CFMEU & Anor v The Commonwealth of Australia S138/1998 [1999] HCATrans 472 (10 November 1999)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S137 of 1998

In the matter of -

An application for Writs of Certiorari, Prohibition and Mandamus against THE HONOURABLE JUSTICE ALAN J. BOULTON, a Senior Deputy President of the Australian Industrial Relations Commission and the Full Bench of the Australian Industrial Relations Commission consisting of the Senior Deputy President JOHN W. MACBEAN, Senior Deputy President COLIN G. POLITES and GREG HARRISON, Commissioner, all of the Australian Industrial Relations Commission

First Respondent

PACIFIC COAL PTY LIMITED

Second Respondent

CAPRICORN COAL MANAGEMENT PTY LTD

Third Respondent

CALLIDE COALFIELDS PTY LTD

Fourth Respondent

COLLINSVILLE COAL COMPANY PTY LTD

Fifth Respondent

ENSHAM RESOURCES PTY

Sixth Respondent

BLUFF MINING PTY LTD

Seventh Respondent

LEO AND GREEN PTY LTD

Eighth Respondent

NEWLANDS COAL PTY LTD

Ninth Respondent

OAKY CREEK COAL PTY LTD

Tenth Respondent

SOUTH BLACKWATER COAL LIMITED

Eleventh Respondent

YARRABEE COAL COMPANY PTY LTD

Twelfth Respondent

COAL OPERATIONS AUSTRALIA LIMITED

Thirteenth Respondent

WARKWORTH MINING LIMITED

Fourteenth Respondent

COALPAC PTY LTD

Fifteenth Respondent

DRAYTON COAL PTY LTD

Sixteenth Respondent

WAMBO MINING CORPORATION PTY LTD

Seventeenth Respondent

COAL AND ALLIED OPERATIONS PTY LTD

Eighteenth Respondent

ULAN COAL MINES LTD

Nineteenth Respondent

LIDDELL PREPARATION COAL PTY LIMITED

Twentieth Respondent

MUSWELLBROOK COAL CO LTD

Twenty-first Respondent

HARTLEY VALLEY COAL CO PTY LTD

Twenty-second Respondent

COOK RESOURCE MINING PTY LTD

Twenty-third Respondent

CURRAGH QUEENSLAND MINING LIMITED

Twenty-fourth Respondent

NORTH GOONYELLA COAL MINES LIMITED

Twenty-fifth Respondent

ROCHE HIGHWALL MINING PTY LTD

Twenty-sixth Respondent

OCEANIC COAL AUSTRALIA LIMITED

Twenty-seventh Respondent

STRATFORD COAL PTY LTD

Twenty-eighth Respondent

THE CORNWALL COAL COMPANY NO LIABILITY

Twenty-ninth Respondent

CENTENNIAL COAL CO LTD

Thirtieth Respondent

BERRIMA COAL PTY LIMITED

Thirty-first Respondent

CHARBON COAL PTY LTD

Thirty-second Respondent

CLARENCE COLLIERY PTY LTD

Thirty-third Respondent

IVANHOE COAL PTY LTD

Thirty-fourth Respondent

AIRLY COAL PTY LTD

Thirty-fifth Respondent

PEABODY COAL LIMITED

Thirty-sixth Respondent

LEMINGTON COAL MINES LTD

Thirty-seventh Respondent

NOVACOAL AUSTRALIA PTY LTD

Thirty-eighth Respondent

MOUNT THORLEY OPERATIONS PTY LTD

Thirty-ninth Respondent

and

KANDOS COLLIERIES PTY LTD

Fortieth Respondent

Ex parte -

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

First Prosecutor

GARRY WILLIAM BARNES

Second Prosecutor

Office of the Registry

Sydney No S138 of 1998

B e t w e e n

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

First Plaintiff

GARRY WILLIAM BARNES

Second Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

GLEESON CJ

GAUDRON J

McHUGH J

GUMMOW J

KIRBY J

HAYNE J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY 10 NOVEMBER 1999, AT 10.21 AM

(Continued from 9/11/99)

Copyright in the High Court of Australia

GLEESON CJ: Yes, Mr Solicitor.

MR BENNETT: May it please the Court. Yesterday afternoon I was asked a question by Justice Gaudron and a question by Justice McHugh. I propose to spend a little time answering that question. That answer has a number of parts which will cut across the seven categories I referred to yesterday and, indeed, will cover the majority of my submissions. I propose, therefore, to answer those questions first in some detail and then return to what is left of my seven points. Might I hand to your Honours a document which just sets out the headings under which I propose to answer the two questions.

GLEESON CJ: Thank you.

MR BENNETT: The questions that were put to me in summary were these, that the proposition against me is that the legislature could not require an arbitrator to insert a provision in particular terms in an award or an amended award in a particular way; the operation of Items 50 and 51 have that effect, therefore they are invalid. The starting point in answering those questions is that the prohibition on the legislature requiring an arbitrator to insert a provision in particular terms in an award or to amend it in a particular way arises not from any prohibition in the Constitution but merely from the absence of power. The ambit of section 51(xxxv) does not include a legislative provision imposing a particular term in an award.

Now, we support Items 50 and 51 in three ways, none of which involve that vice, but it is important to realise that if that vice exists it is not a prohibition if one can otherwise justify the amendment.

McHUGH J: From a forensic point of view it is very effective rhetoric to talk about an absence of power but perhaps there is an absence of power because there is a negative implication. That is to say, the terms of 51(xxxv) imply that the Commonwealth itself cannot conciliate or arbitrate as such. All it can do is make laws that sets up the apparatus or institutions that - - -

MR BENNETT: The law which is set up, of course, is not conciliating or arbitrating. The law which is set up is merely dealing with the enforcement of something which has been done and which is amended in a particular way.

KIRBY J: But it is not really enforcing it; it is changing it.

MR BENNETT: We do not accept that, your Honour.

KIRBY J: Well, you do not accept it but there will hang in the air of this case until the end and the respondents will have to answer it - Justice McHugh's example yesterday - an award - there is a certain amount trade-off for a certain number of hours.

MR BENNETT: Yes.

KIRBY J: Take out one and you have an entirely different creature.

MR BENNETT: I am going to deal with that, your Honour.

KIRBY J: And, if you are changing that balance you are amending the award which the Commonwealth Parliament cannot do.

MR BENNETT: Your Honour, may I come to that, because that is in a sense the centre of it and that is something which I have dealt with in each of the three subsections of section 2 of this answer to it? If I can just give your Honour Justice McHugh - if I can finish answering that question first before answering Justice Kirby's question - suppose one had, as might have been in Victoria v The Commonwealth, had the Court dealt with it on a different basis, an external affair; suppose one had a treaty under the auspices of the International Labour Organisation, which said, "It shall be a term of every contract of employment in the workplace that there be no discrimination on the basis of race", and suppose it was desired to put that in existing awards and it was done, assume, squarely under the external affairs power. Now one would not then say that there is an implied prohibition in section 51(xxxv) that stops one doing that. One would simply say, "This is not something done under that provision; it is done under another provision having no relation to it."

Now here, what we say has been done, can be justified in three alternative ways - - -

GAUDRON J: I see that first way in which you do it, but it does not seem to me that that is the relevant connection you must look for, as you specify it in 2.1. That is a connection you would have to look for if the Commission were varying the award by means of arbitration or purporting to vary the award. The connection you have got to look for is the connection with respect to conciliation and arbitration for the prevention or settlement of interstate industrial disputes generally, not with any particular dispute, it seems to me.

McHUGH J: So it is a compound conception, 51(xxxv), and it is a mistake, particularly in this case, to break it up into elements. You have this whole conception which you have to connect with.

MR BENNETT: Yes, but the real answer to that is proposition 3, that the award itself is nothing without the provisions of the legislation which give it a legal effect.

GAUDRON J: That is right, but if you had an Act that did not give it legal effect, for example, you might not have a 51(xxxv) law.

McHUGH J: Because there might be no arbitration. There is that passage at page 253 in the judgment of Justice Starke in Alexander's Case where he regarded it as going to jurisdiction.

MR BENNETT: Yes, if I can just deal first with the suggestion that - there are cases where one might have conciliation and arbitration without legal effect. For example, one might conciliate a dispute in such a way that the resulting consensus was an agreement which was merely morally binding on the parties, specifically without legal effect. Now, that might still be conciliation of the dispute, it might result in the practical settlement of the dispute because the parties might choose, as they probably would, to observe their moral obligations. So it may not be an essential element of the power that there be a provision for enforcement, it might be that there was not. But what is relevant for present purposes - - -

GAUDRON J: Well, you would at least have to have, would you not, coming out of it an agreement with some legal effect.

MR BENNETT: Well, it may not matter for this case, your Honour, but we would submit even if there were no legal effect but it resulted in the settlement of the dispute by conciliation - - -

GAUDRON J: But it might be a series of agreements between employer and individual employees, but they would have some legal effect.

MR BENNETT: There are many situations in the world of commerce, and no doubt in the world of employee/employer relationships where things are done having no legal effect which nevertheless the parties observe because of - the colloquial phrase is "moral obligation".

GAUDRON J: They might not have the effect of the award, but they may well have legal effect independently of it.

MR BENNETT: They might if the parties chose to give them that. Certainly the parties might enter into an agreement which was binding as a matter of contract law and have no other effect or they might enter into an agreement which was merely morally binding and had no legal effect.

GUMMOW J: The question then would be whether that was conciliation leading to a settlement. You would say settlement does not necessarily have a requirement of compulsive legal effect, whether through statute or contract.

MR BENNETT: Precisely, your Honour.

GUMMOW J: The fact is they are back at work because they have been conciliated.

MR BENNETT: Yes, precisely, your Honour.

HAYNE J: The agreement to reach a future agreement may be the paradigm example of that.

MR BENNETT: Yes, that is another example, your Honour, where there is a non-binding agreement to reach a future agreement and, as your Honour Justice Gummow says, they are back at work.

In the present case that is not the issue. The issue here concerns the nature of an award, and what is important about the award is that its sole legal significance lies in what can be done with it, and that is the provisions of the Act which deal with the penal provisions, the obligation to pay wages and the effect of the award as between the parties. That can be repealed by the Commonwealth; that can be amended or varied by the Commonwealth in various ways; and there can be a relevant connection between the original settlement of the dispute by conciliation and arbitration even though there is now a different or more limited extent to which the resulting award can be enforced.

KIRBY J: But is it then, the award, the product of conciliation and arbitration? It is not. It is something entirely different. It is a creature of Parliament directly legislating. It is no longer the award. Justice Boulton made that absolutely plain when he said, "What I am now doing is not necessarily what I would have done if I had been exercising a general power to the Commission".

MR BENNETT: That is so, your Honour, but the phrase used in Victoria v The Commonwealth was "relevant connection".

KIRBY J: Yes, but it is relevant connection with the award. It is not relevant connection with this hybrid. This is not the award. It no longer is the award. It is cut-a-about and emasculated, changed instrument. It is just not the award of conciliation and arbitration. It has no legitimacy in the Constitution.

MR BENNETT: It is part of that award, your Honour, with certain things taken out.

KIRBY J: Certain things that, as Justice McHugh's example indicates, can absolutely change its character and the structure and balance. If you know anything about awards, you know that they are carefully adjusted balances and negotiations, and compromises - deals - and this is completely a changed result. It is no longer a constitutional award, the product of conciliation and arbitration. It is a creature of Parliament and Parliament cannot do it.

MR BENNETT: The question is, is there a relevant connection?

GAUDRON J: With what?

MR BENNETT: With the settlements of the original dispute.

GAUDRON J: Why? Why do you say that is the question? I can well understand that that is the question if you are looking at what the Commissioner has done and undoubtedly that was the way in which the test was posed in Victoria v The Commonwealth, looking at it from the perspective of what the Commission can do in the exercise of the arbitral power. We are not looking at the exercise of arbitral power here. We are looking at the exercise of the legislative power and what there has to be is a relevant connection with the head of power. Surely that must be right.

MR BENNETT: Yes, and, your Honour, the first way we find that relevant connection is by looking at the award as affected and the award as it was, settling the original dispute by conciliation and arbitration. Where one finds that some elements of that remain, and some are removed - maybe if what is removed from the award is no longer to be part of the agreement between the parties or there is no compensatory adjustment by certified agreement or by other amendment to the award, the balance may be altered. But the mere fact that the balance is altered does not answer the question, "Is there a relevant connection?"

If I can just take your Honours to the passage in Victoria v The Commonwealth187 CLR 416. There are two passages I just want to remind your Honours of very briefly. The first passage is at page 527 and following, and at the bottom of page 527 this passage appears in the judgment of the majority of five Justices:

It is well settled that the terms of an award must be "`relevant' or `reasonably incidental' or `appropriate' to the settlement of the differences constituting the interstate dispute.....". The "ambit" doctrine, which confines the variation of awards within the limits of the dispute upon which the award was based, is an aspect, albeit an important aspect, of that more general rule.

That certainly is variation by the tribunal, but let me go on:

It is conceivable (although hardly likely in practice) -

and we stress the words in parentheses:

that the variation of an award, either by removing or amending a discriminatory term of the kind to which s 150A(2)(b) is directed, could result in the award no longer having the required connection with the dispute on which it was founded.

So it is conceivable, but hardly likely in practice, that the variation of an award by removing it or amending it a term could result in it no longer having the required connection.

KIRBY J: Are their Honours there referring to variation by the Commission?

MR BENNETT: Yes, they are.

KIRBY J: Well, that is a very different thing. This is the exercise of the arbitral power. There is no question then, no question whatever, of the constitutionality, unless, as their Honours say, you get to the extreme case that it is such a variation that it is no longer settlement of the original dispute. But we are not talking about that case; we are talking about variation by Parliament.

MR BENNETT: Yes, but, your Honour, Parliament has power to legislate in relation to how an award is to be effectuated.

GAUDRON J: Well, Parliament has power to legislate with respect to conciliation and arbitration for the prevention and settlement of industrial disputes.

MR BENNETT: Yes.

GAUDRON J: We will forget about the "extending beyond". Now, in Item 51 it is certainly not legislating with respect to conciliation or arbitration, is it?

MR BENNETT: Well, let us take Item 50, your Honour, first because we start with 50 and say 51 is merely a procedural - - -

GAUDRON J: Well, in Item 50 it is not legislating with respect to conciliation and arbitration because it is saying it has an effect independently of the conciliation and arbitration.

MR BENNETT: Well, your Honour, we would submit that it is. What it is doing in Item 50 is saying here is an award which is the result of conciliation or arbitration of a dispute. We are entitled as part of the power in 51(xxxv) to determine what effect is given to that award, if any.

GAUDRON J: Well, you may have power to determine whether it has any effect.

MR BENNETT: Yes.

GAUDRON J: But there is no dispute about that, whether it has effect or no effect. The question is whether when you say it has a different effect it is with respect to conciliation and arbitration.

MR BENNETT: Yes, that is the question and one does not answer that question by saying the balance of the original agreement or arbitral result is in practice altered. One simply asks: is the limitation on the extent to which the award can be enforced something which has a relevant connection with the original matter? Clearly it does because it is - - -

GAUDRON J: Well, what is that connection? It is very well to - what is the connection? It is not a law. At best it is a law with respect to the effect of an award.

MR BENNETT: It is limiting the enforceability to the major matters - - -

GAUDRON J: It does not say enforceability, it says effect.

MR BENNETT: Effect, if one likes. It is limiting the effect to the major matter which it has now determined should be left to the arbitral and conciliatory process in incorporation in awards and it is eliminating the minor matters which are no longer to be placed in awards.

GAUDRON J: And, you say "minor".

MR BENNETT: If one looks at the list, your Honour, one sees that by far the bulk of the major matters which appear in awards are covered, but whether it is minor or major does not matter, perhaps, for present purposes. That is more important when one comes to severability but what it does it says certain of the matters which were either agreed or imposed by the arbitrator shall continue to be enforced by the provisions contained in the Act. Certain other matters will not.

GAUDRON J: And, it may be that the vice is in that first part.

MR BENNETT: That is the case against me but the submission is that once there is power, as there clearly is, to determine the extent of enforcement there is certain - - -

GAUDRON J: You keep saying that but I am not sure that there is. You say "as there clearly is, to determine the extent of enforcement". I am not sure that there is. There may be power to say that they shall be enforced, to limit the methods by which they - that they have legal effect and limit - provide as to - or there may be power to say they have no legal effect, but you cannot assume that there is power to determine the extent, that is the problem.

HAYNE J: Much may turn, may it not, on this word "effect" and what having effect means, what giving effect means and the distinction which at the moment, at least, seems to me to be a radical and important distinction between the effect of the award in the sense of the effect of its provisions on their true construction and the effect to be given to an award in the sense of rights, remedies and the like that are thus created if - - -

MR BENNETT: It is the latter, yes.

HAYNE J: Well, at some point, Mr Solicitor, the argument must grapple with the words of Item 50 and must grapple with those words and what consequences those words have on the statute which is being - if I can use the word neutrally - changed and then and only then can we come to this question of power.

MR BENNETT: Yes. Well, your Honour - - -

McHUGH J: That is why I said yesterday it seemed to me that in real terms the case depends upon what is the effect of the application of Justice Kitto's principle in Fairfax's Case. You have to see what does this legislation really do. That is the critical question in so far as it affects rights.

HAYNE J: Mr Solicitor, at the moment it seems to me that section 51(xxxv), on any view, gives the Commonwealth Parliament power to set up the process. That, I would have thought, was entirely uncontroversial. The next step is, if the Parliament can set up the process, can Parliament say what are the consequences to be attached going through that process? Again, it seems to me at first blush to be uncontroversial to say yes, of course Parliament can say what are the consequences of going through the process, but then the debate that you have been having this morning tends to be a debate about can Parliament attach different consequences to going through the process. Cast in that way, the answer seems to be one of, "Well, why not?". What lies behind all of that is what is Item 50 actually doing?

MR BENNETT: Your Honour, we would submit, all that Item 50 is doing is saying that the provisions of the Act which give effect to awards shall henceforth only apply to certain parts of awards, and that is all it is saying. In the same way it might say, for example, we will set up two tribunals, one to enforce employees' obligations; one to enforce employers' obligations, and employees and employers will go to different tribunals to enforce particular provisions in the awards, but it may be harder to enforce one than to enforce the other. It may be that even - set up a system under which can be enforced and one could not.

GAUDRON J: But it does not say "shall not be enforced", and one can well understand that the Parliament might withdraw certain enforcement procedures or change the mode of enforcement procedures. It says "ceases to have effect".

MR BENNETT: Yes, but that is - - -

GAUDRON J: An award independently may have an effect at various levels independently of the enforcement procedures; that is what Byrne was about.

HAYNE J: And therefore, what is Item 50 doing? What is it telling us?

MR BENNETT: It is dealing solely with the effect given by the Act.

GAUDRON J: Surely it is also dealing with the contract of employment, the underlying contract of employment or the contract of employment upon which the award operates, unless you give the words "ceases to have effect" something other than their normal meaning. For example, let us look at it this way: let us say that there was a provision in the award for 25 per cent loading for work on public holidays and that was taken out; that would be part of the contract of employment. It would become part of the contract of employment simply by the making of the award. The fact that you had no enforcement processes available under the Act would not stop you suing at common law on the contract, but does Item 50 do that?

MR BENNETT: No, your Honour, Item 50 is concerned, we would submit, solely with the effect under the Act. What it does is it deals with that effect by saying that the enforcement procedures in the Act shall not apply to certain aspects of the award.

GAUDRON J: But the contract of employment continues to be as it was under the award and employees can enforce their rights in civil courts, including, I presume, by injunction or declaration.

MR BENNETT: That depends on what the agreement is in the particular case. It - - -

McHUGH J: But it says that the:

award ceases to have effect to the extent that it provides for matters other than allowable award matters.

Now, if an award contained a provision for maternity leave, that was an enforceable right that a worker had. The effect of Item 50 is that that matter ceases to have effect by virtue of Item 50. That seems to me to alter the rights of the people who get rights under the award.

MR BENNETT: But, your Honour, all it is affecting is their rights under the Act, their rights under the Act to enforce the award. I will come to the question of the extent to which an award may or may not involve an underlying agreement which has effect independently of the award. If there is such an underlying agreement, of course, this section does not affect it. What this section is concerned with is the effect given to the award by the Act, and that is why we say that the award, as such, is a thing writ on water but for the effect given by the Act. Its purpose is that it is what the enforcement provisions of the Act operate on, and those provisions are provisions which it is within the power to vary.

May I just show your Honours one other part of what was said in Victoria v The Commonwealth where - - -

GAUDRON J: What if you had a private arbitration resulting in an award and the parties had agreed in advance to abide by the outcome; would that be a thing writ in water?

MR BENNETT: No, your Honour, that would be an independent effect, independent of the award. The award would then have two quite separate functions.

GAUDRON J: No, it would not be. The award would embody the agreement, in effect.

MR BENNETT: If the parties said - - -

GAUDRON J: It would not be without legal effect, would it?

MR BENNETT: In your Honour's example, the award would have a dual role: a role as an award and a role as something other than an award, as a private arbitral award in that example. Certainly, one could have a situation where there is an agreement which parties agree will be binding on themselves at common law in a situation where all the relevant people are physically, or by agreement, or agency in some other way, actually parties to it, where, by coincidence, the same piece of paper has an independent function. But that is not what this is talking about. This is talking about the effect of a statutory concept having statutory results. The results being the results set out in this Act.

McHUGH J: Yes, but that is because you divide off the enforcement provisions from the whole concept of conciliation and arbitration for the prevention and settlement of disputes. When I first saw this case and looked at it I tended to think this was a Kartinyeri-type case and that the prosecutor would probably fail subject to hearing argument but after having heard Mr Kenzie's argument, I must say my inclination at the moment is the opposite effect, that it is not a Kartinyeri-type case at all, that it is affecting rights.

MR BENNETT: Your Honour, I am going to come to the Kartinyeri aspect, but the only rights that Item 50 is dealing with are the rights of enforcement under the Act. I use the word "enforcement" - - -

GAUDRON J: So, what it means is, in effect, nobody can go to the Federal Court for a penalty or the like, but they can go to equity for a declaration and an injunction. Is that what it means?

MR BENNETT: No, your Honour. It only means that if there is an agreement which is enforceable at common law, independently of the statutory award. Now, they may or may not be. Normally, one would have thought they would not be, if only because of deficiency of parties.

GAUDRON J: One would have thought that there were individual agreements between each employer and each employee, and that if there were not agreements, as such, then there would be estoppels which prevented people denying their existence.

MR BENNETT: Your Honour, that may or may not be the situation in a specific case, but that is not what we are concerned with here. What we are concerned with here is an enforcement mechanism in the Act being said from here on to be available for certain purposes and not available for certain other purposes, and that is all that is being talked about.

If one looks at Byrne 185 CLR 410, which your Honour referred me to, that is a case which we submit supports us. What was said there was, at 455, by Justices McHugh and Gummow at about point 5 in the paragraph beginning "The third point" in the middle of the page, three lines down:

The present case is concerned with the operation and effect of the Award, which draws its legal efficacy from the rather special provisions of the 1904 Act and now the 1988 Act. Of itself, the Award could not answer the description of a law of the Commonwealth -

and so on-

is made part of the law, not by its own force but by force of its adoption by the statute, which makes the directions -

et cetera. So, it is the statutory effect which the Act gives it which is relevant, and it is that statutory effect which is now sought to be limited. One of the cases referred to there was the - I do not think it is a case on your Honours' list - but it is the case of Proprietors of the Daily News Ltd v Australian Journalists' Association [1920] HCA 43; 27 CLR 532 at 537. Your Honours do have it, apparently. It is at point 3 of the page. It is three lines below the names of the Judges in the right-hand margin:

The award has no force of itself. It is made effective by force of sec 29. That section operates so as to effectuate, but not to enlarge, the directions or orders contained in the award, and makes them binding and enforceable in law.

et cetera.

KIRBY J: But that is all a reference to the award, the outcome of the process that the Constitution envisages. It is not a reference to half an award or a quarter of an award, or a different award. Has there ever been a case where this Court has upheld a disturbance of the content of the award so that that which emerges is still called an award?

MR BENNETT: There are three examples of that, your Honour, which have been discussed in the cases. Each of them is not as pure as it might otherwise be, but each of them goes the distance towards that. There is the Waterside Workers' Case dealing with the extension of the period of an award.

KIRBY J: But that is of an award, a full award. It is not of a hybrid, of a part award.

MR BENNETT: Except that, that depends on whether one regards the term as part of the award or not, but which is part of the debate that we - - -

KIRBY J: But it was the whole award that was extended.

MR BENNETT: Yes.

KIRBY J: All right, that is your first example. What is your second example?

MR BENNETT: The second example is the George Hudson Case where the award was extended to successes in title of original employers who - - -

KIRBY J: That is the whole award. There is not a purported attempt to change the balances and the content of it?

MR BENNETT: There is a change of parties, your Honour, which is a fairly basic change, we would submit.

KIRBY J: But the substance of the award, this is the people who are bound by the award of the arbitrator, not the terms of the settlement of the interstate dispute.

MR BENNETT: Well, people who were not a party to the conciliation and arbitration, or arbitration. So it goes beyond, in that sense, what was the original conciliation and arbitration of a particular dispute. So that is an example, we would submit. The third example is the Victoria v The Commonwealth type of situation where one has an adjustment because of changing industrial standards.

KIRBY J: Adjustment by the Commission of its award, not adjustment by the Parliament of the award. This Court has held from the very beginning of the Commonwealth that the Parliament does not have the direct power to make industrial conditions. It must do it indirectly through its arbitration body.

MR BENNETT: Let me take that in stages, your Honour. The first point about the case is, it may upset the balance in that the parties have negotiated, or the arbitrator has awarded something which contains the relevant discrimination which modern industrial standards make unacceptable. The Commission then comes along and upsets the balance. It may be a totally consensual award in which the balance is upset by the imposition of the appropriate standard, and that is - - -

McHUGH J: Can I put this to you? What distinguishes this case from all other cases that come before this Court is this: in other cases the question has been concerned with the award, to extend the award to somebody, to enforce it for not enforcing it. But here what the Parliament is seeking to do is to deal with the terms of the award. Can the Parliament say that some terms of the award are not enforceable? Not whether the award is enforceable but whether some terms of the award are enforceable. Now that takes you to very different territory.

GAUDRON J: Can I add to that because in some respects I think there was a problem in just looking at Item 51. Can it say "and the employees and employers are bound by some terms"? It is not just that some are not enforceable but that it leaves them bound by other terms, which may well have been part of a package deal.

MR BENNETT: Well, we would submit yes, your Honour, and that one should not concentrate on the terms of the award. The focus should be on the whole of the settlement or arbitration.

McHUGH J: Well, I think those affected by it would concentrate on the terms of the award.

KIRBY J: And they would be entitled to say, "Our conditions of work have changed. They were X, Y and Z. Now, they are X. Who changed it?" "The Parliament." And the Parliament does not have the power to change it.

MR BENNETT: Yes. Well, your Honour, there are two questions in that which I have to deal with that separately. Dealing first with the question of change and deferring for the moment the question of who changes, the question of change does not depend on the terms of the agreement itself. It turns on more than that. One looks at the whole of the settlement or the whole of the arbitral award. That may involve who the parties are. It may involve the term of it and in each of those cases it has been held that it can be adjusted.

Now, the actual terms are merely something else which the award contains, but the whole settlement includes the terms, the period and the parties, and to add parties alters a settlement and may alter the balance. To extend it for a period of time, particularly in a period of inflation, may very dramatically alter the balance. If one says that an award which is made for particular sums of money for a particular period is to extend indefinitely until some other award is made, that, at a time when there is inflation operating, may produce a totally different balance, but that does not affect the result of the Waterside Workers' Case. Any variation in one sense necessarily alters the balance and that is discussed in the Industrial Relations Case where there is a discussion at page 529 of that concept, and this is the reference to reading down that your Honour Justice Gaudron asked me about yesterday. At the top of 529:

Given that s 150A(2) is concerned entirely with awards made in settlement or prevention of interstate industrial disputes, s 150A(3) must be read down so as to authorise the variation of awards only to the extent that the variation has a relevant connection with the dispute -

and that I dealt with earlier -

If the removal or variation of an award provision containing the proscribed grounds would deny the connection required between the award and the dispute in settlement of which the award was made, the award could not be considered to be "deficient" by reason of the provision that contains the proscribed grounds. Indeed, the need to find a deficiency in the award confers on the Commission the function of considering the significance of any of the proscribed grounds to the matters in dispute between the parties to the dispute. The fact that an award contains a provision which discriminates.....does not by itself establish a deficiency in the award. If it were otherwise, no provision which justifiably discriminates on any of those grounds could be maintained.

KIRBY J: So you say, taking again Justice McHugh's example yesterday, that where an amount of money is paid a week, and that is in the award, and then certain hours are to be worked a week, and that is in the award, that the Parliament would have the power to step in, and, though that was a very delicate balance struck and fixed by the arbitrator, take out one component and say, "Well you have got to pay these high wages but there is no obligation to work other than the standard week". Do you say Parliament could do that, alter the milieu of employment?

MR BENNETT: It alters what can be enforced but it does that in the context of provisions which say, as I submitted yesterday, that there is an 18 month period for renegotiation, provision - - -

KIRBY J: I am not talking - I am testing your proposition. I mean, we are not concerned with this legislation, we are concerned with what the Parliament of the Commonwealth can do. It has to be tested by the extreme case.

MR BENNETT: Yes.

KIRBY J: It takes our entirely "hours". It just says, "Well, you have got to pay these very high wages. Don't you worry about the hours".

MR BENNETT: The Parliament can say, "Here is an award resulting from conciliation or arbitration of a dispute. That contains a number of terms. We provide, and in the course of our powers under section 51(xxxv), a means of enforcement. We will henceforth limit that and provide a means of enforcement of certain of the terms and not of certain others of the terms".

KIRBY J: Even though the net result is then not the award?

MR BENNETT: That happens whenever there is a variation by the Commission. It happens when there is the permitted variations of the other type I have referred to where you add a party or extend the period or adjust the award - - -

KIRBY J: And, your answer to my question is, "Yes". I think the employers of Australia would be astonished at that possibility which is utterly new to this Commonwealth. For a hundred years it has not been the case.

MR BENNETT: Yes. That is not, of course, what we say has happened in this case but the - - -

KIRBY J: I am not talking about this case.

MR BENNETT: No, I understand that.

KIRBY J: We are entitled and obliged to test what is done in this case by the example that Justice McHugh raised yesterday.

MR BENNETT: Yes, I accept that, your Honour.

KIRBY J: You have to answer it.

MR BENNETT: And, I have answered it, your Honour.

KIRBY J: Your answer is "Yes"?

MR BENNETT: Yes, your Honour.

KIRBY J: Well, that is astonishing.

HAYNE J: That is, you adopt, Mr Solicitor, do you, the proposition that that is no longer the award?

MR BENNETT: No, your Honour. One would still have to - - -

HAYNE J: Well, that was the proposition put to you, Mr Solicitor, and that is what I understood Justice Kirby to put to you. Do you accept that in the hypothetical put to you, the consequence of the change in enforcement provisions that you have hypothesised is that what remains is no longer the award?

MR BENNETT: No, your Honour, I do not accept that.

HAYNE J: I did not understand your submissions to be so, but there may be some - - -

MR BENNETT: Well, I do not know if Justice Kirby and I misunderstood each other, but certainly was not what I understood I was assenting to.

KIRBY J: Well there will be cases - I mean, it is a matter of characterisation, but one would think that in the example Justice McHugh raised, you take out a very high, let it be hypothesised, extremely high salary on the basis that you work very long hours, you take out the hours, you have got the extremely high salary, you are obliged only to work standard hours by the law, then the question is: is that still the award in settlement of the interstate industrial dispute? You would be forgiven for saying no.

MR BENNETT: Well, your Honour, one may have cases where the effect of the alteration is so great that one can say it is not - - -

HAYNE J: But alteration to what? The debate, if I may say so, Mr Solicitor, appears to be using "effect" in about 47 different ways and, unless close attention is paid to it, there is a grave risk of misunderstanding.

MR BENNETT: Well, your Honour, I had thought I had defined the reference to "effect" by reference to the provisions of the Act which give it effect and to those provisions - - -

GAUDRON J: That is in essence enforcement provisions and the provision that says that the parties are bound by the award.

MR BENNETT: Yes, there are three provisions, I think, altogether.

GAUDRON J: And perhaps you will come back to it later, but in that context, my problem is with the law which then says the parties are bound by what is left rather than with the notion that you can say they are not bound by X, Y and X per se.

MR BENNETT: Well, yes, that might well be the effect of it.

GAUDRON J: Yes, but I mean, that is the constitutional problem I see, that they are bound by what is left.

MR BENNETT: Yes, but I stress that in relation to this legislation, that is not the structure which has been adopted. What has been done is to say in relation to certain types of provision there is to be a renegotiation. If one is to agree on those matters it is done by certified agreement and if one does not do it within that time one then goes to the Commission, the provisions are taken out and there is provision for variation and adjustment even at that stage.

GAUDRON J: But, in the meantime, they are bound by the residue regardless of how long it takes to resolve their rights in this area.

MR BENNETT: Yes, because - - -

GAUDRON J: And there may never be a resolution of them; it is possible.

MR BENNETT: It is possible but unlikely, bearing in mind the fact that the party in whose interest it is to deal with it will no doubt take it to the Commission and say, "I need these compensating provisions. If one has taken out a benefit on my side, then one needs to vary the award to deal with that in the overall adjustment", and that is clearly what is provided for by the combination of Item 50 with section 113 dealing with variation.

GLEESON CJ: Does section 51(xxxv) empower Parliament to make laws with respect to private arbitration for the prevention and settlement of industrial disputes?

MR BENNETT: Yes, your Honour, that would be conciliation.

GLEESON CJ: Arbitration.

MR BENNETT: I am sorry, arbitration, yes, that would be arbitration.

GLEESON CJ: Could a law with respect to private arbitration for the prevention and settlement of industrial disputes forbid agreement or forbid the inclusion in an award of a private arbitrator of certain terms and conditions?

MR BENNETT: Yes, your Honour, because what is done here is not to forbid the parties to agree, but merely to say that if they agree on certain matters there is a procedure by certified agreement for doing it. If they agree on certain other matters, they are appropriate for the award procedure.

GLEESON CJ: Could a law with respect to private arbitration for the prevention and settlement of industrial disputes provide that if a private arbitrator's award contains certain types of provision, those provisions will not be binding on the parties but the remaining provisions will?

MR BENNETT: Yes, your Honour, that would be incidental to the power to provide for arbitration by means of private arbitration.

KIRBY J: Mr Kenzie agreed yesterday, I thought, that all this could be done prospectively, that they can set the parameters within which the award of the Commission can be performed. The question is whether, in respect of retrospective awards, the Parliament can step in and make some parts enforceable and take away others even though that may change the character of the outcome of the conciliation and arbitration process.

McHUGH J: It is a question of how you characterise it. In the past the power of the Parliament to limit the subject matters for arbitration has always been characterised as going to the nature of the dispute which Parliament is authorised in the Commission to say, for example, hours and wages - you would have a dispute about hours and wages. An arbitrator who included something unconnected with any of the specified is acting outside power. I am not sure that is the question here though. Once the arbitrator is acting within power and has made an award as to whether the Parliament can then say that certain terms of an award made within power is not enforceable.

You see, Item 50, when paragraph (1) talks about "each award", it must be talking about each arbitrator's award "ceases to have effect". So, it is the award of the arbitrator and it is still enforced. The enforcement provisions of the award have not changed. What has changed is the content of what can be enforced.

MR BENNETT: Well, we would submit, rather, it is the extent to which - it is which parts of it can be enforced. What enforcement procedures and what enforcement enactment, in the sense of making it binding, are available. Those are something which are provided pursuant to section 51(xxxv) and can be varied or effected within the parameters of the original dispute.

GLEESON CJ: But if I can just test this by reference to the concept of private arbitration which may not be fantastic or unrealistic. Suppose Parliament were to take the view that certain types of terms and conditions of awards which were readily acceptable to both employers and employees and popular amongst private arbitrators were contrary to public policy, so Parliament then enacted a law - if I could use a neutral expression or one that straddles some of the problems in this case - forbidding that type of provision in a private arbitral award, would it be a law with respect to the subject matter of paragraph 35 to say, "We not only prevent that for the future, but we strip past awards of that part of their effect."?

MR BENNETT: Yes, your Honour, because looking at the resulting awards, they are clearly things which could have been done under the power and the past awards, to the extent that they are still available to be enforced, there is the necessary connection with them and with the original dispute in what remains. There is no magic in the fact that the balance may have been altered. That certainly may be so but that is not the relevant test for the purpose of determining whether there is a relevant connection. In my respectful submission what your Honour puts to me clearly could be done.

KIRBY J: You surely get to a point where the outcome is then not the award. I mean, if they strip away vital parts of the balance, then it is then thereafter what Parliament is calling an award or an enforceable arrangement. It is not the award of the arbitrator who originally made it.

MR BENNETT: Your Honour, we would submit it is still something relevant to the settlement of the original dispute that some of the provisions of the original award continue to be enforceable and others do not. The public policy example is a very good one because that illustrates very clearly the fact that there can be a limited power. As your Honour put to me, it is conceded that one can limit it as to the future. The sole question is, can one by transitional provision put the existing awards into the same box by setting up a procedure under which the parties are encouraged to renegotiate other aspects to deal with them in a different way by agreement, rather than by arbitration, and then the existing awards continue stripped of matters which can no longer be the subject matter of awards?

KIRBY J: So on your theory in the case of Victoria v The Commonwealth the Parliament could have stepped straight in and provided that any discriminatory parts would not be enforced?

MR BENNETT: Yes, your Honour, it is harder than - - -

KIRBY J: Instead it sent it back to the Commission.

MR BENNETT: It is harder there because it may not be a matter merely of stripping. Suppose one has a provision which says men will be paid $300 a week and women $500 a week. One cannot simply take a blue pencil and by taking a blue pencil make that into a non-discriminatory provision, so there may be some additional problems which arise in that type of case which do not arise here. But, if the discrimination in Victoria v The Commonwealth had been no woman can become an airline pilot, for example, it would have been a simple matter to say the award can be enforced but that provision cannot be.

GLEESON CJ: Mr Bennett, does the Trade Practices Act have the consequence in some respects that terms and conditions of carefully negotiated and balanced contractual arrangements are to some extent rendered unenforceable whilst the agreement otherwise remains on foot?

MR BENNETT: Yes, your Honour, subject to the laws as to severability, which would then have to be looked at. Then, of course, Fazal Deen and all those cases would then require one to ask whether the balance is sufficiently affected or not affected. That would be a different test.

GUMMOW J: Section 45 is a paradigm example, surely.

MR BENNETT: Yes, it is, your Honour.

KIRBY J: But of course that is based, is it not, substantially on the trade and commerce power or the corporations power; it is not based on the arbitration power?

MR BENNETT: Yes, that is so, your Honour.

GAUDRON J: Can I take you back to your answer about discrimination. Does it follow from your answer that this Court was wrong to insist upon a reading down in Victoria v The Commonwealth? It would seem to follow that the Court was wrong in your submission in insisting on that reading down.

MR BENNETT: The reading down reference appears at page - - -

GAUDRON J: Page 529.

MR BENNETT: Yes. That is why I started, when I dealt with this, with the phrase "relevant connection".

GAUDRON J: Yes, but you say the Court was wrong there to read that down?

MR BENNETT: No, your Honour.

GAUDRON J: That the Parliament could have directed the arbitrator to delete discriminatory clauses.

MR BENNETT: One has to find that the ultimate award as varied has a relevant connection with the settlement of the original dispute.

GAUDRON J: What do you say that connection is?

MR BENNETT: The connection is that everything else is there and that the - - -

GAUDRON J: So therefore there need not have been a reading down. If you looked at discrimination in isolation, the Court must have been wrong to read it down.

MR BENNETT: Your Honour, in that example it is harder to see how the reading down would be necessary.

GAUDRON J: It must have been wrong, though, to do it.

MR BENNETT: No, your Honour, not wrong to do it.

GAUDRON J: But if the Parliament can, itself, strip out discriminatory provisions, then one would think it must be able to direct the Commission to do it independently, so long as the award is an award made in settlement of an interstate industrial dispute.

MR BENNETT: Yes, your Honour.

GAUDRON J: And so, therefore, there was no need to read down.

MR BENNETT: An example of where the reading down would make a difference might be this. Suppose there was an award which dealt with one question only and the only aspect of the relationship covered by the award was a provision saying that in the particular industry people of a particular race could not be employed. Now, one could not there amend the award in such a way that it still had a connection with the original dispute or the settlement of the original dispute because there would just be nothing left. One could, of course, repeal it in that example. But in almost every case one can imagine, that reading down would have no particular effect. There would be no need to read it down. The phrase "reading down" is perhaps a slightly, with respect, inapposite phrase. What is really meant is that one can only vary to the extent that the variation has a relevant connection with the original dispute.

GAUDRON J: I think it is to the extent that the award retains the connection.

MR BENNETT: The award as varied, yes.

GAUDRON J: But in this case then you go so far as to say Parliament need not have said these provisions have no effect. It could simply have directed the Commission to delete all the powers.

MR BENNETT: That would have been a different exercise of power.

GAUDRON J: It would be still under 51(xxxv) surely?

MR BENNETT: Yes. There are, of course, limits on what directions can be given to the arbitrator, and the reason for that is that once the directions reach the level of determining what the arbitrator has to decide, it ceases to be an arbitral or conciliated settlement, and that is the - - -

GAUDRON J: Then why does not the same apply once you have a provision having a legislative effect?

MR BENNETT: Because, your Honour, one of the aspects that is left to the Commonwealth is the extent and manner to which the award will be enforced or have effect ultimately, and that aspect can be varied. But may I just, in answer to what your Honour was putting to me earlier, remind you of the passage on page 528 which deals with the distinction between the variation being connected to the dispute and the award as varied being connected with the dispute, and that is the paragraph beginning "It is conceivable" which I took your Honours to before. I took your Honours to the first sentence but it goes on:

Ordinarily, the question asked with respect to the variation of the award is whether the variation is valid. That is a convenient course if, as is almost always the case, the variation can be severed from the award. But the fundamental question is that of the relationship between the award, as varied, and the dispute.

So one does not say, "Does the deletion of the particular provision or the failure to be able to enforce that provision have a connection with the dispute?" One rather asks, "Does what is left have a connection with the original dispute?".

KIRBY J: And that, of course, is referring to variation by the Commission - - -

MR BENNETT: Yes, it is, your Honour.

KIRBY J: - - - one would think in the light of our history a fortiori in relation to a purported variation of the award by Parliament stepping into somebody else's award.

MR BENNETT: Yes. That is the separate aspect, your Honour. I deal with that by saying I am dealing with enforcement rather than with the - - -

KIRBY J: Well, you are dealing with enforcement of an award for the settlement of an interstate dispute, et cetera.

MR BENNETT: Yes, the extent to which it can be enforced, but the final sentence of this paragraph is:

the fundamental question is that of the relationship between the award, as varied, and the dispute. And because that is the question, it is always necessary to relate the Commission's power to vary awards to the conciliation and arbitration power.

So what one has to do is to take the result and ask is there a sufficient connection between the result and the settlement of the original dispute? Now, it may be that in the extreme example that was put to me earlier where one says work is to be done and something is to be paid for it and one takes out the obligation to pay and leaves the obligation to work, it may be in that example one would say the award as varied does not have the requisite connection with the original dispute. That would be a matter for judgment in the individual circumstances and it may be in that extreme case that would be so.

McHUGH J: Mr Solicitor, I must say I have a great deal of difficulty in seeing how that paragraph has any real relevance to this case. I mean, as Justice Kirby pointed out to you, that passage occurs in a context of the institution which made the award varying its own award.

MR BENNETT: Yes.

McHUGH J: But now we are dealing with legislation which varies an award made by another institution and notions of arbitration, notions of settlement all come into play and I do not think you can just simply translate that passage across and say that that states the principle for this type of legislation. This is not a variation by the Commission. This is a variation by the Parliament.

MR BENNETT: But in each case it is asking whether it is within power for a step to be taken which can be taken to some extent and cannot be taken to another extent. In that case it is dealing with the power to vary an existing award, which may be a totally consensual award at the time.

McHUGH J: I know, but that is why I said earlier, you are, in effect, atomising section 51 and concentrating on one aspect of it, and you cannot leave out the fact that it must relate not only to the dispute, but it must also relate to arbitration and settlement. I think in the end your argument really comes down to the proposition that Item 50 constitutes merely an indirect amendment of the enforcement provisions of the Act and does nothing more.

MR BENNETT: Well, that is the submission, your Honour.

McHUGH J: I appreciate that.

GAUDRON J: And if it does more? If the Court were against you on the question of construction, and let me put this to you: consent award - presumably Item 51 applies to consent awards - agreed to, agreed to in circumstances in which it can be said that it varies the contract of employment, as well as has enforcement provisions, and you read Item 50 then as saying, contractual rights are gone as well. Now, if it does that, what do you say? What is your argument then?

MR BENNETT: If it does that, I would have to submit that it is severable. The only argument I could put in relation to the validity of the effect on the contract as opposed to the effect on what the Act does, is that in 2.2 which I am about to come to, and that argument would still operate.

GAUDRON J: Why is it any different then in the case of an award which operates independently of and, I suppose, without effect on, contractual rights?

MR BENNETT: Because, your Honour, it is within Commonwealth legislative power to determine whether, and if so, how, to what extent and to what manner an award made in settlement of a dispute can be enforced.

GAUDRON J: It must mean, on your argument, that it is open to every employee bound by an award, in respect of which Item 50 has operated, to go to an equity court seeking declaration as to his or her contractual rights.

MR BENNETT: If there was a contract.

GAUDRON J: Well there always is. I mean, the award does not negate the existence of a contract; there is always a contract. You do not just work by way of conscription.

MR BENNETT: No, your Honour.

GAUDRON J: The Constitution does not allow that.

MR BENNETT: Of course not; there is always a contract, but the contract does not always incorporate the award.

GAUDRON J: Who knows? Has anybody ever said that?

MR BENNETT: And, your Honour, if it does - - -

GAUDRON J: Has this Court ever said that the contract is not one which of its nature incorporates any awards that are made?

MR BENNETT: Well, it may or it may not. In some cases it may and some cases it may not. There is no absolute rule, and the - - -

GAUDRON J: No.

McHUGH J: Byrne denied it as a matter of custom, did it not?

MR BENNETT: There is some discussion in Byrne, I think, of that issue.

GAUDRON J: Yes.

HAYNE J: And denied it as an implied term, I thought, but perhaps I am wrong in understanding of Byrne.

MR BENNETT: That was precisely what I was - - -

GAUDRON J: Yes, but there may be other - take, for example, the person who enters employment, which is a very common thing, after the award is made. The direct terms of the employment contract are, "You will be employed in accordance of the award, as varied from time to time".

MR BENNETT: If that is said that may have a particular effect.

GAUDRON J: And that would be - - -

MR BENNETT: But if it says "as varied from time to time" - - -

GAUDRON J: And would be employed in accordance with the award.

MR BENNETT: But if it says "as varied from time to time" there would then be a question of construction as to whether this particular - - -

GAUDRON J: That is right. Just say "employed in accordance with the award".

MR BENNETT: It is then a question of construction as to whether that means the award as varied from time to time by legislation or the award as it stands now. Of course, there would questions in individual cases as to that sort of thing but this Act is just not dealing with that. It is simply saying so far as the industrial relations regime gives effect and provides for enforcement, that is now limited to particular cases and that is all it is doing.

HAYNE J: And if it throws it back into the ordinary courts, do I understand your submission to be, "so be it"?

MR BENNETT: So be it. And, as I say, we rely in relation to that on Byrne. Now, coming to 2.2, this is a totally different way of reaching the result and it turns on the relationship of Items 50 and 51, not to the existing industrial dispute but to potential, future disputes. There were two cases in particular which discussed this and I might just very quickly refer your Honours to them. The first is Attorney-General for the State of Queensland v Riordan [1997] HCA 32; 192 CLR 1 at 32 to 33. It is not on the list. It is only a very short passage which I will read to your Honours from the judgment of Justices Gaudron and Gummow.. The phrase used is:

The ambit doctrine has been applied as authorising the an award "if it is `relevant' or `reasonably incidental' or `appropriate' to the settlement of the differences constituting the interstate dispute or if it has a `natural or rational tendency to dispose of the question at issue'". However, it may be that the doctrine permits of greater flexibility than has hitherto been recognised. The power which may be conferred pursuant to s 51(xxxv) is a power to be exercised for a purpose, namely, the prevention and settlement of interstate industrial disputes. And the terms of s 89(a) of the Act identify the main function of the commission in terms of purpose. By that paragraph, its function is:

"to prevent and settle industrial disputes:

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

(ii) where necessary, by arbitration."

And so on. Then:

Similarly, there seems no reason why the Commission's powers should not extend to the variation of an award by provisions which are reasonably capable of being viewed as appropriate and adapted to preserving or maintaining the settlement effected by the award when first made. In respect of these matters, it is sufficient to note that it is uncontroversial that a general power which is to be exercised for a purpose extends to whatever is reasonably capable of being viewed as appropriate and adapted to that purpose.

KIRBY J: What is that decision, I am sorry?

MR BENNETT: That is Attorney-General v Riordan, and it is put more clearly, in relation to the arguments I am putting, by Chief Justice Dixon in The Queen v Kelly; Ex parte Australian Railways Union Case, [1953] HCA 96; (1953) 89 CLR 461 at pages 473 to 474.

KIRBY J: This is another case of Commission variation.

MR BENNETT: Yes, it is a case of the Commission variation but the - - -

KIRBY J: It seems entirely different, absolutely different, chalk and cheese, and that is within the Constitution. That is what the process of conciliation and arbitration by a tribunal contemplates. It is, as Justice Gaudron said earlier, I think, a process, and it is a process into which interlopers like the Parliament cannot intrude in the substance of the outcome of the process.

MR BENNETT: No, your Honour, but one has to ask if what is being done is to deal with the extent of the enforcement of an award, what we are putting is one can then justify that, either by reference to the settlement of the original dispute or by reference to the prevention of future disputes.

KIRBY J: It is a question of what you are enforcing.

MR BENNETT: Yes, of course it is.

KIRBY J: You say you are enforcing the award but if it is the award minus X, Y, Z and G, it is no longer the award.

MR BENNETT: Yes. Well, your Honours, I will not read the passage but it is again a passage which refers to the power of variation and discusses it in terms which contemplate the prevention of future disputes as one aspect of it.

GLEESON CJ: There is a double negative in that sentence on the bottom of 473. Is that right?

MR BENNETT: I am sorry, which sentence your Honour?

GLEESON CJ: The one beginning "It is too late".

MR BENNETT: Yes, the sentence is saying the power does "extend far enough to enable the legislature to give" the Court that power.

GUMMOW J: Though the Chief Justice is rather regretful of it, that that is what he is. That is what you are saying.

HAYNE J: Chief Justice Dixon, I assume.

MR BENNETT: Yes.

GUMMOW J: He is saying, "There it is; that is what it is."

KIRBY J: He had the last laugh three years later.

MR BENNETT: Yes. Now, the third way we put it is in accordance with the Kartinyeri approach and the power to unmake a law once it is made. It is significant that if one is merely unmaking, one does not need to find the necessary purpose in relation to a purposive power in the decision to unmake. Now, the only judgment where that issue became relevant is the judgment of your Honour Justice Gaudron. Your Honour held that while there was a limitation - and your Honour held this with Justice Kirby - on the power requiring, in effect, that the exercise of the power be beneficial, that did not prevent one repealing a beneficial provision where the effect of the repeal might be detrimental.

To take an obvious example, assuming for the moment the correctness of the view your Honours Justices Gaudron and Kirby took in relation to the scope of that provision, a law which said there shall be free university education for Aboriginal students would clearly be within the power. A law repealing that law might have no benefit whatsoever in relation to Aboriginal people. Indeed, it might have a detrimental effect. But the law would not, on your Honour's view of the scope of the power, have been invalid because, once one can validly make a law, one can validly unmake it, otherwise, of course, there would be a sort of constitutional entrenchment every time one legislated in that area. We submit here, again, where one has a partial repeal - - -

GAUDRON J: Well, is it a partial repeal? Is it simply a partial repeal, when the effect of the enforcement provisions is that part of the award operates? I mean, is it accurately described simply as a partial repeal?

MR BENNETT: Yes, your Honour, and it does not cease to have that effect - - -

GAUDRON J: There might be a partial repeal in the strict sense if it said, "all awards that have discriminatory provisions cease to have effect".

MR BENNETT: Yes.

GAUDRON J: "All awards dealing with preference in employment cease to have effect", or so on. That would clearly be a partial appeal.

MR BENNETT: Yes.

GAUDRON J: But what you are saying is awards have partial effect, and that may not be quite the same thing.

MR BENNETT: Your Honour, we submit that the test one applies to determine whether there is a partial repeal does not involve asking is the balance upset, would the same decision have been given, or anything like that.

GAUDRON J: No.

MR BENNETT: It merely involves asking is there a relevant connection between what is left and the original settlement of the dispute?

GAUDRON J: No, what I am coming to is a different question, and it is a problem of taxonomy, I suppose. We know what repeal is and the like, an amendment. The real question I am coming to is whether what you have left is so altered - and I am not talking about the award, put that aside, I am talking about the law as it is left, which in substance is that awards are enforceable in part and not in part. Does that then retain its character as a law with respect to conciliation and arbitration? That was the question I was adverting to in Kartinyeri when you look to the whole body as amended in its present status, and characterise it, and it may not be adequate to talk about the amending law simply as one that repeals or amends. It may be necessary to go backwards and forwards at the same time.

MR BENNETT: One could ask that question in Kartinyeri. One could ask, "Was one of the purposes of the heritage law that all groups of Aborigines would be treated equally in relation to heritage", and if one treats that as one of the original purposes then one may have a variation of that purpose by virtue of the partial implied repeal. Of course that is so, but that would not detract from validity as long as one has - and it is a very general phrase of course - the relevant connection between what is left under the law and what was originally done.

CALLINAN J: Mr Solicitor, you have to make a distinction though, do you not, between a repeal of the Act and a purported repeal of an award made under the Act? And is that not the situation here, that the new legislation purports to repeal the award made under the preceding legislation?

MR BENNETT: No, what it does is say, "We have provided enforcement mechanism and effect to all provisions of awards". We now say, "In relation to some - - -

CALLINAN J: "We withdraw enforcement in relation to part of it".

MR BENNETT: Yes.

CALLINAN J: All right. It repeals, does it not?

MR BENNETT: One is not repealing the - - -

CALLINAN J: But it does not leave intact the whole award, because is it not more than withdrawing mere enforcement?

MR BENNETT: No, your Honour.

CALLINAN J: It says it has no effect at all. Is that not the same as saying it ceases for all practical purposes to exist?

MR BENNETT: That is, in fact, the consequence because, in most cases, except where the award has, as Justice Gaudron put to me, some independent contractual effect.

CALLINAN J: I was going to ask you about that. Is there no provision of the Act which says that enforcement is to be exclusive? That is, enforcement under the legislation is to be - so that all contractual rights are left intact, are they, no matter what happens by way of an award or the making of an award?

MR BENNETT: Yes. Section 149 provides that:

Subject to any order of the Commission, an award determining an industrial dispute is binding on:

(a) all parties to the industrial dispute who appeared -

and then certain other parties who have been notified, and so on. Now, that clearly extends beyond what would be the contractual effect. One does not become a party to a contract in the way in which section 149 makes one bound by an award. But one can have contracts independently of the Act and one can have the situation where the award is the only - - -

CALLINAN J: Once the contract - and it is, say, a contract that is made by agreement, so there is an award by an agreement, but once the parties have agreed and their agreement becomes registered as an award, does the agreement then become exclusively enforceable under this Act, or are there other rights left intact at common law to sue in contract?

MR BENNETT: It would depend on the intention of the parties in the individual case, your Honour. But section 149 makes it binding on the parties and then the other provisions deal with the specific enforcement. I am going to come in a few minutes to the question of the nature of a consent award. That is really a separate question and perhaps I am almost ready to come to it now, but that is the issue of when one has, where one consents to an award, an underlying contract with force in its own right and where the award and its statutory consequences are the only thing that remains, and Byrne's Case suggests, certainly on the facts of that case, that the award was not incorporated in the contract and all that one had was the rights conferred by the legislation. That is the reason why we say Item 51 is not an item having any particular substantive effect because it is Item 50 which deals with what the Act is dealing with in relation to enforcement and rights.

HAYNE J: Consideration of underlying contracts needs to pay the closest attention, does it not, to who are the parties to the agreement that is said to constitute this underlying agreement? The whole purpose of 149 and the related provisions is to iron out many of those difficulties that the common law encountered in working with arrangements or agreements that were entered in this field?

MR BENNETT: Yes. Well, may I then, under the heading of paragraph 3 and in answer to Justice Callinan's question, come straight to the submissions which I provided to your Honours yesterday entitled "Supplementary Commonwealth Submissions in Response to Queensland" because they deal with this question of the underlying contract or no underlying contract. I should go straight to it and may I start by way of analogy by taking your Honours to the decision of the English Court of Appeal which I handed up copies to your Honours in Siebe Gorman & Co Ltd v Pneupac Ltd (1982) 1 WLR 185.

Now, this was a case outside the industrial context but it was a case where two solicitors outside a motion list had agreed to an order under which there was an extension of time for discovery and a peremptory provision that the action would be decided a particular way if it was not complied with and on the last day the person who had the benefit of the extension wrote and said, "Can we have an extension of time?", and the other solicitor wrote back the following day and said, "You're too late. The action is dismissed by force of the order." And there was then an application for extension of time and the question was whether the court was, in effect, bound by the agreement of the two parties. That is discussed by Lord Denning at page 190 where he refers to the two types of case and just above the letter D on page 190 his Lordship said this:

I cannot put any such interpretation on the order which was drawn up in this case. It often happens in the Bear Garden that one solicitor or legal executive says to the other, "Give me 10 days." The other agrees. They go in before the master. They say, "We have agreed the order." The master initials it. It is said to be "by consent." But there is no real contract. All that happens is that the master makes an order without any objection being made to it. It seems to me that that is exactly what happened here. The solicitors for the plaintiffs were saying, "We do not object to the order. Give us the extra 10 days from the time of inspection, and that is good enough." It seems to me quite impossible in this case to infer any contract from the fact that the order was drawn up as "by consent."

CALLINAN J: I find that very very unpersuasive.

HAYNE J: And a very very long way from the industrial realities of Australia.

MR BENNETT: But, your Honour, I do not suggest for a moment that in every case where a consent order is made there either is or is not a contract. The point which I make is that it depends on the specific situation. Your Honour Justice McHugh referred to that in a case called Paino v Hofbauer (1988) 13 NSWLR 193. At page 198C your Honour says:

English courts have gone so far as to say that a court will only interfere with a consent order based on a contract on the grounds that it interferes with any other contract.

And your Honour then refers to the Huddersfield Case. Your Honour also refers to Siebe Gorman, which is an example the other way, as I have indicated, and then your Honour says this:

The issue in Harvey v Phillips, and in General Credits Ltd v Ebsworth.....which applied it, was whether a consent order based on a compromise agreement could be set aside. The issue in the present case is different. The Court does have a discretion. Moreover, I am not prepared to adopt the English approach to consent orders based on contracts. The discretion conferred by Pt 2, r 3 -

the power to amend an order -

is not to be equated with the extent of the Court's powers to vary or set aside contracts.

But that was a case involving a consent order involving time to pay and the question whether the court could relieve from the consequences. The Huddersfield Case which your Honour referred to is the case which says that where one has a consent order settling litigation, the consent order may be set aside on any ground on which the original contract could have been set aside, but that is a case where one assumes an underlying contract and the court simply adjusts its order to that.

But what these cases illustrate, we would submit, is that one cannot say that in every case where there is an award there is necessarily consent. The Act provides for conciliation and arbitration. It may be in some cases that the parties agree on all the terms and go to the Commission and say, "Please make an order in these terms". Even there, there are numerous powers in the Act of the Commissioner to say, "I will not accept this term" or "I think this term should be varied" or "This one is not in accordance with current wages policy" or whatever else is desired. So, one is not dealing with a contract in the traditional sense. There is almost always some element of arbitration as opposed to conciliation and that structure rather suggests that normally there would not be an underlying contract. Of course, the other thing that may happen, and no doubt happens in many cases, is that the parties may agree on 7/8ths of what is to go in the award and not agree on the remaining 1/8th, and in that situation no one could say that the resulting award is the result of a contract.

So, we would submit that here, where one is dealing with contracts which are made in the particular manner required by this Act, the bare fact that there may have been consent in a particular case does not have the necessary consequence that there is an underlying contract. We have given, in paragraph 2(a) in footnote 6 - - -

GAUDRON J: But there will always be a contract upon which it has some effect.

MR BENNETT: There may be no contract at all, your Honour.

GAUDRON J: Well, there will always be an employment contract on which it has some effect.

MR BENNETT: There will always be an employment contract.

GAUDRON J: On which it has some effect. It will always have some effect on that contract.

MR BENNETT: It may or may not, your Honour, depending on the wording of the contract and the provisions covered by the award. But that is Byrne's Case, where the contract does not necessarily incorporate by reference - - -

GAUDRON J: No, it does not necessarily incorporate it. There will be contracts that do, of course. "You will be employed in accordance with the award", yes.

MR BENNETT: In some cases, of course, the award may override the contract.

GAUDRON J: That is what I said, it will have an effect on it.

MR BENNETT: In that sense, yes, your Honour. In that sense, yes.

McHUGH J: But although Byrne holds that there is ordinarily no implied term either by reason of necessity or custom, some judgments accept Justice Dixon's views in True's Case that the award is imported into the contract, but they say it does not change the character and the rights stemming from the award, but nevertheless, it is imported into the contract of employment. On that basis, Order 50 does change the nature of the contract of employment.

MR BENNETT: Depending on what it is incorporated in; whether it is the award in one sense or the other sense. In one sense, of course, that is in accordance with the whole purpose of these amendments, which is to move away from arbitration and towards contracts, and towards a contractual situation in which the matter is dealt with that way. The ultimate aim is to encourage people to put these terms in the contracts, so it would be ironic if one were to say that invalidity in some way were to flow because of the question of possible effect on contracts. It is ultimately a provision intended to determine how matters are to be dealt with under the section.

GAUDRON J: It will certainly affect the employment relationship.

MR BENNETT: It will certainly do that. In Byrne's Case (1995) 185 CLR 410 at 420 in the judgment of the Chief Justice and Justices Dawson and Toohey, this passage appears just above the quotation at point 2 of the page. The quotation is from True's Case. I think that is a passage your Honour Justice McHugh had in mind. Their Honours go on:

However, we do not understand Dixon J to be saying in that passage that "a term imported by statute into the contract of employment" loses its statutory character and becomes incorporated in the contract as one of its terms. On the contrary, he recognises the distinction between an obligation originating in a statute and an obligation arising from a contract. In his view, the distinction was not of importance in that case, but it is crucial in the present one. No doubt there are terms which are incorporated by statute in contracts of a particular kind so that the ordinary remedies for breach of contract are available in relation to them.

And he goes on to discuss how terms can be incorporated.

McHUGH J: What I had more in mind was further down the page:

A right to the payment of award rates is imported by statute into the employment relationship, which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract. But award rates are imported as a statutory right imposing a statutory obligation to pay them.

MR BENNETT: Yes, and that is stressing the point we make about the true nature of an award, something which gives rise to statutory rights. Yes, that passage, of course, emphasises the difference between relationship and contract.

McHUGH J: That is so, yes.

MR BENNETT: Returning to this short document, the answer to Queensland document, in paragraph 2(a), (b), (c), there are three examples of the operation of the distinction in relation to consent awards. The first is that "the Commission is not bound to make an award" merely because the parties consent. If it does make an award "it is not bound to replicate" the parties' terms, and that is discussed in footnote 6 with those examples of sections. Secondly, if it "does make an award", and I have dealt with this, the "legal effect" may extend "beyond that of any underlying agreement, both as to time and the persons bound", and that is Waterside Workers' and George Hudson.

Then (c), the Commission retains its powers of variation, and we have given your Honours the provisions. While, of course, there is a reluctance to vary a consent award, and that is referred to in paragraph 3, and the Commission will not lightly vary a consent award during its term, it nevertheless will not hesitate to do so where there has been some new circumstance which makes it unjust. We have referred in footnote 11 to the Journalist Cases which were referred to yesterday.

GUMMOW J: But it is within power to pass a law empowering the Commission to vary an award against the wishes of both parties to the original award. That is what Kelly decided, did it not?

MR BENNETT: I am sorry?

GUMMOW J: That is what Kelly decides.

MR BENNETT: Yes, clearly so. The next issue concerns a submission made in my learned friend Mr Kenzie's written submissions which refer to an inability to do indirectly what cannot be done directly. The submission is, in effect, that because one cannot directly legislate as to the effect of an award, one cannot seek to achieve that result indirectly. I have handed your Honours a written submission dealing with that.

GLEESON CJ: Whether or not you can do something indirectly that you cannot do directly all depends on why you cannot do it directly.

MR BENNETT: That is our submission, your Honour. That is what we take a page and a half to say and your Honour has successfully encapsulated in one sentence. But the difference is between something one is forbidden to do and something which one does not have power to do. The clearest example, of course, is the use of a Commonwealth grants power to achieve a result that cannot be achieved under any of the placita of section 51 and that is discussed in the DOGS Case, The Attorney-General...... My learned friend has given four examples to support the proposition. We have dealt with those in paragraph 4 of the submission.

The first was the statement of Justice Powers in the Waterside Workers' Case and his Honour used the same phrase that my learned friend used. He used the proposition "it is not permissible to do indirectly what one cannot do directly". Now, that is my friend's submission and that phrase does appear in the judgment of Justice Powers in the Waterside Workers' Case but his Honour was in dissent on that point and we submit that the true proposition is that one cannot do indirectly what one is prohibited from doing directly.

We have cited Caltex Oil v Best which I do not think is on any list. It is in 170 CLR page 516 where the original Latin maxim is set out and we have quoted that in paragraph 3 which clearly relates to what is prohibited rather than what one cannot do. Each of the other cases is in that category. The Bank Nationalisation Case is, of course, a section 51(xxxi) case on this aspect. That concerned an implied prohibition. Section 92, of course, is a prohibition; and the example in Caltex Oil v Best was a case where there was a prohibition on a particular contractual term. So in each of those there is no principle, we submit, which says that where one does not have an express power, one cannot indirectly achieve that result by using some other power one has.

GUMMOW J: There is much authority to the contrary.

MR BENNETT: Precisely, your Honour, yes.

GUMMOW J: Murphyores is the classic recent case.

MR BENNETT: Yes, Murphyores is a clear example of that. Would your Honours just pardon me a moment. I think I have covered each of the points except section 7A which I will mention in a moment.

I have not referred to one minor matter and that is the significance of the variation power. We simply point out to your Honours that section 113 of the Act gives a general power of variation and the provisions in Item 51 which provide for the Commission to review each award do not exclude the power variation the Commission has under section 113 so that if one had a situation where there was a particular benefit given to employees and it was said that related to part of the salary that was granted, and there can be an adjustment made to the salary figure to compensate if the effect of the amendment is that that benefit disappears. Of course, the more normal situation is that one would simply have a certified agreement in relation to that benefit. If one could not agree on that, there is provision for variation and section 113 permits such variation. We would submit that there is no expressio unius to be found anywhere in Item 51 which precludes the exercise of that general power which would clearly be appropriately exercised in such a case.

I simply remind your Honours of what was said in the Australian Railways Union Case, The Queen v Kelly 89 CLR. I will not read it to your Honours, but it is page 461, particularly at page 474 where it said that the reasons:

for reviewing or revising the terms of an award may be found in changing circumstances as well as in a reconsideration of the wisdom or expediency of the provision independently of any change -

So there is always that power and that is clearly intended to be exercised.

The overall purpose of the amendments I have take your Honours to and it requires looking at the whole of Part 2 which is headed "Transitional provisions" and particularly Items 47 and 49. There was some discussion in the course of my learned friend's submissions about severability. All I want to say about that is this, that these are transitional provisions and quite clearly they are severable from the balance of the amending provisions. The transitional provisions - - -

GUMMOW J: And are 50 and 51 severable from 49 in the earlier transitional provisions?

MR BENNETT: That is harder, your Honour. One would have to go through - - -

GUMMOW J: It seems to me you cannot construe 50 and 51 without starting in the earlier items.

MR BENNETT: Yes. That does not mean that the earlier items cannot in some cases stand on their own, but your Honours do not need to decide that in this case. My friend seeks orders and declarations only in relation to those two items. Finally, in relation to section 7A, we do not submit that section 7A achieves the result which has been suggested. I do not want to make detailed submissions on it, except to say that the purpose of section 7A was to deal with partial prohibitions rather than partial absences of power and the - yes, there was a case just before it was enacted called Chu Kheng Lim, which I think was an example and this type of provision, which appears also in the Native Title Act, was enacted to deal with that.

KIRBY J: What was the partial prohibition in that case? Can you give us the citation?

MR BENNETT: It was the separation of powers under Chapter III, I think.

McHUGH J: It was a migration case, the direction.

MR BENNETT: It was a migration case. It was a direction in a migration case.

McHUGH J: 54R of the Migration Act it was concerned with.

MR BENNETT: Yes, the prohibition being the implied prohibition arising out of Chapter III, but the field of - - -

KIRBY J: What is the citation of that case? Do you have that?

MR BENNETT: 176 CLR 1, your Honour.

KIRBY J: Thank you very much.

MR BENNETT: And the field of discourse of the use of other powers in section 51(xxxv) is covered by sections such as 5, 5AA, 5A, 7 and I think section 127C in relation to other aspects of powers. But section 7A, we submit, is not in the Act for that purpose and we do not rely on it or the corporations power in relation to the present matter. I should say, of course, I adopt all my written submissions to the extent that I have not dealt with them. May it please the Court.

GLEESON CJ: Yes, Mr Jessup.

MR JESSUP: Your Honours, we have distributed to the Court a note of our response to the submissions by our learned friend appearing for the States of Queensland and Victoria with respect to the point concerning the consent nature of the award and the possibility that there is a contract lying underneath that and we do not wish to add to those submissions in relation to that point. May we deal then with the general case or the case at a general level. May we submit, firstly, that what has gone so far in these proceedings does not cut against the proposition that Items 50 and 51, or section 3 to the extent that it implements Items 50 and 51, is a law with respect to arbitration or the settlement of disputes, et cetera.

Prima facie it is, and if one has a look at the wide meaning which is given to the expression with respect to, and the linkages and connections which the Court in many other areas of section 51 has over the years been prepared to admit, then, prima facie at least, subject to two qualifications which are important in this case, prima facie this is a law with respect to arbitration because it is a law with respect to an arbitration which has occurred and whose ongoing efficacy is the result of statutory provisions.

The difficulty with the case, or can I say the kernel of the argument, seems to be with respect to two basic constitutional propositions which the prosecutors have silently underlying their submissions. The first is that the legislature cannot do under section 51(xxxv) anything which would fix directly the terms and conditions of employment of employees and, not being able to do that directly, the legislature cannot do the same thing or achieve the same result indirectly. Now, that is the first of two propositions.

GAUDRON J: Do you accept that the first proposition is correct?

MR JESSUP: No, your Honour, we do not.

GAUDRON J: You say that under 51(xxxv) it can legislate directly as to the terms and conditions of employment?

KIRBY J: The verb you used was "affect".

MR JESSUP: No, what we say is the same as the learned solicitor said on that, your Honour. We accept that Item 51 is not a source of power to do so, but we contest the proposition that there is implicit a prohibition to the opposite effect.

GAUDRON J: Yes, but I wonder why you are talking about direct and indirect. I wonder why the direct effect of the legislation in question is not to legislate directly as to the terms and conditions of employment.

MR JESSUP: Well, your Honour - - -

McHUGH J: If I just add this qualification, or at all events the employment relationship.

GAUDRON J: Yes.

MR JESSUP: Yes, your Honour, I will get to that, but whether it is direct or indirect, the position is the same, in our submission, and perhaps we do not need to - - -

GAUDRON J: But you say if the legislation directly does that, it is not authorised by 51(xxxv)?

MR JESSUP: Your Honour, we would rather put it the other way round. We would say the legislation is authorised by section 51(xxxv) and the fact that it does that, whether directly or indirectly, is neither here nor there.

GAUDRON J: I am lost. Did you not agree that 51(xxxv) does not authorise laws directly determining the nature of the employment relationship or the wages and conditions of employment?

MR JESSUP: That is so, your Honour, but that is a conclusion. That is not the test.

GLEESON CJ: I understood your submission to be that they cannot do that if that is all there is to it.

MR JESSUP: I suppose you could put it in those terms, your Honour, yes. But to ask whether the law does that and then say "Oh, if it does that, that is game, set and match", that is the wrong question. The question is not whether it does that. The question is whether it is a law with respect to conciliation, et cetera, and in this case we say, assuming for the moment this to be an arbitrated award, although it might just as easily be a conciliated agreement that has been certified, we say that a law which has an impact upon the arbitrated outcome of an interstate industrial dispute is a law with respect to arbitration or the settlement of a dispute.

KIRBY J: You have supporting you there the decision in the Waterside Workers' Case where there was a very strong dissent by Justice Isaacs and Justice Rich because they thought that continuation was affecting employment and in that sense was a direct legislation, so the key to your first submission is the word "affect"; it may affect the employment but that is not what is prohibited.

MR JESSUP: That is so, your Honour.

KIRBY J: The Court has held that in the extension of the awards, so affectation is possible. The question is whether or not this is affectation of the award or whether this is affectation of some new hybrid creature, but no doubt you will deal with that.

MR JESSUP: Yes, I will, your Honour. The second proposition which lies beneath the prosecutors' submissions is that once a dispute has been prevented or settled pursuant to powers granted by valid legislation under section 51(xxxv) then the legislature cannot upset or change the balance of that outcome by, for example, withdrawing efficacy from some provision so arbitrated but not otherwise. Now, the case really revolves around the correctness and utility of those two negative propositions and we will seek to deal with them.

GAUDRON J: The fundamental question is how you characterise the legislation.

MR JESSUP: How you characterise what, your Honour? Item 50?

GAUDRON J: Yes.

McHUGH J: And read in the context of Item 51 because, after all, Item 51 says:

the Commission must review each award.....that the Commission is satisfied has been affected by item 50.

That rather points to the characterisation of section 3 and Item 50 and 51 as directed to altering the awards rather than indirectly amending section 149.

MR JESSUP: No, your Honour. When it says "has been affected by Item 50", it means with respect to which Item 50 has had an operation. It is simply a link back to Item 50.

McHUGH J: I appreciate that but "must review each award". I mean, one reading of Items 50 and 51 is that it sees the award as continuing. It is not the least concerned with section 149 but it is concerned to excise from the awards those provisions that are not allowable award matters. Now, if it seeks to do that, would you concede that it is constitutionally invalid.

MR JESSUP: Not at all, your Honour.

McHUGH J: Even if it seeks to excise the award, the terms of the award?

MR JESSUP: Not at all, even if it does that. We have put our argument in a number of ways and it is only the aspects which are apparently required to respond to some of your Honour's concern that I will be dealing with orally, but as we make clear in our written outline we say not only that the effect of - I will not use that word - but the operation of these provisions is with respect to so much of the provisions of the principal Act as give efficacy to awards. By efficacy I not only mean the provisions to take proceedings for breach but the provisions which specify on whom they would be binding and provisions which specify over what period of time they will have force, which are the words of the Act.

That is the first way we put it, or, that is a way we put it, but if your Honours are not persuaded that the provisions in the schedule are limited in that way or are focused in that way then we also say that in any event, even if they have the effect, viewed together, of stripping provisions out of awards, then they are valid because there is the relevant connection.

Now, your Honours, one must ask why would not the legislature do that. These awards, after all, are creatures of legislation. An award is not something - - -

McHUGH J: That depends what you mean when you say they are creatures of legislation. They flow from legislation. The award, as your written submissions point out, I think, is the factum, but the legislation is in the background but all these rights flow from the award; the Parliament itself has no power to confer or withdraw any of these rights as such.

MR JESSUP: If I may say so, with respect, your Honour, one cannot really grapple with the main premise which is in the prosecutors' case without coming to these two, as it were, understandings or prohibitions or limitations. Your Honour puts to me what Parliament cannot do rather than whether what Parliament has done is within what it can do. We submit that it is - - -

McHUGH J: But that is part of the problem of the case, as it seems to me, that you have had one institution, namely the Commission, making an award within its powers, and then Parliament legislates by referring to awards, disputes, and so on, if you like, and it seeks to do something. The question is whether it has gone beyond what it can do. Everybody seems to agree that Parliament can say these awards are no longer enforceable.

MR JESSUP: Your Honour, apropos the Constitution, Parliament lies between the Commission and the Constitution. The umbilicus connecting the Commission runs through Parliament, and likewise with awards. The notion of a commission is not known constitutionally, neither is the notion of an award known constitutionally.

McHUGH J: That is absolutely correct, but in this context, award is the product of a constitutionally arbitrated dispute which meets certain criteria, and - - -

MR JESSUP: Only because the Act says it should be, your Honour.

McHUGH J: No, because the Constitution says it should be, and the Act conforms with the Constitution.

MR JESSUP: The Constitution does not say an award has to be the product, your Honour.

McHUGH J: Yes, that is true, but it is the product; it is the product of the necessity for there to be an arbitration in relation to a relevant dispute.

MR JESSUP: It happens to be the statutory product of that, your Honour, but it is not the constitutional product of it.

KIRBY J: You would have to have a constitutional product; it could be called "decision", it could be called "remit", it could be called "mandate", it probably could not be called "a judgment", but it could be called lots of things, but it is called "an award". There has to be the decision of the arbitration which is its outcome.

MR JESSUP: Your Honour, not in our submission, as there has to be - - -

KIRBY J: How else can you have an outcome.

MR JESSUP: One would expect there would be an outcome of some kind or another, but this, as it were, comes back to Justice Gaudron's observation yesterday, she asked rhetorically, would it be conciliation and arbitration if there were no outcome, given the force or efficacy of law by the Act? And we would prefer, if we might, your Honour, to come to that in the course of our submissions, because we do wish to say something about it. What we wanted to commence with was the proposition that the legislature cannot directly legislate for terms and conditions of employment. Now, may we remind your Honours, with respect, before we go into that proposition as a general one, that in the facts of this case there has been no attempt directly to fix the terms and conditions of employment by the legislature. What the legislature has done is to mark out the genera of award provisions. Whatever the arbitrator in a particular award shall have ordained previously, if it is within those genera, then it runs on, it continues. So the legislature has certainly marked out certain fields within which awards will have a continuing valid operation, but it has not specified what the content of those awards will be.

May we say further in relation to that, and this is something that my learned friend, Mr Bennett, made a point about, the Commission, of course, retains its power under section 113 to keep its awards up to date and relevant to changing conditions.

The prosecutors' proposition must be that any law which has the effect of establishing terms and conditions of employment is invalid, because this law does not do so in terms. So already there is a qualification on the proposition in its application to this case. It must be that any law which has that effect, not only in a law which does so in terms, but a law which has that effect, will be invalid. Now the first problem with that, if we may so submit, with respect, is that section 89A itself does no more prospectively than Items 50 and 51 do in relation to previous arbitrations.

So if there is an underlying limitation by reference to the ability of the legislature to make laws which have this effect, then it is a limitation which is overstepped by section 89A itself at least if it is overstepped by Item 50 and 51.

McHUGH J: You will have to develop this argument because the mere stating of it does not seem to me to be correct, Dr Jessup.

MR JESSUP: Yes, your Honour.

McHUGH J: No, what I am putting to you is that it can be accepted that 89A is valid. It does not necessarily follow from the validity of 89A that Item 50 and 51 are valid or vice versa.

MR JESSUP: It does not universally, your Honour, but with respect to this particular point, it does. If the only point made against us is that a law which had the effect of establishing the classes or genera within which award provisions could validly operate was not valid.

McHUGH J: But it just seems to me to ignore entirely that Item 50 and 51 are dealing with the product of a process.

MR JESSUP: Your Honour, that is another point and we will come to that. That is the second of the two limitations which I have identified in my learned friend's case.

GAUDRON J: I will tell you why I think your second proposition does not follow from the first. It does not depend on the subheadnotes so much as the fact that they may accurately describe what is happening. Article 89A defines what an industrial dispute normally includes and so that is all you can have an award about. Item 51 seems to proceed on the basis that the industrial dispute was not so limited but, nonetheless, the same consequences flow. So you are not dealing with the nature of a dispute and what can be awarded by reference to a dispute at all. Nor, it seems to me, are you really dealing with the effect of an award as such. You are dealing with the award. You are dealing with the regulation of employment in the context of a different dispute from that to which 89A is directed.

MR JESSUP: Your Honour, I accept that 89A has a direct operation by way of delimiting the scope of the industrial dispute and in that sense it operates at the point at which the arbitrator is sitting and doing his or her work.

GAUDRON J: Yes, but that is why I think you cannot take your proposition that if you can do 89A, you can do Item 50 at face value.

McHUGH J: That is what I said this morning when the discussion was going on about private arbitration, that there was a question of what the Parliament could do to limit the disputes that the arbitrator could handle and what it can do in respect of an award that was made within power.

MR JESSUP: Your Honours, I perhaps ought to make clear again the very limited basis upon which I am making the submission at this time. We say that Item 50 is valid because it is with respect to - it is put against us that cannot be right because it has the effect of prescribing a regime of terms and conditions of employment, as it turns out, not specific ones, but classes. We respond to that by saying that cannot be the discrimen. It cannot be the discrimen because section 89A likewise is quite wholesome on its face, but it has that effect. It has that effect that the arbitrator is limited to the very same genera which provide the basis for Item 50.

So all we wanted to do is to demonstrate the proposition that if the result of this legislation is to leave in the award or to produce in the award a regime of terms and conditions of employment which is not what the arbitrator would otherwise have chosen but which is in categories ordained by the legislature, then everything must be bad. That is the proposition with which we take issue and once that proposition is out of the way, then we are back to the original connection between the subject matter of Item 50 on its face and the constitutional head of power.

GAUDRON J: You see, that does bring you to the subheadnote to section 89A. There there is a connection with the conciliation and arbitration of industrial disputes as defined.

MR JESSUP: Yes, your Honour.

GAUDRON J: Here there may be no longer any dispute. When you come to Item 50 and Item 51 it is entirely conceivable that there is no longer any dispute. The award is standing but there is no longer any dispute. Not only is the award standing without the possibility of a dispute, but what Items 50 and 51 are concerned with are not conciliation and arbitration and the award itself, to take the matter further, may not have any interstate element. You may be removed from every element of 51(xxxv) when the directive in Item 50 bites and when the direction in Item 51 comes into operation.

MR JESSUP: Well, your Honour, that proposition was resolved in the Waterside Workers' Case. It was put in the Waterside Workers' Case that you cannot extend an award beyond the time fixed by the arbitrator because the dispute may no longer exist and the arbitrator, presumably at the outset, had made a judgment that the dispute required a settlement lasting, say, three years, and the Parliament cannot say, "We will make it four." But, rightly or wrongly, that is the law, and it has been since then and your Honours have not been invited to reconsider the Waterside Workers' Federation Case.

HAYNE J: It may also be necessary to consider two other elements, namely the variation cases, and as a separate field of discourse, the prevention aspect of 51(xxxv).

MR JESSUP: Yes.

HAYNE J: Now, those are two very separate and distinct areas, but they may bear upon the general subjects that were the subject of the exchange just had.

MR JESSUP: As we understand the constitutional significance of the variation power, it depends not so much upon the fact that it shall be a process of conciliation and arbitration but, rather, the fact that the dispute is to be kept up to date to changing conditions and circumstances.

HAYNE J: The award is.

McHUGH J: That proposition that you have just put, I think, may need some qualification because the variation may only affect a particular State, for example, employment in a particular State at a particular port. An award may be made in settlement of an interstate dispute which only applies in one State. Years may go on. Once the Commission has found the dispute, it can make an award for New South Wales and there may be no other award made in any other State for years.

MR JESSUP: Yes, your Honour. It is not that the original dispute is, in point of fact, being varied according to what was then in dispute or being further settled according to what was then in dispute, but rather that there was a settlement of that dispute which is now proving to be an embarrassment or an impediment by reason of changed circumstances. Now it may be that within the original parameters of the dispute, neither the parties nor the arbitrators would have had a bar of what later is required as a variation. Under section 113 the general power to vary generally is tied to the arbitrator's assessment of what needs to be done to keep the settlement up to date.

GAUDRON J: But also depends on the notion that the dispute continues within the ambit of the original - - -

MR JESSUP: It has to be within the ambit, it does your Honour, yes.

GAUDRON J: Let us say the employer of an employee - let us say one employer award. They come up to the Commission the day before the expiration of the interim period. We are not in dispute. We are perfectly agreed about everything. There is no dispute between us and there is no larger dispute to which we are parties, and then Item 50 operates.

HAYNE J: Assumedly there is no dispute because the employees will continue to obtain the benefits on the non-allowable award matters and the contract of employment, if not hitherto providing for those benefits, will thereafter do so, otherwise one assumes the parties are not agreed.

MR JESSUP: Your Honour, with respect, that is to beg the question, it assumes that the parties need to be in a state of disputation before an award can be varied, and it has never been thus.

GAUDRON J: No, it is a question of asking how you relate Item 50 to the power to legislate with respect to conciliation and arbitration for the prevention and settlement of interstate industrial disputes, when it can bite, it seems to me, when there is no dispute and when it does not involve conciliation and arbitration.

MR JESSUP: That goes right back to the start, if we may say so, your Honour, with respect. We ask the question: is this a law with respect to the arbitrated outcome of - - -

GAUDRON J: Yes, that seems to me to be the only question in this case. It can be the only question. I think we must all be in heated agreement about that.

MR JESSUP: I would be delighted if that is all I had to persuade your Honours of, because the law is well and truly on our side with respect to the width of the expression "with respect to", and there is, on any view, the strongest subject matter connection between Item 50 and an existing previous arbitrated settlement of a dispute which retains its efficacy as a result of the Act under which it was originally made. It would be, we would submit, under all normal approaches taken under section 51, idle to deny that proposition. So, we are driven, we find ourselves back to doing battle on the subsidiary fields which, in our submission, are subsidiary fields but nonetheless that is where we find ourselves.

McHUGH J: Your submissions have concentrated on the question of connection but the first matter which must be dealt with is the character of the law enacted by section 3 through Items 50 and 51. You have to ask yourself what is the character of that law having regard to the rights, powers, privileges, liabilities, which it creates or changes.

MR JESSUP: I accept that, your Honour, and as I have said, the law has, (a), the kind of character for which the learned Solicitor contended which is that it simply removes the efficacy which the Act otherwise gives to an award - - -

McHUGH J: Yes, the moment you talk about efficacy you are not talking about rights.

MR JESSUP: Well, remove the rights under the Act, the rights to proceed under the Act, the rights to enforce the award. Secondly, if your Honours are persuaded that it has a wider effect or character, in the Kitto sense, then we would also accept that the words "effect" in Item 50 mean all effect so that the clauses after the operation of Item 50 simply do not have any effect anywhere, anyhow, and, our argument would be basically equally sound, we submit, on either of those cases. There is no question, your Honour, it changes the practical operation of an award it changes the rights which flow from it and the obligations which arise under it. That is clear. Now, whether it does so only under the Act or whether it has other consequences with respect to contracts and the like really does not need to be considered.

McHUGH J: But is it not a difficulty, from your point of view? Once you concede that it changes the character of the rights that flow from the award, does not it raise a question as to whether Parliament has got any power to do that?

MR JESSUP: It is conceded Parliament could annul or rescind the award altogether, your Honour, and that would be a change of that kind qualitatively and of a much greater magnitude.

GLEESON CJ: Is that a convenient time?

MR JESSUP: Yes.

GLEESON CJ: We will adjourn until 2.15 pm.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

GLEESON CJ: Dr Jessup, just before you continue, could we have a brief word about the future in this matter.

MR JESSUP: Yes, your Honour.

GLEESON CJ: How long do you expect to require to complete your submissions?

MR JESSUP: An hour to an hour and a half, an hour forty, depending a bit on how things go, your Honour.

GLEESON CJ: Mr Buchanan, how long do you think you will need?

MR BUCHANAN: At least half and hour.

GLEESON CJ: Mr Meadows?

MR MEADOWS: Approximately 15 minutes, your Honour.

GLEESON CJ: We could, if necessary, sit on this case at noon tomorrow, but it would plainly be more suitable for most people if we could get to a stage at the end of today where we were either finished or were in a position where written submissions could cover whatever remained unsaid. At all events we will sit until 4.30 this afternoon. Go ahead, Dr Jessup.

MR JESSUP: Thank you, your Honour. In summary with respect to the question of direct legislative enactment of terms and conditions, may we say that the truism that such a power does not arise in terms from section 51(xxxv) is nothing more than that; it is not a statement of the extent of the power. Sometimes the Court will need to discard these similar sorts of notions or cliches, if I can say that without any disrespect for those who have used it in the past, as it has discarded in the Blue Sky Case the cliche, if you like, about mandatory and directory legislative provisions, and come back in this case to what the Constitution actually says.

As I understand the case which might possibly be advanced against us on this point is, it is that there is some kind of underlying prohibition similar to the kind in section 51(xxxi) on the Commonwealth legislating for terms and conditions of employment anywhere. Well, in our submission, that cannot be right. In point of fact, the Act presently contains directly legislated terms and conditions of employment in section 500 and the terms and conditions are actually set out in Schedule 1A. That is legislation made not under 51(xxxv) but under 51(xxxvii) but we draw that to your Honours' attention to show that it is not anathema to the idea of this legislation to have direct enactment on terms and conditions of employment in it, in a much more prescriptive way than Item 50 attempts to do.

We would submit that if section 51(xx), for example, section 51(xxxvii), are not governed by any prohibition with respect to direct enactment of terms and conditions of employment then there is no reason why section 51(xxxv) should be and that it is no more than a shorthand way of paraphrasing in other words the extent to which 51(xxxv) runs. Now, I will not spend much time on the proposition of the prosecutors that the legislature cannot do indirectly what it cannot do directly. The point has been, in our respectful submission, covered by the learned Solicitor and we would seek to associate ourselves with what he has said on behalf of the Commonwealth on that point.

May we emphasise that the principle was, in its foundations, concerned only with what you are prohibited from doing as the maxim itself makes clear. Those were the terms in which Chief Justice Dixon put it in Wragg [1953] HCA 34; 88 CLR 353 at 387 to 388, and we do no more than give your Honours the reference to this without asking you to read it, and in Grannall v Marrickville Margarine Pty Ltd, [1955] HCA 6; 93 CLR 55 at 78.

May we turn next to the other general limitation which is the foundation of the prosecutors' case, namely that the legislature can bring the whole of any award to an end, as we understand their submissions, but it cannot cherry pick, it cannot bring parts of the award to an end whilst allowing the others to have their statutory continuation in accordance with the provisions upheld in the Waterside Workers' Case.

Now, if one goes to the Constitution which, in our submission, one must, the jurisprudential foundation of that proposition must be that the legislature cannot destroy or corrupt the settlement of the dispute which was originally ordained by the arbitrator. However, for the purposes of their case here, the prosecutors need to go further than that proposition. They need to say, and they do say, that the legislature cannot bring to an end the binding effect of certain award provisions made by an arbitrator. In our submission, that is a different and much more problematic proposition. The proposition is flawed, we submit, because it seeks to give constitutional significance to the award which is no more than the form which the legislature has chosen as the legal embodiment of the arbitral outcome, rather than, as they ought, to the process of settling disputes by conciliation and arbitration. As to what constitutes the award in any particular case, that will depend entirely on what the arbitrator has done.

The prosecutors concede that a legislative provision along the following lines would be valid: At the end of the interim period, each award which provides for matters other than allowable award matters ceases to have effect. In our submission, issues of constitutional legislative competence cannot turn on such fine distinctions of form. The prosectors' acceptance, we submit, of the case that Items 50 and 51 would be valid if they were concerned with awards as a whole destroys the jurisprudential foundation of their argument.

May we refer your Honours to two or three concrete examples to give substance to what we say. If you take first the case of an award which contained no provisions other than non-allowable matters, that is to say no allowable award matters, the practical effect - and my learned friends are keen that your Honours should be conscious of the practical effect of this legislation - would be that an award of that kind was deprived of its whole binding effect and its whole effect by Item 50 in its present terms. We are not sure whether the prosecutors would grant to Item 50 a valid operation, to that extent at least, pursuant to section 15A. That is to say, to the extent of an award which has only non-allowable matters in it. Yet, whether a particular award or a dispute was settled by the making of an award in those terms would be entirely a matter of decision or chance, happenchance so far as the arbitrator is concerned.

More importantly, may we put to your Honours a couple of other instances, and they really flow from an appreciation that there is no necessity for the terms of an award to be co-extensive with the dispute in settlement of which it is made. This has a number of different manifestations. The first and the most obvious one, of course, is that the award can leave a certain amount of a dispute unsettled, and it would be put against us that is what the arbitrator has decided to do. But if, as my friends concede, the whole of an award can be brought to an end validly by the legislation, would that not, we ask rhetorically, be to upset the so-called fine balance? The arbitrator having said, "We will leave so much of the award unsettled and we will settle the rest with this award", how do the prosecutors cope with legislation which comes along and rescinds the award in toto, as they concede could be done?

Secondly, awards may deal with a dispute piecemeal, and may we give your Honours the reference which established that, if it was not already clear: Reg v Isaac and Others : Ex parte State Electricity Commission of Victoria [1978] HCA 33; 140 CLR 615. Now, it is not controversial so we will not ask your Honours to read any passages in that case, but that made good the proposition that if you have an interstate industrial dispute in that case binding electricity authorities in many States, then there could be an award binding on the Victorian authority, an award binding on the South Australian authority, and so forth. And if you do have that, then the award binding on the South Australian authority, which was the one before the Court in that case, it could be varied, it could be adjusted and various things could be done to it without the respondents to the Victorian award having any right to be heard in relation to those proceedings. Because the rules of natural justice did not apply, they were not bound by that award notwithstanding that they were all parties to the dispute.

If we are talking about arbitrators having made fine decisions and nicely balanced outcomes and various things of that kind, we must include the circumstance in which an arbitrator will settle a single dispute which, after all, is the constitutional phenomenon by the making of more than one award. And, again, if you allow for the fact that the legislature might come in and abrogate or rescind the operation of a particular award completely, then inevitably you allow for the disturbance of the arbitrator's fine balance of - - -

KIRBY J: But is there not an indifference - perhaps you might like to finish your sentence and then I will ask the question.

MR JESSUP: - - - of the constitutional phenomenon or the constitutional artefact with which he was concerned.

KIRBY J: There seems to me a difference - and perhaps it needs more thought to express it clearly - between the Parliament giving the power that will enforce an award and then withdrawing that power so that it has no enforcement at all, and the Parliament, as it were, disturbing the nuances and content of the award by withdrawing the power to enforce part of it only or by saying that only parts of it will have effect. The one is simply the withdrawal of power. It is a grant of power. But the withdrawal of it to the other is turning what was the award into something that is no longer the award and purporting to legislate directly on industrial conditions which under our Constitution, rightly or wrongly, the Parliament of the Commonwealth has no power to do under paragraph (xxxv).

MR JESSUP: Well, your Honour, with respect, justifies the major proposition which you put to me by reference to the secondary one. I mean, unless it is accepted, your Honour, that whatever else may be valid, you simply cannot legislate directly and unless that is accepted then the earlier propositions do not, with respect, your Honour, withstand examination. There is, of course, a distinction, your Honour, between withdrawing the binding force, enforceability, et cetera, of an award as a whole and doing so only in part, but it is not a difference with constitutional significance because the - - -

KIRBY J: Well, if it takes away from it the character of being the award of the arbitrator, it is very, very much a constitutional significance because it is no longer that which an arbitrator by the process of arbitration, which is all that our Constitution under this paragraph permits, has done. It is no longer the award. It is no longer the product of arbitration.

MR JESSUP: I appreciate that, your Honour, with respect, but my point is that whether or not it is the award, there are many things which the prosecutors here would allow could be done and, as I understand what your Honour is putting to me in arguendo, which you would allow to be done, which would produce a result which was no longer that ordained by the arbitrator. The fact that something is not the award made by the arbitrator or not is simply the result of the fact that the legislation prescribes an award as the means by which the arbitrator will give effect to his or her decision, but that need not be so.

KIRBY J: Well, it need not be so, but long before paragraph (xxxv) came along there were arbitrations and the noun normally used in English legal parlance and Australian legal parlance to dispose of an arbitration was an award, so that although the legislation could have called it something else, something had to be there as the decision of arbitration.

MR JESSUP: Well, I will come to that very shortly because it is linked with what your Honour Justice Gaudron was saying about enforceability. If I might return to the kernel of your Honour's point, the arbitrator's settlement of the dispute may be several awards. Constitutionally, if there is any substance in the point made against us, it is the settlement of the dispute which is inviolate, not the particular terms of what might be one of half a dozen or so awards made in so doing.

KIRBY J: That is consistent with what the Court has said on a number of occasions that it must come back to being the settlement of the interstate dispute.

MR JESSUP: No, it is not that so much, your Honour, it is the fact that it follows inevitably from the fact that we are talking here about constitutional power and that the award is a legislative artefact whereas the dispute is the constitutional phenomenon to which one must always return. Now, just as one may settle a dispute with several awards, likewise, one may have one award for the settlement of several disputes. You may have a series of new disputes arising or you may have disputes with a series of employers laterally, as it were, all settled by a single award being made. Again, there is not, we submit, any necessary correspondence between the award and the constitutional phenomenon, the dispute, it is just happens that that is the way the legislature has set it up.

McHUGH J: But given that an arbitrator is acting within the ambit of a dispute, do you concede that the Commonwealth cannot direct him or her as to how the dispute is to be settled or what terms and conditions can be provided within the terms of that dispute?

MR JESSUP: No, your Honour, I do not concede that because it depends what your Honour means by direct.

McHUGH J: Do you concede the first - - -

MR JESSUP: Section 89A is, on one view of things, such a direction.

McHUGH J: Surely the sidenote correctly describes it as "the scope of the dispute", what you can have a dispute about. But, let it be assumed it is a dispute about wages which is within the Commission's ordinary jurisdiction and has an interstate dispute about that. Can the Commonwealth legislate to direct the arbitrator how they are to perform their tasks in relation to that?

MR JESSUP: Yes, and has done; the Commonwealth has legislated to say that wages must be minimum wages, a properly fixed safety net with relationships between awards and they must be relevant and all those sorts of things.

McHUGH J: But most of those either go to questions of procedure or, more importantly, they have usually been regarded as describing the ambit of the dispute, have they not?

MR JESSUP: No, your Honour, with respect, no, not the ambit of the dispute.

McHUGH J: What about the minimum wage?

MR JESSUP: Not the ambit of the dispute and not procedures so far as minimum wages are concerned; that is content, your Honour, because - - -

McHUGH J: Well, I appreciate minimum wage is content, but is not the jurisdiction or the jurisprudence of the court that that is part of the dispute, that there cannot be disputes; they have got no jurisdiction to decide disputes outside the limits of the minimum wage provision?

MR JESSUP: No, it is not put in the Act as being a cutting away of other parts of the dispute; that must be there for a number of reasons, one being that it could be settled by the making of an agreement over the award which was then certified. So the dispute is always there. Whether or not there is a question of power involved, your Honour, conflates really to the same proposition. One way or another the Commission is the offspring of the legislation and has to act consistently with it, so long as it is arbitration and the view which has been taken, your Honour, as I understand it, is that the legislature can establish certain broad criteria, such as, take into account the public interest, such as establishing a safety net of awards to protect people in a minimum rate sense, so long as what is done by the arbitrator is still arbitration but, nonetheless, within those confines.

Now, when you come to section 150A, and it might be a convenient time for me to come to that, we would submit that the Commonwealth's point is well made here. Would your Honours turn to the New South Wales submissions, because they conveniently have annexed to them a photocopy of section 150A. Your Honours, it is directly after the end of the text of the submissions, you will see an extract from the Industrial Relations Act 1988 Reprint No 2 and if you look at section 150A, subsection (1) requires, not permits, but requires the Commission to review awards within a certain time frame. Subsection (2) says:

If.....the Commission considers that the award is deficient in any of these respects -

and then one goes to paragraph (b):

contains a provision which discriminates against an employee because of, or for reasons including, race -

et cetera, and then, at the bottom:

the Commission must, in order to remedy the deficiency, take the steps (if any) prescribed by the regulations.

Now I do not know that the regulations are - yes they are there, your Honours. If you go a number of pages further on you will see the regulations. I think in my copy the first page is upside down, but whether or not your Honours are labouring under that inversion.

KIRBY J: It is just an attempt to confuse you; we do not have that problem.

MR JESSUP: Excellent, your Honour. Well, that is usually the way counsel feels. Your Honours will see that Regulation 26A deals with the subject. To get to the gravamen of it one has to come to sub-regulation (4), and then sub-regulation (4) requires the Commission, as a mandate, to "vary the award" or take other steps in order to remedy the deficiency. Now, there are some euphemisms involved in all of that, but stripped of them, what it means is this: if there is, for example, in an award a provision which says married men will get a 10 per cent increase and unmarried men will get a 5 per cent increase, then that has to go. The Commission can adjust the award in various things, as it can under Item 51, but the substance of that provision has to go and the Commission has no choice in the matter. It is a direct, frontal legislative direction; take it out of the award.

McHUGH J: Well, it may be a question of the source of the direction, and 150A(2)(b), for example, rather looks like it is based on the external affairs power.

MR JESSUP: It was not so dealt with in Victoria v The Commonwealth, your Honour.

McHUGH J: I know it was not.

MR JESSUP: It was upheld as an exercise of power under section 51(xxxv).

GAUDRON J: But read down.

MR JESSUP: But read down so that it would not be outside the ambit of the dispute, your Honour; and, of course, it is almost inconceivable that Item 50 would have that problem because all it does is to withdraw. It does not, as it were, put into the award things that would blow out its ambit beyond that of the dispute, but our point is that if you had - and this is a very - - -

GAUDRON J: But do not forget, it has first to determine that it is deficient, that the provision in question is deficient.

MR JESSUP: Yes.

GAUDRON J: And before doing that, it has to hear the parties, engage in what looks like a process of arbitration in that regard, or the normal procedures of arbitration, and then if it has come to the conclusion that there is a deficiency it must vary.

MR JESSUP: As with Item 51, your Honour. Item 50 does have the additional operation that of its own force it renders ineffective certain award provisions, but in the present case and in other cases, the way it happens as a matter of mechanics within the Commission is that the award is reviewed as Item 51 says it must be. The Commission has to decide whether the provision ceased to have effect, so it has to decide whether it is an allowable award matter. To take an example given by your Honour Justice Kirby yesterday, Picnic Day, Picnic Day in the ACT has been held to be a public holiday so it stays in the award; say, in the example mentioned by your Honour Justice McHugh this morning, maternity leave. Maternity leave is mentioned in the list of allowable award matters.

So the Commission has to make that judgment as to which matters are and which matters are not allowable award matters. Our point is that no less than Item 50 does section 150A requires these changes to be made regardless of whether it would tend to settle the dispute or prevent further disputes or whatever, or regardless of the particular inclinations of the arbitrator.

McHUGH J: Yes, but it seems to me that what your argument glides over all the time is that this amending statute, section 3, itself, must be a law with respect to conciliation and arbitration for the prevention and settlement of disputes extending beyond the limits of any one State. What has been done, particularly in the Commonwealth's submissions, is an attempt to seize on the variation power of the Commission and somehow analogise from that. But the question is, as with every Commonwealth Act, "What is the head of power that supports it?" So you have to be able to say that this is a law with respect to conciliation and arbitration for the prevention and settlement of disputes.

MR JESSUP: We have said that, your Honour.

McHUGH J: I know.

MR JESSUP: And we would say that that is the easiest part of our submission, because the connection with the arbitrative settlement of a dispute given force by the Act, et cetera, is direct and it is obvious.

McHUGH J: But it is not; the dispute is in the past. It refers to a dispute. That is not enough. As Chief Justice Latham once said, the fact that there is a reference to a head of Commonwealth power is not enough.

MR JESSUP: Your Honour, the fact that it is a dispute in the past has never cast any shadow of doubt upon the provisions of the legislation which give awards statutory effect. A dispute is settled and the settlement has to be continued.

McHUGH J: Yes.

MR JESSUP: It is inevitably an ongoing thing and that is why prima facie, at least, these two items attach to the instrument by which the dispute was settled. So we would submit, as we did before lunch, that we cross that very low threshold easily. It is only when we get tangled up with these other implications and limitations that we need to detain your Honours for any length of time at all, really. But the point we are making here is, whatever may be the answer to those things, they would be at least as much an answer to the validity of section 150A in the form in which it came before the Court in Victoria v The Commonwealth.

I wanted to give your Honours an example of that which had to do with the so-called fine balance, because it is not just a matter of provisions which discriminate against sexes and races and things like that. You might have a claim, shall we say, for a 10 per cent wage increase by a union and a response by the employer to say that "In the current difficult times 10 per cent is completely over the top. We could not possibly afford an increase of that kind. It would be placing this business in jeopardy." These are the sorts of arguments your Honours might imagine happen from time to time. But the cost of living has gone up. It is harder to bring up a family and a well-meaning commissioner might say, "I just think that people with families ought to be protected against the ravages of inflation." So he puts in, or she puts in, 10 per cent for people with family responsibilities and 5 per cent with others.

KIRBY J: That is what Justice Higgins did in the Harvester Award, did he not? Basically that was supposed to be for the average family.

MR JESSUP: Exactly, your Honour. If you like, until these more recent views about discrimination, that was really part of the main spread of industrial arbitration in Australia and yet that provision - so, if he says, "All right, 10 per cent for those with families, 5 per cent for those without", that would be a balancing. If your Honour's proposition before lunch about the high wages and the low hours is given the same kind of currency, you take away the - - -

GAUDRON J: Section 150A is to do with varying it. It would be a different thing altogether, would it not, if you had the equivalent of Item 50 which said "all award provisions which give preference to married men cease to have effect".

MR JESSUP: No, your Honour, not qualitatively. One of the main cases or main observations which is put against us is that of the Chief Justice and of Justice Windeyer in Ex parte The Amalgamated Engineering Union, and their observations were concerned with statutory provisions which, so it was argued, not successfully, but so it was argued, provided for a formula or edict which the Commission had to follow in setting its own rates. They did not set the rates and they did not pull out any rates from the award. Section 150A, likewise, is every bit as unacceptable, if the argument against us is correct, as a provision such as Item 50 which operates directly with reference to the award provisions.

So we would say, with respect, that it was implicit in Victoria v The Commonwealth that an award which does contain the relevant connection with the original dispute, that is to say, it stays within ambit, would be valid - I am sorry, so long as the award affected by section 150A stays within a relevant ambit connection with the original dispute, then it would not matter that what you have here is an obligation being imposed upon the Commission to effect a particular variation regardless of whether it considers it to be a proper keeping up to date of the award or a proper further settlement of the dispute, or a settlement of a new dispute, or whatever you may have.

KIRBY J: But the seemliness of the Constitution has been followed, the seemliness, it has been left to the Commission. It is the Commission that does it, it is not the Parliament.

MR JESSUP: But, your Honour, that is not what the Constitution says. The case against us is that a law which directed the Commission as to what to do - - -

KIRBY J: But the Constitution does not say that the Parliament may do conciliation and arbitration and that is - - -

MR JESSUP: No, your Honour, but section 150A directed the Commission to take out of the award a clause having a particular operation.

GAUDRON J: To vary the award, not to take out of it, to vary.

MR JESSUP: Well, yes. Your Honour - - -

GAUDRON J: Well, there are all sorts of ways that you might effect a variation without taking out - you might vary the award in that case simply - I mean, in all probability, you would not do it by reducing the married rate, although I do remember people submitting to me a long time ago that you could implement equal pay by reducing the male rate, but, I mean, that is one way you could vary it. You would not delete it entirely. What you are doing in Item 50 is deleting entirely, leaving a subject matter in the ether. Section 150A is directing you to vary the provision with respect to that subject matter of dispute.

MR JESSUP: That, with respect, your Honour, is our point. You would not. The arbitrator would not take out the married rate.

GAUDRON J: No.

MR JESSUP: The arbitrator would bring the unmarried rate up to 10 per cent, which would be a complete destruction - - -

GAUDRON J: Yes, but it would not leave wage rates unregulated for the married man.

MR JESSUP: If it acted as your Honour is suggesting it would, it would destroy the fundamental basis, the ethical foundation, of the original settlement.

GAUDRON J: Yes, and what is happening in Item 50 is a different thing, it seems to me. It is taking it straight out of the award, no power of variation, no power of substitution. It just goes.

MR JESSUP: That, with respect, is not correct, your Honour. Item 51 requires the Commission to review the award and to make such variations as are appropriate in the light of the fact that these classes of clauses are no longer in it.

GAUDRON J: Well, does it?

MR JESSUP: And, in fact, if you look at what Justice Boulton did in this case, you will see that he made variations to the award to make the whole thing, as it were, go through as smoothly as possible.

CALLINAN J: And to preserve, I think, some benefits.

MR JESSUP: I beg your pardon, your Honour.

CALLINAN J: Is it 51(3)?

MR JESSUP: Yes.

CALLINAN J: It has to be reasonable in preservation of existing conditions, is it not?

MR JESSUP: Yes.

CALLINAN J: I have just forgotten the wording of it.

MR JESSUP: Yes, yes.

CALLINAN J: It is to that effect, is it not?

MR JESSUP: That is the provision. It does not, of course, enable the arbitrator to retain the non-allowable matters - - -

CALLINAN J: Non-allowable figures, I know.

MR JESSUP: - - - any more than section 150 enables the arbitrator to retain discriminatory provisions. Now, your Honour Justice Gaudron says to me section 150 does not require the Commission to take clauses out of the award. That is to give - - -

GAUDRON J: And leave the area unregulated.

MR JESSUP: Yes, that is to give it - that is to take a textual approach, your Honour. Whether a discriminatory provision is in a particular clause or not will simply be a matter of the way the award has been drawn up. Something will run foul of section 150 if it is the end result of a series of little bits and pieces in a number of clauses and the Commission nonetheless is required to take them out. Our point is that the operative provision - and I use "provision" with a small "p" - of the award has to come out under section 150, no less so - - -

GAUDRON J: Well, it ceases to have effect under section 150.

MR JESSUP: Under Item 50.

GAUDRON J: Under Item 50.

MR JESSUP: It does, your Honour, yes.

GAUDRON J: Yes, which is a slightly different thing, too.

MR JESSUP: It is, but may we say that the legislature must be given a certain amount of leeway. It has required the Commission under Item 51 - I think it is "as soon as practicable" or very soon "after the end of the interim period" - very soon after the clauses have ceased to have effect to take them out and then it empowers the legislature - - -

GAUDRON J: "As soon as practicable".

MR JESSUP: Yes, "as soon as practicable".

GAUDRON J: And, you do not substitute other provisions in that area. You can make other variations relating to allowable award matters.

MR JESSUP: Yes. You do not substitute non-allowable award matters, your Honour.

GAUDRON J: Well, you do not substitute allowable award matters, either.

MR JESSUP: You can.

GAUDRON J: Well - - -

MR JESSUP: You can. Not perhaps under Item 51(3) but they have got the general power of variation, your Honour. That has to be assumed all the time. Can I take your Honours to one final thing about Victoria v The Commonwealth in the context of section 150A and to page 529 of 187 CLR.

KIRBY J: Were these regulations under consideration in this case, by the way? Was Regulation 151 and 150 "must", were they under consideration in Victoria v The Commonwealth?

MR JESSUP: Do you mean Items 50 and 51?

KIRBY J: No, the regulations that you were just taking us to, Regulation 4, industrial - well, that is part of the section, is it? I am sorry.

MR JESSUP: Do you mean Regulation 26A, your Honour?

KIRBY J: Yes. Yes, "it must".

MR JESSUP: Yes, it is referred to at page 527 at about point 2.

Regulations have in fact been made with the consequence that, if the Commission considers that an award is deficient in respect of the matters set out in s 150A(2)(b), it must allow the parties.....if any, to be heard and, thereafter, must remedy the deficiency by varying the award -

and the footnote refers to Regulation 26A.

KIRBY J: But the validity of the regulations was not in question, it was simply noting that they had been made.

MR JESSUP: I think the regulations, in terms of validity, your Honour, were suspended from the Act and it was the Act validity which was in question. I accept what your Honour says that the validity of the regulations, if the Act was valid, was not apparently before the Court on that occasion. I wanted to take your Honours to page 529. Your Honours will see that the first sentence in the paragraph commencing at point 6 refers to "current industrial standards". Now, it would seem to be good law that:

Parliament may legislate to require regulation revision and variation of awards to reflect current industrial standards.

GAUDRON J:

so long as the award as varied retains the required connection with an interstate industrial dispute.

MR JESSUP: Yes, with the dispute. In other words, your Honour, so long as it does not go outside ambit. Now, the current industrial standards to which that paragraph referred on page 529 were the standards of the legislature, not of the arbitrator. Once it is accepted that the legislature may require awards to be revised and varied to reflect current industrial standards, whether expressed generally or in relation to specific matters, it must likewise be accepted, we submit, that current industrial standards implicit in section 89A may be the subject of a legislative requirement with respect to pre-existing awards similar to that imposed by section 150A.

Having dealt with your Honour's questions on that aspect, if I may just return briefly to the issue of a dispute which is settled by the making of several awards or several disputes settled by the making of a single award. In either of those cases, what the award or awards happen to say will not be constitutionally significant. If the legislature wanted to require a different pattern of award structure, that is to say, if the legislature wanted to say that a dispute could be settled only by the making of a single award, it could. So when one gets into the area of disturbing the arbitrator's fine balance and the quid pros quo that the arbitrator has struck, and things of that kind, they are really not constitutionally significant unless the proposition is rooted in the dispute, the single dispute, rather than in the award which happens to be made in a settlement or part settlement of that dispute.

In this respect can we draw your Honours attention to section 4(3) of the Act which, in effect, authorises the Commission to deal with a part of a dispute in the same way as it would deal with a whole dispute. So we find the Commission from time to time dealing with bits of disputes or dealing with separate disputes. If you are talking about quid pros quo, you might, in a particular employment, have an award which deals only with a particular subject matter. I think in some public sector areas it was traditional for there to be a conditions award and a pay award. Now, if those two awards are made by different arbitrators but in relation to the same dispute, where is the fine balance? There might be a fine balance. The pay might be in some respects a quid pro quo or an offset against the conditions. But the prosecutors' proposition here is that it is not the dispute that cannot be interfered with but a particular award cannot be interfered with. Our answer to that is that that is not a proposition which has any constitutional significance or consequences.

Your Honours, can we turn next to the George Hudson Case and say something about what the prosecutors have said in their submissions in reply about George Hudson. Your Honours will recall that George Hudson was the case in which the transmission provisions of the Act were upheld. They are now to be found in section 149. As the learned Solicitor for the Commonwealth pointed out, it must be borne in mind, we submit, that the effect of these provisions was to make an award binding upon a person who succeeded to the business of a party bound by the original award, notwithstanding that that person was not a party to the original dispute; notwithstanding that the arbitrator never said anything about making the award binding on other persons; notwithstanding that it was no part of the settlement of the dispute that the award should be binding on anyone other than those immediately involved. But the legislation was held to be valid. My learned friends on behalf of the prosecutors here say in their reply that is all right because it maintains the settlement of the dispute, so that is wholesome. It is what the Constitution wants us to do.

But it is not what the arbitrator wanted to do. It is the legislature deciding that the settlement of that dispute should be maintained and the legislature deciding that to make the award binding on a business successor would constitute a maintenance of that settlement. Now, it may be that all of that is very sound and correct and worthwhile in every respect, but it is idle to pretend that it is the doing of the arbitrator. It is idle to pretend that it does not constitute a fundamental change in the position of the goalposts in so far as the arbitrator's outcome is concerned.

KIRBY J: Chief Justice Knox and Justice Gavan Duffy thought it did and there has always been a stream of - when you are drawing lines under a Constitution, you say that it cannot turn on such matters, but you know as well as we do that in respect of the logs of claims and other developments in this area, the Court has drawn lines.

MR JESSUP: Yes, quite right.

KIRBY J: Some of them may be criticised as artificial but they have lasted a long while and generally they have been beneficial for the development of the colony and the nation.

MR JESSUP: We do not criticise the line, your Honour, it is part of the territory which we have all inherited. But we simply say that that is part of the established jurisprudence and this case ought to be decided consistent with it and consistent with the Waterside Workers' Federation and other cases.

McHUGH J: It is one thing for the Parliament to legislate that somebody to whom a business is assigned, or who succeeds to that business, that the owner of the business being a party to the original award should be bound, but one thing the Parliament cannot do is to lay down a common law rule that other people shall be bound by the award.

MR JESSUP: Yes, it cannot, your Honour, and that is an example of his Honour's line being drawn beyond that point. But our submission is that that is the Parliament making these judgments. Well, in respect of the common rule, the Parliament did attempt to make such a law and this Court held that it would be going too far to do so. All I can say is that this case does not involve questions of that kind because what is being done here is a cutting back rather than a pushing out of the area regulated by a given award.

Now, your Honour, may we next say something very briefly about the partial repeal proposition. Enough has been said about Kartinyeri's Case. I do not want to say anything more about that, but the thrust of our submissions was not so much that it was four square a Kartinyeri situation, although we would wish to associate ourselves with submissions to that effect, but we do not believe we can assist your Honour by expanding upon them. We were more saying that analogously with a repeal that the validity of Items 50 and 51 should be assessed, as I think your Honour Justice Gaudron proposed in Kartinyeri, by reference to whether what remains is valid. Clearly what remains is a law with respect to conciliation and arbitration. It is true that the awards do not have a lot of things in them that were previously there, or do not have some things in them that were previously there, but they remain awards which were made in settlement of disputes and which are given continuing operation by the legislation.

If we can ask your Honours to turn to the reply of the prosecutors, may we tell the Court what we submit with respect to the hypothetical cases that are set out in paragraphs 46 and following. We submit that what is in paragraph 46 would be a valid law for the reasons that we have given. What is in paragraph 47 would be a valid law. And what is in paragraph 49 is beyond the scope of anything which requires to be considered in this case. But if we were pressed we would likewise say that that would be a valid law. If we had to go so far as to say that a law by which Parliament, after the event, looked at an award and said, "We do not like that award", and rescinded it, then we would say that. It is really not the Constitution which counts against that outcome, it is all of the assumptions and implications which have been rusted onto it over the years, but if they preclude such an outcome, in our respectful submission, they do not withstand examination. And the Parliament might. We have said before that the award system is after all something which the Parliament has made and something which owes its existence and efficacy to laws made by the Parliament.

To take an extreme case, you might get an award which is manifestly contrary to the national interest. Section 90 says that the Commission must take into account the public interest. But the public interest, of course, is very much in the eye of the beholder, and if the Commission were to make an award which manifestly threatened macro-economic stability, as it might do if it were to make an award having very serious flow-on consequences, then if we were pushed to it, we would say of course the Parliament can say that award is rescinded. We are just removing the lifeblood which would flow from the statutory umbilicus to that award because as a Parliament, and as a matter of policy, we do not like it. There is not anything, we submit, which would prevent that being done. As I understand it, our learned friend does accept that an award can be completely put aside, as it were.

The submissions which we have made run equally whether Items 50 and 51 are read as separate provisions in a two-stage process, or whether they are, as it were, seen as part of a system or scheme as the prosecutors contend. Although, as a matter of construction, with respect, we see no reason why they should not be regarded as other than what they say, that is, Item 50, which takes away the effect of certain award provisions, and then Item 51 which says the Commission must take them out of awards, and in doing so may make other adjustments.

May we emphasise what we have said in our written submissions in which my learned friend, Mr Kenzie, gave little, if any, reference to, and that is that in the particular case of the award with which our clients are concerned it is beyond the time fixed by the arbitrator. If we are talking about the sanctity of the arbitrated outcome, then that came to an end on 4 June 1999.

The only reason this award exists is because the legislature has deemed that it should do so under the provision which is the present day equivalent of the old section 28(2) dealt with in the Waterside Workers' Case - - -

GUMMOW J: Which paragraph are you referring to in your written submissions?

MR JESSUP: In our original submissions, your Honour?

GUMMOW J: Yes.

MR JESSUP: Yes, your Honour, I will come to that.

HAYNE J: Page 7, paragraph 21?

MR JESSUP: Yes, that is it, paragraph 21 and following, your Honour.

GUMMOW J: Thank you.

HAYNE J: I think you gave the date as 4 June 1999; in fact, the date is 4 June 1988.

MR JESSUP: It should be 1988, yes; the submission is correct as printed, your Honour. So, whatever might be said about the general proposition that the award is sacrosanct because that is the way the arbitrator ordained it, with all of the balances and all of the checks involved, that can only be said for the period specified by the arbitrator. After that, you are in the realm of legislative direction and that legislative direction, in our respectful submission, can be removed, it can be qualified, it can be withdrawn from; it cannot be expanded. The legislature, we accept, cannot push out into new territory the area covered by the arbitrator, but the legislature can withdraw.

May I say something next about the suggestion made by your Honour Justice Gaudron that a law which did not provide for outcomes having some existence in law, some legal efficacy or binding force, would not or perhaps may not be a law with respect to conciliation and arbitration, and I think I promised your Honour Justice Kirby that I would come back to this aspect. It may first be said that we do not understand our learned friends to have put their submission upon this basis, as they seem to accept that an amendment that deprived all awards, or the whole of certain awards, of legal effect, would be within power, but we do no more than make that observation in transit, as it were.

What we do submit is that, having the outcome of any industrial conciliation or arbitration, legally binding, is not an inherent element of conciliation or arbitration. At common law, collective industrial agreements - and arbitrated and conciliated outcomes are collective instruments rather than instruments between individual employees and employers, generally speaking, are not regarded as contracts between the union and the companies which entered into them. That was how, as long ago as 1968 --I cannot give your Honours the exact citation but it is (1968) 2 QB Ford Motor Company v Amalgamated Union of Engineering Workers.

HAYNE J: In a very different industrial context.

MR JESSUP: A very different industrial context, and your Honour was involved in Ryan v Textile, Clothing & Footwear Union which is a decision of the Victorian Court of Appeal which we have given a reference to in that written submission we handed up regarding the Queensland submissions on contract, so can we ask your Honours to refer to that.

Our point is simply this, that if you take away the Act altogether, then whether the agreed settlements of industrial dispute by employers and employees without any assistance from public officials have binding effect in law or not will depend entirely upon the circumstances. There is no a priori position that they will or that they will not be legally binding, and what the Engineering Case in the UK did establish is that it is not hard to envisage an industrial environment in which the parties would be quite receptive to a settlement which was simply binding either in honour or as a matter of understanding between the parties and if either of them should not abide by the agreement, then there would be serious industrial consequences - not legal ones, industrial ones. So, we are not suggesting for a moment that that is the way all agreements have to end up or that all conciliations or arbitrations have to end up that way. We simply say that inherently industrial conciliation and arbitration does not have to end up with some binding instrument of one kind or another.

HAYNE J: Would it be valid, on your submission, to repeal section 178 altogether and substitute for it a provision that said, "Henceforth to the extent to which terms of an award are embodied in a contract of employment, those terms may be enforced only as a contract by the ordinary processes of the common law and equity and not otherwise"?

MR JESSUP: Yes, your Honour, it would.

GAUDRON J: Would it possible to amend it to say "have no legal effect whatsoever"?

MR JESSUP: Well, your Honour, it would certainly be possible to delete all the provisions which gave them legal effect, but, yes, if the Act was otherwise one with respect to conciliation and arbitration, it could say that.

GAUDRON J: Well, that is the question: would it remain an act with respect to conciliation and arbitration if it said, "the outcome of the process has no legal effect whatsoever"?

MR JESSUP: Yes, your Honour, in our submission it would. May I - - -

GAUDRON J: And cannot be enforced in any court of law or equity.

MR JESSUP: Yes, most certainly.

HAYNE J: And then the third class - - -

MR JESSUP: The policy-makers might not want the lawyers to get involved at all, your Honour, and it has often been said that the most wholesome form of industrial regulation is one in which there are no lawyers and no courts.

HAYNE J: And the third class of case for consideration would be where some kinds of provision are to be dealt with as Justice Gaudron's example envisages.

MR JESSUP: Yes. Another would be that within the Act there could be a provision that says the Commissioner in making his new award, or her new award, may take account of whether the parties have breached any awards in the past and I believe that there are provisions which come close to that in relation to deregistration of organisations. So that you might very well say, "We will set up this system and we will not enforce the awards at all but we will take account of whether you have complied with the award when we make the next award and when we consider whether we should deregister you." Possibly they could have a provision as to whether someone might not have an audience before the tribunal, if the tribunal took the view that they had not abided by awards in the past. They are all different ways of skinning a cat, as it were.

Can we take your Honours to what Justice Starke said in the Waterside Workers 28 CLR 253 in a passage your Honour Justice McHugh has adverted to once or twice. His Honour makes a distinction on page 253 between the establishment of the conciliation and arbitration mechanism and the giving of force to the outcomes. He says at about point 2:

Parliament admittedly can take up the award which has been made and give it efficacy and force.

So his Honour is saying it can give it efficacy in force. We would say whether it does so or not is a matter of parliamentary choice, not a matter inherent in the notion of conciliation and arbitration as such. There is another example, your Honour, of a legitimate and useful arbitration outcome which does not result in any binding or legal instrument and that is a situation, even under the present Act, where the Commissioner decides not to change award conditions or not to do anything.

GAUDRON J: Or not to make an award.

MR JESSUP: Or not to make an award at all. Now, that that is contemplated is apparent from section 45 of the Act, which gives you an appeal against that. If your Honours would look at section 45. Subsection (1) sets out the acts of the Commission against which appeals may be taken to the Full Bench and paragraph (c):

a decision of a member of the Commission not to make an award or order;

Now, if there is an existing award in place, of course, the Commissioner's decision may be an implicit affirmation of the continuation of the existing legal order, but if you have parties coming for the first time before the tribunal in a new industry previously unregulated and there is a long case run with lots of witnesses and lots of arguments, at the end of which the Commissioner says, "Look, I am going to settle this dispute by simply doing nothing. I do not see any basis for changing the way the parties have conducted themselves in this industry and I so rule." There is no instrument and no award, nothing made under section 143 and nothing which can be enforced, and yet that would be, we submit, an arbitration.

CALLINAN J: The mere availability of arbitration may itself be a pressure valve, as it were, or the fact that people can air their grievances there itself without any binding outcome at all may be useful.

MR JESSUP: Absolutely. You might very well have the Commissioner saying, "Look, you do not want to press me on this, do you, because you might not be too happy with what I do?" So the matter is stood down and half an hour later they have said, "This matter has just gone away". Of course, in conciliation that can happen right in the middle of arbitration. Once the Commissioner has embarked on the arbitration and seen the nature of the evidence and worked out the credibility of the witnesses, as the Commissioner might say, after having had someone's managing director in the box, might say, "Well, do you really want to continue with this case?"

So that is arbitration and all the more so is it conciliation. Conciliation is the very kind of process which would not necessarily have a legally effective instrument as the outcome. Now, it is true that this is not something with which Item 50 is concerned but in answer to the theoretical proposition, can you have conciliation and arbitration if you do not have legally effective instruments, then in relation to conciliation you must have. The most successful conciliation is one in which the Commission does nothing but the parties walk away happy and so, clearly, is not, we would say, an inherent constitutional ingredient.

Finally, with respect to this, can we take your Honours back to Victoria v The Commonwealth at page 537? What I have just said is consistent with the paragraph which commences at the foot of 537 at about point 7 on the page and runs over to 538.

What the Court is saying there is that it would be quite appropriate for the legislature to withdraw from arbitration altogether. That is to say that conciliation will henceforth be the only means by which disputes are resolved. If that were so, then the emphasis upon outcomes which did not involve any legally effective instrument or edict would be all the greater. As the learned Solicitor for the Commonwealth said, that is one way of understanding exactly what has happened in this round of amendments in the Act. A lot of the things which were previously for conciliation and arbitration are now for conciliation only because, of course, section 89A is only concerned with arbitral-type processes. The Commission still has its full range of responsibilities in relation to conciliation.

Might we then conclude with some subsidiary matters, none of which will occupy much time. The first is the question of reading down section 15A, section 3 of the WROLA Act, and those sorts of things. It is no part of our submission that anything is invalid, so we do not ask your Honours to read anything down, but may we make this submission, that the consequence of the submission made by the prosecutors that section 3 of the WROLA Act must be read down, as it seems to us, would be that some words come out of Item 50(1), they being all the words after the word "effect", with the result that Item 50 would read, "At the end of the interim period, each award ceases to have effect".

We say that because, if you are going to use section 15A you necessarily make only the minimum notional changes to what has been enacted necessary to bring the law within constitutional competence.

HAYNE J: What do you do? Do that by a word count, do you, Dr Jessup? Is that what you are suggesting, rather than having regard to the substance of the changes you make?

MR JESSUP: That raises the question that my learned friend on behalf of Queensland broached, as to whether the legislature should be regarded as having put a higher emphasis upon the preservation of awards or upon the excision of non-allowable matters, and that is something which the Court will have to decide quite clearly if in other respects it is against the submissions which we advance. But Item 49 seems to give pre-eminence, we would submit, to the excision of non-allowable matters.

GAUDRON J: So if you read Item 50 that way there would no longer be any award of the Commission notwithstanding that it was only concerned with allowable matters?

MR JESSUP: That seems to be the case, your Honour, yes. Early on the first day your Honour the Chief Justice asked what would happen if Parliament later amended section 89A, for example, by taking out superannuation, and I think it was implicit in your Honour's question, how would Item 50 then operate? Our submission is that Item 50 specifies a point in time at which it operates. Its work is then complete; it will not have any further work to do, whatever happens to section 89A in the future.

Your Honour Justice Hayne also early yesterday asked in what form of the Act do we apply Item 50. Is it the Act in its terms when it was amended by the WROLA Act at the beginning of 1997 or the Act at the time when Item 50 operates? In our submission, it would be the latter, because Item 50 gives you a particular point in time at which it operates.

Finally, your Honour Justice Kirby said yesterday that if our submission that the legislature can take things out of awards is correct, then it must also be correct that the legislature can put things into awards. We do not go that far and it is not implicit in the submission we make. It is part of our submission that a withdrawal of part of what the arbitrator has done is permissible, but once you add to what the arbitrator has done, then, of course, you are providing regulation to an area which has not been regulated, which has not been the subject of arbitration and which might not have been the subject of the dispute. So we submit that there is a qualitative distinction between taking away and adding in.

McHUGH J: What about a variation of the subject matter? In other words, the arbitrator awards a rise of $20 a week and the legislature amend the award so that it is $15 a week?

MR JESSUP: Your Honour, there are instances in which that would be a law with respect to arbitration. There are instances in which it would not. That is all I can say. I cannot give your Honour a single universal response simply by reason of it being a variation. Indeed, on one view, the withdrawal of something from an award, as I think was remarked upon in one of the cases - it might have been Kartinyeri - is the repeal of a provision but the amendment of the award, the variation of the award. So in one sense, what is happening in Item 50 is a variation of the award but it is a variation by way of cutting down and, to that extent, permissible.

GAUDRON J: You would have to say, would you not, that if the Commission, for example, decided that - I do not know, do they have the equivalent of national wage cases any more?

MR JESSUP: They have what is called test cases, I think.

GAUDRON J: Safety net cases.

MR JESSUP: Safety net cases.

GAUDRON J: Yes, let us say that the Commission decided in a safety net case that the safety net wage was to be increased by $10 and that it would vary the particular awards, it was the vehicle for that case accordingly. In the ordinary course, it would vary other awards, of course, to the same effect. Now, could the Parliament legislate to say no award variation after such-and-such a date shall have any effect?

MR JESSUP: Yes.

GAUDRON J: You would have to say that, would it not?

MR JESSUP: Yes, I think Mr Kenzie would too because that would be prospective.

GAUDRON J: No, it would be retrospective.

MR JESSUP: I see, your Honour. The "such-and-such" would be some previous date, your Honour?

GAUDRON J: Yes, you would have to go so far as to say - - -

MR JESSUP: Yes, we would say that that would be acceptable and valid.

GAUDRON J: Now, how precisely do you say that is a law with respect to conciliation and arbitration for the prevention and settlement of industrial disputes?

MR JESSUP: The concern of the law, that is to say, the factum upon which the law operated is the arbitrated settlement of disputes, which arbitrated settlement is given a legal effect and consequence only by reason of the doing of the Parliament itself.

GAUDRON J: Now, let us say that the Parliament took a dislike to the personnel of the Commission or a particular person, a particular member of the Commission.

MR JESSUP: That is highly unlikely, your Honour.

GAUDRON J: Well, I am not too sure about that, but let us say it said that "No variation of an award by", we will say, "Mr Justice Boulton shall have any force or effect."

MR JESSUP: Well, that is a bit like the law which said that the Myer Emporium Limited may not issue any more shares. Would that be a law with respect to trading corporations?

GAUDRON J: It might well be, but the question is not whether this is - it is a different type of subject matter in 51(xxxv).

MR JESSUP: Yes.

GAUDRON J: Yes, so, theoretically, so long as it deals only with variations of the award, I take it, the Parliament can legislate as it wishes to say that they have no effect, and it could do it retrospectively, your Honour.

MR JESSUP: Your Honour, subject - your Honour puts to me the example about a particular member of the Commission.

GAUDRON J: Yes.

MR JESSUP: I do not know whether that introduces another dimension which would take it out of the power of section 51(xxxv), that is to say, because it requires the law to be differently characterised because of its subject matter.

GAUDRON J: Why would it? Why might it?

MR JESSUP: It might be a law about Mr Justice Boulton, your Honour.

McHUGH J: That is because you are asking what the true character of the law is and that is the question here under Item 50. What is the true character of this law? Is it, as you say in one submission, only an indirect amendment of the enforcement provisions or is it altering rights?

MR JESSUP: Well, your Honour, it is no part of our submission that it does not affect rights in the Fairfax sense. Of course it does. Of course it does, but, then every time an award is made the rights are affected and every time the Act is amended rights are affected. When section 28(2) was - well, that has been in the Act from the start, but that affects rights. With respect, your Honour, it is does not assist in providing an answer for the present question to say that Item 50 affects rights. It clearly does.

McHUGH J: Well, I think it may.

MR JESSUP: It is intended to.

McHUGH J: Well, that is the question, but the question is, can the Parliament affect these rights? These are rights that have been generated by an award. But, can I ask you this question: supposing the Parliament legislated that if the Commission should increase wages under, say, what was once the Metal Trades Award, then every other award should be amended to include that increase.

MR JESSUP: No, that could not be so because what it would be doing would be imposing upon persons who were not parties to a dispute which had been dealt with by any arbitrator at any time - - -

McHUGH J: Where they are being dealt with by other arbitrators - - -

MR JESSUP: A regime.

McHUGH J: Existing awards?

MR JESSUP: No, your Honour. We accept that the concept of arbitration in relation to an industrial dispute requires there to be a dispute, parties and the arbitrator to have dealt with that dispute and to have heard those parties in the normal way.

McHUGH J: Yes, but the hypothesis is that there are in existence many other awards of the Commission and the Parliament, has said, "Well, if you raise the wages under the Metal Trades Award, then all other awards, excepting industrial disputes, are pro tanto altered". Is that a law with respect to conciliation and arbitration?

MR JESSUP: No, it is not, your Honour.

McHUGH J: Why not?

MR JESSUP: That is on the common rule side of the line, namely, the wrong side of the line.

McHUGH J: But why not?

MR JESSUP: Well, because it is pushing out the substance of the settlement and those other disputes, not simply withdrawing what is in the basket of provisions so settled, but giving them a wider operation than they previously had.

McHUGH J: Supposing, as in New South Wales in 1931, they legislated for a 10 per cent reduction in all award wage rates. Supposing it was federal legislation reducing entitlements.

MR JESSUP: Yes, your Honour, that would be valid because it would be within the ambit of the disputes and - - -

McHUGH J: So Parliament can reduce the wages but it cannot legislate for an increase in wages.

KIRBY J: It seems a very unequal theory at the operation of the Constitution.

MR JESSUP: Your Honour, it is not a matter of even-handedness or equality, and I am responding to the particular example which is given. It may not always operate in that sense.

KIRBY J: You say there is a difference in kind between withdrawal and adding.

MR JESSUP: Yes.

KIRBY J: That is understandable.

MR JESSUP: Adding is not per se, and therefore may not be, in settlement of the dispute by arbitration but, once you have had a dispute settled by arbitration, then if the legislature withdraws the efficacy given by the Act to some of those awarded provisions, it is, we submit, your Honour, a law with respect to the arbitrated outcome.

GAUDRON J: Yes, but it has to be more than that. It has to be more than a law with respect to the arbitrated outcome. There is no difficulty whatsoever in characterising Items 50 and 51 as a law with respect to an arbitrated outcome.

MR JESSUP: The outcome is the settlement, your Honour.

GAUDRON J: There is no difficulty characterising it as a law with respect to an arbitrated settlement, but that is not what 51(xxxv) is about.

MR JESSUP: When your Honour says "what it is about", it is a law "with respect to" - - -

GAUDRON J: It is laws "with respect to" the "conciliation and arbitration", a process for the resolution "for the prevention and settlement" of disputes of a particular kind. It is about a process, essentially.

MR JESSUP: Well, your Honour, it is not, with respect, confined to that because we know from the Waterside Workers' Case that well beyond the process it is competent for the Parliament to give the outcome a life of its own or a life of the statutes and it is in that area that Items 50 and 51 operate.

McHUGH J: I have never had much trouble with the Waterside Workers' Case in so far as it would say that awards were to continue on, because the arbitrator would make a decision and it would then carry on - I am sorry, I was thinking of Hudson's Case. The problem with Hudson's Case is the legislation operated retrospectively, in effect.

MR JESSUP: It did, yes.

McHUGH J: Yes. It has always troubled me. I could understand when the arbitrator makes an award, he knows that it is going to have that effect, that is one thing, but it seems to be a different point altogether to say that legislatively you can retrospectively apply an award already made. But that is the point in your favour.

MR JESSUP: That has been the law for many years, your Honour.

McHUGH J: Yes.

MR JESSUP: There is, of course - even if it were not retrospective, the fact that the arbitrator knew that that is what would happen to the award which he or she made, it would not be any great comfort. I mean, it would still be something beyond what the arbitrator might choose to do, and it might be quite antithetical to what the arbitrator - - -

McHUGH J: Well, it goes to the point whether the arbitrator might make an award at all. The arbitrator, under the old 111 or whatever it was, the section, whatever its equivalent today, the arbitrator might just refuse to exercise, refuse to make an award.

MR JESSUP: Yes, refuse to make an award as the best of a series of undesirable outcomes as channelled and pushed by the legislation under which the arbitrator is operating, your Honour, which is - - -

McHUGH J: Yes.

MR JESSUP: I suppose I can only say that one must always come back to what the Constitution says rather than to the rusted-on series of assumptions and, if I may say so, with respect, half-truths about the effect of the Constitution.

McHUGH J: It may not be this case, but, I mean, in the 1920s and the 1930s this Court pushed the arbitration power out far beyond anything that was ever thought about back in 1900.

KIRBY J: The Constitution says nothing about logs of claim.

MR JESSUP: No, or ambit, your Honour.

KIRBY J: It was part of the greater overreach.

MR JESSUP: The Constitution does not even say anything about Dunlop Rubber, your Honour, which is - - -

CALLINAN J: Or about paper disputes.

MR JESSUP: A great disappointment to many of us.

McHUGH J: Disputes, and in a couple of the cases, three or four years ago, in one sense we cut back, some might say, the ambit of the paper disputes cases. It may be the time is when we might have to have another look at the arbitration power.

MR JESSUP: Yes, your Honour.

CALLINAN J: Particularly when we are supposed to be interested in substance and not form.

MR JESSUP: Yes, that is our submission.

GLEESON CJ: Yes, thank you, Mr Jessup.

KIRBY J: You have nothing to say on section 7A?

MR JESSUP: No, your Honour.

GLEESON CJ: Thank you, Dr Jessup. Mr Buchanan?

MR BUCHANAN: Your Honours, we rely, of course, upon our written submissions. We wish to say three things shortly about section 51(xxxv). The first is that it is important, in our submission, to see Items 50 and 51 in the context of the totality of the amendments which were made. One intention and purpose of the amending Act was to change the balance between arbitration and conciliation. Arbitration was to occur as a last resort. In the submissions for the State of Queensland there are extracted from page 8 some of the remarks of the Minister and we refer your Honours to them without going to them directly. It is a legitimate purpose within the context of using the conciliation and arbitration power to refocus the energies of the parties - - -

KIRBY J: Well, nobody really - Mr Kenzie does not dispute this in futuro.

MR BUCHANAN: No.

KIRBY J: The question is whether you can do it in a matter which has already been the subject of an award.

MR BUCHANAN: Yes. Your Honour, we just wanted to make the point that everything that was taken out by Item 50 could be accomplished by two forms of agreement under the Act within the 18-month period or later or in the special cases to which they relate by two special forms of arbitration: the arbitration that is contemplated by section 89A(7), exceptional matters orders, or an arbitration under section 170MX of the Act, which arose if the Commission terminated a bargaining period for some reason or the other. One of the features of the amending legislation was that there was provided an 18-month period and later indefinitely into the future, an opportunity for the parties themselves, or the Commission in special circumstances, to deal with, including, if necessary, by restoring the matters which Item 50 stripped of effect.

We wanted to make the submission as a result that Parliament could withdraw support for one method of dealing with industrial disputes in favour of another and the alteration which it made with the amending Act and the transitional provisions which it enacted to accompany the amendments all should properly be seen as laws or part of a law for conciliation and arbitration in the relevant sense.

The next submission we wanted to make was this, that Parliament did not by Item 50 or Item 51 fix terms or conditions of employment. It enacted no provisions of its own in that respect. It established no formula to direct the Commission as to the content of terms and conditions of employment. It merely left the legal position as to the provisions removed elsewhere and for the parties. One thing it did not do was to establish terms and conditions of employment about non-allowable matters and we wanted to take your Honours, if we may, very quickly to two of the cases that are relied upon by the prosecutors to compare the effect of Item 50 with what Justices of this Court have said are the limits upon the power of the Parliament in this respect.

Might we ask your Honours to go to the Amalgamated Engineering Union Case [1967] HCA 47; 118 CLR 219 at 242 and then I am going to come back briefly to the Waterside Workers' Case. At page 242 at about point 3 are the remarks of Chief Justice Barwick which play such an important part in the prosecutors' argument in this case, but his Honour was talking about the Parliament being:

unable itself to legislate the level of wages to be paid. Nor has it power to direct the arbitrator as to the level of wages he shall prescribe - - -

KIRBY J: But is not the Parliament doing that? Say if you have got Justice McHugh's example, and it takes out provisions relating to hours which were part of a trade-off, then it alters the compact and in effect is legislating in respect of level of wages - - -

MR BUCHANAN: No, it does not.

KIRBY J: - - - because then the just general law of the minimum wage, minimum hours would apply and the hourly rate would proportionately increase.

MR BUCHANAN: There may be some other legal prescription about hours which would operate or be activated as the legal effect was taken from the federal award. But that is not the same thing as the Parliament, itself, legislating with respect to it. What Parliament does is to - - -

KIRBY J: If we are talking about form and substance, that, in substance, is that Parliament has provided instead of say X hours, it is providing two X per hour.

MR BUCHANAN: Parliament vacates the field, or causes the award to vacate the field.

KIRBY J: No, but it vacates only part of the field.

MR BUCHANAN: That is so.

KIRBY J: It vacates the field as to the hours and leaves the wages standing for standard hours.

MR BUCHANAN: Parliament does not, any more than it previously did, legislate for the wages. Neither does it legislate for the hours. It removes the - - -

KIRBY J: It is a question of how you view this, but that seems to me then to be the consequence of what Parliament has done. It may not have done it in form. It is merely taking out the hours and it has left the wages as the wages for standard hours then.

MR BUCHANAN: Your Honour, if there is such a principle, it is not the principle to which the prosecutor refers when it refers to these cases, because these cases do not say things of that kind. His Honour here is talking about Parliament legislating a level of wages, or directing the arbitrator about the level of wages. May I go back to the Waterside Workers' Case [1920] HCA 20; 28 CLR 209, firstly, at 219 in the judgment of the Chief Justice. The reference we want to make is at about point 3 at page 218, firstly, and almost opposite at page 219, where his Honour talks about prescribing "conditions of employment by legislative enactment". It is our submission that that is not what is done in the present issue. If your Honours were to go forward to page 242 in the judgment of Justice Higgins, he uses very similar language at about point 8:

It is agreed on all sides that Parliament cannot affirmatively or directly prescribe conditions of employment by its own enactment -

At 251 in the judgment of Justice Powers, also at about point 8, his Honour talks about Parliament purporting:

to fix rates to be paid and conditions to be observed -

If one goes back then to the judgment of Justices Isaacs and Rich at page 232, their Honours talk at about point 5 about Parliament enacting:

what new and independent obligations outside the arbitrator's award shall subsist between individuals as an industrial law.

What is done by Item 50 in this case would not fall within their Honours criticism, in our submission. It would not fall within the reservations of any of the Judges in the majority and it would not fall within the reservations in this judgment.

KIRBY J: But in constitutional evaluation you have to test the proposition. You do not just look at the particular provision. You have to say if this kind of provision is extended, is that constitutionally permissible?

MR BUCHANAN: Well, that is so, your Honour, but the principle that is being appealed to in this case is that Parliament cannot directly legislate for specific terms and conditions of employment, but neither has it done so. The prosecutors need the Court to establish a new principle in this case in order to succeed. They have to persuade the Court to go further than the observations of Justices Isaacs and Rich in the Waterside Workers' Case, to go further than the observations of Chief Justice Barwick and to establish a new principle which has not hitherto been declared by the Court.

McHUGH J: What is that principle?

MR BUCHANAN: Well, it would be a principle that Parliament could not modify the settlement of an industrial dispute.

GAUDRON J: But all they have to establish is that it is not a law with respect to conciliation and arbitration, et cetera.

MR BUCHANAN: Well, your Honour, they cannot do it by referring to the cases that they rely upon, and that was the point of going directly to them and to make the comparison. The central submission that we make in this area is this: awards depend upon the statute; it is the statute which gives life to the awards and breathes legal force into them. Parliament is not obliged to sustain them, whether in whole or in part.

McHUGH J: That may be so, but the reason why the enforcement provisions are valid is because they operate so as to effectuate the directions and orders contained in the award. When the Parliament seeks to do more than withdraw that effectuation of those directions or orders but change their nature by reducing some of them, it seems to me you arguably walk into another area.

GAUDRON J: And to continue the effect of some of it; to effectuate some, but not others.

MR BUCHANAN: But, your Honours, that involves a moral - - -

HAYNE J: Which gives real point to the wages and hours example that has been debated, in this way. Let it be assumed the award provision about hours ceases to have effect. What then governs within the employment relationship? It is said that there is a provision for payment found within the employment relationship. For what hours? At the moment I cannot identify anything that would otherwise fill in that gap, and thus the example that has been discussed on a number of occasions is one which for my part I would like to see analysed a little further because I cannot see the consequences that follow from it.

MR BUCHANAN: Your Honour is postulating a scenario where there is a certain level of wages for a certain number of hours and so the connection - - -

HAYNE J: Yes, $1,000 but in return you must work 48 hours a week or 54 hours a week and the 54 hour a week element is struck down differentially by saying any provision about hours shall have no effect at law for the Act for any purpose whatever.

MR BUCHANAN: Well, your Honour, the example incorporates an assumption which makes it difficult to resist your Honour's logic. At a more general level it has been put that anything which is done in this area will affect the fine balance or modify the arbitrator's settlement. There is some allowance for that in Item 51(3) which allows the Commission to maintain, as it were, although expressed in a different way, the allowable matters which remain after Item 50 has been taken into account. But if your Honour would permit me to take an example where the connection is not made that close, assume that a level of wages was set and independently a level of hours was prescribed and hours became non-allowable, the only result would be that hours would no longer be prescribed by the award in question. They may be fixed by agreement, they may be fixed by a State award, they may be fixed by the contract of employment, they may come to be fixed by a certified agreement, an Australian Workplace Agreement - - -

KIRBY J: Are there State Acts for minimum hours or - I think - - -

MR BUCHANAN: I think technically in New South Wales there is some such provision, your Honour, but I am only using it as an example because, of course, hours is a non-allowable matter.

KIRBY J: No, of course, but this is in order to demonstrate in the most vivid possible way a point that could be made with other combinations of award provisions.

GAUDRON J: Overtime is not an allowable matter, is it, what used to be known as overtime?

MR BUCHANAN: I thought it was, your Honour. It is a rate of pay.

GAUDRON J: Well, there used to be provisions, for example, that said you were required to work reasonable overtime. Some awards went on to say how much that was per week or in a particular shift period or something of that nature.

MR BUCHANAN: Yes.

CALLINAN J: It is (k), is it not:

loadings for working overtime or for casual or shift work - - -

MR BUCHANAN: Yes, thank you, your Honour.

GAUDRON J: That is the loadings but it does not say whether you could be required to work overtime.

MR BUCHANAN: That probably comes under the prescription for ordinary time hours of work. Overtime, of course, is beyond that. You get loadings for overtime.

GAUDRON J: But you could not be required. Unless there were an award provision you could not be required to work overtime, it seems to me.

MR BUCHANAN: I must say, your Honour, I had not - - -

GAUDRON J: Unless you have a contract of - - -

MR BUCHANAN: I really had not given that the thought that might be necessary to debate it. I was taken, I think, from the questions that your Honour and Justice McHugh were asking me about the - - -

McHUGH J: I was talking about the enforceability.

MR BUCHANAN: About the enforceability. But your Honour used the word "effectuate".

McHUGH J: Yes.

MR BUCHANAN: The provisions in relation to enforceability are valid because they operate upon the arbitrator's opinion and give it the force of law.

McHUGH J: It effectuates the award. That is the way it was put by Chief Justice Knox, Justice Gavan Duffy and Justice Starke in the Journalists Case.

MR BUCHANAN: But it has never been said that Parliament is obliged to give full effect to everything the arbitrator thinks. It can limit the ambit of his award in advance.

McHUGH J: No, but what I was putting to you is that the reason why the Parliament has power to provide for these enforcement provisions is because they effectuate the arbitrator's award and it does not follow that if, upon the proper construction of Item 50, it is effecting matters or adducing matters that you can place any reliance on the reasons that justify the enactment of the enforcement provisions.

MR BUCHANAN: Your Honour, it is a limitation on the extent to which the award is effectuated. It cuts back the extent of the effectuation.

GAUDRON J: One aspect that is related to what Justice McHugh is putting to you is that the provisions giving effect to the awards are not in the heart of the power with respect to conciliation and arbitration. They are implicitly in it by reason of the doctrine of the implied incidental power that attaches to every constitutional power, that is, everything that is necessary to effectuate it. Once you come to the point, though, that you are not effectuating it, you are only effectuating part of it, are you still within the power, and that is much the same sort of notion that is involved in the theory that a test of whether or not they are incidental is proportionality or reasonably and appropriately adapted, and so on. So when you only get to dealing with part of it, are you still within the implied incidental aspect of a legislative power?

MR BUCHANAN: Your Honour, we would put it that the means and processes for enforcing awards arise directly under section 51(xxxv) and do not need to arise by implication or as incidental powers and anything that the Parliament does to limit the extent to which it has provided for enforcement of awards is supported by the same power. Parliament cannot be obliged to treat awards as though they become entrenched. Once they are made by an arbitrator, that sits under the statute which invests him with authority or because it has once made a provision that awards will be enforceable in a certain way. In our submission, it is within Parliament's discretion to impose limits upon that and that is all that it has done in Item 50.

Your Honours, if I may, there is a third matter I want to deal with briefly and then I need to come to section 7A where we appear to be a little isolated. I just wanted to draw your Honours' attention again to something that Justice Gaudron mentioned which was the technique which was used in section 89A to limit the authority of the Commission with respect to allowable and non-allowable matters. That is, by imposing a statutory constriction upon the ambit of the industrial dispute which the Constitution would otherwise recognise.

It does not do it for all purposes. As I said earlier, there are some forms of arbitration which remain open and there are some forms of agreement which remain available which can use the whole width of the industrial dispute. But for the purposes of ordinary arbitrations, the Parliament has imposed a statutory limit upon the ambit of the dispute and our submission is that Item 50 is, in substance and in effect, simply the removal of the excess. In other words, it removes the pre-condition to legal effectiveness in a different way to 89A but - - -

KIRBY J: You say so but, you see, one thing is to put a sort of a cake dish, and then the cake will be within a certain size. Another thing is to allow the cake to grow to a magnificent and beautiful cake and then to impose on it an entirely different thing, taking out a tiny corner of it here, and a bit there, and then what you are left with is not the magnificent creation of the arbitrator, wedding decorations and picnic provisions, and so on, some modest little morsel.

GLEESON CJ: It might be better for you.

MR BUCHANAN: Your Honour, in our submission, the Parliament could have said, in terms, "From a certain date in the future, the dispute which sustains awards will be deemed to be restricted to certain nominated matters, namely, the allowable matters in section 89A". In substance, that is what it has done with Item 50. It has simply removed the statutory authority for those provisions in the award. In 89A it does it prospectively, in Item 50 it does it prospectively but acting on awards that are in existence but, in our submission, constitutionally there is no distinction to be made between the two.

Your Honours, that is as much as we wanted to say in addition to what has already been said about section 51(xxxv). May I come to deal with section 7A of the Act? In our submission, the language of section 7A is tolerably clear. Before I go to it, however, might I ask your Honours to note Item 52 in Schedule 5. This is a provision that applies only to constitutional corporations and its effect is, so far as Item 50 has operated, that if there was a State award which would revive in its application, then that State award is not to revive in relation to that constitutional - - -

GAUDRON J: Well, that provision may raise other constitutional issues, may it not?

MR BUCHANAN: Well, your Honour, it is not supported by section 51(xxxv) because there is no longer an award provision.

GAUDRON J: No, no. If the laws are in conflict relevantly, then they are in conflict and section 109 operates upon it, but that looks suspiciously like a law which gives section 109 an additional operation.

MR BUCHANAN: Your Honour, it is a declaration of intention.

GAUDRON J: Well, is it?

MR BUCHANAN: That constitutional - - -

KIRBY J: It does not seem to be so expressed. It does not say it is the will of the Parliament.

MR BUCHANAN: No, I accept that, your Honour, I accept that; it provides to the effect that constitutional corporations will not be bound by those State awards unless they apply to be bound. The point we wanted to make about it, quite apart from its effectiveness, is that it obviously is based upon the constitutional power in section 51(xx). It does not rely upon section 51(xxxv) because in this area the award provision which would be given effect by a combination of section 152 of the Act and section 109 has been removed. We just wanted to draw the Court's attention to the fact that very close by Items 50 and 51, the Parliament has resorted to the constitutional power in section 51(xx).

Then may I ask your Honours to go for a moment to section 7A(5), and I will take the liberty, if I may, of assuming that your Honours are sufficiently familiar with the operation of the section; I do not need to go through all of its provisions. Subsection (5) is the definitions subsection and we wanted to refer in particular to the definition of "valid application", which:

in relation to a provision, means an application that, if it were the provision's only application, would be within the Commonwealth's legislative power.

We wanted to ask your Honours to assume that Items 50 and 51 were drafted to apply expressly with respect to constitutional corporations and only to them.

GAUDRON J: Yes, it would still be a question whether you would characterise it as a law with respect to corporations or a law with respect to arbitrated settlements and so on. You still have to get a law of that kind characterised.

MR BUCHANAN: There may be more than one character.

GAUDRON J: Yes.

MR BUCHANAN: But if it had been drafted to refer to, and only to, constitutional corporations, then, in our respectful submission, it would not be doubted that it would be within the Commonwealth's legislative power because of section 51(xx).

GAUDRON J: Because it refers to a corporation?

MR BUCHANAN: And because it acted directly upon the rights and obligations of the corporation with respect to its employees.

KIRBY J: But on their face, 50 and 51 are not so expressed.

MR BUCHANAN: No, your Honour, but we have to make this step in order to examine the application and operation of section 7A.

KIRBY J: But why should we and why should the citizen be doing a scissors and paste job when the Parliament has not bothered to do it and express in terms the application of that paragraph of the Constitution?

MR BUCHANAN: Because the Parliament, your Honour, has declared an intention through this section that it is intending to avail itself of the constitutional powers which are available to it. It is a bit like the exercise which arises in relation to privity provisions. One has a statutory limitation which appears to restrict authority, on the one hand, and on the other hand, there is a provision which validates action which might be in excess of those limits and it is necessary to reconcile the two. Generally, the - - -

GAUDRON J: Is it is a law imposing obligations, on your analysis, on corporations? If so, clearly within the corporations power, on the way you analyse it? Or is it a law dealing with the rights of employees who happen to be - - -

MR BUCHANAN: It might do both, your Honour, depending on the award provision in question.

GAUDRON J: Well, exactly, you see this can get you into a - - -

MR BUCHANAN: But it would not matter, your Honour, whether it imposed obligations or provided rights.

GAUDRON J: Well, I am not too sure about that. Undoubtedly, if it imposed obligations on corporations, on the authorities to date, it would be in there. Undoubtedly, if it sought to protect the interest of the corporations in some way, then it is within there. But if what it is doing is saying that employees of companies do not have certain rights, then I think you have to bring it within a law with respect to corporations, as distinct from their employees.

MR BUCHANAN: Your Honour, in our submission, because of the nature of awards and the obligations, rights and benefits which awards provide one way and another, the requisite connection would be there. If that is right, then that would be, if it were the only application, a valid application and section 7A declares that it is Parliament's intention that it is to have that valid application - - -

GLEESON CJ: Subject to any contrary intention.

MR BUCHANAN: Yes, I have to come to that.

GLEESON CJ: Well, does a contrary intention appear from the statement of the principal objects of the Act? Is it consistent with the principal objects of the Act to have a substantially different regime of industrial relations applying to employees of trading and financial corporations formed within the limits of the Commonwealth, on the one hand, and employees of everybody else on the other?

MR BUCHANAN: Your Honour, in our submission, the question that has to be asked is whether in the event of partial invalidity, which is the premise upon which this section operates, so that the primary intention has failed, in that event, did the Parliament intend that it should not apply to constitutional corporations if it did not otherwise apply? Our submission is that the better view, having regard to the purpose of the amendments, is that Parliament intended it should survive so far as possible rather than all fall away because there was partial invalidity.

We do not argue that one can discern from the amending Act, or from Items 50 or 51 on their face, an intention that they should just apply to constitutional corporations; the contrary is obviously the case. But, using the premise upon which section 7A depends, and if we are right in contending that it would be a valid application if limited to constitutional corporations, our submission is that to that extent it survives, and no doubt to other extents also. There may be no doubt that that would bring inconvenience with it.

We have, of course, considered for ourselves the possibility of lighthouses and other examples that arise from section 51, but in our submission, that is what Parliament intends. We do submit that 7A(2)(a) for that reason is not engaged. Section 7A(2)(b) is not engaged because it would operate in relation to constitutional corporations as it would have if it had operated in relation to everybody.

Your Honours, we did give a reference in our written submissions on this matter to some sections of the Act, which I will not go to now, that do disclose a contrary intention, that is an intention that they be limited to operate in a particular way. That is in paragraph 3 of the submission. We also gave a reference to the Native Title Act Case in connection with our contention that there is no question of an invalidity arising in relation to section 7A. There is a declaration of intention. There is no question that it is invalid.

GUMMOW J: I cannot understand that. Declarations of intention are not laws.

MR BUCHANAN: No, your Honour.

GUMMOW J: Well, what head of power supports section 7A as enacted, not as applied from time to time here there and everywhere, but as enacted? What head of power supports section 7A?

MR BUCHANAN: The Constitution as a whole, your Honour, and every provision within section 51.

GUMMOW J: You cannot say that. Every provision in section 51?

MR BUCHANAN: Yes. It is open to the Parliament to declare its intention. It has been so held by this Court on many occasions. We gave one reference and I wanted to give four more. There may be a question about the effectiveness of the declaration, but no question arises about its validity.

GUMMOW J: Parliament can pass resolutions about all sorts of things, but they are not laws. This purports to be a law.

MR BUCHANAN: It does, your Honour. It purports to be an aid to construction in the same way that section 15A of the Acts Interpretation Act - - -

GAUDRON J: Does it? It does not purport to tell a court what to do.

MR BUCHANAN: No, it is not a direction.

GAUDRON J: No.

MR BUCHANAN: But it is a declaration of intention. May we just record the additional references. In the last one, particularly, there are some things said about this. In addition to the one that we have given at paragraph 4 of the submission there is the Metal Trades Industry Association v Amalgamated Metal Workers' and Shipwrights' Union [1983] HCA 28; 152 CLR 632 at 648 to 649, Bank of New South Wales v The Commonwealth [1948] HCA 7; 76 CLR 1 at 369 - that is the Bank Nationalisation Case - Strickland v Rocla Concrete Pipes 124 CLR 468 at 492 to 493. There is a case, not on our list, but we have provided copies, Reg v Re The Credit Tribunal; Ex Parte General Motors Acceptance Corporation, Australia [1977] HCA 34; 137 CLR 545 at 552, Chief Justice Barwick and - - -

GUMMOW J: They are cases talking about section 109 and covering the field.

MR BUCHANAN: Some of them.

GUMMOW J: Yes.

MR BUCHANAN: But not all of them.

GUMMOW J: Or they are cases about severance.

MR BUCHANAN: Indeed.

GUMMOW J: Strickland is not exactly helpful to you on that sort of subject, I would have thought.

MR BUCHANAN: Well, indeed, your Honour, but they were cases about section 15A but the principle, in our submission, applies here.

GUMMOW J: What is the principle?

MR BUCHANAN: Parliament can declare its intention about the application of the legislation that it is enacting and the Court will strive to give effect to it.

GAUDRON J: So, by the way in which you read it down? So, you are saying, are you, that one would come to the conclusion - one would write a judgment which said, "Items 50 and 51 were invalid except in so far as they apply to awards to which corporations are a party"? Is that what you say we should do?

MR BUCHANAN: No, this submission only arises for consideration if the prosecutor succeeds on what it has argued so far.

GAUDRON J: Yes.

MR BUCHANAN: But in that event, and bearing in mind our - - -

GAUDRON J: You are only on the prohibition?

GAUDRON J: But you say in so far as they apply to awards to which a constitutional corporation is a party. Is that what you say the effect is?

MR BUCHANAN: It is one of the effects, your Honour.

GAUDRON J: No, tell me, relevantly, here.

MR BUCHANAN: Relevantly, here, that would be sufficient and the prosecutor would fail on the application for prerogative relief that it brings - - -

GAUDRON J: So, alternatively, to put to the other side, the provisions are valid in so far as they apply to awards to which a corporation is a party.

MR BUCHANAN: Yes.

GAUDRON J: You do not seek to have it put any other way?

MR BUCHANAN: We do not need to, your Honour, to meet the prosecutors' case.

GAUDRON J: But then, it seems to me, there is still a question, having put it that way, whether you can characterise it as a law with respect to corporations.

MR BUCHANAN: Our submission, your Honour, is that it is necessarily because it - - -

GAUDRON J: Would it similarly be right to say the awards are valid in so far as they apply to awards to which married persons are respondents?

MR BUCHANAN: That may be an operation which might arise for consideration in some cases but it does not arise for consideration in the case for prerogative relief which we are meeting.

GAUDRON J: I am not too sure. If you are asserting that they are valid laws with respect to corporations, when read in the way you have agreed, then I am not too sure that it is sufficient that they simply refer to awards to which a corporation is a party. It may well depend on looking at the precise provisions of the awards in question.

MR BUCHANAN: Section 7A evinces an intention that the provisions in question are to have at least one valid application. We have attempted to point to it - the one which would be sufficient for our purposes. They are, of course, to have every other valid application but it is not necessary for the court - - -

GAUDRON J: What I am querying is your premise. That you can decide it has a valid application without looking at the terms of the award in question.

MR BUCHANAN: Your Honour, because what is done is to deprive award provisions of their effect, award provisions being ones which are given legal force and effect by the Act and which, by their nature, involve the imposition of obligations or the.....of benefits, then, whichever way it runs, for or against a corporation, necessarily, such a law would be a law with respect to corporations in the sense in which the court has applied the constitutional description in 51(xx). Your Honours, there was just one final submission, if I may, that I was going to - - -

KIRBY J: Could I just ask if your submission is that the operation of section 7A is to sustain the validity of the award as such and thereby to sustain its operation upon non-corporation, or only to the extent that the award applies to corporations applicable to the corporations?

MR BUCHANAN: It is to sustain the validity of Items 50 and 51 and therefore the decisions and orders which are under challenge in the proceedings.

KIRBY J: Even though 50 and 51 are addressed to awards which apply without discrimination to individual employers, associations and corporations?

MR BUCHANAN: Yes, because 7A is premised upon partial invalidity and the failure of the primary purpose and on the submission which we have put that there is not evinced by 50 and 51 an intention to operate only if they operate in their entirety. That is a question that may have to be answered, of course, but our submission is that the contrary intention does not appear.

Your Honours, the final thing we wanted to say as quickly as we can was that we have tended to focus on Items 50 and 51, as have other parties, but if the correct approach is to focus on section 3 of the amending Act, then our submission is that it is clear that section 3 accesses a variety of powers under section 51 of the Constitution. Some easy examples, for example, are in Schedule 8 Item 19, Schedule 10 Item 3, which accesses a variety of powers. We have already referred to Item 52 and Schedule 5.

GUMMOW J: You do not access a power. People might do it in marketing jargon, but they do not do it here.

McHUGH J: Yes, I must say I could not bring myself to write down a note, "accesses a power", I wrote, "section 3 gives access".

MR BUCHANAN: All right, "intends to rely upon the existence of a power".

GUMMOW J: No, "relies upon".

MR BUCHANAN: Thank you, "relies upon the power in section 51".

GUMMOW J: Because it is a law with respect to it.

MR BUCHANAN: Yes, it is evident that section 3 relies upon a number of powers in section 51, including the corporations power, and section 3 is subject to section 15A of the Acts Interpretation Act. It comes under the influence of section 7A of the Workplace Relations Act and, in our respectful submission, the intention of Parliament is it should be given effect as far as constitutionally possible, and there is no reason to deny it support from section 51(xx) as to any aspect, or to render that support partial only. In other words, to be selective about it, to allow reliance on it for some purposes in the amending Act, but not for others. On that approach also, the decision and orders, in our respectful submission, were validly made. Your Honours, those are our submissions.

GLEESON CJ: Thank you. Just excuse me for a moment.

If we were to resume the hearing of this matter at 12.00 noon tomorrow, would that cause any embarrassment to any party? Very well then, we will adjourn this afternoon and we will resume the hearing of this matter at 12.00 noon tomorrow.

AT 4.32 PM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 11 NOVEMBER 1999