CFMEU & Anor, Ex parte - Re The Hon Justice Boulton &Ors and Pacific Coal & Ors S137/1998 [1999] HCATrans 478 (11 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 THURSDAY 11 NOVEMBER 1999, AT 12.01 PM

(Continued from 10/11/99)

Copyright in the High Court of Australia

GLEESON CJ: Yes, Mr Solicitor.

MR MEADOWS: May it please the Court. Our written submissions are before the Court and of course we rely on them, and we also adopt the submissions which have been made on behalf of the Commonwealth and the second and subsequent respondents to the extent that those submissions deal with section 51(xxxv). We make no submissions in relation to section 51(xx) or section 7A of the Workplace Relations Act 1996 . My learned friend Mr Buchanan touched on the relevance of the additional transitional provisions in Part 2 of Schedule 5 of the WROLA Act and we wish to develop those submissions a little further.

In our written submissions we noted that the amendments made by the WROLA Act are concerned to change the focus of the conciliation and arbitration system from one where the Commission takes a primary role in resolving the disputes of the parties to one where the parties themselves are primarily responsible for resolving their disputes. The Commission's role is to facilitate this by means of conciliation and where arbitration is to be the last resort.

Viewed in this way, the amendments can be seen as a law which provides for a system of conciliation and arbitration which is as much for the prevention of industrial disputes as it is for the settlement of them. It places the emphasis on agreement between employer and employee, either achieved with the assistance of the Commission in conciliation or by the parties themselves.

It can be justified, we would say, on the basis that if the parties can agree on the terms and conditions of employment, rather than having those terms and conditions imposed upon them by arbitration, the likelihood is that future industrial disputation will be lessened. In that way, the legislation overcomes the paradox which was identified by Justice Deane in the Wooldumpers Case [1989] HCA 10; 166 CLR 311 in a passage at page 327. This is also emphasised by section 170LO(c).

So in discerning whether section 3, to the extent that it gives effect to Items 50 and 51 of the schedule, is a law with respect to a head of constitutional power, the particular context in which Items 50 and 51 appear must be borne in mind because the operation of those two items is dependent upon the failure of the parties to an award to avail themselves of the opportunity provided in Item 49 to make variations to the award, to ensure that it deals only with allowable award matters, or to make an agreement for certification by the Commission which could deal with both allowable and non-allowable award matters or, of course, it could deal only with non-allowable award matters so that the award would continue but in a way where the non-allowable award matters would no longer be applicable.

So Items 50 and 51(1) to (3) should be seen as a default provision. It only comes into play if the parties fail to avail themselves of the processes for which the amending legislation and the existing legislation provide.

KIRBY J: That does not relieve them of the obligation to conform to the Constitution, of course.

MR MEADOWS: Let me put it this way, your Honour: it only occurs if the parties fail to avail themselves, but if the parties are dissatisfied with that outcome the processes are available whereby you can finish up either with a certified agreement or you can finish up with an award, admittedly containing only allowable award items, but an award which is one which is arbitrated and which covers - - -

KIRBY J: By the Commission.

MR MEADOWS: And by the Commission.

KIRBY J: Not by the legislature.

MR MEADOWS: No, the parties are in a situation where they can either leave it as the default provision places them in a position, or they can avail themselves of the processes provided for in the legislation. The legislation encourages them to seek an agreement and it encourages the Commission to conciliate so that they can reach an agreement but, if they cannot, then they can arbitrate. Of course, the ultimate award can compensate or make allowance for the fact that non-allowable items are no longer in the award. But, at the end of the day, you finish up either with an agreement which has been certified or an award and an agreement or you finish up with simply an award. So we would submit that the legislation should be viewed in that way.

So that in the end, contrary to what your Honour Justice Gaudron said yesterday, the non-allowable award matters are not simply left in the ether. Ultimately, under the new regime which is created you can finish up with an award which, whilst it does not contain the non-allowable award matters, contains a resolution of the differences between the parties in the form of an award dealing with allowable award matters. So we would say that the ultimate result, unless the parties are prepared to accept the default position which is created by Items 50 and 51(1) to (3), is that if the parties avail themselves of the processes, is that they finish up with an award minus non-allowable award matters and a certified agreement or, alternatively, a certified agreement which replaces all of the matters formally in the award, both allowable and non-allowable or an award dealing with allowable award matters which may contain provisions which make allowance for or compensate for the loss of non-allowable award matters. So that in the end, notwithstanding the effect of Items 50 and 51(1) to (3), the parties finish up with an outcome which is either agreed through conciliation or otherwise or an arbitrated resolution. If it please the Court.

GLEESON CJ: Thank you, Mr Solicitor. Yes, Mr Kenzie.

MR KENZIE: Thank you, your Honour. May it please the Court, the debate that has taken place has reflected the position that the starting point is and must be the characterisation of the law that is the subject of these proceedings. The character of the law is to be determined by an examination of its true effect in substance in accordance with the authorities to which the Court has already been taken. It is and has been our submission that when you look at the legislation here and its effect, it is, of course, directed to the awards which are themselves the subject of the process of conciliation and arbitration.

GLEESON CJ: I am not suggesting that this affects the ultimate outcome at all but is the law or are the laws with which we are concerned section 3 or the items we have been talking about? I only ask that question, if I may say so, because of the form of the stated case.

MR KENZIE: Yes, your Honour. I think we have been driven in debate to concede that one is taken back to section 3 and I think we have acknowledged that in the former debate.

GLEESON CJ: Have you taken account of the questions that are reserved on page 5 of the case stated book?

MR KENZIE: Your Honour, could I return to that?

GLEESON CJ: Yes, of course.

MR KENZIE: I am going to be relatively brief. Could I deal with the question raised by your Honour shortly? It has been and is our submission that the provisions that are challenged changed the awards by stripping from them certain things. When you look at the text and the reality the truth is that the items remove, for all intents and purposes, the relevant provisions and completely. I want to come immediately to a question raised during the discussion by your Honour Justice Hayne. The question - and I am paraphrasing, your Honour - raised was this, really, that if the Parliament can make by laws or create processes relating to the prevention and settlement of disputes by conciliation and arbitration why cannot it make further laws affecting the processes, and your Honour asked the further question, on one view, all that is happening here is that Parliament is saying that all of the provisions of the Act giving effect to awards only apply to certain parts of awards made by arbitrators.

May we deal with that important question in this way: firstly, of course, Parliament can make laws affecting a valid process put in place under section 51(xxxv), that is trite, but the legislative outcome of such a step affecting that process must itself be, leaving aside other heads of power for the moment, a law within section 51(xxxv). We accept, your Honour, for the purposes of this debate, that it is not an essential attribute of a system of arbitration created under section 51(xxxv), that the result of arbitration be something that is legally enforceable. That Act may validly create a situation in which the result is reflected in an order, judgment, award, that is or is not legally enforceable. It may be a recommendation or the like. The legislation may also embrace the prospect discussed by our learned friend, Dr Jessop, that, of course, the result of the exercise before the tribunal may be no award.

We accept all of that for the purposes of dealing with your Honour's proposition, but accepting that Parliament might give an award or settlement outcome any legal effect that it chooses, an essential ingredient of the process, any valid process, established under section 51(xxxv), is a settlement of the dispute, whether by way of no award, award, by the arbitrator and not directly by Parliament. It is that proposition that underlies the contention that it is not constitutional for Parliament to provide that the settlement arrived at by the arbitrator be altered by Parliament.

HAYNE J: The point that troubles me is can there be differential provision made by Parliament differentiating between the means of enforcement, a particular kind of provision, or differentiating between enforceable or no, different elements of what you have described as the arbitrated settlement.

MR KENZIE: Yes, your Honour, and, indeed, that is the next step, if I may respectfully say so. The words "differential effect" have been used in the course of debate and may we respectfully submit that the words "differential effect" underscore or underplay what has, in fact, happened here because it is not a matter of Parliament here giving a differential effect to the arbitrated outcome. This is a case where the difference is between effect and no effect. That is, non-existence, and if I can - - -

HAYNE J: I understand that point. Is it desirable for the purpose of considering the validity of that point to consider the intermediate case of differential effect or do you say that sheds no light on what you describe as the true character of what has been done here?

MR KENZIE: It is conceivable that it might assist but it could not be determinative of the debate, your Honour. If I can put it this way: what we are dealing with here, on a proper construction of the legislation, to which I will come back in a moment, is a situation in which the Parliament has effectively and, in truth, put up a blank sheet of paper over part of the settlement achieved by the arbitrator and it has done it in this way. It has removed the effect. Item 50 removes the effect of the award and your Honour says and has said, "Well, what is the effect?", but for the purposes of the debate the effect can be taken as being the effect urged in argument of simply dealing with sections like section 148 or 149 or it can be a wider effect, the effect discussed by Justice McHugh by reference to Byrne, namely, the effect of importing those matters into contracts of employment affecting rights.

But whatever the removal of the effect is in Item 50, the effect - I am getting there, your Honour - of the two items is this, that the effect of the award is taken away and what is left are the words on the page of the paper and that is taken away by Item 51. Now, this whole scheme is about removing any vestige of the arbitrator's hand on the paper to the extent decided by Parliament.

KIRBY J: Yes, but you sound as though you are pitching it at the great purist level which Sir Isaac Isaacs embraced but, in fact, this Court has upheld extensions, extension of time, extension of parties. If I recollect it, awards sometimes had a provision of parties covered and would have parties there and effectively Parliament has added. Now, why can it add but not subtract?

MR KENZIE: Your Honour, can I come to that and, indeed, George Hudson and the Waterside Workers' Case have been put against us in this respect - - -

KIRBY J: Absolutely.

MR KENZIE: - - - and I need to deal with those and I will, but I am, if I may, attending to the wider question that your Honour Justice Hayne asked and, leaving aside any debate as to the legitimacy of the steps taken in George Hudson and Waterside Workers', if you accept that what Parliament has done here by the processes in Items 50 and 51, it has been specifically designed to remove the aspects of the settlement of the arbitrator that were part and parcel of his or her resolution of the industrial dispute.

HAYNE J: That proposition seems to me to be based upon a construction of Items 50 and 51 that would mean that the non-allowable provisions are excised from the employment relationship of individuals and that, as I understand it, is one of the ways in which you put your case. If according to the way you put your case that would lead to invalidity, that may leave as a separate question whether then Items 50 and 51 to preserve validity could or should be read as confined to an effect on the Act provisions for enforcement.

MR KENZIE: Yes, your Honour.

HAYNE J: And if so confined - and I understand you say they are not, but if so confined where does your submission - - -

MR KENZIE: Your Honour, it is unaffected, in our respectful submission. It does not matter for the purposes of this submission whether you are talking about Item 50 as affecting only the effect given by the legislation, or whether you are talking about the effect in the wider sense. The result is the same because the arbitration created by the legislation is intended to be the arbitration result of the arbitrator. That is what is contemplated by 51(xxxv), and whether you are talking about rights in a wider or narrower sense here, the result of this legislation is to remove the hand of the arbitrator. That can be easily tested, regardless of the two approaches to the legislation your Honour is talking about. It can be easily tested by asking the simple question, "If you look at the prescription that exists at the end of the day, that is the prescription that the statute acknowledges, the award - - -

HAYNE J: Yes, the paper.

MR KENZIE: "How did we get here? What process took us here?", and the answer to that question is as clear as a pikestaff, we did not get here by a process of arbitration. We got here by a process that involved the arbitrator at some stage and was then overtaken by Parliament with the result that we see, and it does not matter how wide or narrow you read Item 50 for this purpose, your Honour.

GUMMOW J: If that point is good, why is it not good in, say, the Deregistration Case, like the BLF Act, you remember that? It withdrew the Federation as a party to awards.

HAYNE J: Why is it not good in the variation by extension of time? The variation by addition of parties and so on.

MR KENZIE: Your Honour, one has to deal with the approach taken in cases like Hudson to accommodate this, and I shall. The answer to that question is that taking the Waterside Workers' Case, first, the approach of the Court was to proceed on the basis that the term of the award was a thing apart - rightly or wrongly, your Honour. Rightly or wrongly. They proceeded on the basis that that was a thing apart and the debate went forward on that basis, at least as far as the majority was concerned - - -

GUMMOW J: Sorry, a thing apart from what?

MR KENZIE: I am sorry, your Honour. A thing apart from the arbitrator's decision.

GUMMOW J: That what was?

MR KENZIE: The term of the award.

McHUGH J: You mean the duration of the award?

MR KENZIE: The duration, yes, your Honour. Rightly or wrongly that was the approach that was taken. It was said by Chief Justice Knox to be part of the machinery.

KIRBY J: You say rightly or wrongly, but there were strong dissents in that case.

MR KENZIE: Yes, your Honour.

KIRBY J: That case has stood for a very long time and no one has challenged its correctness here, and therefore the Court would normally approach the matter on the basis that we would endeavour, or I would endeavour, to try to find an analogous principle that will be consistent with that reasoning.

MR KENZIE: One cannot escape the reasoning in the decision itself and you cannot read that case without forming the view that had the term "the duration of the award" been perceived by those of their Honours who upheld its validity as a part of the arbitrator's arbitration, then the result would have been different, and I have put that submission before.

The reconciliation that your Honour is looking for is that the Waterside Workers' Case is to be understood because the duration of the award - and that is why I say rightly or wrongly, your Honour - was put into another area. It stood for many years but it stood on that basis. Likewise, your Honour, the George Hudson Case - - -

KIRBY J: But can I just interrupt you. You will recall the many questions that were put to counsel about Justice McHugh's example of so much wages, so many hours. It is self-evident that the duration may be just as bound up with the award that is settled as are hours and wages, and of course this is what Justice Isaacs and the other Justice who dissented - - -

MR KENZIE: One has to reconcile the authorities and the Waterside Workers' Case has stood for many years together with a raft of cases in which this Court has otherwise said, that it is not the role of Parliament to make and prescribe industrial conditions for federally covered employees. That is a fundamental position which - - -

KIRBY J: By extending an award beyond the time that the arbitrator fixed, is not Parliament thereby doing just that?

MR KENZIE: I would not argue with your Honour, and it may be that one might say that if you follow the Justice Isaacs and Justice Rich view, that is the result you get. The logical extension of that is that you would get a different result. I am not quarrelling with your Honour; I am simply saying that the decisions of this Court have consistently adopted the view and, indeed, it is not contested around the Bar table that Parliament cannot prescribe industrial conditions, that there is the limitation or the crippled power in 51(xxxv). There is the Waterside Workers' Case and there is George Hudson but the tail cannot wag the dog, your Honour. You might have those decisions there. They might be accepted as decisions which are based on the fact that Parliament can do something with the award as a whole. It could extend its term on the basis of the reasoning in Waterside Workers'. It can provide in the present section 149 that it is binding on persons who were not immediately involved in the proceedings. A great deal was said and has been said about the validity of the legislation considered in George Hudson, including questions as to the validity of it in the sense discussed by your Honour Justice McHugh yesterday, namely, that aspect of it which may be seen as having a retrospective effect, but those cases have to be put into context, in my respectful submission.

They do not amount to a gateway into the general principle which has been enshrined in the decisions that have been long accepted by this Court dealing with section 51(xxxv). They simply do not, but this provided, in truth, the basis of our learned friend Dr Jessup's submissions. He really said there is a flaw in the contentions of the prosecutors, namely this flaw, and therefore the gateway opens, and what follows? It is suggested that Parliament can then prescribe conditions of employment for federal employees.

McHUGH J: In Kelly's Case where Whybrow was followed the Court was not prepared to take the next step from George Hudson and say, "Well, it's one thing for your successor in business to be bound by the award but the Court would not say other people in the industry are bound by the award".

MR KENZIE: That is right. That is it in a nutshell.

GAUDRON J: Would I be right in thinking, although I may be quite wrong, that both with respect to the term of the award and the question as to who is to be bound by the award, it has always been in both cases subject to any order of the Commission?

MR KENZIE: Yes, I would not be - - -

GAUDRON J: It certainly is now and I do not remember a time when it was not.

MR KENZIE: I cannot be confident in my answer. There is no doubt about the position in relation to term because there was a great deal of discussion in the Waterside Workers' Case about the words "subject to any order of the Commission" or words to that effect.

GAUDRON J: Yes.

MR KENZIE: Justices Isaacs and Rich did not think that they were material. Justice Higgins actually discussed them and said, "Well, look, there is a residual discretion and that is part and parcel that the Commission can act. And, indeed, that sort of residual discretion is something that distinguishes the legislation which we are considering here from legislation - - -

GLEESON CJ: Is that right? Does not Item 49 have a corresponding effect?

MR KENZIE: No, your Honour. Item 49 operates in respect of the period of time leading up to the end of the interim period and, as has been put against us, if you arrive at the end of the interim period and you are at 1 July 1988, then Item 50 bites and it bites regardless of whether there is any degree of industrial disagreement between the parties, regardless of what steps might or might not have been taken in relation to Item 49, and there is no residual discretion at the Item 50 stage for the Commission to say, "Oh well, it's not a good idea to remove these things at this point of time". There is not that residual discretion and it is one of the things that separates Items 50 and 51 from legislation, for example, such as that considered in the Waterside Workers' Case.

KIRBY J: Leaving aside Justice McHugh's illustration which is still troubling me, there is a difference in kind of Parliament getting in and enacting industrial conditions and Parliament picking up an award which the parties have negotiated and settled and simply saying "We will withdraw the enforcement of certain parts of it".

MR KENZIE: Indeed.

KIRBY J: Therefore, it is not, as it were, a frank offence to the principle that the Parliament cannot legislate for industrial conditions. In a sense, the machinery that is being used is the withdrawal of enforcement of part. Now, what you have to say at the bottom line, I think, is that when Parliament does that it changes the quality of that which is being enforced. It is no longer the award of the arbitrator. It is to be characterised as something different, a hybrid, partly the arbitrator, partly Parliament, but no longer the product of conciliation and arbitration.

MR KENZIE: Yes, I accept that, your Honour, subject to your Honour's reversion to the language of enforcement as a description of that which the items are concerned with. Our submission is that it understates the significance and effect of the items to say that they are simply concerned with enforcement. They are directed, like some post-revolutionary decree, to remove all sign or trace that the arbitrator was ever there. The words are gone, the effect is gone. There is nothing left, your Honour, there is nothing left in the ether at all, so you are removing completely that part of the arbitrated result, and that is true - I am repeating, but that is true regardless of what might be said as to the requirement that 51(xxxv) has as to what effect must be given.

GAUDRON J: And your argument must extend to whether the law in question operates prospectively or retrospectively, so long as it takes out one part then - - -

MR KENZIE: No, your Honour, that is - - -

GAUDRON J: No, why not? Let us assume that the Parliament were to enact prospectively, that no variation of an award implementing equal rights for men and women in respect of leave shall have any effect.

MR KENZIE: Yes.

GAUDRON J: You would accept that that was valid?

MR KENZIE: Well, it would fall into a different category.

GAUDRON J: That is to say it allows for the arbitration of disputes, but takes away at least part of the result. It seems to me to be in a different category from a law which says there can be no dispute about the equal rights of male and women employees.

MR KENZIE: I see what your Honour means; to that extent that might be right. I had had it in mind that your Honour was considering a law like section 89A, where the position is different, but, whether or not - - -

GAUDRON J: Yes, because that defines the dispute.

MR KENZIE: It defines the dispute.

GAUDRON J: But a law which allowed there to be an arbitration of those matters and then said but some parts will not have effect - the Parliament has got a right to declare which bits will have effect.

MR KENZIE: Your Honour, a law that said there can be an arbitration by the arbitrator, but before publication of the result by the arbitrator it has got to be subjected to a parliamentary committee, who can cut it in two and then it will be shown to the parties; it would be that sort of law and it would be invalid.

GAUDRON J: It would be valid.

MR KENZIE: Invalid.

GAUDRON J: Yes, that is what I thought.

GLEESON CJ: The Trade Practices Act says that certain corporations cannot agree between themselves on particular things, because it is contrary to public policy. Could Parliament say that parties to an industrial dispute cannot, as a result of a process of conciliation, agree between themselves on a certain result which Parliament says is contrary to public policy?

MR KENZIE: Yes.

GAUDRON J: It has done so, in effect, on many occasions.

MR KENZIE: Indeed.

GLEESON CJ: How can it get rid of terms contrary to public policy out of past agreements?

MR KENZIE: Your Honour, in the way that was dealt with very carefully in Victoria v The Commonwealth, which dealt with such a circumstance. Victoria v The Commonwealth dealt with the desirable end of removing from federal awards discriminatory provisions, undesirable on public policy grounds. Contrary to the submissions that our learned friend Dr Jessup put, the legislation and the regulations in that case carefully attended to the constitutional limitations which are the subject of our submission.

Parliament could, to answer your Honour's question, provide that there is a duty on the Commission to periodically re-examine federal awards, or a type of federal awards, for the purposes of determining whether they have certain characteristics. For example, whether they contain discriminatory provisions. For example, whether they are in tune with the current and changing objects of the Act.

CALLINAN J: Whether they reflect current industrial standards.

MR KENZIE: That is right, and Parliament can require the Commission to attend to that and Parliament can go further - - -

GUMMOW J: But what are the current industrial standards? They are not in the ether either.

MR KENZIE: No, indeed.

GUMMOW J: Surely the Parliament can proscribe them?

MR KENZIE: Yes, and Parliament has changed the Act. We have an 88A and we have 89A but we also have some awards that have been made under a different regime and the question is - - -

GUMMOW J: Why is it not a law with respect to conciliation to provide that, in some respects, the product of conciliation is not to be accepted?

KIRBY J: Has it been done by defining the scope of the dispute? Is that how it has been done, Constitution?

HAYNE J: Why does it have to be done that way?

GAUDRON J: It has been done by defining "dispute" but it has also been done by prospective laws saying that awards shall not contain certain provisions. There was always a section about the limits of preference and employment in the Act which did not relate to the dispute. It acknowledged there could be a dispute but defined the sort of award you could be and that was held valid.

MR KENZIE: That is right.

HAYNE J: Accepting that is the way it has always been done, why does it have to be done that way? Why is the argument not one that proceeds from this premise: Parliament has power under 51(xxxv) to establish a regime where terms and conditions of employment are fixed, are to be found in awards enforceable by provisions made under the Act, but the existence of that power neither demonstrates that all terms and conditions must be found in awards, nor does it mean, does it, that Parliament cannot withdraw from the field, the constitutional field, prescribed by 51(xxxv) and withdraw it in whole or in part?

MR KENZIE: Well, your Honour, if that be accepted, then this becomes the case which was suggested in argument as one which rewrites section 51(xxxv) because that - - -

GUMMOW J: Now, why does it - you keep saying that. I said to you two days ago a lot of these cases are upon statutes framed at a particular time on a particular view of what industrial relations structures should be in Australia and that does not necessarily exhaust the scope of 51(xxxv) which is in the Constitution and has to last as these things ebb and flow.

GAUDRON J: Is the vice, when you come to that, that people are bound by the remaining provisions? Is that not where the vice comes? They are committed to something which is not the full range of things.

HAYNE J: Well, that assumes that the whole of the terms and conditions of employment are to be found entirely within the four corners of that which is left, and that is a proposition the accuracy of which is not yet self-evidently demonstrated to me.

MR KENZIE: Well, your Honour, it - - -

GAUDRON J: I think it does not. I think it depends on the binding effect of some provisions which might not have come about in the processes.

HAYNE J: Exactly so, and the whole of the British industrial relations system until very recent times was founded in collective bargaining, enforceable through industrial means, not through the legal system, and since 1904 we in Australia have grown up in the legal or quasi-legal industrial relations scheme.

GUMMOW J: The question is, why is that mandated by 51(xxxv)?

MR KENZIE: It is mandated by section 51(xxxv) because this Court has said, without reference to particular streams of legislation in force at any particular time, that that is a limitation that is found within section 51(xxxv). This is not a proposition that has been developed for the purposes of this case. Kelly's Case is one of the cases in which the Court has said as a matter of constitutional principle and not a principle that depends upon the form of the Act from time to time, or the context as urged by the Solicitor-General for Western Australia, but a constitutional principle. I cannot answer your Honours, I think, other than by referring to the line of authority of this Court which has not been attacked. Your Honours have not been invited in this case to reconsider Kelly.

It is not the sort of case that was discussed in debate yesterday, namely, where the Court has been invited to revisit the fundamental constitutional principles. This is a case that has been decided, as acknowledge by Dr Jessup in accordance with the authorities of the Court on which we have relied. He has said, "Well, yes, although those things have been said, there are some exceptions", and he has relied on Victoria v The Commonwealth and the Waterside Workers' Federation Case. But, your Honours have not been invited either to the conclusion that those cases are no longer law, and your Honours have not been invited to the conclusion that those cases are all to be understood by reference to a legislative regime which was peculiar.

GAUDRON J: But it does, does it not, come down to this: whether you characterise the law as a law - well, not Items 50 and 51, the binding provision, is that 114 now, or something - - -?

McHUGH J: Section 148.

GAUDRON J: Section 148, yes. Whether you characterise that as modified by, as it would be modified by Items 50 and 51 if valid, as a law with respect to the effect of an arbitrated settlement or not, and if you say it is not a law with respect to the arbitrated settlement because it is only part of it, then you win, and if you say a law with respect to the effect of part of an arbitrated settlement is a law with respect to the settlement notwithstanding it has only partly failed. The consequences of it being not of the latter is that the Parliament can pick and choose prospectively and retrospectively which parts of an arbitrated settlement people will be bound by.

MR KENZIE: Yes.

GAUDRON J: And it could, for example, say "award provisions requiring employees to work reasonable overtime shall have no effect" and leave the rest of the award in place.

MR KENZIE: Well, your Honour, if we are wrong on the level that we are putting in response to Justice Gummow, then we are, indeed, wrong, and there is nothing more that I can put except that this case has been put before the Court on the basis that the principle and - - -

GUMMOW J: I do not know what the principle is yet, because it has exceptions which keep consuming it, which you have to concede because your argument on the past cases.

MR KENZIE: In our respectful submission - - -

GUMMOW J: You only have an award because of something that Parliament did which has nothing to do with the award itself. The award would be dead.

MR KENZIE: I am coming to that point, your Honour. That is contrary to our - - -

GUMMOW J: That is one exception.

MR KENZIE: Yes, your Honour.

GUMMOW J: It can bring something to life which is dead.

MR KENZIE: It can continue something.

GAUDRON J: You do not dispute that it could kill it off entirely?

MR KENZIE: Certainly not.

McHUGH J: No, and when this award was made the understanding was that it would continue after the period specified.

MR KENZIE: Yes, and your Honour - - -

GUMMOW J: But I suppose they have repealed the section that permitted for extension.

MR KENZIE: Then one would be left - - -

GUMMOW J: So it is irrelevant that this was a factor in mind at the time the award was made. It was subject to repeal, and everyone understood that.

MR KENZIE: But could I put this, that be that as it may, a law that extends, as did - - -

GUMMOW J: I am sorry to interrupt you all the time. When I say I have not got the principle yet, I have not got the principle expressed in terms of the Constitution itself, bearing in mind that we are construing a Constitution.

MR KENZIE: Your Honour, the principle - - -

GUMMOW J: It is not a clause in an award. It is not black leather law stuff. It is constitutional head of power. It is not a clause in a trust deed.

MR KENZIE: Your Honour, our submission is that in accordance with the propositions accepted in cases such as Kelly, that section 51(xxxv) authorises laws with respect to the prevention and settlement of interstate industrial disputes by conciliation and arbitration, and not by direct intervention of Parliament. That principle has been expressed by this Court and it is a principle upon which we rely.

Those cases which have been discussed in the course of this proceeding are cases which must be explained on the basis that they provide not a relevant intrusion into that principle, rightly or wrongly, your Honour. They must be understood on that basis and indeed, Hudson's Case was understood on that basis in Kelly, which has stood now for 49 years and has been one of the landmark decisions of this Court under section 51(xxxv). Your Honours, in George Hudson, in answer to the question, the section, like the section in the Waterside Workers' Case, was subject to a contrary order of the Commission. It was a case where ultimate discretion was left to the Commission.

CALLINAN J: Mr Kenzie, perhaps I should not be too concerned about the consequences, but assume you were to succeed and you do not attack 89A, would you concede then that the respondents could make an application for a new award and that the new award would then be governed by 89A?

MR KENZIE: Yes.

CALLINAN J: I thought that was your position, yes.

MR KENZIE: There is no doubt - this could have been done in a variety of ways, but that is one of them, but there is no - - -

McHUGH J: They can also apply for a variation, cannot they, of the existing award, on the ground that the award would be inconsistent with other awards?

MR KENZIE: Section 113 applies and continues to apply.

KIRBY J: What is that; that is the variation?

MR KENZIE: That is the variation power and it is discretionary, and - - -

GUMMOW J: Now, where does the variation power come out of section 51(xxxv)?

MR KENZIE: Well, your Honour, it has been explained and defended on the basis that it is valid as it is at least incidental to the prevention and settlement of disputes by arbitration.

GUMMOW J: Exactly, and we have to get to this word "incidental", I would have thought.

MR KENZIE: Yes, your Honour, and we do not flee from that. Your Honour, that is Kelly's Case [1953] HCA 96; (1953) 89 CLR 461 at 473 to 474 and, your Honour - - -

McHUGH J: The trouble with the use of "incidental", as this Court said in Hatzimanolis's Case, is it describes a result; it does not tell you how to get there.

MR KENZIE: Well, your Honour, in addition to that - and we have put this in our submissions before, your Honour - Parliament might think it is a good idea to have a common rule, but that is not available under the direct or incidental provision because it is a departure from the arbitrated step; it involves people who have not been the subject of arbitration. It is the other side of the coin to that which we are considering here. An extension of the award beyond that which was able to be arbitrated is impermissible. It is impermissible and not incidental, as has been established since Whybrow. This is likewise not defensible because it involves, though in the other direction, a departure, a cutting-off of what the arbitrator wanted instead of an adding-on and. Again, contrary to the submissions put by our learned friend Dr Jessup, there is no relevant distinction between a legislative provision that tacks on, always within the ambit of the dispute, and a legislative provision that subtracts, in our respectful submission.

Your Honour, the other aspect of your Honour Justice Gummow's question which was based upon the proposition that this award continues in existence only by the will of Parliament is this, that that law - - -

GUMMOW J: It was only made in the first place by the will of Parliament.

MR KENZIE: Yes, that is right, but it was only valid - - -

GUMMOW J: By some officers of the Commonwealth.

MR KENZIE: Yes, but, your Honour, could I put this: it is only valid on the basis that it extends the settlement achieved by the arbitrator, and it would not have been valid if the law had been "those parts of the award selected by Parliament will extend beyond the term fixed by the arbitrator".

GUMMOW J: That is the question. It is another aspect of this question.

MR KENZIE: That is our submission, your Honour. Far from being our friend's strongest case, it is an example. When you get to the stage of the section that is being tacked on by the will of Parliament because it is incidental, you are at the extremity of the power, if I can put it that way, and it has to be incidental to the settlement of the dispute. When you are looking at it at that level of removal from the dispute, it could not - at least on our submission, your Honour - be defensible if it was that part only selected by Parliament. How could that be related to section 51(xxxv), we would submit? It could not.

Your Honour, the other aspect of the variation power which was the subject of question is that it was, of course, held to be valid because it maintained or tended to maintaining the settlement of the dispute, that is, it is a provision that does operate careless of whether it maintains the settlement of the dispute. In distinction, or by way of contrast, you have Item 50 which strikes regardless of the level of agreement between the parties, regardless of whether there is any issue between them, regardless of whether they have remained blissfully happy with the terms and conditions of employment, and it says "we are now cutting the award in half".

GAUDRON J: It would strike, even if on the day before the parties went up and said, "We withdraw all claims beyond those which are embodied in the award, so that there is no longer a dispute between us".

MR KENZIE: If they stood up before the Commission and said they were as happy as they could be with their arrangement and they did not want anything to happen, it worked perfectly, Item 50 strikes and the Commission is deprived of any discretion, your Honour, any discretion in that regard.

HAYNE J: The manner of its expression by you just now, if I may say so, obscures more than it illuminates. You say the parties are happy, et cetera. What does that mean? It means, presumably, that they reached a bargain or an agreement that is reflected in terms and conditions of employment.

MR KENZIE: No, your Honour, it means - - -

GAUDRON J: It means that there is no industrial dispute.

HAYNE J: Just so, but if there is no industrial dispute, there is no industrial dispute between the organisation and the employer. Is there an industrial dispute between members and the employer? As I say, it obscures more than it illuminates to speak in generalities of that kind, Mr Kenzie.

MR KENZIE: But it operates without regard to the presence of such dispute, your Honour. If proceedings were instituted in this Court in reliance on an industrial dispute without evidence that there was a dispute, disagreement between the organisation or, perhaps, members of it and relevant employers, and the Commission proceeded to act, then it would be - and the cases are legion, amenable to prerogative relief. One can accept that there may be instances, many instances along the lines that your Honour talks about, but this section operates careless of that. It does not care whether that situation exists or not.

The section bites and the Commission is left without discretion and, your Honour, it is because the section is not concerned with such things that it is impossible to relate it to, in our respectful submission, 51(xxxv). It does not have a reference point except that it acts on awards which is the other point that is run against us. It said, "Well, it is a law under 51(xxxv) because it takes as its subject matter the award of the Commission". Now, in our respectful submission, that aspect, which was discussed yesterday, asks the wrong question. It is entirely insufficient to say that a law is a law in relation to a 51(xxxv) law because it takes as its subject an award of the Commission. That asks the question at the wrong end of the debate.

The question is, what has it done to that award? Does it do to that award something that takes it beyond 51(xxxv) and into some area that could not possibly be said to be concerned with the provision? If it does, it is invalid, in our respectful submission. It is not valid because at the point at which the section struck there was an award and the award was the subject matter of the section. So it has never been enough to say that a provision is valid because it deals with arbitration. I think I drew attention to Justice Starke's judgment in the Waterside Workers' Case which focused on part of the constitutional provision but not the whole.

GLEESON CJ: Mr Kenzie, how long do you expect to require to complete your argument?

MR KENZIE: Probably about 10 minutes, your Honour.

GLEESON CJ: All right, we will adjourn now and resume at 2 pm.

AT 12.59 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.03 PM:

GLEESON CJ: Yes, Mr Kenzie.

MR KENZIE: Thank you, your Honour. In relation to the relationship between Hudson and the Waterside Workers' Case and the principles discussed in the authorities such as Kelly's Case, could we give your Honours a reference in fact to Kelly's Case [1950] HCA 7; 81 CLR 64 which deals with both matters that were the subject of debate before the luncheon adjournment. The passages that we were referring to were the passages at point 2 at 81. If it please the Court, I know that this case was not on our list and your Honours do not have it, but at 80 point 2 there is the reference to the principle that:

the constitutional power is limited to conciliation and arbitration between disputing parties, and to make a common rule is to go outside the scope of conciliation and arbitration and to assume a function of general industrial legislation.

At page 81 is the passage that your Honour Justice McHugh identified this morning.

Following an attempt by the respondent to utilise George Hudson's Case in much the way that Dr Jessup is seeking to utilise it in this case, it was put before the Court as an authority that demonstrated that you could depart from the actual matter before the arbitrator and that attempt was rejected at page 81 point 6 where the Full Court, referring to Justice Isaacs' judgment, said that George Hudson is explained on the basis of its particular circumstances and does not provide some form of entree to undermining the fundamental principle that is identified on page 80.

They are our submissions in this matter. We do submit that unless our submission is correct, then Parliament can, in effect, under section 51(xxxv), in circumstances where a matter has been regulated by an award, as Dr Jessup contends, then say, "Well, it has been regulated by an award, at some stage, whether the award is current or not, perhaps. The award provides for A, B and C. We do not like that, so we will remove items A, B and C and substitute D, E and F".

GUMMOW J: In relation to that, can I take you back to section 89A, which you were drawn to by a question of Justice Callinan before lunch. If there was fresh or further industrial dispute, 89A would apply to it, would it not?

MR KENZIE: Yes.

GUMMOW J: In a way, are not Items 50 and 51 in anticipation in terms of practical operation of 89A?

MR KENZIE: Yes, but that does not provide the relevant - - -

GUMMOW J: And in a sense then preventative of a further dispute which would engage 89A?

MR KENZIE: Well, no, your Honour, there can be no relevant industrial dispute in relation to allowable matters that transcend 89A. All that is involved is the removal of those things leaving a situation in which an attempt has been made to make the old look like the new, but it is not, and cannot be, put forward on the basis that it is going to prevent something that is cognisable under the Act.

McHUGH J: Particularly because the hypothesis of Item 50 is that neither party has bothered to move under Item 49.

MR KENZIE: Exactly.

McHUGH J: Therefore, they are content.

MR KENZIE: And that is why we say that it is careless as to the impact on either the existing industrial dispute or the maintenance of industrial peace for the purposes of the Act.

KIRBY J: I think you overstate the respondents' case though. Their case is more subtle than you have just suggested because it is one thing for Parliament to add provisions - leave aside extending the time and adding parties, but add provisions to a full award. It is quite a different thing, it seems to me, to say, "Well, we are not going to enforce certain provisions of the award." The one would clearly be an attempt to legislative in respect of industrial conditions. The other, depending on characterisation, is either an interference and which is the product of constitutional conciliation and arbitration or a removal of enforcement of an award which was undoubtedly the product of constitutional process.

MR KENZIE: Your Honour, if one goes back to the language of enforcement and one construes the legislation that is now attacked as dealing with enforcement simply, then that follows, but that is not a correct characterisation of this legislation. It is designed to go beyond the question of enforcement and to destroy the role of the arbitrator in relation to the resolution of the dispute.

GUMMOW J: Why is it not just a mechanism for variation, the parties not being sufficiently in disagreement about it to have taken the steps under 49?

MR KENZIE: Because it is a variation. If this could be defended on that basis, then so could a variation virtually to add anything that fell within the definition of "industrial matter".

GUMMOW J: No, to take it out.

MR KENZIE: Yes. Now, your Honours, Hudson and - - -

McHUGH J: What do you say is the power of Parliament to pass legislation declaring a specific award of no force or effect at any time?

MR KENZIE: At any time?

McHUGH J: Yes.

MR KENZIE: Well, that would be defensible on the basis that it is legislation that deals holus bolus with the award, the settlement of the arbitrator, and goes just to the question of effect, and it would not fall into a different basket to legislation which we have conceded, certainly for the purposes of argument, that deprived an award of future effect, your Honour. But for the purposes of our argument, it makes no difference.

Your Honours, in both those cases, as was observed during debate, that is Hudson and the Waterside Workers' Federation, it was the whole award that was the subject of the legislation and in both cases there was provision in the statute that gave ultimate discretion to the Commission, although in the Waterside Workers' Case there was division amongst their Honours as to whether that was effective.

That is relevant when one comes to consider Victoria v The Commonwealth 187 CLR, and I will be very brief about Victoria v The Commonwealth, your Honours. That is also to be distinguished, and clearly distinguished, in our respectful submission. The passage to which I wish to take your Honours to briefly is at page 527. It is very important to recall when considering Victoria v The Commonwealth that no one was suggesting that the legislation there was invalid because it was directing the Commission as to what to do in relation to an industrial dispute. In other words, the nature of the challenge was quite distinct from the challenge that is mounted here. Western Australia claimed that section 150A was invalid because it potentially permitted a result that was outside the ambit of the dispute; that was the debate. They never contended, your Honours, that the provision failed on grounds that are discussed here, nor could they have, and the reasons include that the legislation made absolutely no attempt to dictate to the Commission.

At page 527, the provision was summarised. Section 150A required the Commission to consider whether any deficiency existed and to take steps. Those steps were steps concerned with the remedying of the deficiency by varying the award or taking such other action as it considers appropriate; those words at the end of the paragraph. In other words, the ultimate discretion was left to the Commission, so that the attack that was made here would have been impossible, had it been made, in our respectful submission, and was not made. Further, the regulations which were summarised on page 527 - if the Court would be good enough to go to the New South Wales submissions, again briefly, the regulations are annexed to those submissions, and the regulations that were summarised on the last page of the annexures to the New South Wales submissions, Regulation 26A provided in sub-regulation (4), page 13:

After hearing any party.....the Commission must, in order to remedy the deficiency:

(a) vary the award; or

(b) take such other action in relation to the award as the Commission thinks appropriate.

And then:

(5) In making a decision under subregulation (4) relating to a deficiency.....the Commission must consider:

(a) whether any provision containing the deficiency should be omitted from the award; and

(b) whether there is any provision in the award that would be more appropriately included -

and so on. So that one was a long way away from the debate that we were talking about in this case and it was never put forward on that basis. So to advance Victoria v The Commonwealth as another point of entry into the principle discussed in Kelly is to misconstrue it, in our respectful submission.

A couple of other matters, if it please the Court. Our submissions, based on the principle that what cannot be accomplished directly could not be accomplished indirectly, were assailed and, understandably, if I may say, assailed on the basis that they paid insufficient attention to the notion of whether a relevant prohibition existed. It may be arguable that a relevant prohibition is found within section 51(xxxv). But without pausing to deal with that at the moment, if our friends' attack on those submissions is successful, it does not avail them because in this case the attack on the award constituted by the arrival of the items is a direct attack in any event.

Finally, our friend Dr Jessup suggested that it might be an answer to our submissions to understand that an award might be dealt with in piecemeal fashion by an arbitrator. In our respectful submission, that does not advance the debate. If an arbitrator deals with a dispute in a piecemeal fashion, the arbitrator might decide that without waiting for another award, without waiting for an award covering Queensland to be made before dealing with New South Wales, an award is appropriate in relation to the State of New South Wales. The arbitrator will make a decision and that will be the arbitrator's decision.

It does not meet the debate to say that we concede that that award could be set aside. So it could, but it is still the arbitrator's result and it is not attended with the same aspects as you find when in a single award or determination of an arbitrator, which is a package or may be a package, Parliament cuts it in two, or three, or, depending upon the nature of the provisions, in some other slice. So, we do respectfully submit that our friend's submission does not provide an answer.

Your Honours, those are the matters that we wish to go to in relation to 51(xxxv). We have filed written submissions in relation to section 7A and those written submissions, in relation to the invalidity question, have almost - we do not wish to add to them, your Honours, for a number of reasons. Firstly, they have almost a haunting ring of familiarity now of looking at the summary of the arguments in Dingjan. They are matters which have been rehearsed before the Court before. I think again to an extent in Victoria v The Commonwealth.

In so far as contrary intention is concerned, there is the argument that was discussed when raised by your Honour the Chief Justice. In relation to the construction advanced by the Solicitor-General for the Commonwealth, that is a construction that is dealt with in our submissions, that is, the construction that suggests that section 7A does not invite the Court or ask the Court to look around and find other heads of power and reconstruct a section, a construction which might be suggested by the problems attended by an alternate construction.

If the alternate construction is appropriate, then one runs into the problems identified in our written submission. They are problems that were identified as early as Burgess and Pidoto, which we have dealt with in our submission. Of course, one does not get to those issues if there is a contrary intention or if the statute is to be approached on the basis suggested by the Commonwealth Solicitor-General. Your Honours, there were a couple of other matters that were outstanding. Firstly, your Honour Justice Kirby asked us some time ago if there was anything in the materials that demonstrated how the award had been changed in total by the items and if we could give your Honour a reference to the book which does actually throw those things up because there is an index of the total content of the award before changes and the effects made, page 17 of the book shows the award - the provisions or the nature of the provisions in the award before the changes. In fact, the whole award is there.

Page 226 shows the order of the Commission made listing all changes and page 254 is the appeal bench order where, pursuant to the appeal of the mining companies, a further provision was removed relating to customer practice from the award. In relation to the question raised by Kartinyeri and the debate that has taken place as to the effect of invalidity, if established, might we give your Honours a reference to a discussion note in the Federal Law Review, a discussion on constitutional validity and amendments to Acts by Mr Rose which your Honours might find of assistance in 10 (1979) Federal Law Review 93. There is a discussion of the issues that were addressed in Kartinyeri later and in this proceeding as well.

Your Honour the Chief Justice then asked a question about the question reserved and the impact of the debate on that. The question reserved appears at page 5 of the case stated book and as a result of what has been thrown up by the debate it would be our submission that the question would be properly attended if before the reference to Items 50 and 51(a) and (b) and after the word "invalid" appeared the words "section 3 of the Workplace Relations and Other Legislation Amendment Act to the extent that it purports to give effect to", and we would ask your Honours' leave to provide a document with that amendment in it.

KIRBY J: Would that not require further amendment to the order nisi because there are similar provisions on page 272 of the book.

MR KENZIE: It might, your Honour.

KIRBY J: Well, you can take it it is on 272, where it says that the order nisi was granted upon the grounds that Items 50 and sub-item so and so on - - -

MR KENZIE: We would seek similar leave in relation to the order nisi to reflect the debate that has taken place before the Court, your Honour.

KIRBY J: Debate suggests equality of debating. It is normally submissions.

MR KENZIE: I certainly would not suggest equality, your Honour, but - - -

GLEESON CJ: Does anybody oppose that application? Yes, you have that leave.

MR KENZIE: Thank you, your Honour. They are the matters.

GLEESON CJ: We reserve our decision in this matter. We will adjourn for a few minutes.

AT 2.22 PM THE MATTER WAS ADJOURNED