is a new dispute, you proceed to deal with a new dispute. If it does not settle it finally, then we concede it is then possible to argue that the certification arises out of the process of conciliation and arbitration out of which the award arose. But beyond that, what we say is that the argument your Honour puts leads inevitably to the conclusion that the certification of agreement, even without an award, is valid because it makes the settlement of the dispute more effective.

TOOHEY J: It cannot be certification without an award.

MR SELWAY: True, your Honour.

TOOHEY J: But that is simply because on one side the parties to the agreement, namely the employees, must have their terms and conditions, at least in part, controlled by an award.

MR SELWAY: Yes, your Honour.

TOOHEY J: But it does not follow that the agreement they make need touch the contents of the award.

MR SELWAY: No, your Honour, it does not, and whatever agreement they do make will have priority over that award under these sections. What we are putting to the Court is that the award there and as referred to in section 170MC(1)(a) is merely an historical fact, whether or not one exists. It may be as a matter of fact - - -

TOOHEY J: Well, it is not so much an historical fact, is it, Mr Solicitor, as it identifies the category of persons who can be a party to the agreement, namely employees whose conditions are regulated by one or more awards. That appears to be the only role that the existence of the award has under that particular section.

MR SELWAY: Yes, well with respect, we would adopt that. We would also make the reference to section 170MC(6) which provides that an award in this section includes a State award but does not include certified agreements or enterprise flexibility agreements. So, it may be an award that did not even arise out of an interstate dispute, to the extent that a State award is applicable.

If I could take the Court to Division 5 of Part VIB, that commences at page 32,553. I do not think the Court has been taken to this division yet.

TOOHEY J: Is it a division that is challenged in your writ?

MR SELWAY: No, your Honour, no, but it may have relevance to the question of whether there is conciliation in respect of Division 2. Division 5 provides for the creation of a bargaining division of the Commission. Section 170QJ which is at page 32,603 - perhaps before I come to that if I could refer the Court to 170QH, that provides, in its effect that where:

the Commission becomes aware that:

(a) a party to an industrial situation wants to negotiate, or is negotiating -

in respect of -

an agreement under Division 2 -

then under section 170QH(2):

The Commission may try, by conciliation, to facilitate the making of such an agreement if it considers that conciliation by it would facilitate the making of such an agreement.

Then, if I could take the Court to 170QJ:

In so far as it relates to conciliation by the commission, Part VI applies in relation to conciliation by the Commission under this Division:

(a) in the same way as it applies to preventing and settling industrial disputes by conciliation -

Again, if it please the Court, it is unclear how those provisions fit in with Division 4, but be that as it may, it is clear from those provisions that the Commission does have power to conciliate in respect of a certified agreement. The point we would make though, is that under section 170QH, there is no duty to conciliate, and we would compare that to section 100 where, as it were, in the ordinary course, that duty does arise.

In our submission, even if Division 5 is viewed as conciliation and arbitration for the purposes of the Constitution, there is no requirement that those provisions be used. In the result, the Commission is not required to be notified of the industrial situation and is not necessarily involved in the conciliation of it. In our submission, it cannot be assumed, as the Act is currently drafted, that a certified agreement is affected by conciliation or arbitration.

The Act clearly permits agreements to be registered where the Commission was not aware of the industrial situation before the agreement is presented for certification. It is our submission that the certification process itself is not conciliation in the sense we have used it. The agreements once certified have effects as awards, in particular they call in aid section 109 of the Commonwealth Constitution. To that extent it is our submission that the provisions are beyond power and we acknowledge that that is a limited extent, but our submission is that Division 2 does provide for the settlement of disputes by agreements otherwise than by conciliation and arbitration and that they do so because they reflect the objectives set out in sections 3(a) and (c) of the Act, namely, a scheme established for collective bargaining, not a scheme for conciliation and arbitration.

If I could take the Court then to Part VIB of Division 4, the immunity from civil liability provisions. That division starts at page 32,453. My learned friend, the Solicitor for Victoria, has taken the Court to those provisions so I will quickly summarise what we say their effect is for the purpose of our submission. The Commonwealth relies upon both the external affairs power and the arbitration power to support the validity of that division and as to the arbitration power, if I could merely refer the Court to section 170PA(3).

Victoria has made submissions respecting the external affairs power and we will deal with the arbitration power.

The division applies in the circumstances outlined in section 170PC. I think your Honour Justice Toohey drew attention yesterday to the reference in paragraph (b) of that section to the particular employer and particular organisation. On one view it may be possible to read that section so that, in effect, it could have no application or very little application to a dispute relating to a State government. Certainly an "industrial dispute" in paragraph (a) would mean an interstate industrial dispute, but under paragraph (b), the reference to "the dispute" involving "a particular employer" may have the effect that only disputes which were not interstate disputes, at least so far as State governments were concerned, would be involved. However, our understanding is that the word "involves" means that more than a particular employer can be involved in the dispute. It is also our understanding that that is the way the section has been applied in practice. That being the case, so long as a particular employer and a particular organisation are involved in the interstate dispute, that is enough to attract section 170PC, notwithstanding that other employers and other organisations may also be involved in that same dispute.

The procedure set out in those sections and that division is that a party seeking to negotiate a certified agreement gives notice under section 170PD. The bargaining period begins seven days after that date and continues until it is determined under section 170PN and during that period the parties may undertake certain protected action, including strikes and lockouts.

In our submission, there is no doubt that the Commonwealth Parliament has the power to legislate to ensure that parties use the system of conciliation and arbitration. On that basis, in our submission, legislation can prohibit strikes and lockouts. If I could perhaps take the Court to the case of Stemp v Australian Glass Manufacturers Co Ltd [1917] HCA 29; (1917) 23 CLR 226. Acting Chief Justice Barton at page 234, at about point 4, says:

In my view, the provisions of this Part are in the main framed with the object of clearing the ground for the proper execution of the power in sec 51 (xxxv) of the Constitution, and the particular enactment now challenged is designed to prevent the parties from proceeding to extremities after the inception of an inter-State industrial dispute, which gives jurisdiction to the Court.

I interject. Your Honour, the particular provisions were ones in respect to strikes and lockouts prohibiting those. He goes on:

The Legislature could not enter on the work of executing the power by means of compulsory conciliation and arbitration without being conscious that strikes and lock-outs were the most frequent and the most favoured means of insisting on industrial demands, whether just or unjust, and without observing their disastrous effects in keeping the parties at arm's length, often in a protracted struggles accompanied with violence and always at great loss both to capital and to labour. Resort to either of these drastic instruments was among the very things which it must be the vary object of conciliation and arbitration to prevent or minimize. But more; resort to either of them brought the parties necessarily into such strained relations with each other as rendered it the most difficult thing possible to bring them together for the settlement of their differences.

I would also refer the Court to other comments in the judgments at page 240 point 2 to 242; pages 244 to 245 and 248 to 249. In our submission, a prohibition of these or other forms of industrial action has the effect of requiring the parties to use the conciliation and arbitration system. It is, in effect, a prohibition of using an alternative, namely industrial force, to that system. Of course, the Parliament could, if it wished, not prohibit strikes or lockouts and then take the risk to the efficacy of the system that might result. But in our submission, the Commonwealth could not legislate so as to require the parties to use an alternative system to conciliation and arbitration. It could not, in effect, require them to settle their industrial differences by the use of industrial force, namely by strikes or lockouts.

On the same basis, we would submit that the Commonwealth cannot legislate to protect parties so as to assist them in resolving their disputes by that alternative mechanism. What we say the provisions of Division 4 do is assist in the object of collective bargaining, not the object of conciliation and arbitration. In that regard, it is noted that the United Kingdom legislation, referred to in the Commonwealth written submissions at paragraph 2.38, is legislation designed to assist a collective bargaining system. It is certainly true that if the Commonwealth had power to establish a collective bargaining system, then Division 4 would be appropriate legislation for the Commonwealth to enact. But, it does not have that power and in our submission, Division 4 of Part VIB cannot be supported by the arbitration power.

For similar reasons, we submit that the immunities and protections in section 164 - that is contained at page 31,853 of the CCH version of the Act - and that relates to proceedings in relation to boycott conduct. Section 166, which relates to breaches of bans clauses and 166A, which is the restriction of certain actions in tort, cannot be supported under the arbitration power. I should point out that section 164 is also supported under the corporations power and Western Australia will make submissions in respect of that.

McHUGH J: But, if the Parliament can enact legislation for the incorporation of trade unions, as Jumbunna has held and all other cases have accepted, why cannot the Parliament incidentally legislate to protect the trade union?

MR SELWAY: To an extent it can, your Honour, but I come back to the submissions we put before lunch that the power of the Commonwealth, as it were, to establish the unions, is limited to the purpose which is that of settlement of industrial disputes through conciliation and arbitration. Now, the Commonwealth cannot give them an immunity which, in effect, reduces or diminishes that purpose. Our submission is that these sorts of immunities do diminish that purpose.

McHUGH J: But, surely, the Commonwealth could pass legislation that the funds of a trade union cannot be seized by State authorities? If they can do that, why cannot they prevent State legislation or common law cause of action being brought against trade unions?

MR SELWAY: I may have agreed with your Honour too readily. In certain circumstances, and in respect of certain matters, the Commonwealth may be able to legislate to protect the funds of an organisation. The circumstances where it might do so would have to, in our submission, be related to the facilitation of the organisation's involvement in the prevention or settlement of disputes by the process of conciliation and arbitration. Now, we have put submissions before lunch that, in fact, the incidental power would not go so far as to provide that the agreements made by an organisation are protected by section 152. That remains our submission and that would have some qualifications on the extent to which the funds of the organisation could be protected.

Having said that, our concern about these provisions is that the immunities actually go to the opposite effect. Not only do they not assist the process of conciliation and arbitration, they go to establish a separate system from it, a collective bargaining system. It may be, for example, that if the Commonwealth legislated and said where an employer has breached a recommendation of a conciliation commissioner, reasonable industrial action taken by union in response to that breach is immune from State laws.

One could see how you could run an argument in that context, that the immunity actually serves to assist the process of conciliation. Here, however, the immunities are immunities that protect the use of industrial force outside of that system. Now, acknowledging what your Honour says, the cases, as we understand them are clear that the Commonwealth legislation has to be incidental not to the protection of a union, but to the prevention of industrial disputes through conciliation and arbitration. Our submission is that these provisions cannot be understood as achieving that end, even if they do make unions more protected. I am sorry, your Honour, that is perhaps not a very good answer.

McHUGH J: Yes, it is.

MR SELWAY: We acknowledge the comments raised by your Honour Justice Toohey yesterday about the effect of section 166A and join with Victoria in saying those matters are not raised on the current pleadings, nor are they dealt with in the section 78B notice and, perhaps unfortunately, would have to wait another day.

For the same reasons we submit that section 334A, which is on page 34,301, which prevents an employer dismissing an employee for engaging in industrial action, for the same reasons we say that power cannot be supported under the arbitration power and Victoria has made submissions in respect of whether it can be supported under the external affairs power. That brings us to section 152 and the enterprise flexibility agreements. If I could take the Court to Division 3 of Part VIB, which is at page 32,303. Section 170NA provides that:

An employer that is a constitutional corporation and carries on an enterprise may prepare an instrument that:

(a) applies to the enterprise; and

(b) is about matters pertaining to the relationship between employers and employees.

I would ask the Court to note the words "matters pertaining to the relationship between employers and employees" picks up a phrase that appears in the definition of "industrial dispute", but there is nothing in Division 3 which requires an industrial dispute, much less an interstate industrial dispute, that is to say on these provisions an employer can enter into an agreement without there being an industrial dispute. Under section 170NA(2) there is provision for the preparation of the agreement. There is provision in section 170NB for the parties who have a right to comment in the process on an application to the Commission in respect of that agreement. Then under section 170NC there is again provision for the approval of the agreement. Again the formula is used:

On an application to the Commission to approve implementation of an agreement, the Commission must do so if, and must not do so unless, it is satisfied that -

and then several paragraphs are set out. I will not take the Court right through, but those paragraphs are similar to, though the Commission has more power in respect of, than it does under section 170MC in respect of certified agreements. For example, under section 170NC(2)(b) the Commission has power not to approve:

in the context of their terms and conditions of employment considered as a whole, the Commission considers that the reduction is contrary to the public interest.

That might be compared to section 170MD(1)(b) in respect of certified agreements where the provision seems to be narrower.

TOOHEY J: Mr Solicitor, although the terminology is "enterprise flexibility agreement", is it in truth an agreement that is presented on application to the Commission?

MR SELWAY: In the terms of the Act, the use of the agreement may be an exaggeration. In practice I suspect it probably is.

TOOHEY J: I was not thinking of practice, but section 170NA speaks of the employer preparing an instrument and in later sections speak of an application to the Commission to approve implementation of the agreement, but at the moment I cannot see anything that requires the consent of employees before the application is made to the Commission.

MR SELWAY: Your Honour, section 170NC(1)(i) requires that:

a majority of persons who, as at the end of the day , that is specified in the application.....were employees covered by the agreement have, on or before the specified day, genuinely agreed to be bound by the agreement, even if they so agreed at - - -

TOOHEY J: Do you mean the agreement is something that takes place subsequent to the making of the application or is it prior to?

MR SELWAY: It is prior to, your Honour. The instrument referred to in 170NA(1) is the agreement; that is what the agreement is, and before certification there has to be a consultation process under 170NC(1)(g) and (h), and then the approval of the employees has to be obtained under (i).

TOOHEY J: Yes, I follow. Thank you.

MR SELWAY: It is worth pointing out that it does not require, on the face of it at least, the involvement of a registered union, though that would have a right to be heard under section 170NB. Once approved and in force, section 170NL, which is at page 32,403:

the terms of the agreement prevail over the terms of an award or order of the Commission -

but -

the agreement has no effect in so far as it is inconsistent with a certified agreement that was certified before implementation of the first-mentioned agreement was approved -

The particular matter that raises concern for our submissions can be seen if I take the Court to the definitions in section 4(1) of the Act firstly, "constitutional corporation", which is at 30,504. Your Honours, can see that the first three paragraphs of that definition rely upon section 51(xx). The other two paragraphs rely upon the territories power and presumably the executive power. We do not make any submission in respect of the territories power or the executive power. Our submissions are restricted to constitutional corporations within the meaning of section 51(xx).

If I could also take the Court to the definition of "award" at page 30,502, which is defined to include "an enterprise flexibility agreement". And then section 152 of the Act provides that:

Where a State law, or an order, award, decision or determination of a State industrial authority, is inconsistent with, or deals with a matter dealt with in, an award, the latter prevails and the former, to the extent of the inconsistency or in relation to the matter dealt with, is invalid.

The effect of those provisions is that an agreement between a constitutional corporation and its employees relating to industrial matters and which complies with certain conditions must be approved under the Act. Once approved, State laws which are inconsistent with that agreement are invalid to the extent of inconsistency.

Section 152 has been accepted as valid in previous cases under the arbitration power because the power to prevent and settle disputes carries with it the power to ensure that the terms upon which this is done may be implemented and imposed. The connection between section 152 and the head of power, namely the arbitration power, is, in our submission, significant. The very existence of an effective federal arbitration system requires that there be, and a capacity for the arbitrator to put into operation, the arbitrated settlement. The operation of section 152 has been explained in a number of cases - I do not think it is necessary to read from them, your Honour, but if I could give the Court just a couple of the references: Collins v Charles Marshall [1955] HCA 44; (1955) 92 CLR 529, at page 547 and T. A. Robinson v Haylor [1957] HCA 76; (1957) 97 CLR 177, at page l82. The effect is that section 152 is not itself the law which renders the State law invalid, rather, it is an expression of Parliament's intent that the factum, that is to say the award, should cover the field and then section 109 operates to hold the State law invalid.

In our submission, the power to enact section 152 stems from the purpose of the arbitration power and the arbitral function contained within it. If the decision of the arbitrator could not be enforced to the exclusion of State laws, then the power to provide for conciliation and arbitration would be frustrated. A comparison of the corporations power and the arbitration power shows that this approach is not available in respect of corporations. The arbitration power is a power over an activity which could be frustrated by State legislation; that corporations power is a power over persons not activities.

That distinction is, in our submission, drawn by Justice Evatt in the case of Stock Motor Ploughs Ltd v Forsyth [1932] HCA 40; (1932) 48 CLR 128, where at page 147 at about point 6 his Honour makes a general comment about the subjects mentioned in section 51 and its potential for inconsistency. In the last paragraph he says:

But it is also clear that, owing to the very nature of some of the subjects specified in sec. 51, it will seldom, if ever, be possible for the Commonwealth Parliament to pass a law, which will not only be a valid law with respect to the specified subject, but will also be one "covering the field" so as to render inconsistent and void any State law which deals with or operates upon the same subject. Take, for instance, the subject of aliens, mentioned in sec. 51(xix). A Commonwealth statute might validly impose prescribed duties upon aliens, but it is difficult to see how a Commonwealth law could be passed upon the subject of aliens which would render inconsistent with it State laws imposing separate and additional duties, even upon aliens alone. With other subject matters, the position is more difficult of general statement.

He then deals with taxation. He says in the next paragraph:

In other words, does not the subject matter of "aliens" indicate a class of persons who may enter into an innumerable number of relations with the States and their citizens, and that of "taxation" indicate a process or system of extraction which, as exercised by the Commonwealth authority, implies the payment of taxes to the Commonwealth itself, and is not directly related to what the States may demand as taxes from the same citizens, so long as Commonwealth requirements are met?

He then contrasts those two subject matters with conciliation and arbitration. What we draw from that is that where the legislation deals with a person, namely a corporation, then it is necessary for the Commonwealth law to identify some distinguishing feature upon which to base its legislative power. We say that follows from the Court's recent decision in Re Dingjan; Ex parte Wagner [1995] HCA 16; (1995) 69 ALJR 284. I will not take the Court through the judgments in that case, but if I give the Court the references to what we say are the relevant discussion of how you characterise a law relying on the corporations power, Chief Justice Mason at pages 285 to 286, your Honour the Chief Justice at 287 - I apologise. Your Honours are using ALR references. I can give those pages.

BRENNAN CJ: We probably have both. In fact, they are on the bench at the moment.

MR SELWAY: If I give the ALJR references, if that is convenient to the Court. I think our list had ALRs, but I notice the Commonwealth had ALJRs, so we will use that. Your Honour Justice Brennan at 287, 288 to 289; your Honour Justice Dawson at 292 to 294; Justice Toohey at 297 to 298; your Honour Justice Gaudron with whom Justice Deane agreed at 303 to 304 and your Honour Justice McHugh at 306 to 307.

Apart, perhaps, from Chief Justice Mason, it is our understanding of that decision that all the Justices would accept that a corporations power is a power in respect of persons, not activities and that the question of whether a particular law is a law in respect of corporations depends upon the significance to constitutional corporations of the matter regulated. That is clearly a question of fact and degree and it seemed to us that the difference between the majority and Justices Gaudron and Deane was based upon the relative significance they each attached to the matter regulated.

Our submission is that the corporations power may be wide enough to validate a law empowering a corporation to enter into agreements with its employees, which agreements are subject to the general law of the State. In any event, we would not challenge the Commonwealth's power to do so. However, we say that section 152 is not a law in respect of corporations or in respect of a corporation's activities. It is not the source of any substantive rights or obligations; it is merely a declaration of the intent of the Commonwealth Parliament that a particular factum - in this case the agreement - should operate exclusive of State law with the effect that the State law is invalidated.

The only criteria specified is that the matter pertains to the relationship of employer and employee and that there be an agreement which meets certain minimum conditions. Otherwise, Commonwealth Parliament's declaration in section 152 is at large. Given the breadth of the matters that could be covered in an enterprise flexibility agreement, it is our submission that it cannot be said that constitutional corporations are affected by State laws in some respects sufficiently material to give significance to their discriminatory treatment, to pick up the words of your Honour the Chief Justice in Dingjan's Case.

If we assume a hypothetical Commonwealth law based on the corporations power that no corporation which informs the Industrial Commission in writing that it does not wish to be bound by a State law which affects any matters pertaining to the relationship between the corporation and its employees, shall be bound by that State law. In our submission, if section 152 is valid based on the corporations power, then a law in that hypothetical form must also be valid. There is no relevant distinction between section 152 in its application to enterprise flexibility agreements and a law related entirely to the wishes of a corporation.

Our submission is that that law would not be valid because the corporations power will not support the mere exclusion of State law. In our submission, section 152, which can validly apply in respect of the arbitration power, cannot be used in the way it is used in respect of the corporations power.

This perhaps brings us to the Melbourne Corporation argument. Subject to the qualification already made in respect of the use of Leeth's Case, South Australia adopts the submissions of Victoria in respect of discrimination. In addition, South Australia repeats the submissions it put to the Court in the State Employees' Case, that is, Australian Education Union, Ex parte Victoria [1995] HCA 71; (1995) 69 ALJR 451, in particular at 465.

In respect of the State's capacity to function, we make the following submissions. On any view, it is our submission that sections 170DB, 170DE, 170DF and 170DG are impediments to the State determining the number and identity of the persons it wishes to employ. Your Honours, those are the provisions dealing with dismissal and restricting the power to dismiss. In our submissions, those sections cannot apply to any State employees. In paragraph 6.21 of the Commonwealth's submissions, reference is made, it appears to us, to the purpose, the beneficial purpose, of those sections.

In our submission, those arguments of the Commonwealth disclose a misunderstanding of the State Employees' Case. The relevant principle does not mean that the terms of the Commonwealth legislation may not be appropriate or sound. It is simply that the Commonwealth and its institutions cannot bind the States in respect of those matters. If any restrictions are to be imposed upon the State, they should be imposed by the State itself, not by the Commonwealth.

On the other hand, the Court's decision does make it plain that the Melbourne Corporation principle does not prevent the Commonwealth legislating for awards which impose minimum conditions of employment for most State employees, but restricts the Commonwealth so that it cannot do so for those employees in the higher levels of government and possibly others as well. The question of who those people are is, in our submission, a mixed question of law and fact which cannot be resolved on the material before the Court.

TOOHEY J: Mr Solicitor, in regard to this part of your argument and the question of discrimination between States, is there anything in the case stated to which we should have regard?

MR SELWAY: Your Honour, in respect of the discrimination argument, the only submission we put on the discrimination argument is to accept the submissions put by the learned solicitor for Victoria.

TOOHEY J: Yes, I appreciate that, but my question arose because of your reference to factual matters. No one has referred to the case stated thus far. I just wonder whether there is anything that we need have regard to in the case stated that bears upon any factual matter.

MR SELWAY: No, your Honour. So far as South Australia is concerned the case stated is addressed to the proof of the entry into force of various treaties and those are basically the only facts within it. The only submission we make on this point is that there are no facts upon which this Court could be asked to make a judgment of what employees may be at the higher levels of government. Even assuming the Court was prepared to embark upon that exercise, there is no material before the Court to enable it to do so.

TOOHEY J: Yes, thank you.

MR SELWAY: South Australia agrees with the Commonwealth in respect of Division 1, minimum salaries; Division 2, equal remuneration for equal work; and Division 5, parental leave; that the relevant provisions need to be read down to avoid invalidity and the occasion for determining the extent to which it can or should be read down should await a case that raises the matter. I refer the Court generally to paragraph 6.8 to 6.11, 6.16 and 6.29 of the Commonwealth submissions. In terms of the reading down of those provisions, we do repeat that we adopt the submissions of New South Wales as to the invalidity of section 7A of the Act, but that reading down by virtue of section 15A of the Acts Interpretation Act may be available in respect of this limited argument about the persons in the higher levels of government.

Finally, if it please the Court, South Australia specifically adopts the submission of Western Australia that the requirement in section 170PP of the Act that an award be a paid rates award is inconsistent with the State Employees' Case.

Yes. Your Honours will see at page 32,552 that, where the Commission terminates a bargaining period the effect of it is that they have to make a new award as a paid rates award. In our submission, a requirement as to a minimum amount that can be paid to an employee has only budgetary consequences and the Court has held that those consequences do not interfere with the capacity of a State to function, at least unless it applies to the higher levels of government. On the other hand, a limitation upon the maximum that the State can pay is effectively a limitation upon whom it can employ and a paid rates award limits the maximum that can be paid. In our submission, the State cannot be subject to a paid rates award and to the extend that it is relevant South Australia made that submission in both the SPSF Case and the State Employees' Case. Subject to any further matters, your Honour, those are the submissions for South Australia.

BRENNAN CJ: Thank you, Mr Solicitor. Yes, Mr Cock.

MR COCK: If your Honour please. My learned friend the Solicitor for South Australia has stolen rather more of our thunder than we thought he may have. As a consequence of that, I may not be as long as I anticipated before lunch.

Western Australia adopts the submissions, both oral and the written submissions, of the learned Solicitor for Victoria, and we also adopt the oral and written submissions of the learned Solicitor for South Australia, and we also adopt the written submissions of the Attorney-General for the State of New South Wales intervening, in so far as they bear upon section VIA of the Act. Western Australia, as members of the Court will have noticed did, by the case stated, seek a declaration that the enterprise flexibility provisions of the Act that is Division 3 of Part VIA - was invalid. We have indicated to the parties that we no longer proceed with that and we abandon that challenge, and accordingly, the answer to question 9f of the case stated may, with respect, be answered no.

As the learned Solicitor for Victoria has noted yesterday, there were a few additional arguments which it was not anticipated would be covered by either the South Australian or the Victorian cases, and we would be advancing argument on those alone. We have prepared and filed a written argument on 10 April this year and because that argument was delivered only on the Monday following the delivery by this Court of the State Employees' Case decision the previous Friday, we prepared a further written submission dated 28 August, which we would ask the Court to have regard as additional submissions, but limited to the purpose of advancing our arguments in relation to those matters concerned with the so-called Melbourne Corporation principle, and in particular, the curtailment limb of the Melbourne Corporation doctrine.

The additional areas of argument that I would like to cover number essentially four. Firstly, we have some additional provisions which we seek to attack relying upon the external affairs power but, as members will have noticed from our outline, the additional areas are very narrow in ambit because what we have done is simply sought to challenge additional statutory provisions which require the Commission to give effect to, in registering or certifying agreements or in issuing awards, the desire to reduce discrimination on the ground of sexual preference, age or physical or mental disability and our arguments in those respects are the same as the argument already advanced by the learned Solicitor for Victoria in respect to section 170DF; the argument which I will develop very shortly. That will not take particularly long, with respect.

We then argue that those provisions with those words which, it is argued, are supported by the conciliation and arbitration power, are not so supportable. That is our second argument. We then seek to advance the submission that section 164 of the Act is invalid in relation to the corporations power and we then finalise with a submission concerning the extent to which Division 4 of Part VIB; that provision dealing with immunity from civil liability which has already been challenged by Victoria, in particular on the external affairs power and by South Australia on the conciliation and arbitration power is, so far as we are concerned, also constituting an infringement of the Melbourne Corporation doctrine as the learned Solicitor for South Australia has foreshadowed.

With some trepidation, we have overnight prepared an additional document entitled Additional Submissions of Western Australia on Appropriate External Affairs Test which we would, with respect, seek to have the Court read but upon which I would not seek to advance any additional submission. What we have sought to do was to try and respond to the questions posed by your Honour Justice McHugh at page 52 of the transcript and your Honour Justice Dawson at pages 61 and 63 of the transcript yesterday. We do not think that it differs to any marked degree from the solution proposed by the learned Solicitor for Victoria this morning although, with respect to him, I do not think we make quite as many concessions as he does in the formation of our test which members will see is found at paragraph 8 of the document.

What we have tried to do is to formulate a test which would leave as good law the recent decisions of the Court in Dams, in Richardson, in Burgess, and in Koowarta, but at the same time focus rather more directly upon the words of the provision and external affair. It slightly differs from the submissions put by Victoria and Western Australia in the Koowarta case in that we have added an additional criteria (c) on page 4.

BRENNAN CJ: What is the meaning of 8(b), Mr Cock?

MR COCK: States is to be read as international States.

BRENNAN CJ: Dealings with our citizens?

MR COCK: Yes.

BRENNAN CJ: That is Australians overseas, what they do?

MR COCK: Yes, it is.

McHUGH J: I just do not follow why this legislation does not require domestic affairs to be judged by an international standard.

MR COCK: The terms of the recommendations and treaties to which reference has already been extensively made seemed to use words like appropriate for the circumstance of the particular country rather than circumstances or standards which would be applicable internationally. We draw in contrast the decision of the Court in Koowarta where there really was applied the international standard. For example, in relation to Schedule 5 in convention concerning a minimum wages with special reference to developing countries requires the establishment of a system of minimum wages of a particular type in the particular country rather than of a type which is acceptable to other nations. We think there is a contrast in degree with respect to that international obligation, an international obligation which arose - - -

McHUGH J: How does one determine an international standard? It seems almost as elusive a concept as international concern.

MR COCK: Your Honours notice, we have drawn away from the word "concern".

McHUGH J: I appreciate that.

MR COCK: Yes, and that is the significant departure, we think, from the position continued to be advanced by Victoria.

TOOHEY J: But, are we to read your paragraph 8(a), (b) and (c) as "accumulative requirement"?

MR COCK: No, it is disjunctive.

TOOHEY J: I appreciate that, as between (i) and (ii) it is disjunctive - - -

MR COCK: Yes, but also as between (a) and (b).

TOOHEY J: Between each of them?

MR COCK: Yes.

BRENNAN CJ: International standards as to what? Anything?

MR COCK: Yes.

BRENNAN CJ: Labour conditions?

MR COCK: Yes. We would say, I think, as we must concede, that there could be a case for the implementation of a treaty which would give the Commonwealth Parliament the authority to legislate in the way it may have done in this case but the international treaties and recommendation upon which it relies in this case are not of that type.

GUMMOW J: Why not?

MR COCK: They are not because they do not require Australia to implement standards which are recognised by other countries. What has happened is the Commonwealth Parliament has sought to implement its own standards, as it is entitled to do under the recommendations upon which it relies, whereas we would say the convention concerning discrimination in respect of employment and occupation was a standard equally applicable in Australia and any other country by whom the convention was ratified.

McHUGH J: But why is it not an international standard that each country should provide for minimum wages, having regard to the state of its economy, for example? Surely that is an international standard.

MR COCK: With respect, we say it is not. We recognise that is the tension in the argument. We would say that in trying to seize upon some rational explanation to justify a distinction between the judgment of the Court in Koowarta and what we would seek to urge upon the Court in this case, there is a basis of distinction in the sense that the convention with which that Court was concerned specified precisely what would be imported into Australian law and it was done. Whereas, in this case, what was to be imported into Australian law was not specified by the convention, that is our argument, although we recognise a system of minimum wage fixation is to be implemented, but we - - -

GUMMOW J: But, why is that not a standard?

MR COCK: We recognise obviously a question of degree arises. Our argument is that this is where, if one accepts our submissions, one can distinguish, in terms of degree, between the earlier conventions which have been successfully endorsed as a legitimate basis for legislation and those which, in this case, we say cannot. We have sought to advance a solution. It is not an argument that we had the primary responsibility for the development of but we simply tried to develop an argument consistent with the position Western Australia has taken in earlier cases before the Court, consistent with what we would submit would be a rational development of a law in this area to give effect to the difficulties that, with respect, were quite properly troubling the Court yesterday.

DAWSON J: You say in relation to the Tasmanian Dam Case that the identification of a property, a world heritage property, is to implement a decision of an international body of the World Heritage Committee. I do not understand that to be the case. The decision is entirely the decision of the country itself and inclusion on the list is only for the purposes of being eligible for some small financial aid.

MR COCK: Our only response is that we would adopt what my learned friend Solicitor for Victoria said about the Dam Case yesterday, that - - -

DAWSON J: But this is not a question of a submission.

MR COCK: No, it is a different argument.

DAWSON J: The fact is the World Heritage Commission does not make any decision as to which property is to be part of world heritage. It is just a matter of the convention.

MR COCK: But it is reference to an international standard or international consideration that the local body - - -

DAWSON J: But it is the decision of the country itself.

MR COCK: It is, yes, but we still say it is distinguishable from the types of requirements that ratification of particular conventions, with which we are now concerned, reveal. In relation to our arguments pertaining to sections 170BC(3)(b)(ii) - and that is a provision that is found within Division 2 of Part VIA of the Act - the Commission may make an order under that division only if the order would be regarded as appropriate and adapted for giving the effect to one or more of the anti-discriminatory conventions or the recommendations referred to in paragraph 170BA(b) or (c).

We, in respect of that provision, say that the section seeks to empower the Commission to make orders that can be reasonably regarded as appropriate and adapted for giving the effect of the effect of the two recommendations which are referred to there, and that whether the Commonwealth Parliament can empower a body to make certain laws depends, at least, upon whether the Commonwealth Parliament itself has the constitutional capacity to make those; that, here, they are solely international labour organisation recommendations and that, in the alternate to the primary submission, we would say that reliance upon recomendations alone is not sufficient because there is no sustaining of that legislative power by conventions with respect to which we adopt entirely the argument of Victoria.

We also challenge 170DF(1)(f). That is a provision which is found within Division 3 of Part VIA of the Act, and that is of the type that also is found in a subsequent provision, which I will identify shortly, but it is the inclusion of the phrase, "sexual preference, age or physical or mental disability" alone that constitutes our additional argument, and we advance the submission that there is no binding obligation, or indeed any obligation, which has been identified either in the Act or by the submissions of the Commonwealth to justify legislation on that basis, using the external affairs power.

We say that, in particular, the phrase cannot be constitutionally supported by Article 5 of the termination of employment convention, because that states that:

The following -

specified reasons -

inter alia, shall not constitute valid reasons for termination -

and that the reasons of sexual preference, age or physical or mental disability are not included reasons.

We support the Victorian argument that the phrase "inter alia" indicates that the convention contemplates there may be specific reasons outside those specified in the Article that will not constitute valid reasons, however, it does not place any obligation on the ratifying State to invalidate other unspecified reasons for termination. Accordingly Article 5 does not create the required international obligation that allows the Commonwealth Parliament to legislate to invalidate those unspecified reasons for termination.

We also advance the submission, as again was advanced by the learned Solicitor for Victoria, that the phrases cannot be constitutionally supported by Article 1(b) of the discrimination employment and occupation convention which is found as Schedule 1 to the Human Rights and Equal Opportunity Act, because, again for the same reasons I have just advanced, Article 1 of that convention was defining discrimination particular terms does not include those words and the phrase to which I have made reference. Again, it is apparent that Article 1(b) seeks to do no more than allow a ratifying State unilaterally to expand the scope of its obligation under the convention by increasing the number of prohibited forms of discrimination, and we submit that that obligation, which is a product of international development, may constitute external affair, however domestically developed commitments, which are unilaterally inernationalised by the means such as that provided in the Article, cannot constitute an external affair, and the lack of any real international obligation in this instance is highlighted by the fact that the domestic unilateral revocation of the recognised other forms will not place Australia in breach of any international obligation.

The alternative submission which was also advanced by Victoria is one which we also adopt; that was, if the proper utilisation of the means provided by Article 1(b) could give rise to an external affair, then the means were not properly utilised in the case, but there was no proper consultation with representative employers and workers' organisations and appropriate bodies, as is required under Article 1(b) of the convention. We rely upon the Victorian extrinsic materials which are found under tab VW to sustain that contention, and we also rely upon the absence of any justification by the Commonwealth in relation to that.

We also observe that the phrase, "sexual preference, age or physical or mental disability", in particular the ground of age, cannot be constitutionally supported by ILO recommendation 166, and, in any event, to the extent that that recommendation does deal with age, it should be noted that Article 5(a) of that recommendation states:

In addition to the ground referred to in the Termination of Employment Convention -

the reason of:

age, subject to national law and practice regarding retirement -

should not constitute a valid reason, and that in any event, even if reliance was placed upon that ILO recommendation for justification of legislation we observe that the significant restriction in the recommendation is not reproduced in the legislation.

We advance the identical argument in relation to section 170MD(5), again in relation to the certification of agreements and again in respect to the words, "sexual preference, age or physical or mental disability", and I do not repeat the argument.

We also advance the same argument in respect of section 150A(2)(b) of the Act. That provision requires the Commission for the purpose of reviewing awards other than certified agreements or enterprise flexibility agreements to review them in the first instance within three years of the commencement of the section and otherwise within three years after the award was made and within three years thereafter and look for deficiencies in the award. An award is deficient under that section if by subsection (2)(b) the award contains, relevantly to our argument, sexual preference, age, physical or mental disability discrimination provisions.

Again, we contend that that requirement on the Commission could also not be supported by the external affairs power. The matter is of some importance in any event because there are existing awards, and existing State awards in particular, which do distinguish in relation to age of workers, the particular rates that are applicable and the advantages that flow. There are other awards and, indeed, there are proclamations in Western Australia under our Minimum Conditions of Employment Act which entitle persons with physical or mental disability to be employed for rates less than that applicable for an able-bodied person and there may be particular reasons we would advance why that could be done in a particular State and that we would say it is quite important to the State's capacity to give effect to its own responsibilities in relation to providing wage rates for persons of different ages, wage rates for persons of different physical or mental abilities to discriminate on that basis.

In other words, it is a legitimate form of discrimination and it does cause considerable difficulty, with respect, as a matter of practical application if the Commission can be bound, as section 150A requires it, to, in fact, review all of its awards to see whether they have provisions providing for such discrimination. Whilst we do not want to get into the debate about the merits of whether or not provisions should have such discrimination, we do contend that it is a significant incursion into the rights of the State and one which is not authorised, we say, by any of the conventions or recommendations to which reference has already been made in the case.

Finally, in this part of our argument, we also make reference to the objects provisions of the Act to which my learned friend the Solicitor for South Australia has already gone and section 3 of the Act deals with the principal object of the Act. By paragraph (g) thereof, one of the objects is expressed to be:

helping to prevent and eliminate discrimination on the basis of -

and again we find the words:

sexual preference, age, physical or mental disability,

Again, whilst we would not necessarily challenge an object of an Act on its own, because of the way in which the object's provision is linked into the duties upon the Commission by section 90(a) of the Act which requires the Commission in the performance of its functions under Part VI of the Act to take into account the public interest and have regard to the objects of the Act and, in particular, the objects of the Part, we would say that there is no basis relying upon the external affairs power, at least, for the Commission to be obliged to give effect to an object which requires the elimination of discrimination on the basis of sexual preference, age or physical or mental disability and their argument, in that regard, is the same as that already advanced.

We note the Commonwealth take the point against us that, well, perhaps it is a challenge really to section 90(a) rather than a challenge to paragraph 3(g) in the objects provision. We think, with respect, that is really a matter of style, not a matter of substance, but if it be necessary, then we would obviously seek leave to amend our action to make it a challenge to section 90(a) although we would have thought, with respect, that the same result is achieved if section 3(g) is, to the extent that we have argued, read down by section 15A of the Acts Interpretation Act if that is available.

The other basis upon which the Commonwealth would contend that the objects provision in 3(g), the duty on the Commission under section 150A(2)(b) and the Commission's responsibility under section 170MD(5) is sustained is upon the use of the conciliation and arbitration power. We have expressed our submissions in that regard in paragraphs 2.0 through to 2.12 of our written outline dated 10 April and I do not seek to do any more than adopt that and invite the Court's attention to it. The operative parts of our outline would be found at paragraph 2.4 where we express the test to be applied in relation to the ascertainment of the matters the subject of the arbitration power and we have made reference to what is sometimes loosely described as the "ambit doctrine".

The point we advance through paragraph 2.4 and 2.6 of our outline and finally on 2.10 of our written outline is that regardless of the extent to which this Court has developed the so-called doctrine of ambit, even the preventative limb of section 51(xxxv) only enables the Commonwealth to legislate with respect to matters which might reasonably be said to arise or be likely to arise in relation to, or reasonably incidental or appropriate to the settlement or prevention of a dispute and, in our respectful submission, it cannot be right, as the Commonwealth argues, to say that matters of sexual preference, age and physical or mental disability would be such matters as one could authoritatively assert would be likely to arise in relation to the settlement of industrial disputes.

Indeed, we would pose the question, "How does the Commission settle the industrial dispute which concerns the appropriate pay rates to be given to 17-year-old boilermakers or boilermaker apprentices?". I mean, does the Commission say, "Well I am sorry, but we have got to resolve this on the basis of no discrimination on the ground of age, and if the boilermaker is 17 years of age we simply cannot resolve that dispute". It seems to us to fly in the face of reliance upon the conciliation and arbitration power. We could accept that if it was subject to an international obligation there would be a legitimate basis in the external affairs power to require it, but we have identified, we think, an absence of authority there and we say it therefore cannot naturally always arise in relation to the conciliation and arbitration for the settlement of industrial disputes extending beyond the limits of any one State because one cannot possibly say, with respect, that disputes could not exist in relation to the appropriate wage rates for juniors or the appropriate wage rates for disabled persons, for example. As I say, if the international obligation was in different form, there may be some basis to legislate; it has not been identified in this case.

We also advance - and this is the third part of our argument - a submission in relation to section 164 of the Act. The Court has already been referred to the section which provides that:

Subject to this section, an action under a law of a State or Territory does not lie against a trade union, or officer, member or employee of a trade union, in relation to conduct of the trade union or of the officer, member or employee acting in that capacity if the conduct is boycott conduct as defined by section 156 or would be boycott conduct as so defined if subsections 162(7) and 163(4) and section 162A had not been enacted.

If the Court pleases, the final words to section 164, in our respectful submission, are indicative of the difficulty that is sustaining the constitutional validity of that section poses. Mr learned friend the Solicitor for South Australia has advanced a submission in respect of the inability of the Commonwealth to justify that section on the ground of the conciliation and arbitration power, and we adopt that submission. Our submission is that if that is right, it cannot be sustained as an exercise of the corporations power.

Section 156 of the Act, by the definition section, defines a "boycott conduct" as meaning:

conduct that constitutes or would constitute:

(a) a boycott contravention; or

(b) attempting to commit a boycott contravention; or

any of the matters there specified in paragraphs (a) through to (f). A "boycott contravention" is defined as meaning "a contravention of section 162 or 163" and the definition of "boycott conduct" principally applies to the conduct of natural persons, including persons who are only indirectly knowingly concerned in the boycott conduct against a constitutional corporation.

Now, the protection under section 162 of the Act only applies to certain conduct, the ultimate purpose of which seems to be to prevent or advance the interest of a person or trade union in relation to industrial matters and the provisions only have application, inter alia, if the conduct hinders or prevents a person from trading with another and that either or both of those persons are constitutional corporations. Similar considerations can be seen in section 163 concerning boycotting agreements.

We would accept that section 162 and 163 can be characterised properly as a law with respect to trading corporations and we accept and adopt the submissions of the learned Solicitor for South Australia recently advanced in relation to Dingjan; Ex parte Wagner and we would also adopt his formulation of the test that may be found in that case, that the test of constitutional validity of a law with respect to a corporation is that the law should be significant in the way in which the law relates to the corporation. We acknowledge that the test has more refinements than that but, for the present purposes, we think that that would assist sustaining the constitutional validity of section 162 and 163.

At paragraph 4.11 of our written outline, the passages in Dingjan's Case to which we would refer are set out and I do not seek to read passages from the judgment. But, what we say is that that test does not sustain the constitutional validity of section 164 because section 164 cannot be said to be described as an exercise of the incidental power because it is not a provision, we say, the denial of which would render section 162 or 163 ineffective. What we say is that Division 7C of Part VI of the Act in which section 164 is found, establishes a scheme whereby certain boycott conduct is prohibited.

The provisions are expressly designed to prohibit interference in contractual relations between a constitutional corporation, who is a party to a dispute, and an unrelated third party, that the conduct in question may relate to the business activities of the constitutional corporation and a third party. However the boycott conduct prescribed could not have any connection with the trading financial business functions of a trade union, which is a constitutional corporation. Moreover, we say that section 164 has no connection with the trading or financial business functions of a constitutional corporation whose trading functions are affected by the boycott.

What we say is that the immunity that section 164(1) provides in relation to conduct that would be boycott conduct, as defined if the exceptions in 162(7), 163(4) and 162A had not been enacted, but we accept that the exception to the immunity arises under subsection (2) but that is not pertinent to the present argument. But, we say it is difficult to see how the grant of the immunity to a trade union can be justified by a corporations power and that the most clear way of illustrating the point of the absence of the connection with a trade union is the extension of immunity to conduct which is not boycott conduct because it falls within the exceptions in the three sections mentioned at the end of subsection (1). In other words, as no prohibition falls on that particular conduct, it cannot be a means of protecting corporations.

Because no prohibition arises of the conduct, it is not protecting corporations, it is only protecting, we say, trade unions, and the grant of an immunity to a trade union in respect of that conduct does not seem to have any significance at all to a corporation, nor any sufficient connection with constitutional corporations at all. It may be illustrated this way, that we see it as an exclusion provided by section 162A. That section provides that section 162 does not apply to conduct consisting only of persons being present outside particular premises or a particular place for one or more of these purposes. For example, paragraph (a) is:

obtaining information from, or communicating information to, people wishing to enter or leave the premises or place.

So what section 162A firstly does is permit the provision of information to people wishing to enter or leave premises and other conduct which is engaged in in order to persuade persons not to enter or leave premises if the conduct does not involve obstruction. So it is not designed, we say, clearly not designed, to protect corporations from conduct which however reasonable or proper or peaceful it might be might well damage the corporations interests.

So that sort of conduct does not have any significance or show any connection with a corporation because the conduct is not prohibited under the general law. There is no different operation which the law has on constitutional corporation by comparison to other persons. And, indeed, the rights of a person to picket peacefully in respect to a corporation are no different to the rights in respect to other persons in the community.

BRENNAN CJ: But 162A is an exception to 162, is it not?

MR COCK: Yes.

BRENNAN CJ: The question is, is 162 valid?

MR COCK: We accept 162 is valid.

BRENNAN CJ: Well, why is it that if 162 is valid you cannot have an exception to it?

MR COCK: You can have an exception to 162, we do not mind that, but what we say is what is sought to be done by section 164, which is the provision under challenge, is to provide an immunity in relation to activities which would, if 162A was not enacted, have been unlawful. In other words, it provides an immunity with respect to conduct which is not immune, or not unlawful. Or putting it another way - - -

BRENNAN CJ: Is it, too, an exception to section 162?

MR COCK: Yes, but, with respect, when one gets to section 164 it is disclosed, in our submission, that really section 164 is not a law with respect to corporations, it is a law with respect to trade unions and what they can and cannot do and it simply does not operate with any rational or substantial connection with the corporations power.

BRENNAN CJ: If section 162 is valid, why cannot the legislature say but the remedy or the rights created by section 162 do not apply in any of the following situations that have nothing to do with any of the powers in section 51?

MR COCK: We would say it would still have to be a connection with the corporation.

BRENNAN CJ: Why?

MR COCK: Because it is the corporations power which is being utilised to enact section 162, as we understand it.

BRENNAN CJ: Section 162 says corporations are protected and then the other sections say except where. What falls, the exceptions?

MR COCK: Our argument is simply that to treat conduct which is not within section 162 as being conduct which would be entitled to come within the exemption of section 164 is not a law with respect to corporations; in respect of trade unions, we say. Section 162A only uses corporations as a reference point, it seems to us, rather than in affecting substantially corporations and it is really the activities of others where the corporation is a reference point that is seized upon. In our respectful submission, that is not a sufficient connection with a Constitution corporation to justify section 164. Perhaps it could be analysed in relation to section 162(7) similarly. Section 162(7) provides that the:

section does not apply if:

(a) the fourth person has freely agreed to the conduct; or

(b) the conduct was specifically authorised or approved by or under an award, an award or order of a State industrial authority.....; or

(c) the conduct was in contemplation or furtherance of claims.....;or

(d) the conduct was in support of industrial action -

In other words, it treats persons who are not employees of the fourth person in the same way as persons who are employees and so a boycott cannot be held to have occurred if the persons engaging in the conduct are employees of the person to whom the industrial claims are to be made.

So conduct engaged in by persons who are directly affected by the claims made is not to be held to be boycott conduct, and the section then does not provide protection to corporations, nor does it differentially apply to corporations as opposed to other persons. The substantive operation of the section appears to lie in the conferral of protection upon persons who will be directly affected by the industrial claims to be made. We say that is the same as the formulation in section 163(4).

What is put against us by the Commonwealth is that the purpose of section 164 is simply to provide the Commonwealth remedies under Division 7 of Part VI are exclusive remedies, that they cover the field, but we say that does not meet the submission we are putting, that the immunity granted by section 164, to some extent, applies to conduct that Parliament has not even prohibited, and that the prohibition of stipulated conduct in such cases is not a valid means of protecting constitutional corporations.

The grant of immunity to trade unions in relation to other conduct, that is not prohibited; it just does not operate on constitutional corporations in a way which imparts the appropriate character to the law to enable it to be authorised by the corporations power. In other words, there is really no point of reference to a corporation in the sense that the Court has recently enunciated in Dingjan's Case.

The final submission we would advance has also been foreshadowed in relation to Division 4 of Part VIB of the Act. It is the Division entitled, "Immunity from civil liability". The scheme would now be familiar to your Honours, because my learned friends have already taken your Honours through the purpose to be served by the section and the operative provisions of sections 170PO and 170PP. We advance our submission on the assumption that the division would apply in relation to an industrial dispute which has a number of employers, and that a particular employer and a particular organisation are merely a subset of the primary dispute.

We make that submission under section 170PC, as my learned friend the Solicitor for South Australia expressed. If, in fact, the industrial dispute to which paragraph (a) speaks is only an industrial dispute with one employer, it would be hard to see how there could be an interstate industrial dispute affecting a State. So we make the submission on the assumption that the proper construction of 170PC could arise where there is an interstate industrial dispute involving a number of employers, one of whom is a State, and that the dispute involves a particular employer being a State and a particular organisation of employees and conditions of their employment.

On that assumption, the division would have potential application to States as employers and our difficulty with the whole division is that under section 170PP, if the bargaining period initiated by an organisation of employees is terminated on the grounds set out in 170PO, and the grounds do not trouble us for the purpose of our argument, then the Commission is obliged under section 170PP(2) to immediately begin to exercise its powers under the Act. Subsection (3) provides that:

Subject to subsection (5), if the Commission proposes:

(a) to make a new award covering; or

(b) to vary an existing award so as to cover;

employees whose terms and conditions of employment were the subject of the industrial dispute -

and we say that those conditions could be satisfied in respect of a State and State employees, then the Commission must, as the word used by the section if paragraph (a) applies, make the new award as a paid rates award, or, if paragraph (b) applies, vary the award so that it will be a paid rates award:

in relation to any of those employees who are employed in the single business or part of the single business, or at the single place of work, to which the bargaining period relates.

So, we say there is nothing in the words of the section to suggest that it was not intended to apply to States as employers.

Subsection (5) provides that subsection (3) does not apply but that is, as members of the Court will see, only where there is a:

new award or a variation of an existing award if the parties to the industrial dispute agree that the subsection is not so to apply.

And that would not necessarily suggest that the State would, therefore, not be covered by the duty upon the Commission to make a paid rates award or vary an existing award so it becomes a paid rates award, and moreover we note by subsection (7) of that section that under subsection (6), of course, an award has to be for a fixed period, by subsection (7):

During the fixed period:

(a) subsections 148(1).....does not apply; and

(b) the award may only be varied for the purpose of:

(i) removing ambiguity or uncertainty; or.....

(iii) including, omitting or varying a term (however expressed) that authorises an employer to stand-down an employee.

or:

(ii) varying a bans clause;

Nothing to enable the Commission to remove the obligation that the award be a paid rates award and it is the nature of a paid rates award under the Act which, we say, would infringe the constitutional doctrine described as the Melbourne Corporation principle in so far as States are concerned and - - -

GUMMOW J: Why would it do so?

MR COCK: Because we understand a paid rates award to be award that specifies generally most of the conditions of employment of employees and specifies the actual rates which shall be paid which may not be exceeded, we would say. And if those conditions are right, then prescription by the Commission of those conditions would exceed what this Court has recently said in the State Employees' Case as to the capacity of the Commission to be invested by the Parliament with authority to settle a dispute concerning State employees. The Court in the State Employees' Case found there was no doubt that the Commission could be invested with power to prescribe minimum wages and working conditions in respect of those persons who were not at the higher levels of government.

With that, we naturally entirely agree but to invest the Commission with authority - in fact, require it by duty to, in fact, settle the terms of a particular dispute with State employees in terms that the employment relationship is by way of a comprehensive award set in maxima would, in our respectful submission, infringe the restriction upon the Commission and the Commonwealth to legislate - - -

GUMMOW J: But why?

MR COCK: Because, to prescribe more than minimum wages and working conditions would restrict the machinery of the State in its operations. I do not know whether your Honour is asking - - -

GUMMOW J: Is that a constitutional proposition?

MR COCK: Yes.

BRENNAN CJ: What is the difference between restricting it in that way and restricting it by prescribing the minima?

MR COCK: We accept that the capacity of the Commonwealth to apply minimum standards is not an infringement of the implied prohibition in the same way as the imposition of income and payroll tax on the States is not an infringement. We would rely upon the judgement in the State Chamber of Commerce and Industry v The Commonwealth decision [1987] HCA 38; (1987) 163 CLR 329, at page 356 where the then Chief Justice and Justice Wilson and your Honours Justices Dawson, Toohey and Gaudron, in that case said:

The alternative contention that the legislation interferes with or impairs or curtails the States in the exercise of their functions of government rests on the view that anything which inhibits a State in establishing the terms and conditions upon which the persons who constitute the organs of government shall be remunerated is an interference with the capacity of the State to govern.

That was the States' submission in that case but your Honours had said the short answer is that the States are subject to Commonwealth Parliament's exercise of taxation power. They have no immunity from the Commonwealth taxation. That was the payroll tax case, and as it is accepted that the imposition of income tax on the salaries of State ministers, members of Parliament, and judges is not an infringement of any prohibition under the Constitution, it must follow, it was said in that case, the imposition of a tax on the States in respect of fringe benefits provided by the States to such persons is part of a general fringe benefits tax on those who pay salaries and wages, is not an infringement of the implied prohibition.

Likewise, it seems, so the reasoning goes, a requirement to pay minimum wages and working wages would not be an infringement upon the capacity of the State to perform its functions which it has. So, that is why we understand this Court in the State Employees case and repeated, I think, on three or four occasions in the judgment.

BRENNAN CJ: We understand the minimum argument.

MR COCK: Yes.

BRENNAN CJ: The question that was asked of you is how do you distinguish for constitutional purposes the powers of prescribed minima and the power to prescribe paid rates?

MR COCK: Well, the power to prescribe paid rates would deny to the State the authority or the capacity to attract the particular person the State may wish to perform a particular function. That is, we would say, the primary example where if one has a policy department in the Ministry of Premier and Cabinet and one wants a key person with great qualifications and of high calibre, one could, with respect, as a matter of logic not attract that person if one was obliged to pay rates which are set as maximum by the Commonwealth Industrial Relations Commission.

DAWSON J: Particularly if the State is competing with other employers and with the other governmental employers.

MR COCK: Well, it makes it particularly obvious in circumstances of some government concerns, yes, where there are key persons who would be ideally suited to that type of work in government and it is a matter of fact that the States are, to significant degrees, competing with each other, and if a paid rates award was prescribed, the State could simply not, as a matter of logic, attract the calibre of the person it required. We say that must follow as a matter of logic and we would, with respect, adopt the reasoning in the State Employees Case that came to the view that it would not curtail the capacity of a State to function if merely minimum wages and working conditions were prescribed.

We would have thought that the reason that that formulation was developed was that it was in recognition of the fact that one would probably have, in any event - if one was attracting an employee to pay the minimum applicable across Australia, one could not expect realistically, as indeed the Fringe Benefits Case expressed, the State to be immune from some financial impost in relation to something it is performing, and we would have thought that the employment of particular persons would naturally enough carry with it the implication, would have to pay them a minimum rate, and the Court has held that the Commission could, as an exercise of arbitral authority, provide for an award that sets minimum wages, and we do not cavil with that at all.

But we would have thought, with respect, that it would go too far in so far as infringing the capacity of the State to function to enable the Commission to in fact set maximum rates or maximum conditions. I mean, another area of concern would, of course, be in so far as working hours or things of that sort, and the paid rates award would prescribe working hours and times at work and a comprehensive restriction upon the State's capacity to have particular members of its staff working particular hours on particular days, on particular shifts could, with respect, as a matter of logic, impair the State's capacity to function.

That is why we say that a comprehensive award that prescribes generally all conditions or most significant conditions of service as maximum and minimum at once would deny to the State the capacity to function the way it wants to function. It would set it up to function the way the Industrial Relations Commission would allow it to function.

GUMMOW J: It all comes down to what the word "function" means in this area of discussion.

MR COCK: Yes.

GUMMOW J: As far as I can see, it has never really been explained.

MR COCK: Well, we think we have drawn attention to the recent judgments of the Court that have developed the notion of the machinery of government - and we would adopt those words - as mean the performance by the staff of the State, of things that the State needs to do to perform the functions a State has left, and it is the way in which it performs those functions that it should be free, and we would have thought, with respect, that a paid rates award in respect of State employment would deny the State the capacity to function the way it wants to function. Its capacity to function the way it wants is what we say it must be entitled to do.

So, if we are right about this submission, then we would say that Division 4 of Part VIB of the Act could simply have no application to State employment because of the operation of the paid rates award requirement upon the Commission. If your Honours please, that concludes my submissions.

BRENNAN CJ: Thank you, Mr Cock. Is there an agreement between you, Mr Solicitor, and Mr Solicitor for New South Wales, as to the order?

MR GRIFFITH: Your Honour, the last time my learned friend the Solicitor-General for New South Wales announced his appearance to support the Commonwealth, his proposition was Cigamatic should be overruled. This time, your Honour, it was announced that New South Wales was intervening in the same interest, your Honour, but, as we understand it, the principal argument is section 7A is invalid. So we agree that it is appropriate he should address that first, if it suits the Court.

MR MASON: Your Honours, with that introduction, I put the submission that New South Wales supports and adopts the submissions of the Commonwealth as to the validity of the legislation. There are two areas of departure, one where we submit the Commonwealth has not gone far enough in defence of the legislation, and one where we submit that the provision is invalid.

Your Honours I trust have the outline of the written submissions. The one matter where we would seek to add perhaps an additional reason for validity concerns Division 2 of Part VIB. That was the portion of the Act that was primarily assailed by my learned friend the Solicitor-General for South Australia, the division dealing with certified agreements commencing at section 170MA. As we read the Commonwealth's submissions, particularly paragraph 2.16, the suggestion is primarily that that division is supported as incidental to the conciliation and arbitration power. In our submission, it is within the conciliation power in its own right.

There are four provisions to which reference need briefly be made: 170MI(1), which provides that a certified agreement only comes into force when certified; 170QH, which arms the Commission with power, as it were, to intervene at the time of the process of bargaining towards the proposed agreement; 170MG, which imposes on the Commission an active obligation of what might be described as an inquisitorial role, the Commission must take certain steps before performing its function; and, finally, sections such as 170MC and 170MD which prescribe the matters for which the Commission must be satisfied and control the exercise of its power to certify agreements. The combination of those provisions means, in our submission, that the Commission exercises a sufficient role with respect to certified agreements as to make it a conciliator and that certified agreements when certified are the process of a settlement of dispute through the means of conciliation.

The leading authority that was cited against that proposition in 15 CLR, was J. C. Williamson v Musicians Union, and your Honours will recall my learned friend the Solicitor for South Australia argued that Chief Justice Griffith, in effect, supported the broader use of conciliation, but that the other two judgments were opposed to that. Our submissions are twofold; the first is that Justices Barton and Isaacs each had different reasons, in other words, there were three different sets of reasoning in the judgment, and secondly, neither of those two judgments, that of Justices Barton and Isaacs, is in point with reference to the present legislation.

At page 641 of the report, the very conclusion of the report of the argument of Mr Knox, it is stated that:

There may be conciliation without the intervention of a third party.

That was the proposition that was being advanced. For some strange reason the submission of the defendants are not reported, although there is full detail of the submissions in-chief and in reply of Mr Knox. So, the argument was that there was conciliation without the intervention of a third party. That was the argument to which Justice Isaacs turned his attention and rejected, at page 659, near the top of the page, in the first full paragraph, which my learned friend read. So, the proposition he was rejecting was that certification without any role is not conciliation, and for the reasons I have already put, the present legislation is clearly distinguishable from that.

Justice Barton proceeded, as we would read the judgment, on a completely different basis and the passage at 647 and 648 which was read by my learned friend held that the agreement in question did not fall within section 73 but simply because it was not an agreement for the prevention and settlement of industrial disputes existing or future by conciliation and arbitration. In other words, the nature of the agreement, as distinct from the process by which it received statutory effect, was the reason why it did not fall within the statute. That, as we would read the whole of the passage my friend referred to, is the basis upon which Justice Barton dealt with the matter. At 648, about lines 7 and 8 towards the conclusion of that passage, he said:

The agreement between the present parties deals very extensively with the terms and conditions of employment, but does not purport to provide for the prevention of industrial disputes by conciliation or by arbitration.

So, in the end for his Honour, it was a question of statutory construction of section 73 rather than defining the nature of conciliation.

Your Honours, in paragraph 2.2 of our outline of submissions we refer to three cases. A closer reading suggests that, perhaps, only the first one is directly in point. It is the Bain decision in 159 CLR. Our submission is that the section in question there, section 28 of the 1904 Act, was similar to that addressed in the earlier case in that there was no active role for the Commission, unlike the present law. Section 28 is set out in Justice Murphy's judgment at 165 of the report in 159 CLR. It was in that context that the remarks have to be read but, nevertheless, such statements as there are by three of the Justices support our argument, in my submission.

Justice Murphy at 168, near the middle of the page in the last couple of sentences of that paragraph, appeared to contemplate that for him conciliation was involved when an agreement was given force by section 28. In other words, he seemed to be taking the view that you did not even need to have a conciliator provided there was agreement.

BRENNAN CJ: And provided there was a dispute in that section.

MR MASON: And a dispute which, of course, is pre requisite to the power to certify agreements in the present context as well, and at 176, at the top of the page in the joint judgment of Justices Brennan and Deane, there is a reference made to conciliation functions in the third line:

involve and are directed to assisting the prevention or settlement of industrial disputes by "amicable agreement"

That definition or that description of conciliation is entirely consistent with what is present in Division 2, in our submission.

BRENNAN CJ: It is not, in fact, necessary to have an industrial dispute at present, is it? An industrial situation is sufficient, falling short of an industrial dispute.

MR MASON: Not for certified agreements as I read it, your Honour.

BRENNAN CJ: Section 170MA(2)?

MR MASON: That is for the purpose of preventing a situation from giving rise to an industrial dispute so that it is within the prevention arm of the placitum.

TOOHEY J: Well, except for subsection (2).

MR MASON: Yes, but if they "agree on terms for preventing the situation from giving rise to an industrial dispute". I am sorry, am I looking at the wrong - - -

TOOHEY J: No, it is that subsection, but the earlier reference to "the parties to an industrial situation".

MR MASON: If that were the only connector for the agreement there would not be the nexus but because the agreement is directed at, in terms, preventing the situation from giving rise to a dispute, then it would satisfy the requirement of the placitum, provided the means for preventing the industrial dispute involve conciliation as they do, in my submission.

BRENNAN CJ: We can develop this further tomorrow, Mr Solicitor. How is the time situation?

MR MASON: I will be five minutes more.

BRENNAN CJ: Mr Solicitor for the Commonwealth?

MR GRIFFITH: I would be in the Court's hands, but with a clear run I would hope to finish tomorrow.

BRENNAN CJ: That cannot be guaranteed, Mr Solicitor.

MR GRIFFITH: That is why I expressed it in that way, your Honour.

BRENNAN CJ: Mr Solicitor for Victoria?

MR GRAHAM: It may assist the Court if I indicate that as between the plaintiffs it has been agreed as matters stand at the present time that we would only seek to be heard by one counsel in reply.

BRENNAN CJ: Yes. The Court will adjourn until 10.00 am tomorrow morning.

AT 4.24 PM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 7 SEPTEMBER 1995