Fish & Anor v Solution 6 Holdings Ltd & Ors [2005] HCATrans 917 (9 November 2005)

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Fish & Anor v Solution 6 Holdings Ltd & Ors [2005] HCATrans 917 (9 November 2005)

Last Updated: 9 November 2005

[2005] HCATrans 917

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S206 of 2005

B e t w e e n -

NICHOLAS TERRENCE FISH

First Appellant

NISHA NOMINEES PTY LIMITED

Second Appellant

and

SOLUTION 6 HOLDINGS LIMITED

First Respondent

SOLUTION 6 PTY LIMITED

Second Respondent

NEVILLE BUCH

Third Respondent

NEIL GAMBLE

Fourth Respondent

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Fifth Respondent

Office of the Registry
Sydney No S207 of 2005

B e t w e e n -

PETER JAMES BATTERHAM

First Appellant

MAYLORD EQUITY MANAGEMENT PTY LTD

Second Appellant

and

QSR LIMITED

First Respondent

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Second Respondent

Office of the Registry
Sydney No S209 of 2005

B e t w e e n -

OLD UGC INC

First Appellant

UIH ASIA/PACIFIC COMMUNICATIONS INC

Second Appellant

AUSTAR ENTERTAINMENT PTY LIMITED

Third Appellant

CTV PTY LIMITED

Fourth Appellant

STV PTY LIMITED

Fifth Appellant

and

THE INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

First Respondent

ROBERT McRANN

Second Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 9 NOVEMBER 2005, AT 10.19 AM

(Continued from 8/11/05)

Copyright in the High Court of Australia

GLEESON CJ: Yes, Mr Kenzie.

MR KENZIE: Your Honours, before returning to Brown v Rezitis which I was addressing at the adjournment, there was one matter that arose late yesterday afternoon which dealt with the approaches that might be taken to the legislation, having regard to a number of features, including what might be perceived to be unsatisfactory and unclear drafting and, in addition, the existence of the privative clause. Your Honour Justice Gummow commented on the privative clause in that context and in the context of querying, as we understand it, the width of the interpretation that had been given to section 106 in the earlier cases.

Your Honours, all that we want to say about that very briefly is that of course we would submit that there would not be any principle of construction that would support the notion that the substantial words to be construed would be given a different meaning because of the presence of a privative clause.

GLEESON CJ: No, but it is part of the context, is it not?

MR KENZIE: It may be part of the context, your Honour, but it could not alter the meaning of the words. If I could just put this - - -

GUMMOW J: We are talking about the meaning of “meaning”, Mr Kenzie.

MR KENZIE: Your Honour, all that we wanted to say about it before passing on was that if the privative clause were amended, if it was liberalised and its meaning was – if it was made more limited in its effect, that would not affect the substantial meaning of section 106. It was expanded in 1996 when the word “purported” was added, but that likewise did not affect the meaning of section 106, and it would be strange if the result were otherwise.

GLEESON CJ: On the subject of context, what is the purpose of the probative clause?

MR KENZIE: Your Honour, we were going to come to that. It is our submission that a purposive approach is to be applied to the privative clause as well, and we have addressed this in a slightly different context, that is, the context of the change in policy of the Court of Appeal in relation to intervention in matters like this.

GLEESON CJ: The purpose of the privative clause is to keep the ordinary courts out of the industrial area, is it not?

MR KENZIE: It is to maximise the degree of protection of the decisions of the Industrial Commission from intervention.

GLEESON CJ: So the existence of the privative clause emphasises the industrial nature of the context in which section 106 appears?

MR KENZIE: It does no more than emphasise the desire to preserve that jurisdiction which is given to the Industrial Commission in Court Session, all of its jurisdiction from intervention and that is what it does.

GUMMOW J: By the Supreme Court?

MR KENZIE: By the Supreme Court.

GUMMOW J: In the sort of matter it would have been entertaining in 1900 in these contractual disputes and commercial disputes and in that sense therefore to exclude this Court under section 73?

MR KENZIE: It could not exclude this Court, your Honour, for reasons that were - - -

GUMMOW J: Why not if there is no federal jurisdiction?

MR KENZIE: The provisions of section - - -

GUMMOW J: If it cannot get to the Supreme Court, it cannot get here unless there is federal jurisdiction. That is the way section 73 is cast.

MR KENZIE: Yes, your Honour, but it would not prevent - - -

GUMMOW J: So if the State Parliaments get the traditional jurisdiction, if I can call it that, of the State Supreme Courts, take it out, put it in some other lesser body and then insulate that body that has a necessary flow-on effect.

MR KENZIE: But nothing in section 179 could prevent direct access to this Court from the Industrial Commission, and indeed, that was the - - -

GUMMOW J: No, you cannot get here from a State court unless there is federal jurisdiction if it is not the Supreme Court. This is just basic constitutional law.

MR KENZIE: I understand the point your Honour is making and I am simply putting that the case that Mr Jackson was dealing with yesterday briefly, which I think was the case of Metrocall, was an example of proceedings coming straight from the Industrial Commission to this Court although special leave - - -

GUMMOW J: That was Gosper v Sawyer.

MR KENZIE: Yes, special leave was not granted in that case and Gosper v Sawyer is another example. But the simple point we were making, your Honour, was that the meaning cannot come and go with the breadth of a privative clause and it would be strange if the result was to the contrary. Could I return to Brown v Rezitis [1970] HCA 56; (1970) 127 CLR 157 at 163. I was taking the Court to the judgment of the Chief Justice and I was going to those various matters which had led the Chief Justice to reject the contention that - - -

HAYNE J: And this is in aid of what proposition in your case?

MR KENZIE: It is in aid of the proposition that the decision given in Brown v Rezitis has been wrongly applied by Justice Handley and the majority in rejecting the contention of the appellant that the respondent company was a person, a body against which an order under section 106 could be made notwithstanding the fact that it was not in existence at the time of the actual making of the arrangement.

All that I am doing at the moment is indicating to the Court the bases on which the Chief Justice proceeded. They included the rejection of the notion that the relief was confined to parties to the arrangement because that would defeat the obvious purpose or an obvious purpose of the section. The second thing that his Honour did of course was to direct attention back to the terms of then section 88F itself. His Honour pointed out at page 165 at about point 4 that what was required was a relevant:

connexion between an order made and the contract or arrangement varied or avoided.

His Honour said that the provision was not limited to the making of orders for the payment of money paid under the arrangement itself but extended to an order for:

payment of money where the order on the larger view of the jurisdiction given by the sub-section could be considered to be appropriate to effect wholly or partially the restitution of the parties to their former position . . . the limitation of the power to order the payment of money to such orders either as are or as may be considered in the circumstances to be connected with the making, performance, variation or avoidance of the contract or arrangement sufficiently limits the power -

Now, your Honours - - -

KIRBY J: Can I interrupt your discourse to take you back to the matters with which the Court opened the argument this morning, those matters being whether one takes as a matter of context the constitutional position of section 73 in which the right of appeal to this Court is a very important right. If it be the case that by a procedure of siphoning off jurisdiction to specialised courts and tribunals the result of that is to take away rights of appeal in this Court, then I have to tell you that if that is then a contextual consideration for the reading up or the reading down of legislation which would take out of review in this Court, the ultimate Court of the nation, significant matters which hitherto have been regarded as matters that would come to this Court and be reviewed by the Court, that is a very important matter for my consideration of the issues in these appeals. My understanding is that no notice has been given under the Judiciary Act to the law officers of the Commonwealth.

MR KENZIE: Correct.

KIRBY J: As far as I am concerned, I have to tell you that is a very important matter for my consideration of the appeal. I will not say any more but you should draw inferences about it, I think. If it is a contextual consideration, it is a constitutional contextual consideration and normally that should be on notice to the law officers.

MR KENZIE: I understand, your Honour. It is of course our submission that - - -

KIRBY J: I realise your submission. You say you do not get to it.

MR KENZIE: You do not get to it.

KIRBY J: But we have gone beyond in this Court narrow literal interpretation. We are in the realm of contextual interpretation. There is text and there is context and context includes in many cases – and I am beginning to see looming up in this case – contextual considerations of the Constitution. Though I can see strong arguments for the interpretation you have urged, you cannot read the privative clause, if it bites, out of the context by which you then look back at what is said – you will remember Justice McHugh on the special leave – to be the counter-intuitive conclusion that provisions on trust deeds and commercial documents and commercial disputes are taken out of the jurisdiction of the Supreme Court by the privative clause and thereby excluded from the ultimate review of this Court.

That, if it is a point of construction, will, as far as I am concerned, be a very important point of construction and it will have a very strong counterbalancing effect against any belief that I might otherwise have on the construction of the statute left on its own. You cannot leave things on their own; you have to read them in context. In Australia that always means the constitutional context.

MR KENZIE: Yes, your Honour. Could we perhaps take that on notice. One thing that obviously emerges is that the relationship between section 179 and section 69 is not a matter that is confined to the Batterham Case.

KIRBY J: I realise that, but one can see arguments and they indeed go back before 1900. They certainly go back to 1900, whereby purely industrial matters, if I can use that expression loosely, have been regarded as appropriate for historical and cultural and other reasons to be left to the industrial tribunals. But once you start getting the industrial tribunals, perhaps because of the change in the context of what is an industrial matter, getting into the final determination of matters which will involve the law of trusts, the law of corporations and other branches of the law that cannot then as of right come before this Court for an application for special leave, then you begin to take out your magnifying glass.

MR KENZIE: I understand the argument about context, your Honour. I cannot take it further than the submission. The question of whether section 78B notices should be served was a matter certainly addressed and considered by the parties in the proceedings.

KIRBY J: Well, just give it some thought.

MR KENZIE: Thank you, your Honour.

KIRBY J: Maybe you can say something or somebody can say something before the end of the day.

MR KENZIE: Certainly, your Honour. Your Honours, could I just direct the Court’s attention to what his Honour Justice Menzies said in the matter. Your Honours will see that at page 169, where his Honour, in the second paragraph of his Honour’s judgment, although he came to a different result on some of the orders, said:

The section is clearly intended to confer a comprehensive power upon the Commission to go to the substance of an arrangement made for a person to perform work in an industry – and to do so in disregard of the legal dress in which the arrangement has been clothed – in order to put such a worker in no worse a position than if he had been working under a contract of employment protected by award conditions.

Now, what has happened in this case, your Honours, is that Justice Handley has responded to the submissions made by the respondent in paragraph 66 of the decision at page 327 of the Court book. His Honour has done it in this way. His Honour has referred to the position before incorporation and has stated – and there is obviously no issue about this – that:

the claimant was not a person “who . . . in reality [was] the actor deriving benefit from the making –

his Honour has left out the words “relating to execution” but I pass over that –

of the contract or arrangement” in the words of Barwick CJ . . . It was not in any sense “an actor” during this period.

So much may be accepted. Then his Honour goes on:

Following its incorporation the claimant accepted the benefit of the work done by its promoters prior to incorporation –

so his Honour had no difficulty in accepting that –

but any contract or arrangement to this effect was not one whereby a person performed the pre-incorporation work. In my judgment therefore the Commission lacked jurisdiction in proceedings against the claimant over any contract or arrangement which pre-dated its incorporation.

HAYNE J: Now, this discussion in paragraph 66 takes place against the recorded concession in paragraph 62. Paragraph 62 your predecessor is recorded as acknowledging that the option deed is not itself a contract or arrangement whereby a person performed work.

MR KENZIE: Yes, was not in itself one of those. It was part of a submission to the effect that looked at in itself it was not an arrangement or contract which would have satisfied the section, but the appellants were maintaining the argument that the deed was part of an overall arrangement which was an arrangement which was made pre-incorporation, which was overarching, it involved all of the activities of the appellant - - -

HAYNE J: “Involved” simply slides, Mr Kenzie. It is a weasel word that tells me nothing. At some point I would be grateful if you would articulate with particular care what is said to be the arrangement in issue – not what was done under the arrangement, but what is the arrangement.

MR KENZIE: Your Honour, we have attempted to do that insofar as we can in paragraph 4.2.

HAYNE J: That tells me a lot about what was done under it.

MR KENZIE: It tells your Honour more than that, it tells your Honour that what was contemplated was that there was an arrangement whereby an activity would take place to put in place heads of agreement, to take administrative steps to create a company to operate the 41 restaurant establishments and the arrangement necessarily involved activity in relation to all of those matters. That activity included all of the steps involved in setting up the structure and - - -

HAYNE J: Is that any more than a proposition that the promoters, namely Mr Batterham, Mr Gillard and Mr Veale agreed to promote a venture and for that purpose make the necessary financial and commercial arrangements?

MR KENZIE: It certainly included those matters and if one adds the seeking of and receiving of advice and the acting on advice, and the setting up of the company then, your Honour, that characterises it but it is work within the meaning of the definition and it was an arrangement for that work to be done. Your Honour, could I say this, without wanting to flee from the question, the Court of Appeal did not doubt that the arrangement that was being relied on here was an arrangement which answered the statutory description. There is no finding of the Court of Appeal that there was not a pre-incorporation arrangement.

GUMMOW J: Yes, but I know. Is there an identification of it, though, in the Court of Appeal judgment?

MR KENZIE: There is a reference to it in paragraph 65 which shows that the court was identifying a contract or arrangement being made with his fellow promoters obviously in relation to the promotion work that has been described in the summons. So further than that it was not defined because it never appeared to be an issue that there was not something in existence that would answer in that way and at that time the statutory description, that is, the description of arrangement.

HAYNE J: Do you accept what Justice Handley says at line 50 on page 326 in paragraph 62, namely:

The performance targets were impersonal, and not linked to work to be done by Mr Batterham. The options could have been exercised although Mr Batterham died later on the day the Deed was executed.

MR KENZIE: I accept all that, your Honour, yes.

HAYNE J: Does it not follow from that that the options that were granted were a benefit provided to Mr Batterham, speaking loosely, in consideration of what he did in connection with promotion?

MR KENZIE: Yes.

HAYNE J: But otherwise had no connection with what was to happen in his performance of office as a director or otherwise in connection with anything done by him with QSR?

MR KENZIE: Well, your Honour, that, with respect, is one of the many questions that could not be sensibly addressed on the proceedings as they existed at the time that the matter went to the Court of Appeal. That is illustrative of the problem of intervention at this stage because necessarily questions like that are left unanswered. There is no doubt a live issue in relation to that, but in the real world, your Honour, the deed which was asserted to be remuneration was asserted by Mr Batterham to be remuneration for what he had done in the arrangement without differentiation between promotion work or post-incorporation work.

From Mr Batterham’s perspective, the incorporation of the company was but an incident of the arrangement. It was a step along the way towards remuneration and reliance was placed on matters careless of whether they were pre or post-incorporation. It was the respondent that sought to refer to the fact of incorporation during this series of events and to then seek to have the court to apply, ultimately, in a retrospective way, on the basis of an interpretation of “whereby”, your Honour, the principle that it could not reach back and get pre-incorporation work.

So, your Honour, those are matters which remain to be addressed and the proper way forward was appreciated by Justice Peterson and what Justice Peterson said was, “Look, I can see that you have asserted an arrangement”. That is a fairly vague sort of thing - - -

GUMMOW J: I know, that is right. Now, what does this word “arrangement” mean? Does it require legal force?

MR KENZIE: Your Honour, the Court of Appeal specifically addressed that issue and rejected the notion that there needed to be an element of enforceability about - - -

GUMMOW J: How do you declare something that has no legal force void?

MR KENZIE: Your Honour, there may be aspects of an arrangement that involve legal steps. There do not have to be enforceable aspects to give rise to an arrangement. But an arrangement may be one - - -

GUMMOW J: How can there be any relevant remedy in its respect and it is the invocation of the remedy which is the essence of the statutory cause of action?

MR KENZIE: If the arrangement contained aspects, as we say it did in this case - - -

GUMMOW J: Suppose it did not? You do not answer the question by assuming something else. Assume it did not, and you seem to say it does not have to?

MR KENZIE: You may not be able to declare it void. You may be confined to the notion of variation.

GUMMOW J: How do you vary it?

MR KENZIE: Your Honour, you declare the rights of the parties on the basis that the arrangement is as described by the Commission.

GLEESON CJ: You mean you introduce legal rights into a situation where they did not previously exist?

MR KENZIE: Your Honour, there is no doubt that as soon as you take steps like that, you are taking the step of creating rights. Indeed, I think in a case that your Honour Justice Kirby may recall, the HREA Case in the 1980s, the question of the nature of section 88F was addressed and was described as having a legislative non-judicial aspect. There is no doubt that if you are in the arena of variation, you are in the potential arena of creating rights. There is no dispute about that, your Honour. Could you declare void an arrangement? I am not aware of any attempt to wrestle with that problem, but the fact that - - -

GUMMOW J: It would be a novel sort of declaration. It would not be a declaration of right, would it? It would be a legislative act.

MR KENZIE: That may be why you would not be able to do that, but if you came to an arrangement which had within it legal components, then you would be able to act in the usual way. In paragraph 66 of the judgment, what Justice Handley was doing was erecting a step which, because it was erected, necessarily excused the respondent from any potential liability under section 106. That step was at the stage where his Honour said that following its incorporation, he accepted that it took the benefit of the work but said that:

any contract or arrangement to this effect was not one whereby a person performed the pre-incorporation work.

In other words, he introduced the requirement that you needed to be able to identify a section 106 contract at that stage of proceedings before you could actually get a 106 order against a respondent and therefore you could not get an order against a respondent like the company because it had not been there.

That was an impermissible addition to the requirements on any view. Your Honours will have already noticed that paragraph 66 of course has not involved his Honour Justice Handley in any analysis of the words of section 106 which were dealt with by Chief Justice Barwick, namely the question of whether the order that was being sought was an order in connection with the arrangement or its execution or avoidance. That is the question; that is the statutory question. It is not answered by saying that, although you can uncover the real transaction, you cannot get at a respondent unless you can say that that respondent is itself party to a 106 contract. That would be an invitation to subterfuge. That would mean that if there was a restructure and a company was created to take the benefit of an arrangement instead of the party to the arrangement during the arrangement, then any attempt to get restitution would be in vain.

Now, your Honours, it took about five minutes for this to be appreciated. All of this emerged shortly thereafter in the subsequent case in the Court of Appeal of Unitedglobalcom [2005] NSWCA 131. Could I ask your Honours to turn to that decision. This case involved a restructure in relation to an arrangement and an assertion on behalf of the respondent company that because the respondent had not been in existence until after the event, that is after the work had all been done, there could not be any exposure under section 106. Your Honours, could I just direct the Court’s attention to paragraph 14, where there was a submission made that the company:

was not formed until about three years after Mr Hagans ceased working for any of the respondents, and Austar was not incorporated until about 18 months after Mr Hagans ceased working for any of the respondents. Accordingly, he submitted, they could not have any connection with the contracts or arrangements –

This is the judgment of Justice Hodgson that at this point deals with the matter by an analysis of Brown v Rezitis, which commences in paragraph 19 and leads to the decision at paragraph 24 and following. His Honour said:

if an applicant obtains an order under s 106 against a respondent for whom the applicant worked in an industry, and it is shown that the assets of that respondent have since passed, by reason of some corporate reorganisation within a group of companies, to another company in that group, there may be jurisdiction under s 106(2) to make an order against the entity to which those assets have passed. If it be the case that the assets that have so passed have been augmented by the work done by the applicant, and if it be the case that the re-structuring has left the original entity for which work was done without sufficient funds to make an appropriate payment, it may be that such a payment is properly regarded as a payment of money in connection with a contract –

and that is supported by what Chief Justice Barwick says in Brown. Then his Honour says two lines further down:

It is also consistent with the reference in his judgment to subterfuges: the re-structuring of a group of companies so as to transfer the business of one company in the group to another company in the group may not be undertaken as a subterfuge to defeat an applicant, but it could possibly have that effect, and in my opinion it may not be beyond the power of the IRC to make orders under s 106(5) to avoid that effect.

In the present case, it is alleged that New UGC is the formal successor to Old UGC, that New UGC assumed rights and benefits in respect of the share option plans . . . Particularly in circumstances where it appears that this may have been consequent on re-structuring . . . these allegations could possibly support an order –

Then, your Honours, significantly at paragraph 28 the court had been taken to QSR because of course the significance of QSR to restructuring was immediately apparent. His Honour dealt with QSR by saying in line 4:

However, it is to be noted that the claim in that case was only against the company, and not against any person with whom the applicant made a contract or arrangement prior to its formation.

Can I just pause there and pick up the matter that Justice Gummow identified yesterday, that is that the statutory provision, whilst they make provision now as to who is to commence proceedings – they did not always, they do now – they are of course silent in relation to the parties against whom proceedings are to be brought. The distinction that the Court of Appeal was making in this case at this point to distinguish QSR was on this basis, that Mr Batterham had not joined his co-promoters but had only sued the company, whereas in this case apparently there had been the other parties to the arrangement that had been joined as well as the company, which did not exist at the time.

Now that, with respect, is a distinction without a difference. There is no reason, no one has ever questioned that there was anything deficient in the claim that Mr Batterham instituted against QSR because other parties to the arrangement were not joined. That would be to erect requirements which are not there and, of course, would fly in the face of provisions like section 106(2) which expressly now provides that:

The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason.

In a contract or arrangement under section 106 the applicant may assert that the other parties to the arrangement have behaved unfairly, they were there at all times. The applicant may assert that conduct has taken place at some point of time during the contract or arrangement that gives rise to the unfairness, and that conduct may have nothing to do with some of the parties to the arrangement. You just may not sue them at all, you may not want to. They may be dead, they may not be able to be found - - -

GLEESON CJ: Would section 106 enable the Commission to vary a partnership agreement between solicitors?

MR KENZIE: It might have originally, but this is one of those areas that the Parliament has attended to in recent times and, your Honours, although it is not picked up in some of the earlier prints, in Print No 4 which is the later print that we have given to the Court you will see that amendments made in 2002, in particular the addition of section 108A operated to limit the jurisdiction of the Commission in certain respects. Section 108A(b) was a limitation that it had the effect of limiting or putting a cap of $200,000 on a contract which could provide the subject of a claim, and I pass over that, and then your Honours will see 2(a):

An application cannot be made for an order under this Division by a person who is a partner carrying on a business if:

(a) the application relates to a contract between that partner and the other persons carrying on that business in partnership –

so this is one of those areas where the Parliament has actually looked at the breadth of section 106 and refined it.

GUMMOW J: The answer to the Chief Justice’s question surely is, yes, at the time this legislation stands for consideration now in this appeal?

MR KENZIE: Subject to 108A.

GUMMOW J: No, it is not subject to 108A. That is later, is it not? These are later amendments? We are not construing the statute as it stands today, are we?

MR KENZIE: No, your Honour, I am sorry, I had rather taken the Chief Justice’s question to be a question about the scope of the jurisdiction. I accept what your Honour says, of course.

GUMMOW J: The answer is yes.

MR KENZIE: Now, your Honours, could I just finally in relation to this case go to what Justice Hodgson said in 28. At about five lines down into the paragraph he said:

In my opinion, if the applicant had alleged performance of work in an industry pursuant to a contract or arrangement made with some other person prior to the formation of the respondent company, claimed that the IRC should declare void or vary that contract or arrangement, and alleged that the company when formed took the benefit of assets created or improved by the work done prior to its formation, the result could have been different. If the company had thus taken advantage of work performed pursuant to a contract found to be unfair, an order for the payment of money by that company could possibly be in connection with that contract, so as to support an order under s 106(5).

Now, your Honours, that was our case in QSR as properly understood and your Honours will have noted that Justice Handley on the first page of that judgment agreed with that judgment.

KIRBY J: What was the time sequence between that decision and this decision? That decision is 4 May 2005.

MR KENZIE: The other one was July 2004.

KIRBY J: And is this case cited in that case, or not?

MR KENZIE: Your Honour, QSR is cited and, indeed, referred to in the judgment.

GLEESON CJ: Referred to on page 213, paragraph 28.

KIRBY J: What is the point of distinction then that Justice Hodgson is drawing?

MR KENZIE: There is no distinction, your Honour. The point of distinction he is drawing is that the other parties to the arrangement were not joined in the proceedings by Mr Batterham. That is the distinction and that does not matter. Your Honour it also goes to show that if Justice Handley - and we will go on to deal with this in a moment – had dealt with the case that was actually put in front of the Court of Appeal in Batterham then this would have been the result and should have been the result which takes me to the second aspect and that is what his Honour did with our submission, the alternate submission, that in any event the company became party to or part of the arrangement upon its incorporation.

Now that is a matter that is referred to by Justice Handley in paragraph 65. He addresses the issue in that paragraph. He makes some observations but at no point of time, subject to correction, does Justice Handley find that it was impossible for the respondents to have become party to the arrangement. What his Honour did instead is this, that in paragraph 72 he identifies the submissions of Mr Rothman, which are submissions which describe the arrangement in terms that reflect the way in which the matter was put before the court and this Court, which make it very clear that what Mr Rothman was referring to was an arrangement which was a pre-contractual arrangement because it:

involved and required the performance of work in an industry . . .

Part of the arrangements was the formation of QSR as the vehicle to obtain the benefit of the acquisition and QSR, it is alleged, became party to the arrangement on its formation.”

Now, the way in which his Honour dealt with this submission is revealed in paragraph 74 over the page at page 330 and he said this:

Although the summons in the Commission seems to rely on a contract or arrangement for the performance of work which pre-dated the formation of the company, Mr Rothman did not attempt to support a case of that width. Instead he relied on a contract or arrangement which came into existence after incorporation under which the company took the benefit of the pre-incorporation work.

That was an error. It was a manifest error. We were seeking - - -

HEYDON J: To work out whether it is an error we would have to look at the oral argument, presumably.

MR KENZIE: Yes, your Honour, paragraph 72 is the written submission and you would have to look at the transcript. It has not been suggested in this proceeding that there was anything in the transcript that altered the case that was being put persistently and consistently to the Court of Appeal.

HEYDON J: Which paragraph in your written submissions makes the point you have just made? Do not bother taking time on it. Perhaps the answer could be found later.

MR KENZIE: Could I give your Honour a reference to it. We have identified two errors. In our written submission we have made the point in paragraph 5.15 under the heading “the order was based on a fundamental misunderstanding of the Appellant’s case” and the errors in paragraph 74 are identified at (a) and (b) and in paragraph 5.19 where we say that ultimately, because of the erroneous approach in paragraph 74 the majority has completely ruled out the prospect of the appellants being able to establish, through evidence, the existence of an arrangement which included the incorporation of the first respondent and which continued, et cetera.

HEYDON J: Thank you.

MR KENZIE: The third side of this, your Honour, is you will not find in the judgment his Honour saying, look, there is no way a company could have become a party to a pre-incorporation arrangement. That would have required analysis. It is not a proposition that is self-justifying. Why cannot the company become party to an arrangement? Why could there not be an alteration of the arrangement as there could be a contract whereby someone became a party to it?

HAYNE J: What then is the answer you make to the last sentence of paragraph 75?

MR KENZIE: Your Honour, the last part of paragraph 75 is – and your Honour is referring to his Honour’s treatment of the word “whereby”, that it actually relates back. The answer that we give is that if you are looking at a post-incorporation contract or arrangement only, then that proposition comes into play and you then say, well, if the arrangement was made on July 1 and all the work had been done by then, it was past consideration, in effect, “whereby” comes into play and you say what Justice Handley said in paragraph 75, assuming that is the right construction of “whereby”, which I do for present purposes.

But if you accept the appellant’s contention that there was a pre-incorporation arrangement, the retrospective notion of “whereby” does not come into play, because our contention was, we made an arrangement on day one, that arrangement involved the notion that there would be an amount of activity performed thereafter, incorporation was an incident and the activity continued. So the question of whether “whereby” looks backward has no work to play, but that is the vice in the decision. His Honour has erected the incorporation as the be all and end all, applied the principle, misunderstood our case about its extent, reasoned backward and said, well, it is not a contract whereby work was performed in industry, go home.

Something went very badly wrong at that stage. Of course, those things underpinned the only order that was made because the limited intervention was based on that reason. The majority said the matter can go forward but it cannot go forward unless it is a based on a post-incorporation arrangement. That was a fundamental error, in our respectful submission.

Your Honours, we make some submissions about what I have described as the tail of the order, and that is the assertion that the arrangement could not have gone on beyond the deed, so 2 November 1999 signalled the end of the arrangement, and we again submit that there is no reason why that is so either. Our contention was the arrangement continued until 2002 and the notion that it artificially ended in relation to options because a deed was entered into as part of that arrangement introduces an element of artificiality at a point of time in the proceeding where it is just totally inappropriate.

How would you know in truth what relationship the deed played to the overarching arrangement and the parties’ intentions as to what would happen in a developing arrangement over a considerable period of time? You would not know, and it just made it a completely inappropriate vehicle for intervention at this stage, something which was apparent to Justice Peterson.

Your Honours, could I briefly refer to the other matters in our contentions. We have made submissions which reflect submissions that Mr Jackson has made in relation to what have been described as the errors of principle in relation to intervention in circumstances where there has been no error identified, there is no anticipation of any error in our case, none identified, and further in our case where a member of the Industrial Commission has considered the very argument and has delivered a decision of the Commission indicating that the best thing to do is to go forward, hear the case, so that matters, including the matter that Justice Hayne raised in argument, can be properly analysed and addressed. That is not what happened and it was inappropriate, in our respectful submission.

Your Honours, could I just give the Court a reference in relation to paragraph 5.12 of our written submissions to the decision of the Court of Appeal in a case called Alliance Motor Auctions [2005] NSWCA 355, paragraphs 22 and 23. I was not going to invite your Honours to open it, but if I can just tell your Honours because of the time, that involved the Court of Appeal discussing the appropriateness of the Court of Appeal picking up a composite claim under section 106, and I think the expression was “parsing it”; in other words, sifting through a complex claim and picking out bits that might or might not be within jurisdiction in advance so that it could lay the ground rules whereby a superior court of record could then go about its business. That was recognised in Alliance as not an appropriate thing to do. It is the complete opposite of what happened here. Of course, the Chief Justice’s approach reflects the approach in Alliance Motor. The approach of Justice Handley, which was to focus on a particular issue that had been identified and then make a series of rules of play that would apply thereafter, was an inappropriate approach, in our respectful submission.

Your Honours, we have, thirdly, our submissions in relation to the actual application of section 179, that is that one difference between Solution 6 and our case is that in our case, as was recognised by the majority, there was a decision for the purposes of section 179. Your Honours, this is a matter that is dealt with – and I propose to be brief – in paragraphs 4.6 through to 4.12 insofar as Justice Peterson’s decision is concerned. In 4.10 we refer to the fact that Justice Peterson, amongst other things, in circumstances where jurisdictional challenges were squarely mounted, said that:

there is sufficient evidence to conclude on an interlocutory basis that work was performed by Mr Batterham in an industry and was a necessary and essential part of the arrangement. The work does not appear to have been an “accidental incident or consequence” of the transaction . . . A feature supporting this conclusion is the receipt of payment or reward –

Of course that involved taking our case at that stage at its highest. So he then dismissed the summons. What happened thereafter was that counsel for the respondent, in its proceedings before the Court of Appeal, submitted that Justice Peterson had fallen into error. Those submissions were made and the circumstances in which they were made we have addressed in paragraph 3.5 of our submission in reply, where we point out that the respondent’s position, which now appears to be adopted in its submissions, is contrary to the propositions advanced by the respondent to the Court of Appeal, namely that Justice Peterson had:

erred in finding that it was inappropriate for him to determine the jurisdictional question conclusively prior to a full hearing of the application “on the merits”.

It is submitted that the lack of jurisdiction was clear and a proper application of the Hickman principle meant that section 179 did not prevent the Court of Appeal from calling the Commission’s decision into question.

What followed, your Honours, was the court’s decision at paragraph 85 where the court accepted on page 332 that there was a decision unlike Solution 6. It was pointed out that Justice Peterson had not actually decided positively about jurisdiction. Then in paragraph 87 there are a series of reasons why the Court of Appeal did not consider that although Justice Peterson had made a decision, the operative effect of which was that the proceedings as a whole would go forward, it was not calling his decision into question to say “Not this part”, and their Honours gave a number of reasons for that. They are found in paragraph 87. It was suggested that the decision was interlocutory and therefore:

does not pre-judge the final decision or create any res judicata or issue estoppel. A final decision in the Commission that it lacked jurisdiction in whole or in part would not call in question the interlocutory decision . . . The fact that this Court, after fuller argument, might conclude that the Commission’s jurisdiction does not extend to any contract or arrangement which pre-dated the incorporation of the claimant would not call into question the interlocutory decision of Peterson J.

Now, we have made a number of submissions in our written submissions in which challenge those propositions. We say that saying that the Court of Appeal is in no different position to the Industrial Commission just does not meet the point. The privative clause is addressed to other courts. Plainly the section provides for appeals from decisions, including the decision of Justice Peterson to a Full Bench of the Commission, either at the time of the dismissal of the summons or at the conclusion of the whole hearing when all the evidence is in, but it just deflects the argument to say that we are in really no different position to the Full Bench. Of course, the Court of Appeal was in a different position to the Full Bench all ends up. It does not help to deflect the argument to say that there has been fuller argument. It is still calling the decision into question. It does not help to say simply that it was interlocutory because they are still calling the decision into question.

Could I just give your Honours a reference to what Chief Justice Spigelman said about what constitutes a decision for the purposes of 179. Your Honours will find that in paragraphs 119 to 123 in Solution 6 at pages 587 to 588 of the decision where his decision embraced the prospect that there was nothing that excluded an interlocutory decision from the category of decisions. It was a matter of looking at the substance.

I should make reference, finally, to section 179(3). There may be an element of circulatory in section 179(3), which says that:

To avoid doubt, this section extends to any decision or purported decision of the Commission, including an award or order of the Commission.

I am the first to accept that that does not answer all questions, but it does not sit happily with the notion that you can exclude some decisions because they happen to be interlocutory. There is a discernible parliamentary intent at that point of time to preserve decisions, and why would not they include decisions along the way? Of course, the contrary result would lead you to the conclusion that you are not to get at the final decision but you can get at procedural decisions along the way, not an attractive proposition, in our respectful submission.

HAYNE J: Do you accept though that the basic principle to be applied in connection with the grant of prohibition is that in Stevedoring Industry Board [1953] HCA 22; 88 CLR 100 particularly at 118 to 119?

MR KENZIE: If your Honour is referring to that aspect of the decision in which the Court addressed the notion that there is a basis for actually proceeding to prohibition because of the consequence if you do not, then we do not draw issue with that. What we have said - - -

HAYNE J: You will have to talk into the microphone, Mr Kenzie, otherwise you will not be recorded.

MR KENZIE: I am sorry, your Honour. We do not draw issue with that. What we have said about the decision is that of course that is a decision which was dealing with the prospect of jurisdiction being exercised in circumstances where there was a fundamental challenge to the jurisdiction of the body, but what is happening here is that the exercise in question involves taking a claim which is acknowledged to be, for present purposes, within jurisdiction and effectively sifting something out on the basis that there may be a risk that there may be an excessive jurisdiction and granting prohibition in advance.

Justice Handley has referred to the Stevedoring Case in this and other cases as the justification or precedent in relation to the granting of prohibition pro usque. We would not want to quarrel with the general principle but we would want to say that it is a very different case. We have put our submissions in relation to that.

Your Honours, I am aware of the time. Could I deal very briefly with some other matters. Your Honour Justice Kirby asked about the Contracts Review Act yesterday. We have looked at that matter. There is no intersection - - -

KIRBY J: I think it was Justice Gummow who asked the question.

MR KENZIE: I am sorry, your Honour. There is no intersection between the two.

GUMMOW J: What about section 6(2)?

MR KENZIE: Section 6(2) operates to greatly exclude categories of contract involving trade, profession or occupation other than some very specific occupations, farming and the like. So that to an extent, perhaps in a Stevenson v Barham-type area, there might be an intersection, but there is no textual reference between the two. Your Honour Justice Kirby – I hope I am right this time – asked about the Queensland Act or other legislation. Your Honour, the relevant provisions from the Industrial Relations Act 1999, section 276, have been made available to the Court. I was not going to open it at this stage.

KIRBY J: That is the only analogous provision.

MR KENZIE: It has been suggested to me that there was a similar provision in I think South Australia which is no longer there, but I cannot be confident, your Honour. Your Honours, the area of intersection between our case and the Fish Case, as we indicated, was in relation to our reliance on the provisions relating to collateral arrangement. Mr Jackson has made submissions about the relationship between the words “whereby” and “related condition and collateral arrangement”. You will find those submissions in paragraphs 39 and 40 of Mr Jackson’s submissions. We adopt those.

Those submissions make the point that if those words were not freed, it would be hard to find any work for “collateral or related condition” to do. What would equally be true would be that if you regard those words as tied to the words “whereby”, et cetera, that would cut across the obvious intention discussed by Chief Justice Barwick in Stevenson to permit the Commission to uncover the real transaction between the parties. Our friend Mr Jackson referred to the decision of Justice Sheppard yesterday as an example of that.

Your Honours, we have responded to the Court’s request last week and made available to the Court two documents: a chart which shows the development of the section since 1959 – I do not propose to go to the detail of it now, your Honour. It may be really regarded as a ready reckoner which your Honours could use to actually get a quick picture of Mr Jackson’s extensive volumes. Your Honours will have noted that it ends in 1998 and does not contain the most recent amendments which I have referred to in Reprint 4, in particular paragraph 108A, but subject to that it is, we hope, a useful document that might shorten the task.

We have also made available a document which follows the history of the jurisdiction which is also an attempt to distil the matters which appear in Mr Jackson’s two folders. There was an element of simultaneous work going on here, as the Court would understand, and we have attempted to distil the relationship between the amendments and some of the decisions that have been made along the way which will allow the Court to see just when the amendments took place, what decisions had been made, for example, decisions like the franchise arrangements which were around well before 1996, Magik Markets and the like. You can actually get a snapshot by reference to that document.

We have also referred to the recent authorities in relation to re-enactment at the back of that document. We have referred to the Electrolux decision and the Alcan decision, which I think were rehearsed very briefly by Mr Rothman at the special leave application, your Honours. The issue there may be that of course the text of the section has changed and the history is complex because what has actually happened is that the word “whereby” was removed, that the definitions were taken out of 106 and then the word whereby was put back in, in 1996. So the history is a strange one and there may be a question as to the applicability of the principle at all, but if the principle is not applicable that only serves to emphasise that the proper focus of attention is the enactment of the Act in 1996 in our respectful submission.

Your Honours, just finally, in relation to the question of the reading down of section 106 could I make just one submission and it is this; that the jurisdictional fact in relation to section 106 or then 88F was identified in Stevenson v Barham in the passage that Mr Jackson read yesterday. As Justice Gummow has pointed out yesterday this area involves a great many cases since then which do not appear to have come up with any defining principle or principles so as to solve the question of what do you do if you come to the conclusion that the section seems to have a breadth that goes beyond expectation. What is to be done about that as a matter of statutory construction?

Your Honours, the attempts have been many and varied and I do not want to take time, but they include attempts made in V.G. Haulage and repeated to an extent in Mitchforce to inject a notion of industrial colour or flavour. They include the Privy Council in Caltex Oil v Feenan saying that either a test of “in fulfilment of” or “in consequence of” would do. That was followed by the Court of Appeal in Production Spray conceiving that it was open to it to choose between those two and it chose “in fulfilment of”. In Mitchforce Chief Justice Spigelman, in language which was reminiscent of Justice Aickin in Stevenson v Barham, in dissent, asked the question of whether the impugned arrangement directly envisages the employment of a person in industry and has a recognisable impact on the conditions of that employment as matters which would go to direct and repeated in Solution 6.

In the present case questions have arisen as to whether the key might be found in the general nature of the legislation, including reference to the long title which, of course, takes one back to what was done in Stevenson v Barham, the list of matters within section 88F which always existed and which were always followed by the word “or” and to the inevitable difficulty of categorisation based on anything which looks like an industrial flavour. Your Honours, this was a matter that the High Court wrestled with in the context of section 51(xxxv) from about 1903 to about 1983 at the time of the CIC Case and the notion of what was industrial and what was not was not a productive search and it is not a productive search here and, of course, one has the definition in section 7. Now, we have McDonald’s - - -

KIRBY J: I do not think it finished in 1985. We had a case last year about it. Alcan or one of those cases.

MR KENZIE: Amcor perhaps.

KIRBY J: Yes.

MR KENZIE: But the notion of what was industry for the purposes of section 51(xxxv) was finally resolved by recourse to the general constitutional expression “industrial disputes” in the CIC Case. After years of wrestling with the question of whether it covered - - -

KIRBY J: I think you had better read that recent case. Your bold assumption that it has all been closed may well be wrong.

MR KENZIE: Well, your Honour, the point that I seek to make - - -

KIRBY J: I think I took the view that you are just expounding, but I do not think the Court did.

MR KENZIE: Well, your Honour, the point that I seek to make is this and only this, that the search for some bright line in relation to section 106 is not going to be found here. It is singularly unlikely to be found here having regard in particular to the extended statutory definition. Finally, in this regard, your Honours, what I am putting is that this is not an area which is ripe for judicial reading down in this way. It is not the sort of area that Justice Mason was talking about in the case referred to by Chief Justice Spigelman, K & S Lake City Freighters Case where you had category A and category B and the Court could ask the question, does the statute extend to category B? Here the excluded categories are slippery and no one after this time has been able to render them otherwise, your Honour. It is one of these cases where, in truth, it is a matter for Parliament and Parliament has, although not in the way that everyone would like, been attending to the matter by reading down 88F and 106 in recent times. If it please your Honours.

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

MR WALKER: May it please your Honours. After some brief remarks about the historical material, the precursor forms of the statute, and a brief note concerning some case law, we will then seek to add to the submissions by reference to the particular text being construed of the statute. We will then move to apply that to the particular contractual provisions which were at the heart of the Solution 6 dispute, and finally make some remarks in elaboration of what we have said as an alternative or fallback position concerning Stevenson v Barham in our written submissions.

Now, as to the travaux preparatoire, which in the main is only to be gathered from Hansard, and for that matter the precursor forms, which may not have great significance in their reordering syntactically or in layout, in our submission they produce the following accurate summary, that as to a concern of a kind which for a long time has been called “the mischief” aimed at by Parliament, the concern was with the ingenuity of variety of methods of making contracts or arrangements with people for work so as to produce the evasion of awards – a form of public law for the melioration of working conditions – and thus the erosion of established minimum standards of conditions of work. That is all it yields as “the mischief”.

Negatively, one can say this, that all of those Hansard references yield nothing to suggest that Parliament was concerned that judges, let alone specialist judges – taking it only as a matter from the later era when it was only judges – should have the power to second guess the allocation of commercial risk between businessmen of a kind which in Solution 6 may be described thus, the taking of shares subject to market rise or fall, and known to be subject to market rise and fall – we know that was known because of the failed negotiation attempt here to have a flaw – to take them in lieu of cash when there had been a negotiation which produced a figure that looked like cash, $19 million.

The circumstances noted in our written submissions at paragraph 13 about what was hoped for as a NASDAQ listing, and what might have been seen as a rocket-fuel rise of the share price, is nowhere suggested in any of the argument about unfair contract or arrangement that your Honours have heard or read in the Solution 6 Case as suggesting that there should have been some sharing by the vendor with the purchaser of what had happened if the risk had turned out favourably by a vast increase rather than a very considerable drop in those prices. There is nothing in any of the travaux preparatoire showing a parliamentary concern with that kind of commercial risk taking, let alone the notion that that should be given to judges to second guess.

CALLINAN J: That provision would be excluded under Codelfa, would it not? It would be one of those instances in which you would be able to receive evidence - - -

MR WALKER: Yes.

CALLINAN J: - - - to demonstrate that the parties had considered a particular term and had rejected it, and therefore you could not have an implication to that effect.

MR WALKER: Quite so, your Honour. This is plainly a commercial risk. Now, it is one thing of course to note the history that produces the legislation, and indeed to note the text would slightly alter. It is another thing of course to discern whether the enacted text before this Court contains within it provisions which limit the scope of the enactment in accordance with an earlier era’s understanding of the mischief to be addressed. We accept that.

In terms of an evolution of the enacted texts in 1966, your Honours have had your attention drawn to the express broadening of the matter to enable what might be called complete remedy to be provided in the one place – the money remedy – and the legislative history to which your attention has been drawn may be found at tab 9 of Mr Jackson’s folder, Part 1 of Legislative History. It happens to be page 2665, left-hand column, foot of the page. I will not go there.

We also accept that the general words which were selected to address that mischief in 1959 and which have been kept thereafter, that they have obviously been selected and are adaptable to, be available for parties to catch what Chief Justice Barwick called subterfuges in an area where it was expressly expected that there would be ingenious variety by people intent on escaping what would otherwise be regulated by awards and the like.

So we accept that one cannot look at the original text and say it can be known from the enactment history at that point what are the kind of arrangements which might be caught by these general words. We accept this is a statute, the general words of which were precisely chosen without knowing what ingenious variety of a kind constituting the general mischief might produce in the future. The question is simply whether those general words are apt to catch something which emerges in the future. But the mischief, we would stress, remained the same: people seeking to evade and subvert.

There may be a question in relation to the enactment history, the textual changes, as to whether the definitional change to “industry” which comes in 1996 and which everyone at the Bar table says produces a very broad scope for that notion – it was pretty broad beforehand – whether that was also an arguable expansion of the provision. It does not matter for the point in this case, we submit, because it made no alteration, of course, as to the character of the contracts, et cetera, so far as concerns the required nexus with work. It was still a question of the nexus being introduced by the phrase commencing with the word “whereby”. Thus, in our submission, it remained what might be called the quasi-employment or the disguised employment quality which can be seen as a constant theme through enactment history, legislative change and the present form.

Now, as to case law on that matter, there is not, in our submission, a great deal to be gathered and certainly nothing which in this Court should be regarded as binding in such a way as to require leave, for example, to submit that there is ratio from which this Court should now depart. However, in our submission, we would, with respect, draw to attention the clarity given to this matter of purpose, in the sense of what was the mischief and how was this statute adapted to address that mischief, to be found at the beginning of Sir Douglas Menzies’ judgment in the passage to which reference has already been made by both my learned friends in Brown v Rezitis [1970] HCA 56; 127 CLR 157 at 169. That is wholly consistent with the position which we have taken in our written submissions and in the proceedings.

That brings us, your Honours, to the text itself, the enacted text as it matters for the present case. It should be observed, and we are permitted to do so by subsection 35(1) of the Interpretation Act 1987 (NSW), that this is all found in Part 9 of Chapter 2 of the Act. Chapter 2 of the Act is headed “Employment”. Reference has already been made to something which, in our submission, provides an appropriate starting point though, in our submission, completely unpromising for the appellants, and that is the objects provisions in section 3 of the Act.

In our submission, without reading any of those, it may be said as a generalisation that each of items (a) to (h) shows a concern, understandably, with employment and what might be called colourable evasions of what ought to be, according to Parliament, the social and industrial expectations of an employment kind of relation. It is, in our submission, therefore to be found in section 3 at the very outset of a textual analysis of the statute strong support for the notion that there is a confinement of the unfairness to be found under section 106 and the consequential relief, which is surely to be shaped only to relieve that unfairness, to aspects which have to do with the performance of work, including, of course, conditions of work.

In relation to conditions of work and the statutory concern with such things, it is significant, your Honours, that there are what are called key expressions in the statue – see that expression found in section 4(2) – and those key expressions are somehow elevated for prominence and emphasis out of the dictionary which is otherwise created under section 4(1) and given their own sections.

Your Honours have already been asked to note section 7 in relation to “industry”. It is of some moment to note the definition of “industrial matters” in section 6, particularly the examples in subsection (2). They are matters which entirely concern and illustrate the function of the Commission, including in Court Session, with respect to the kind of matters which confine relevant unfairness – we submit textually, not by intuition – textually to aspects which have to do with a perceived offence to the fairness with respect to what should have been or should be employment conditions.

Now, the definition of “industrial matters” is then used relevantly in the definition of “conditions of employment” which your Honours will find in the dictionary and it evokes at least some parallel with the remarks of the Chief Justice yesterday with respect to Justice Jacob’s phrase originally in V.G. Haulage about impacts on conditions of employment as being the hallmark of what one looked for in order to identify an unfair contract whereby, et cetera.

The functions of the Commission are also part of the textual context to which attention may usefully be paid in support of the respondents’ position. The “functions” – that word is used in section 146(1) – including even that which is an open category in paragraph (e), in our submission, are functions which again bespeak the industrial – that is employment-related – matters to which I have already referred. Justice Gummow asked about that odd word “functions” used indifferently for different kinds of exercise of power yesterday. As my learned friend, Mr Jackson, noted, you will find that used quite specifically in relation to judicial work, judicial power, in section 151(1) and indeed in the chapeau to section 153(1).

Section 146(2) is important because it expressly refers to the “public interest”, which of course is an expression again found in section 106. In section 146(2) there is an obligation of the Commission to “take into account the public interest” and it is said by legislative stipulation that “for that purpose”, that is for the general purpose of taking into account the public interest, it:

must have regard to:

(a) the objects –

that may have been a work of supererogation but, in our submission, it is an emphasis relevant for present purposes, and also:

(b) the state of the economy . . . and the likely effect of its decisions on that economy.

That rather suggests a greater concern with what I - - -

GUMMOW J: “[T]he economy of New South Wales”, if there is such a thing.

MR WALKER: It is a very curious concept, your Honour, but it is one that Parliament commands the Commission to be able to perform. It may be that it would be difficult to find an economist who for long wished to expatiate on something called “the economy of New South Wales”, but that is what Parliament decided, presumably by reference to a perception concerning territorial limitation, a perception that may well have been too modest.

That is an indicator textually that this has to do with, as you would again expect when one comes to section 107, matters that have an effect on the way in which people are employed and work is performed generally in an industry and at least raises eyebrows with respect to the rewriting of commercial risk taking by business entrepreneurs, as is the case in Solution 6. There is a proviso to section 146(2). It does not apply in criminal proceedings – that presumably does not mean there is no public interest to be taken into account in criminal proceedings but this form of it is not – and it does not apply generally if the Commission determines it is not appropriate. I am afraid I cannot assist your Honours in terms of the jurisprudence, if any, in relation to that inappropriateness.

Then against that surrounding context one comes down to section 106 and subsection (1) posits this notion of investigating whether something is unfair. That immediately takes you to section 106(4), which is the public interest in the specific context. That has not had a lot of attention from the appellants but, in our submission, it again provides textual, not merely intuitive, support for the notion that this is a jurisdiction limited to what might be called employment or quasi-employment aspects. There one has the obligation under the rubric of public interest, to which we will come again in the definition of “unfair contract”, paragraph (b), to the notion of “any system of apprenticeship and other methods of providing a sufficient and trained labour force”, surely an economic concept, being required.

Of course it is possible for Parliament to compel a court to take into account what would otherwise be irrelevant matters, that is Parliament can require apparently odd things to be done, but, in our submission, one would not immediately read a statute in that fashion. This is therefore text suggesting that it has to do with matters, as I say, of employment or quasi-employment that is the focus not only of the mischief but of the cure devised by Parliament.

Standing in section 108 strongly supports that proposition. I will come back in another context to what must be terms of art calling up the common law in section 108(a). A “party to the contract” would appear to be a term of art, particularly the word “party” – alas, the word “contract” is not only a term of act because in the definition one has arrangements to which I will come back again a bit later.

Certainly, paragraphs (c), (d) and (e) of section 108 support the notion by reason of the permissible, the exhaustively permissible, standing to sue being given to trade unions and trade associations in such a way as to support the notion, but that this has nothing to do with unfairness at large, in provisions themselves having nothing to do with – Justice Handley’s expression – the performance of work or the conditions of employment.

Section 107, which is one of the things that may result by exercise of judicial discretion from a finding of unfairness, continues the theme. In a sense, in a primitive sense, it is a kind of a common rule – of a negative kind at least – that section 107 proposes may come from one of these proceedings. One can see from section 107(1)(b) and from the device noted in section 107(2) that these are orders that can be made binding people who are apparently not parties to the proceedings, whose connection is that they are:

any other person who is (in any way considered relevant by the Commission) associated with any . . . party [to the contract].

They become bound upon there being, amongst other things, a newspaper publication under section 107(2)(b). That again suggests the industry-wide potential economic effect and the relation with the subject matter of Chapter 2 of the Act: employment.

Section 105 then to which one comes as the definition that one must use in reading the critical terms in section 106(1) is significant because the definition of “contract” excludes industrial instruments. They are defined in section 8. It is obvious why they are excluded, because the notion of declaring them void or varying them is to be rejected. They are regulated elsewhere in the Act. For example, awards in section 17, enterprise agreements in section 43 and in ways which are not the same as, even if they may bear some resemblance to, proceeding upon perceptions of unfair operation.

The definition of “unfair contract” in section 105(c) and (d) obviously locate the relevant unfairness in terms concerning the performance of work and the conditions of work. It is to be noted in paragraph (c) of that definition the expression “performing the work” – emphasis on the definite article. That is “the work” which is called up by the “whereby” phrase in section 106(1). For some quirk of drafting, the “whereby” phrase is not found in a definition, but is a required jurisdictional gate to be passed through before one gets to consider whether a contract, et cetera, is unfair.

GUMMOW J: But your opponents fix on paragraph (a).

MR WALKER: Quite. As to (a), and for that matter (b), the first thing to be said is that there is already the textual indications with respect to public interests to which I have referred in (b), and (b) being such a large and value-laden concept is plainly to be read in light of and, if it amounts to a limitation, limited by the objects in section 3.

The same thing surely is true of the equally value-laden and potentially amorphous category of unfair, harsh or unconscionable, bearing in mind that this is clearly not a relocation of an equitable jurisdiction. There is nothing in the statute to suggest that. Those words as well have to be read in accordance with the subject matter of the statute and section 3 provides the objects and the clues as to public interest and the economic concern and the exclusion of industrial instruments for the evident purpose to which I have already referred therefore provide the answer to the appellants’ reliance upon (a), and (a), as will often be the case with general words of discretion or general words of value, has to be read in light of the subject matter of the whole statute, the concern of the Parliament to remedy a specified mischief, and in order to make it workable in relation to other parts of the law, common law, equity and other statutes.

In particular, there is nothing here to be found which are words which, apart from their non-contextual breadth - and without a context (a) and (b) are both very broad – there is nothing apart from that non-contextual breadth which provides phrasing in this part of the statute that suggests that within this jurisdiction is the re-examination from the point of view of a disgruntled risk taker of the price that he negotiated for the sale of the capital asset – here, a bundle of shares.

That is important because it is clearly the ambition of the appellants, once they found the hook of a contract whereby work is performed, then passing through, as it were, that narrow gate to be in the wide field of picking over all the terms in the contract, et cetera, discovering anything that is unfair, even if it has no direct connection with conditions of employment, and rewriting the deal after the risk has been taken and has materialised unfavourably to the party.

One clear indication, both from the pre-enactment history and also the text itself, that that is not intended is to raise this question: if Parliament was concerned by these words and the meaning of these words is to be read as providing such a broad jurisdiction, for what sensible purpose would one have confined the Commission’s power to correct unfairness generally in such contracts to contracts which had to do with the performance of work in an industry? If unfairness of a kind not connected with performance of work in an industry was a mischief to be attended to by the discretion of the Commission from time to time, then surely one would expect to see in the statute an indication that they are the contracts within the jurisdiction, but there is no possible suggestion of that.

It is to impute to Parliament an absurd or extremely odd approach to the mischief at hand to say this is a statute which permits the correction of unfairness in commercial risk taking, but only if extraneous to the commercial risk taking being corrected or ameliorated there happens to be this badge of performance of work in an industry.

May I then come to the question of arrangement to which some reference has been made. In our submission, this is an undoubted difficulty in the test. Your Honours have seen a reference in paragraph 42 of the appellant’s written submissions to the decision of Justice Emmett in Raisanen v Special Broadcasting Service. I am not sure whether your Honours have it. May I just hand up copies of that decision. I am not going to take your Honours to it.

GLEESON CJ: Thank you.

MR WALKER: One of the reasons I am not going to take you to it is that there are textual differences between subsection 127A(2) of the Workplace Relations Act 1996 (Cth) and the provisions in question in this case. The passage which we draw to your Honours’ attention is found at paragraphs 52 and 53 of (2001) FCA 1525. I will not read them. They are passages which support a view were your Honours to find that a persuasive understanding of the word “arrangement” in a somewhat similar statutory context, a somewhat similar context. It would support the view that arrangements may include matters that do not mature into or perhaps were never intended to become legally binding.

In the area of what might be called excessively clever attempts to evade stock standard employment it may well be, for example, that in some cases the unfortunate victim, that is, the weaker party, finds themself working pursuant to blandishments which may be dressed up as if they were contractual but which are, on analysis, either too uncertain to be enforceable or illusory because, for example, they preserve complete discretion to the stronger party as to whether there will be work or payment.

No doubt Parliament, when one considers the identification of the mischief from 1959 onwards repeatedly in parliamentary consideration of these provisions, would not have a bar of the notion that the stronger party respondent to such proceedings could turn up and say, “Well, there is no jurisdiction because there is no contract. I was so clever, I got these people to work without any contract at all”.

Now, that would purposively support arrangement including not enforceable – I was about to say arrangement – non-enforceable relations, expectations in line with the way Justice Emmett puts it in Raisanen.

HAYNE J: But would it not extend to the performance of work in a manner directed by an employer assented to by the employee but which finds no relevant contractual base that could bring it within the strict sense of contract?

MR WALKER: Yes, so we submit - - -

HAYNE J: And the unfairness may lie in the overwhelming power of the employer to give such directions, which the employee has no real capacity to deny.

MR WALKER: Quite. Along the lines of, “You’re never going to get a job under the award. You’re not good enough. I’ll give you the same task for half the price”, yes. Now, of course arrangements of the kind that Justice Hayne has just raised do not necessarily constitute relations devoid of legal right because quantum meruit obviously arises as a possibility. But there may be, under for example illusory contracts that may perhaps not give rise to a quasi contractual claim, there may well be cases which lacked all legal force.

Whether there be legal rights in the sense of quasi contract, restitution or not, we accept there is a textual difficulty. It is not the only one in these provisions, but they have to be made sense of. The textual difficulty is of course how do you avoid or vary, which are words relevantly in private law appropriate to contract and not to other of the relations I have just referred to, how do you avoid or vary, let alone impart the avoidance, something which either lacks legal effect or has an illegal effect which is not constituted by terms of a consensual kind that it makes sense to either avoid or vary?

Now, we do not pretend to have an answer satisfactorily to that, except to note that Parliament seems to have required it. We say “seems to have required it” because the alternative is to say “Well, an arrangement must be something, susceptible of avoiding or varying in the ordinary legal understanding of those phrases. That would mean it would have to have legal effect, and that would defeat surely the evident purpose of this legislation – to catch the clever evaders, to expose and remedy subterfuges. As we submit, the startling demerit of a respondent who turns up to say, “Well, I have taken advantage of these people but not pursuant to a contract, not pursuant to anything with any binding legal effect, therefore, I’m free of your jurisdiction”, that is an unthinkable, in our submission, way to construe this legislation. It is clearly beneficial in remedial legislation and so it follows that arrangements must include these things, devoid of what would otherwise be legal content.

“Varying” and “voiding” therefore must be read in a context which gives it a special meaning, and we are forced to respectfully submit that the Chief Justice has raised, with all the problems it has, the notion that this is a jurisdiction which in some cases will see new rights where there were hitherto none – not simply different ones, but hitherto none – of an enforceable kind created by dint of this weird notion of varying an arrangement which itself had no prior legal force.

GLEESON CJ: Which is no doubt why Justice McHugh described this jurisdiction as arbitral rather than judicial.

MR WALKER: Yes, and we, with respect, submit that it is when one considers cases of that kind, which surely are the paradigm case for this statute’s best application, for the weakest person against the strongest person in a way that retrospectively and prospectively protects them in relation to the employment concerns of Parliament, found explicitly in the statute, that must be the result. Of course that is a textual difficulty because of the violence done to the understanding in the law of the notion of avoiding or varying is very considerable, but in our submission - - -

GUMMOW J: It is a textual assistance for you, is it not?

MR WALKER: Yes, quite.

GUMMOW J: Because it points to the arbitral and therefore industrial character of what is going on.

MR WALKER: Yes, it has that large assistance. It has the smaller or more detailed assistance that it shows that “contract” in the definition of section 105 is to be given its ordinary meaning, a contract, and as Chief Justice Spigelman observed in the Solution 6 Case if it is a contract do not move off. That is the category, it is a contract. Do not start calling it a contract or arrangement. It is a contract or it is an arrangement. They are different concepts and they are alternatives.

KIRBY J: Yes, but the use of those words has been adopted by Parliament presumably because of the complexity and variety of the arrangements that are now seeping into this area where once it was fairly straightforward.

MR WALKER: Quite. That is our argument, indeed. We embrace that entirely, but that does not mean that you would give the word “contract” when it is used in the definition, section 105, that is the second time not the first time, it does not mean you would not give that its meaning as a term of art, and this is a statute about and affecting common law relations and contract means contract. If something is a contract and the share sale agreement in this and the future employment or the prospective or possible employment contract in this case were contracts, they are therefore not arrangements.

I have to come to another argument of my learned friend, the so-called third variant of his case considered by the Court of Appeal. It is in that context, in our submission, that one reads purposively the remedial provisions, that is, section 106(3) and (5) and section 107. They are expressed in general discretionary terms “may”, but they are, in our submission, in a completely familiar form of statutory interpretation, to be read according to the subject matter and purpose of the legislation.

In particular that is so because they are overtly directed to the alteration or detraction from what would otherwise be binding common law, private rights which would be otherwise enforceable in courts of law including the Commission. So one has two elements here, the first is that this is read against the subject matter that it represents a regulation of, an incursion into an area of private right and property of a kind which at least bespeaks, perhaps in a weak form, some reticence or resistance in interpreting words very broadly.

The more direct, immediate and important consideration, as a matter of interpretation, is that this is a statute, the purpose of which as I have already addressed and I do not wish to repeat, and thus the remedy will be adapted to those ends rather than, as I say, this nonsensical notion of restricting eligible applicants for relief to people who can point to contracts, et cetera, whereby work is performed by a person in the industry but then allowing the relief to transcend and blossom much more broadly than that entry into the jurisdiction.

It follows, as your Honours appreciate from our written submission and as we heard, I think, my learned friend Mr Jackson say very plainly and without equivocation yesterday, that in the four possibilities of the definition of “contract” in section 105, each one of those elements when they are the one in question - and your Honours will have noted the sequence of three “ors” and with or without the commas they are still “ors” - whichever one of those applies has to be something whereby a person performs work in any industry and we had understood that whatever is said in written submissions is clear in the address of my learned friend Mr Jackson in answer to Justice Hayne early yesterday morning.

In our submission that is an entirely proper concession. It is the only way to make sense of the syntax as Justice Handley points out in his reasons. In our submission, were it otherwise, were an arrangement in particular capable of somehow including something which was not a contract, et cetera, whereby a person performed work in any industry, someone who was a party to the contract within the meaning of paragraph (a) of section 108 standing provision could bring a relief but somebody who was not a party to the contract - in this case the employees contemplated continuing in employment or being engaged by the company, part of the share sale agreement provisions to which my friend took you - they would not be party to the contract and if there is an unfairness surely by now it has been established that the unfairness has to do with their conditions of work, they get no relief.

In our submission, all of that indicates that the extended definition of “contract” does nothing to deflect attention from the requirement that the vice to be identified, which is unfairness, and the remedy of that unfairness are all focused on and limited to the quasi-employment matter.

CALLINAN J: Mr Walker, the contract here was entered into before 2002. Would section 108A have anything to do with the matter? That amendment was made – it was introduced in 2002.

MR WALKER: I am so sorry, your Honour. I have neglected to consider the transitionals if there were any. It would appear to be substantive rather than procedural, so one would lean against a retrospective affair. I am sorry I cannot be more categorical, your Honour. In particular I do not know about the transitionals, for which I apologise.

CALLINAN J: Would this contract be a contract, assuming that section 108(a) could be invoked, would this be a contract to which this could apply?

MR WALKER: Your Honour, with respect, uses the word “this” which calls, as it were, from the appellants for some specification.

CALLINAN J: I understand that.

MR WALKER: The share sale agreement, no.

CALLINAN J: At their broadest construction - - -

MR WALKER: At their broadest, the share sale agreement is what they aim at. They want to rewrite the risk that they took on an exchange. That is not a contract of employment within the meaning – we would certainly submit - - -

CALLINAN J: But on one view of it they say this is a form of remuneration, do they not?

MR WALKER: They do not seem to have volunteered it would be taxable as income.

CALLINAN J: It might be a capital gain perhaps.

MR WALKER: Maybe, which rather suggests it might not be remuneration.

CALLINAN J: I would just be interested in that question. I know in the end it might not - - -

MR WALKER: My learned friend Mr Jackson did not emphasise, and for understandable reasons, the share sale agreement as comprising or in part including the provision of remuneration for work to be performed by Mr Fish in any industry, and understandably. Whether it be $19 million or any other figure, one would expect an accountant would pull him back from the Bar table at that point.

CALLINAN J: Anyway, you might be able to give some thought to that and let us have something about that later, Mr Walker.

MR WALKER: Thank you, your Honour. I can say this immediately, that the expression “contract of employment” in section 108A(1) and obviously the notion of a partnership in section 108A(2) would not embrace on any view of the matter – this is a statute that has to do with substance and reality, not forms and subterfuges – would not be a correct character for the share sale agreement. It is the share sale agreement which was singled out by the Court of Appeal as saying whatever else you can do in the jurisdiction – and they did not stop them doing everything – you cannot go at that. So my answer is no, 108A, had it applied, would not have enhanced our position. While on 108A, it is a dubious form of statutory interpretation to look at a later enactment in investigating what the result of earlier parliamentary action was, dubious to the point of fictitious, but - - -

CALLINAN J: I think the majority view in the Court has been that you should not, contrary to something that Justice Dawson said in a case.

GUMMOW J: Hunter Resources v Melville.

MR WALKER: Yes. In our submission, just as a matter of political science, it is a very curious thing. However one moves away from or views askance the expression “intention” in the notion of “legislative intention”, which is an expression, after all, used in Interpretation Acts, it is piling fiction on fiction to suggest that one can impute anything to a chamber by reference to what some future chamber says.

CALLINAN J: At the moment I am not entirely clear about whether, if it did apply, it would not enhance your position. In any event - - -

MR WALKER: I do not think I can take that any further at the moment, your Honour. There was a third variant to which I have referred of the case against us. My learned friend Mr Jackson has already given your Honours the references to them. May I repeat them. It is introduced in the Chief Justice’s reasons first at paragraph 42 on page 403 of the appeal book where the terms of section 105 are, as it were, employed for the section 106 claim in these terms:

there was a broader “arrangement”, of which the Share Sale Agreement was part, and which included other matters, notably the Employment Agreement.

This is, in our submission, regrettably broad language. Two of the things referred to there are after all contracts.

Now, that was then picked up in paragraph 52, which commences on page 405 and goes over to page 406 of the appeal book. The third variant appears on the second page. The Chief Justice notes the submission that there is “a pre-existing broader arrangement” and we are at a loss, with respect, your Honours, to explicate for your Honours what “pre-existing” refers to. It is trivial to say it is pre-existing the proceedings. It is presumably pre-existing a contract – that is what you would have thought, pre-contract negotiations of the kind that one sees in the summary of facts. The difficulty is then you find the contracts which emerge being part of it, which really is, in our submission, a jumble notion because it includes pre-contract negotiations and representations being included with the contracts that result, all being put together as an arrangement, which utterly defeats Parliament’s use of the term of art “contract” as the first item in the definition of “contract” in section 105.

It never got better, in our submission, and it was, in our submission, an act of charity on the part of the Court of Appeal to have considered, as it no doubt properly did, with respect, that lurking possibility not in the record in the Commission, of a way in which the case might be put forward. So less there be something there it was considered – in our submission, the closer one looks at it, particularly bearing in mind this notion of arrangement as including contracts which resulted from pre-contractual negotiations or representations, in our submission there is no separate point given in favour of the appellants by their so-called third variant of case.

In any event, in relation to linked, related, intersecting – to use words trying to avoid “collateral” as a technical term – contracts, the common law approach which is discussed by Justice Handley at appeal book pages 445 to 448, and his Honour then goes into the application in this statute, paragraphs 172 to 181, particularly 175 to 177, provides the answer, in our submission. Of course these contracts, for the very reasons Mr Jackson pointed out yesterday, are related. There is reference explicitly by one to the other. The difficulty is that the relation in question cannot avoid the need for the “whereby” phrase to qualify whatever it is is said to be the unfair contract.

My learned friend yesterday referred to “connected with”, that is the one is connected with the other, as being a sufficient link here of the share sale agreement and employment contract but, in our submission, that cannot be right jurisdictionally, it is not the statutory test. The statutory test is that the contract, et cetera, be one whereby, et cetera. The fact that there may be a connection with something which does not satisfy the “whereby” phrase is of no moment. Many a contract for the performance of work in an industry will be connected both economically and perhaps even by express reference to quite different contracts, for example of loan or guarantee. That does not mean that the Industrial Commission has acquired a jurisdiction because there is “a connection”, to use my learned friend’s expression, to rewrite the standard terms of mortgage of a trading bank.

The answer why that is not so is because those standard terms of mortgage of a trading bank are not a contract, et cetera, whereby a person performs work in an industry.

GLEESON CJ: Would it make any difference in the present case if there were only one contract incorporating the terms and conditions of the sale agreement and the terms and conditions of the employment agreement?

MR WALKER: Not to the result, for the reasons I have put. The relief in question must remedy the unfairness in question and the unfairness in question must be as to an aspect of the contract being one whereby a person performs work, et cetera. Indeed, that would be to reward form over substance, which seems to be one of the general maxims that everyone on all sides of this dispute agrees ought not to be the position in this jurisdiction.

KIRBY J: How would the Industrial Commission approach such a case?

MR WALKER: By rigorously confining its attention with respect to unfairness and, were it to make an affirmative answer to that, rigorously confining its discretion as to remedy to the unfairness of those aspects which make it one whereby a person performs work in an industry.

GLEESON CJ: I wondered whether a possible approach might be to say that what 106 is talking about is contracts, not documents or instruments.

MR WALKER: Yes, I accept that entirely, your Honour. Now, that is one of the reasons why the reading related or connected contracts together at common law referred to by Justice Handley is of some moment. As his Honour points out, there is nothing difficult about that in contract law and it is true, as it was in this case, that there are self-evident connections between a number of different contracts, lots of contracts, all the contracts of employment that are referred to as either existing or as being subject of an obligation of best endeavours to procure their either novation or future entry. There are lots of connections but, in our submission, it would not make any difference whether they were all in one document or not.

GLEESON CJ: The risk is that once you broaden the idea of contract, you can always say that one term or condition of what is widely described as a contract is in consideration for another term or condition.

MR WALKER: Yes.

GLEESON CJ: You can always say he might have required a higher wage if he had got a lesser price for the business that he was selling.

MR WALKER: I entirely accept that, your Honour. It may be that the Commission is the very place for such assertions, which may range from the plausible to the bizarre, to be tested. So that it may be that it will be in a way not known to the contract law possible to adduce evidence as to the course of negotiation so as to say this is an unfair aspect, which does on the history, which may be revealed in the Commission, which is to brush aside subterfuges, revealed by the history to have been, in effect, in reality, one of the terms of conditions of employment, using that word “employment” in the quasi sense that I have been developing it today.

HAYNE J: Mr Jackson makes the point against you, I think, in paragraph 29 of the written submissions in the last sentence. What is the answer you make to that?

MR WALKER: The answer is the answer that both the Chief Justice and Justice Handley make, namely that there is no indication that the price of the shares is anything other than the price of the shares and it is clear that employment did not have to ensue from the share sale agreement. Can I take your Honours directly to the provision that makes that crystal clear.

HAYNE J: The point against you is that it is denying practical reality to suggest that the provisions of the share sale agreement, especially as to payment and restraint on alternative employment, did not directly affect the terms of the employment contract. That is the point against you.

MR WALKER: I understand the argument, and I am coming to it directly. The first thing is that the employment itself was not an integral part in the sense that it had to happen. I am not talking about death. If your Honours turn to appeal book 242, there is a provision in the middle of provisions my learned friend went to yesterday, clause 2.4 at line 22, and they relate to 2.1 being waivable. Clause 2.1(a) is the employment one and 2.1(a) may simply be waived by the buyer, only by the buyer. So the share sale agreement is not an agreement under which Mr Fish was necessarily going to be employed as contemplated in clause 2.1(a) on page 240, line 37, and that is the first answer.

The second answer is that the employment contract was envisaged to be a separate transaction which may or may not ensue, for the reasons I have just pointed out, at the election of my client and which would provide itself for all terms of employment.

The third, in relation to restraints – may I point out that there are two restraints indirectly or impliedly covering what you can do in employment in the share sale agreement. They are found on page 245 in the escrow of shares provision, clause 4.8(c) starting at line 27, or the whole of the escrow has a relation to the employment, see subclause (c). Then one finds the non-compete starting at 249, clause 8.1, and it is only, as I say, impliedly, that is by inclusion within a much larger general category of conduct, that employment is effected. Over the page, 250, one sees again the cessation dependent upon events under another possible, not certain, relationship, namely the possible employment in subclause (c) on page 250 starting at line 24. The employment contract provides differently for the restraint – appeal book 315, clause 18.

Now, in our submission, it is for those reasons, a coupling of the indirect inclusion within the general in the share sale agreement, the share sale agreement not requiring employment, and the actual employment contract having a different restraint – clause 18 on page 315 – that provides the answer to the appellants’ challenge raised with me by Justice Hayne.

GLEESON CJ: That answer, unfortunately, is particular to the present case. It may solve your problem but ours may be a little wider. Suppose you had a case in which, by pointing to the negotiations, for example, you could find that Mr Fish had written a letter to the other side saying, “My tax adviser has told me that it would be much better for me to take a salary of half what you are offering me under the future employment agreement and to increase the purchase price of the shares. That isn’t going to cost you anything. It’s going to benefit me. Let’s do it that way”. Would that then throw open to review by the Industrial Commission all the terms and conditions of the share sale agreement?

MR WALKER: Not all of them necessarily, but it might.

GLEESON CJ: Or would it throw open to review only those that could be shown to directly affect the level of remuneration under the employment agreement?

MR WALKER: It might throw open more, your Honour, for the reasons I put earlier concerning the possibility of this jurisdiction devoted to substance and reality and to ingenious ways of affecting conditions of employment, quasi as well as formally so.

GLEESON CJ: Well, the ingenuity is not all on the side of the people who are trying to avoid the legislation.

MR WALKER: Yes. On the other hand, they are still jurisdictional phrases.

CALLINAN J: You could not possibly suggest here that the separation of the two agreements or the fact of the two agreements was in order to conceal a subterfuge or for the purposes of a subterfuge.

MR WALKER: No, absolutely not. The employment contract was not an inevitable outcome of this deal. It was an optional extra. Our option, and it would have been extra from him and from us.

CALLINAN J: Well, if the parties had not wanted to give specific separate consideration to the employment agreement, they would have included the whole thing, one would have thought, in the share sale agreement.

MR WALKER: Quite. That is why, in our submission – and I am sorry for just arguing this case, as it were, in answer to the Chief Justice’s question – in our case we can be secure in this position, that the circumstances to which I have referred, the optional extra aspect of the employment contract, puts beyond any doubt – and at, we would submit, a jurisdictional level – that the share sale agreement terms as to price, the risk taken in relation to the fall of a share price in lieu of cash payment, they are not aspects of any contract, et cetera, “whereby a person performs work in any industry”

Now, one of the ways in which my learned friend seemed to put the entrée into broad discretion point was that because there were other employees whose employment is referred to in some of the terms to which your Honours were taken yesterday, that that somehow on the first variant of his case or query under the second variant of his case made the share sale agreement a contract, et cetera, whereby a person – not Mr Fish but these other people – performed worked in an industry. But that is to produce the extraordinary effect that they cannot complain – see section 108(a) – about anything to do with a quasi-employment unfairness, and Mr Fish does not complain about anything in his employment contract; he complains about the share price. Now, in our submission, then intuition and text do combine to reject the jurisdiction.

Finally, your Honours, in relation to Stevenson v Barham, as the alternative or fallback that we introduced in the last page of our written submission, could we simply add these comments. The good sense comment of Chief Justice Barwick does not, in our submission, advance – nor, for that matter, does it depend on – any of the statutory interpretation considerations to which we have gone. It should, in our submission, not receive the approval of this Court as being of any assistance in understanding how to read and apply the jurisdictional requirements of section 106.

It after all comes in a paragraph which has a rather curious notion not of a line of jurisdiction but of a kind of a graded zone. In the paragraph which is at 136 CLR at 192 the Chief Justice, with respect, appears to be confessing as a progress in his reaching judgment to what I have called – I hope not disrespectfully – an intuitive resistance. His Honour refers to finding it difficult in becoming convinced, et cetera. At the end of that sentence is this curious expression:

business ventures, of which the present may be a specimen, freely entered into by parties in equal bargaining positions, should be so far placed within the discretion of the Industrial Commission as to be liable to be declared void.

It is either within or it is not. It either crosses the jurisdictional line or it does not. That, in our submission, is an indication that this is a mere obiter not intended by his Honour to qualify at all the agreement with the reasons which the Chief Justice seems to express as having been arrived at subsequently in the second-last paragraph of his reasons on that page – the reasons, that is, of Justices Mason and Jacobs.

CALLINAN J: In what circumstances would the Commission be entitled not to make an order if unfairness was shown?

MR WALKER: It may be that mitigation, which is an obligatory consideration, could have been complete. Fully avoided loss sometimes occurs in contract.

CALLINAN J: But unqualified unfairness?

MR WALKER: Your Honour, I am not suggesting that it could be a proper - - -

CALLINAN J: No, I am just concerned that the Chief Justice’s suggestion that in some way there is a discretion to exercise good sense even if a case is fully made out. That seems to be the implication.

MR WALKER: With respect, yes, your Honour, it is, in our submission, an unuseful passage which should not be given further approval.

GLEESON CJ: But he was probably concentrating on the kind of problem that was before the Court in that case, which was a share-farming agreement.

MR WALKER: Unquestionably, your Honour.

GLEESON CJ: And he was no doubt thinking about the possibility that share-farming agreements are sometimes entered into by people who are big enough and ugly enough to look after themselves.

MR WALKER: Yes. May I say – and I hope I have not been misunderstood in this regard – I intend no criticism of the Chief Justice referring to the good sense passage in this case. In our submission, it is to be deprecated, however, the later use which has been on many occasions made of that passage. Good sense is not a reason to be relaxed about enforcing statutory jurisdictional limits.

GUMMOW J: Mr Walker, these appeals are clogged up with documents it seems to me. Why does not “contract” that is used in the section simply mean a promise to perform work in an industry?

MR WALKER: It may well, including obviously the terms - - -

GUMMOW J: And that is what you are talking about. That is what is unfair and that is what gets avoided and it may be, if it is only an “understanding” with a big fist, that that then attracts some arbitral function.

MR WALKER: Yes, your Honour. Now, “contract” means it is a binding promise.

GUMMOW J: Yes, and we all think it is a document of 45 pages.

MR WALKER: No, I do not - - -

GUMMOW J: I know you do not, but it colours one’s mind.

MR WALKER: No, the promissory obligation which normally the law would respect, the law that all courts and tribunals are bound by in New South Wales - - -

GUMMOW J: A document called a “contract” has a lot of mutual promises.

MR WALKER: Quite, but the promissory obligation, which is the subject of this statutory entrenchment on what would otherwise be legal rights, is located by the “whereby” phrase, limited by the “whereby” phrase and it does not matter which of the synonyms are used for that “whereby” phrase, the meaning is clear: that is the promise which calls for the work to be performed and provides the consideration for it.

GLEESON CJ: That approach has the advantage of relating the jurisdictional fact to the scope of the remedy.

MR WALKER: Yes, which, in our submission, is critical lest, as I say, non-textual generality of expression in (a) and (b) of the definition of “unfair contract” and the otherwise untrammelled “may” found in the relief provisions, lead to the unaccountable lucky class of commercial risk takers who can go to the Commission because there is somewhere a promise that someone, not necessarily them, will perform work in an industry, and unaccountably an unlucky category where that cannot be found. That, in our submission – there is nothing in the history, nothing in the text, that supports that reading of it.

The last thing I wanted to say is again about Stevenson v Barham. We would, with very great respect, submit that the use of metaphor in the phrase “industrial colour or flavour” has outlived any usefulness it had. We do not shrink from a need to find industrial character in the way I have argued today but we say that that is to be gathered from the text and such of the history as is relevant.

GUMMOW J: If one gives it the construction you have just been giving it, it answers itself.

MR WALKER: Yes, and you do not need to resort to metaphors of that kind. May it please your Honours.

GLEESON CJ: Thank you, Mr Walker. Yes, Mr Grieve.

MR GRIEVE: The centrepiece of our friend’s argument is that the option deed of 2 November 1999 became in some way a part of an arrangement or was itself an arrangement, collateral to an arrangement, whereby a person performed work in an industry. For the reasons expressed by Mr Justice Handley, with whom the President Mr Justice Mason agreed, at paragraphs 165 and 166 - - -

CALLINAN J: I am having trouble hearing you, I am sorry.

MR GRIEVE: I am so sorry, your Honour. For the reasons shortly stated by Mr Justice Handley in Solution 6 [2004] NSWCA 200; 60 NSWLR 558 at paragraphs 165 and 166 and for reasons advanced by our learned friend, Mr Walker, which we respectfully adopt, the construction of sections 105 and 106 to the effect that the “whereby” phrase in 106 qualifies all four limbs of the definition of “contract” in 105 must be correct.

If that is so, it practically disposes of our learned friend Mr Kenzie’s appeal in the sense that on no view could it be said that the option deed, which is at the heart of his clients’ claim, was a contract itself whereby, et cetera. If one approaches the matter on the basis that the option deed was in some way a collateral arrangement, it was simply not one within the section.

We have in paragraph 5.22 to 5.26 of our written submissions contended, contrary to what our friends suggested yesterday, that the contract, et cetera, to be within the purview of the section must precede the performance of the work in question. In this case it is quite obvious that much of the work said to have been done by the first appellant was done prior to the incorporation of the first respondent and all of it, on any view, was done prior to the execution of the option deed insofar as that instrument may have any place within section 106.

In paragraphs 5.5 and 5.6 of our written outline we place reliance on the observations respectively made by Mr Justice Mahoney and Justices Priestly and Handley in Production Spray Painting v Newnham at the references there given. We submit that the second alternative to the word “whereby”, namely in fulfilment of which, ought to be preferred and similarly one must look to see what the purpose of the contract or arrangement in suit may have been, the purpose being one of the performance of work and not a mere incidental or accidental consequence of the arrangement as Mr Justice Mahoney suggested.

The option deed in suit is at appeal book 42 to 47. Without taking time to review its terms, it is plain from clause 2.1 that the options were then and there granted, were exercisable by the grantee at any time during the exercised period, namely 15 February 2003 to 15 March 2003 – that is to be taken from clauses 2.3 and 1.1 – the right to exercise the options was subject only to the respondent company’s achievement at the levels of earning stipulated in clause 2.4 and to the option deed’s formal compliance with the procedural requirements of clause 4. It is clear on its face that the option deed did not require any work to be done by either appellant after its execution. Indeed, it did not even contemplate that any work would be done by either of them.

The jurisdictional facts, in our submission, which must be satisfied in order to empower the Commission to make any order under section 106(1) are, first, the existence of a contract as defined in section 105; secondly, the performance by a person of work in any industry; and thirdly, that such work was performed in fulfilment of the contract so found to exist after the time of its making.

Those facts are not alleged in the appellants’ summons, at least so far as the option deed is concerned, or facts to that effect. Our friends seem to maintain that any pleading deficiencies in the summons can be put to one side given the practice of the Commission to simply allow these matters to proceed in order for everyone to have a look at the evidence. We submit that it is incumbent upon a claimant under this provision to articulate his case with sufficient clarity to enable the respondent to determine whether or not the case is arguably within the terms of the section. If it is not, we submit that the respondent has every right to invoke the supervisory jurisdiction of the superior court with reference to the case as articulated or pleaded in the summons.

It does not, with respect, assist the appellants in this matter to introduce any relevant epithet such as “overall” with reference to any alleged arrangement, as the appellants have done in paragraphs 3.10 and 3.11 of their submissions in reply. For the reasons that we have advanced in paragraphs 5.21 to 5.29 of our written submissions, whichever way one looks at the arrangement for which the appellants contend, on no basis do the facts pleaded in the appellants’ summons satisfy the jurisdictional test to which we have referred.

May we go to Brown v Rezitis [1970] HCA 56; 127 CLR 157, a case much relied upon by our learned friends. That decision simply stands for the proposition that once a contract or arrangement within section 88F has been found to exist and once the contract or arrangement is found to be unfair warranting its avoidance or variation, the Commission may make an order for the payment of money in connection with the contract, et cetera, against a person whether a party to the contract, et cetera, or not. Attention is to be paid to the language then of section 88F(2) set out at page 160 of the report where the Commission is empowered to order:

the payment of money in connection with any contract . . . declared void, in whole or in part, or varied in whole or in part, as may appear to the commission to be just –

A similar provision is now to be found in section 106(5). We submit, however, that one cannot gain any assistance from subsection (5) on the threshold questions which arise under subsection (1). At all events, in Brown v Rezitis each of the persons against whom orders have been made by the Commission under section 88F(2) were found to have received benefits at the time the work was performed, whereas here the first respondent received no benefit at that time for the simple reason it did not then exist. Such so-called benefit which the first appellant subsequently received arose as a result of the vendor’s execution of the restaurant acquisition agreement and not as a result of the fulfilment of any arrangement for the performance of work by the appellants.

Moreover, in Rezitis this Court concluded that, notwithstanding the appellants received money during the course of and as a result of the respondent’s work, there was no sufficient connection between the payments and the work to warrant the making of the orders there made by the IRC under section 88F(2), a fortiori, whereas here QSR was not in existence when the work was done and was therefore a complete stranger to the supposed arrangement, no order could be made against it under section 106(5) even if one were claimed.

In that regard, the remarks of Mr Justice Menzies, who concurred with Chief Justice Barwick, at page 170 of the report, at the very foot of the page – my apologies once again, the note that I have made is erroneous.

HEYDON J: Do you mean 169?

MR GRIEVE: Page 171 is the passage that I had in mind. I do apologise, my notes – it is 170.

GLEESON CJ: Perhaps you could come back to it after lunch, Mr Grieve.

MR GRIEVE: If your Honours please.

GLEESON CJ: We will adjourn until 2.15 pm.

AT 12.46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.22 PM:

GLEESON CJ: Yes, Mr Grieve.

MR GRIEVE: The passage to which I wish to refer the Court in Brown v Rezitis is at page 170 of 127 CLR, last paragraph. Mr Justice Menzies wrote:

I do not doubt that the Commission has a wide discretion in determining not only what money should be paid but by whom it should be paid. It is not for a Court, from which a writ of prohibition or certiorari is sought in relation to an order of the Commission, to exercise for itself the discretion given by the statute to the Commission. A Court can supervise the Commission by means of prerogative writs only when it is satisfied that the payment which has been ordered is one outside the power conferred upon the Commission by the section. Thus, for instance, the making of an order to pay remuneration for work done against a complete stranger to the offending contract or arrangement, or what was done thereunder, would obviously afford a fit occasion for control of the Commission by prerogative writ.

As we put before lunch, in our submission, QSR is in reality a complete stranger to the so-called arrangement which preceded its incorporation. It may incidentally be noted that the appellants have not at any stage made any claim under section 106(5), at least in relation to the option deed. In that respect their proceedings may fairly be described as a suit for the rectification of an instrument under the guise of a claim that certain labour conditions to which the first appellant subjected himself were unfair.

We turn now if we may to section 179. To begin with, in our submission, our friend’s argument that our client’s application to the Court of Appeal amounted to an attempt to appeal against or call into question Mr Justice Peterson’s decision not to dismiss the appellant’s summons for want of jurisdiction falls foul of the section.

The argument rests on a fallacy that we did endeavour to challenge the decision or non-decision on the part of Mr Justice Peterson. Reference to the summons which was filed in the Court of Appeal at appeal book 222 reveals that that was not the case. Our client did not claim prerogative relief in the nature of certiorari in relation to Mr Justice Peterson’s decision – or, more accurately, non-decision. At all events, as appears from our written argument, we submit that there are two answers to the asserted invocation of section 179. The first is that the Court of Appeal held in paragraph 87 at appeal book 333 a decision on an interlocutory or merely procedural question is not a decision within 179, and we have elaborated on that in our written submissions.

Secondly, we submit that a decision to defer a decision is not to make a decision, is not a decision within the relevant sense of the word as appears in the section. All that Mr Justice Peterson did was to determine that it was premature to decide whether or not the Commission had jurisdiction. We adopt Mr Walker’s submissions that a respondent to an application under section 106 where the Commission’s jurisdiction is open to substantial question is entitled, if not prudently bound, to invoke the Supreme Court’s supervisory jurisdiction at the earliest opportunity, lest the Commission were to rule erroneously that it did have jurisdiction. May it please your Honours.

KIRBY J: Just a moment, just before you leave. First of all, you made a submission earlier to the point that section 106(5) would not cast any light on section 106(1), and that is a very old-fashioned way of reading statutes. The Court denounced that in Agfa-Gevaert. You just do not read things in isolation.

MR GRIEVE: I understand that, with respect, your Honours, but what we are saying is that - - -

KIRBY J: Why did you put that submission to us then?

MR GRIEVE: Subsection (5) presupposes that the contract in suit is within subsection (1). You do not get to subsection (5) until you have passed the subsection (1) barrier.

KIRBY J: That is one way to put it. The other way is that you have to read the whole section as a whole. You have to see how it all fits together.

MR GRIEVE: Understood.

KIRBY J: After all, we are not talking about something that is somewhere in the part, we are talking about something that is in the same section.

MR GRIEVE: Indeed, I accept that, with respect, but subsection (5) as appears from the parliamentary material was introduced to facilitate the Commission’s disposal of a claim under subsection (1) so as to alleviate the need for the successful applicant to maintain further litigation in another court, but the test under subsection (1) has to be satisfied before one even gets anywhere near subsection (5), so that the phrase in subsection (5), “in connection with any contract” is a phrase which goes to relief rather than to substantive liability.

KIRBY J: Do you draw any comfort or any inference from the privative provision of the Act? Is there anything in that provision and in the consequence, if it be valid, to cut off a line of appeal to this Court that adds any strength to the argument you have advanced?

MR GRIEVE: It only has application in the sense that one has to construe 106 in a strict purposive fashion. In other words, one cannot approach 106 as if the phrase “whereby a person performs work” is not as significant as we contend it is, and for the reasons that Mr Walker has advanced one must find, we submit, the inherent industrial nature of the contract to confine the jurisdiction of the Commission in light of section 179.

KIRBY J: It does not actually help you very much at the border to formulate a way of expressing those matters which are “whereby” and those matters which are not.

MR GRIEVE: Well, if one applies the phrase “in consequence of which”, which was the alternative considered open by the Privy Council in Feenan, the gate is far wider than if one applies the alternative “in fulfilment of which”, which the majority in Production Spray preferred, and that is one pointer, we submit, to the impact that section 179 has on section 106.

KIRBY J: Anyway, you do not abandon that inference. You draw comfort from it?

MR GRIEVE: Yes, we do, with respect.

KIRBY J: May that not have consequences for the Judiciary Act?

MR GRIEVE: It may, but it does not arise in this case.

KIRBY J: Why?

MR GRIEVE: Because this case does not get to that point given the fundamental fact that the arrangement asserted by the appellants was an arrangement to which the first respondent was not a party. The case stands disposed of on that very short point.

KIRBY J: Well, that might be a correct way of looking at it, but that smacks of the snipping and snapping approach to construction. You just snip a little bit out, just look only at that little bit, and it may not be the correct way to construe a statute nowadays. Anyway, I understand what you have to say.

MR GRIEVE: May it please your Honour.

GLEESON CJ: Yes, Mr Hatcher.

MR HATCHER: May it please the Court, can we deal firstly with the construction of the Industrial Relations Act and the Industrial Arbitration Act before it. In our written submissions we have dealt with the traditional approach to the construction of section 88F in the Industrial Arbitration Act enunciated by his Honour Justice Sheldon in the case Davis v General Transport. We have reproduced an extract from that at paragraph 26 of our submissions. Support for that construction that was embraced by the Court of Appeal in V.G. Haulage and in Stevenson v Barham is to be found by reference to the provisions of the Act, and we support and adopt the submissions of Mr Walker in that regard. Could we also draw attention to the provisions of section 10 of the present Act and section 23A of the Act as it was in 1959, the Industrial Arbitration Act as it was in 1959, those provisions requiring that awards be set by reference to “presently fair and reasonable” conditions and in 1959 “just and reasonable”.

In that context, can we remind the Court of the words of the legislature in the second reading speech that is to be found at tab 7 of the bundle of materials that Mr Jackson provided. It is a very short point. It was read by Mr Jackson and there is no need to turn to it, but can I just observe that at page 2129 in the bottom right-hand column the Minister describes new section 88F, but having described the various provisions says, “The opposite of each of those propositions would be a fair defence”. So if you are paying fair remuneration and fair conditions of employment you have a defence to 88F – “fair” being a term that was embraced in the section by reference to the Commission’s award-making powers.

Now, if one contrasts that to the approach to the construction of the section embraced by the Court of Appeal subsequently in Incitec (1992) 29 NSWLR 83, your Honour the Chief Justice – then the Chief Justice, but in a different capacity – adopted the words of his Honour Justice Hill in his judgment at first instance in that case. At page 86F your Honour extracted from Justice Hill’s judgment the following:

“On the other hand s 88F of the Act deals with the matter of what for present purposes may be briefly described as unfair contracts. It applies to a contract or arrangement between the particular persons who are party thereto. Unfairness may arise either from the terms of the contract itself, the surrounding circumstances, and/or from the manner of performance or operation of the contract. The section deals largely with private rights inter partes. Despite that a general and relevant industrial prescription governing benefits payable to employees in termination of employment situations may exist, unfairness in relation to a particular contract of employment may nevertheless arise in a situation of redundancy or termination of employment for reasons unrelated to or not relevant to the basis of award prescription of an objective and fair general standard of redundancy or severance benefits. It may arise simply in the special circumstances of and surrounding the particular contract.”

That appears to us to represent a quite different approach to the section than that enunciated by Justice Sheldon in Davies, an approach that had found favour at the Court of Appeal level but was rejected in Stevenson v Barham. It is an approach, in our respectful submission, that is consonant with the objectives of the Act. Those appear to be two available approaches to construction of the section.

The contention we advance is that on either of those constructions of the section, it was never any intention of the legislature to effect contracts that were not contracts, the proper law of which was the law of New South Wales. It is clearly more related to the performance of work if the former construction is adopted. It would seem that if it is a section directed to inter partes contractual relations, the rules of private international law would dictate that the parties would be entitled to choose the law of contract.

Yesterday your Honour Justice Gummow suggested that there had not been any close attention to the construction of the section. In deference to Justice Watson formerly of the Industrial Commission, we would invite the Court’s attention to his Honour’s judgment in Cosgrove v International Opal Pty Ltd [1977] AR (NSW) 751. We acknowledge this is a first instance judgment in the Industrial Commission itself but his Honour here brought together a number of authorities that are relevant to the propositions we wish to advance. When the Court has wondered from time to time at the nature of the arrangement that the legislature may have had in mind in 1959, one sees at page 753 of the report the nature of the arrangement that his Honour Justice Watson had before him. It is not atypical in terms of the arrangements that were coming before the Court. The majority of the cases in the early days were transport cases but there were some others such as this. One sees at 753 the advertisement that was - - -

KIRBY J: There were some in the entertainment industry, as I recall.

MR HATCHER: There were, your Honour. In fact, Richardson - - -

KIRBY J: In re Becker and Harry M. Miller.

MR HATCHER: Yes.

KIRBY J: I am sorry I interrupted you. Press on.

MR HATCHER: Your Honours, at 753 the advertisement that led to the work being performed is to be seen and it might be characterised as one of those advertisements where this is your last chance to send money to. In any event, Mr Cosgrove was unfortunate enough to send money to at the last opportunity and that was the arrangement under which work was performed that came before his Honour. At page 758 of the report his Honour summarises Mr Cosgrove’s primary submission and that was a submission:

based on the contract and its connection with NSW –

that appears at the head of the page –

that being the state where the contract had the greatest connection, one of the parties being in NSW, moneys passing under it . . . His alternative submission was based on the wider application of the section to an arrangement and not simply a contract.

His Honour indicates an intention to return to that. From the bottom of the page your Honours will see a reference to Hildred’s Case and his Honour goes in some detail to Hildred’s Case. We have extracted Hildred’s Case in our written submissions and I will not trouble over that here. At 761, having gone to Hildred’s Case, his Honour says this:

If all that occurred involved a bona fide business transaction, I would have little hesitation in coming to a conclusion on the contractual position. On its face, and as may be inferred as the reasonable commercial intentions of the parties, Nessell might be said to have been simply canvassing in NSW and extending invitations to treat with the company, invitations which he would formulate for acceptance in Queensland after the company was satisfied with the capabilities of the trainees. In the normal course of events I would not be prepared to assume, also, without clear evidence, that an agent of the company would necessarily be armed with authority to arrange and conclude contracts which may involve the company as a foreign company not registered in NSW in carrying on business in NSW.

In such circumstances, the further inference would be open that the contract was a Queensland contract untouched by s 88F, the only connection with NSW being its negotiation and that the applicant was to work in Sydney, and possibly receive opals from them and return them to Nessell’s office in Crow’s Nest. Applying what was said in Hildred’s Case that would end the matter. That the work was to be performed wholly or substantially in NSW would not alter that conclusion as the section is framed.

HAYNE J: I see all this and no doubt it will repay careful reading, but what is the process in which you say either this decision was engaged or we should be engaged? Is it a process of construing the contract and attaching a geographical term to an element of the provision?

MR HATCHER: Your Honour, the contract has an express - - -

HAYNE J: I understand that. I misstated the question. Are we construing the section and attaching a geographical element to an element of the section? What are we doing?

MR HATCHER: What we are doing, your Honour, is construing the section and determining what its territorial link is, what does it bite upon.

HAYNE J: And what term do you say is relevantly confined territorially, or what terms?

MR HATCHER: Your Honour, there is an absence of terms so one must look to the subject matter of the section.

GUMMOW J: Why is there an absence of terms?

MR HATCHER: Well, there is an absence of express territorial limitation.

GUMMOW J: Well, yes.

MR HATCHER: So one must look to the subject matter of the section to determine where the territorial limitation is to be found. As we say in our written submissions, it could be the contract, it could be the performance of work in New South Wales or it could be, as the Commission has presently found, the performance of work that has a connection with New South Wales industry.

KIRBY J: There is nothing in the Interpretation Act (NSW) that helps, is there?

MR HATCHER: There is the same section 17 that was considered in Wanganui, your Honour. So it is a question of what does that bite on? What is the subject or matter or thing which is in and of New South Wales for the purposes of the section? So the task is to determine what this section is directed to. Is it directed to the performance of work or is it directed to contracts? If it is directed to contracts - - -

GUMMOW J: What do you mean by “directed to”?

MR HATCHER: The subject matter of the section, the provision, what its focus of attention is.

GUMMOW J: It creates a jurisdiction and then it confers it.

MR HATCHER: It creates a jurisdiction, but one would not think it is a jurisdiction to effect contracts entering into in Germany for work to be performed in France. There must be some territorial limitation. Now, it could be - - -

GUMMOW J: Part of the problem is it does not tell you who the defendant is so questions of service do not seem to have entered into anyone’s mind.

MR HATCHER: Service did arise in Gosper v Sawyer, your Honour. At that stage the Commission’s rules did not provide for service outside New South Wales.

GUMMOW J: I realise that.

MR HATCHER: The Act was amended to provide a substantive power to enable rules to be made authorising service outside the jurisdiction.

GUMMOW J: Where is the rule-making power now?

MR HATCHER: Section 185, your Honour.

GUMMOW J: Does this enable the passage of a rule to tell you who the defendant is, does it?

MR HATCHER: No, your Honour, there is no rule telling you who the defendant is.

GUMMOW J: No, exactly.

MR HATCHER: There is a rule providing for extraterritorial service, and my recollection is that it is specifically authorised by a section in the Act.

GUMMOW J: Service on some innominate class.

MR HATCHER: Indeed. Your Honour, it is a provision we need to struggle to construe but it is a section that at the moment is said to affect our clients, one of whom entered the contract.

GUMMOW J: The question of territorial connection has various aspects to it. One is the nature of the jurisdiction, one is the sufficient connection of the subject matter of the exercise of the jurisdiction, and they are wrapped up together in the case you showed us to.

MR HATCHER: We will attempt to separate them.

GUMMOW J: It comes back to what we were saying early yesterday morning. This section wraps all these ideas up together. They have to be prised apart.

MR HATCHER: Quite.

GUMMOW J: Now, there is no question here about the first element, I think. It is the territorial link of the content of the jurisdiction that has created. So the analogy is choice of law rather than jurisdiction.

MR HATCHER: Yes, your Honour.

HAYNE J: The agreement in issue is an agreement to resolve disputes following termination of an employment.

MR HATCHER: That is so, your Honour. An employment contract between a US company and a US citizen for that employee to be employed by the US company, but for five years to be seconded to Australia.

HAYNE J: But the agreement in issue is the agreement regulating the rights after termination?

MR HATCHER: Yes, and our principal contention is that cannot be a contract under which work is performed. It is the very antithesis of such a contract. Service outside New South Wales is provided in rules 111 and 112 of the Commission’s rules.

GUMMOW J: We had better be supplied with them at some stage.

MR HATCHER: If it please your Honour. At page 762 of the report his Honour proceeds to make an:

assumption that the contract is a sham or mere legal dress or but an incidental part of what occurred –

and then approaches the question of whether he has before him a matter in and of New South Wales from that perspective, and he ultimately finds that he does.

In doing so, he goes at page 763 to the judgment of Justice Sheppard, that our learned friend, Mr Jackson, referred to yesterday and, in particular, his Honour’s reliance on Bell v Federal Commissioner of Taxation. Can we again stress the words in that:

. . . it may be said that the word “arrangement” is the third in a series which as regards comprehensiveness is an ascending series, and that the word extends beyond contracts and agreements so as to embrace all kinds of concerted action by which persons may arrange their affairs for a particular purpose or so as to produce a particular effect.

Now, we are going to come to the terms of the various arrangements between - the various contracts in fact between the parties, but they do not, when one looks to the concerted effect, lead to the performance of work. It is argued against us that they are all to be viewed as an arrangement. Even if they were viewed as such, it would not be an arrangement whereby work was performed, in our submission. Over the page at 764, in an approach that is redolent of the approach that the Full Court took in the proceedings below, his Honour says at point 7:

One difficulty about the submission is that whereas an “arrangement” may include a contract or contracts or plans, or interactions of less binding effect, it cannot be treated, in my view, as a term to be substituted for “contract”, if the main or sole arrangement between all concerned is the contract. If that were the true conclusion to be drawn in this case from all that had occurred, the alternative submission simply reverts back to Hildred’s Case and the applicant’s remedies, if any, may be in Queensland. Section 88F as there construed is not directed at protecting a gullible would-be worker who chooses to step outside the scope of NSW legislation and seeks to gain some advantage there, even though having sought to do so he may come back to NSW to work.

However unfair such a contract or arrangement may be or how otherwise it may offend against a provision such as s 88F, that is something such a worker may need to pursue under any Queensland law that may relate to the issue.

On the other hand if a scheme or plan is perpetrated in NSW, leading directly to work in NSW, the participants in that scheme cannot escape the wide net cast by s 88F, simply by adopting the legal dress of a Queensland contract, or by seeking by non-registration as a foreign company, to adopt a safe retreat beyond NSW by acting through agents in NSW whose role possibly transcends that of the company itself (depending on how bona fide its business and the basis for its incorporation-aspects at this point left somewhat clouded). Legislation such as s 88F cannot be circumvented by subterfuges such as that.

That, in our respectful submission, was the type of arrangement that the legislature had in mind. It is the way the section was being applied and it was consistent with the structure of the Act.

Further down on that page his Honour extracts from Kay’s Leasing. It should be said that his Honour in subsequent years moved from his approach to Hildred’s Case to adopt a view that the territorial limitation of section 88F was the performance of work so that if work was performed in New South Wales section 88F had work to do.

GUMMOW J: Well, that is linked to the New South Wales economy then, I suppose, which we were told underpins this Act.

MR HATCHER: That is one of the objects, your Honour.

GUMMOW J: Yes.

MR HATCHER: But his Honour did so based on what this Court said in Kay’s Leasing. If I could draw particular attention to the extract from his Honour Justice Kitto’s judgment, which is at the bottom of page 765 of the report - - -

GUMMOW J: That was construing the Hire-Purchase Act, was it not?

MR HATCHER: It was, your Honour. After his Honour referred to Wanganui his Honour said:

Such cases have dealt with legislation modifying or making void contractual rights and obligations of specified descriptions; but in each instance the modification or avoidance was enacted as an end in itself and not as a sanction for contravention of statutory requirements.

One can well understand why, if the legislature said no one in New South Wales shall work more than eight hours in a day, it would not matter where you contracted, it was part of the law of New South Wales that you would not engage in that conduct. But it is quite another thing to suggest that the legislature in New South Wales intended to confer a power on judges in New South Wales to consider whether your contract in Germany, France or, in this case, Colorado was - - -

GUMMOW J: What do you mean in Colorado?

MR HATCHER: Well, from the perspective of our client, they entered into both the compensation and release agreement and the original employment agreement in Colorado.

GUMMOW J: Yes, that was the lex loci contractus. It is Colorado.

MR HATCHER: Indeed, yes.

GUMMOW J: So what?

MR HATCHER: Well, they would not immediately anticipate applying the rules of private international law that their contract, if their employee happened to perform some work in connection with New South Wales industry, would be examined by a judge of the New South Wales Industrial Commission to consider whether it was fair or not.

GUMMOW J: But it is not a question of what they thought. It is a question of what the New South Wales Parliament has provided.

MR HATCHER: Well, quite, your Honour.

GUMMOW J: That is what Justice Kitto is saying in Kay’s Leasing.

MR HATCHER: But he is pointing to a distinction, your Honour, where the Parliament says do not do this and someone engages in the conduct as opposed to a facultative provision enabling a court to examine a contract and to do some work in relation to a contract. That was the point of distinction in Kay’s Leasing from Wanganui, the fact that it proscribed particular conduct which was represented by the contracts that were being entered into. Here it is not a proscription of conduct. You can perfectly lawfully enter an unfair contract. It is simply subject to examination. So it is simply a provision empowering a New South Wales court to examine contracts to consider whether they meet a statutory test or not.

Apart from that, we rely on our written submissions on the question of the proper law. Can I then go to the appeal book and the contracts at issue in these proceedings. Can I start from - - -

KIRBY J: Now, just pausing there. So far the point you have been arguing has nothing to do with the other appeals. They are quite unique to your appeal.

MR HATCHER: Subject to the general point of what the section hits upon, your Honour, that is, is it directed to fairness in the sense of contracts whereby work is performed in an industry that might be regulated by fair and reasonable conditions of employment under the award-making powers of the Commission, or is it a general grant of jurisdiction to examine contracts where work is performed in New South Wales by reference to the inter partes fairness or otherwise? That cuts across I think all three cases, your Honour.

At page 88 of the appeal book the original employment agreement is to be found. Can we draw attention to a few features of this document. Firstly, under “Title”:

As an employee of UIH –

and I should say UIH is the company that has become Unitedglobalcom and Old UGC. It has changed names several times and there have been a few restructures of the company’s affairs as other investors have come into the operation –

you will be seconded on a full-time basis to our Australian affiliates CTV Pty Limited and STV Pty Limited (the “Companies”) with the title of Managing Director.

Job Description: Manage the financing, construction and operation of MMDS, DTH and cable television businesses for the Companies.

That is, this is a start-up business. The assignment is for a period of five years and the salary and bonus are provided. Then in “Incentive Compensation” your Honours will see that he is to be:

entitled to 0.75% of the Residual Equity Value of the Companies as calculated in (2) below (the “Incentive Interest”). The Incentive Interest will vest 20% as at the date of hire and then monthly over the next 48 months. You may put the Incentive Interest back to the Companies during a 12 month period beginning March 7, 2000 and the Companies may call the Incentive Interest during a 12 month period beginning March 7, 2001. Prior to the end of the five year term, the vested amount of the Incentive Interest will become payable if you resign and, at your option, upon termination as described below.

The termination provision is simply that it takes effect at the nominated dates, that is March 2000 and 2001, or at his option it can be brought forward earlier.

There will be no floor and no cap on the value of the Incentive Interest.

That is an important provision.

There is then a provision for the calculation. That calculation is obviously going to be problematic in early years of a start-up company, which is why there is a real difference between the provisions on resignation and termination. On termination, even if he is terminated six months into the agreement, he can wait for five years and see how the company is travelling, whether there is a real value going to attach to his .75 per cent. If he resigns, he only gets the value calculated of the company at the time of resignation. Termination is dealt with and over the page one sees the sorts of provisions that one might anticipate for a contract where someone is asked to serve overseas for a time.

GUMMOW J: What is the point of this detailed analysis, Mr Hatcher, at 2.55 pm? We can read all this.

MR HATCHER: The point, your Honour, is that it is put against us that this is a contract varied by the compensation and release agreement. It is put against us that this is part of an overall arrangement whereby Mr McRann performed work in New South Wales industry. We wish to contend that it cannot be perceived as such.

One sees at page 90 of the appeal book there are references to a cost of living differential, relocation, moving allowances, tax equalisation and home leave. It has all the hallmarks of a contract whereby someone is performing work for a Colorado company, albeit temporarily in New South Wales. Can I then go to page 92 of the appeal book where the termination of employment letter is reproduced. Importantly, the second paragraph:

This letter and the attached Compensation and Release Agreement (“CRA”) set forth the terms and conditions of the termination of the Existing Agreement.

You acknowledge that the terms and conditions of your new assignment with A2000 are contained in a separate agreement.

. . .

In exchange for executing the attached CRA, you will receive the compensation and benefits contained in the CRA and abide by all of the terms and conditions of such CRA.

If the foregoing accurately sets forth the terms –

sign it, and it is signed. Then at page 94 of the appeal book we get to the compensation and release agreement:

This Compensation and Release Agreement (the “Agreement”) is entered into between United International Holdings, Inc (“UIH”), including its affiliated companies . . . and its officers, directors and employees –

This is said to constitute a variation of his contract of employment. It is a contract whereby he is releasing employees of UIH and its affiliates from any obligations. They become parties somehow to a contract of employment with him. The purpose of agreement is set forth in fairly clear terms:

The purpose of this Agreement is to forever resolve any and all legal disputes between the Company and the Employee with respect to the Employment Letter Agreement between the Employee and UIH dated February 21, 1995 and any amendments thereto (the “Existing Agreement”), and to provide the Employee with the compensation and benefits described herein to which Employee would not otherwise be entitled in exchange for Employee giving up any and all legal rights or claims which arise out of the Existing Agreement.

And he has provided:

As consideration for entering into this Agreement, Employee shall be entitled to the following incentive compensation benefits for services provided to Austar Entertainment Pty Ltd, CTV Pty Limited and STV Pty Limited (together “Austar”).

They are not the employers. He was working in their businesses on secondment from his employer. They are providing the compensation under this compensation and release agreement. Importantly, a floor and ceiling is introduced in the compensation benefits. He had no entitlement to that. It is introduced in a circumstance where our learned friends’ submissions make clear there is a real contest between the parties as to whether he was resigning or being terminated to take up the position with another joint venture company, a company in which UIH had an interest in Amsterdam. There is a contest between the parties as to whether he is resigning.

The termination of employment letter agreement says, “In view of our mutual agreement to terminate”, and he receives benefits that would not be available on a resignation. He gives a comprehensive release in Chapter III of the agreement:

Employee gives up his right to bring any legal claims against the Company of any nature and related in any way, directly or indirectly, to his employment relationship with the Company pursuant to the Existing Agreement or the termination thereof, and his secondment to Austar.

This hardly varies his contract of employment.

GUMMOW J: You quarrel with paragraph 57 on page 155? Is that what it comes to?

MR HATCHER: That is exactly what we - I think it starts from 51, your Honour. I am sorry, from 55, but yes, 57. It simply has no regard, in our respectful submission, to the expressed intention of the parties. Now this Court has said in Concut v Worrell and FCT v Sara Lee and Tallerman and a long line of cases, but the way one determines whether a contract rescinds an earlier contract or varies an earlier contract is to have a look at the expressed intention of the parties.

Here we have a document that clearly expresses the intention that compensation will be provided on the basis of a release being provided at the termination of a contract of employment. The court below finds that that constitutes a variation of his contract of employment. Our learned friends say no, it is part of an overall arrangement whereby he is employed. Well, it does not express itself as such. It rather says this is what you get for giving up your rights under your contract of employment. It says so expressly.

We cannot assist as to how the court came to the conclusion that it was a variation. It was not something suggested by our learned friends. Their argument is made clear by his Honour at paragraphs 46 and 47 of his judgment on page 121 of the appeal book. They were talking about a tripartite arrangement or a three-tiered arrangement composed of the employment letter agreement, the termination letter and the compensation and release agreement. They had not pleaded that initially in their summons in the Commission. They were only attacking the compensation and release agreement. It was in the course of argument before the Court of Appeal that the arrangement was argued and as his Honour says, if it is open to be pleaded on the facts, it is open to be pleaded on the facts. Jurisdiction could be found. His Honour says that arrangement is not open.

HEYDON J: What do you say about grounds 3 and 4 of the notice of contention at page 136?

MR HATCHER: Your Honour, in order to be related or collateral in the relevant sense to the contract under which work was performed it must be, in our respectful submission, part of the overall arrangement. It must have work to do in the arrangement under which work is performed. You see, if our learned friend’s contention is right it has this result. You can never settle proceedings under section 106. Now, that appears to be the existing jurisprudence in the Commission. In Lahoud v Lahoud a settlement was arrived at in conciliation of a 106 and that settlement arrived at in conciliation itself became the subject of 106 proceedings.

Now, in our respectful submission, the Court of Appeal found in Qantas v Gubbins that it is contrary to the public interest to construe the Equal Opportunity Act, an Act which does make certain conduct unlawful in such a way that the parties could not settle by release and that that release could not be relied upon as a full answer subject to equity not denying the lines upon it.

But this approach to the collateral arrangement or related condition would mean that in 106 it does not matter how you have said it, it becomes a related condition or a collateral arrangement and is subject to challenge in the same way. You just cannot settle 106 proceedings. In our respectful submission, that cannot have been the statutory intent, not in legislation which does not make unlawful and unfair contract. It simply gives you an opportunity to seek that it be reviewed and encourages, indeed requires, conciliation on the path to review.

May it please the Court, our learned friends invite the Court to construe the compensation and release agreement as varying the initial employment agreement. If one looks at paragraph 5.27 of their submissions, it simply defies both law and logic to construe the agreement, which I have read in some detail, as varying or forming part of the arrangement under which work was performed. It is the very antithesis of it. Mr McRann himself referred to it as a buy-out of his entitlements – as it is.

There is some disagreement, or a potential disagreement. There is some uncertainty as to how one would go about valuing the equity interest so early into the operation of a start-up company. Two very experienced people, experienced in business. Mr McRann was here to start up the business of Austar in Australia. They sit down, they negotiate an agreement to resolve that dispute. They commit it to writing. Mr McRann was authorised to commit Austar, indeed, UIH, to millions of dollars in the operation of this business, yet he goes before a judge of the Industrial Commission inviting them to assist him because of the unfairness he now says is perpetrated on him in the deal he negotiated – a deal that he has already litigated in the District Court of Colorado; unsuccessful.

KIRBY J: What was the issue in that litigation?

MR HATCHER: What occurred, your Honour, was Mr McRann, after he went to the A2000 operation in Amsterdam there was a parting of the ways - - -

KIRBY J: I realise that. I am just asking you what was the nature of the claim in Colorado.

MR HATCHER: The claim in Colorado was directed both to the A2000 arrangement and directly to the compensation and release agreement. It was sought to avoid the compensation and release agreement on an allegation of fraudulent misrepresentation.

KIRBY J: That is a higher barrier to jump over than the New South Wales Act if it attaches.

MR HATCHER: Well, the New South Wales Act has not been perceived to be a particularly high barrier to jump over, if it attaches in the way it has been applied, if it please your Honour. It is an ex post facto assessment. It might be said that there are not too many fair contracts that the Commissioner has had the opportunity over time to review in recent years.

KIRBY J: That is no doubt the sorting out of litigation, litigation because of its great costs, which we see at the Bar table here assembled - - -

MR HATCHER: Indeed, your Honour.

KIRBY J: - - - and he sorts out the cases that are worth taking. It cuts both ways that one.

MR HATCHER: That is possible, your Honour, although if one recalls from our written submissions, the reference to his Honour Justice Peterson’s observations in Canizales v Microsoft. Now, one does wonder whether the legislation has tracked or the application of the legislation has tracked some distance from what the legislature had in mind in 1959.

KIRBY J: Where is that said?

MR HATCHER: Canizales v Microsoft. It is referred to in our written submissions, your Honour.

KIRBY J: Yes, we can track that down from there.

MR HATCHER: I can quickly turn to it, your Honour.

KIRBY J: But in the end the Court’s duty is to give effect to the purpose of the legislation as expressed in its language.

MR HATCHER: Quite.

KIRBY J: If it has tracked away from what was originally thought, well, that does happen. We see that from time to time.

MR HATCHER: Yes, the reference, your Honour, was paragraph 40 of our written submissions. Canizales is reported at [2000] NSWIRComm 118; (2000) 99 IR 426. If it please the Court, those are our submissions.

GLEESON CJ: Thank you, Mr Hatcher. Yes, Mr West.

MR WEST: The last matter my learned friend referred to was the situation in the United States proceedings. I will not distract the Court, merely ask the Court to look at page 67 of the appeal book in the judgment of Justice Peterson. In paragraphs 68, 69 and 70 his Honour deals with the assertion that the issue in this case had been decided in America or that he had passed upon it and he dispatched that proposition with élan.

There are three agreements in this case. The first is the employment agreement. My learned friend has taken you to that. It is plainly an employment contract. It was for work in New South Wales in industry in and of New South Wales and it was for five years – page 88 to 91 of the appeal book. There was in that contract an incentive compensation provision. It had not fully bitten by the time Mr McRann became involved with his then employers in the prospect of his being transferred to a new assignment in Holland. The arrangements for the Holland transfer were never completed. It was found in America that the contract in respect of that was not enforceable.

What Mr McRann gave up as part and parcel of being prepared to go to Holland were the rights which were accruing under his employment contract in New South Wales insofar as they were incentive provisions. What happened was that Mr McRann’s employment, although ongoing, was agreed to be terminated as of 31 July 1997. This contract did not provide for that, but the second of the documents in the series did – that is the termination of employment letter so-called at pages 92 and 93. It was between the same parties as had made the employment contract. It contemplated and recorded that the employment contract would terminate in the future, not as at the date from which it spoke.

Virtually contemporaneously with that agreement being put in place, the so-called compensation and release agreement, which appears at pages 94 through to 96 of the appeal book, came into existence. It did a number of things, but relevantly it varied so much of Mr McRann’s continuing extant employment contract as related to incentive compensation rights.

HAYNE J: Well, it made different provision, I understand that. Why did it vary it? The agreement was terminated and a new agreement was made.

MR WEST: Your Honour, it had not terminated as at the date that the compensation and release agreement came into effect. The employment agreement was still ongoing, and your Honours will notice that on appeal book page 94 under the heading, “II. Compensation and Benefits” and then next to 1:

As of July 4, 1997, Employee will be deemed to have vested a total of 0.50% of the Residual Equity value –

This document spoke from the day it was made, which was two days earlier, 2 July. At this time Mr McRann’s employment was continuing and he was giving value for his salary and his benefits. From the date it spoke it changed the basis upon which his incentive rights accrued and it set out into the future what his rights would be once the employment contract came to an end at the end of July.

So that rather than this document, the third of the agreements, bringing Mr McRann’s employment to an end, it did not. It fed into the current employment contract and it changed the rights, so far as incentive benefits were concerned, which were accruing at that time.

GUMMOW J: Now, that submission is independent, is it, of your notice of contention?

MR WEST: No, your Honour. His Honour in the Court of Appeal – the Court of Appeal accepted that. The Court of Appeal found that there was indeed this window that I have just identified during which time the employment continued, it was one of the matters that we pointed out to the Court, and that the Court then satisfied that there was no issue about privity here. The privity question is a furphy. The two parties who made the first agreement also made the second. They were also two of the more than two who made the third; there is no issue on privity.

There were just additional people who were parties to the third but that did not destroy the privity as between the two contract makers. So the Court of Appeal was correct, in our respectful submission, to construe the three agreements as working together, reading them together and then finding that the third worked in substance a variation of the first, as indeed did the second. So understood, there is no problem.

There was a contract whereby work was performed in an industry and the terms were varied. If there had been a problem with privity, this case would have highlighted one of the issues discussed this morning in this Court, namely what is meant by an arrangement. If the contract or part of it failed because of privity problems, then it would be an unenforceable agreement. It looked like a contract but it was not enforceable as such. It would certainly be attractive under 106 as an arrangement or a collateral arrangement or a related condition to a contract which did fall within 106.

Hence, we respectfully wish to associate ourselves with the submissions put by my learned friend Mr Walker that indeed, in answer to your Honour the Chief Justice, where an arrangement is involved, indeed one is putting in place by variation a set of legal rights which did not hitherto exist. That is inevitable, in our respectful submission. Your Honours, if we are right about that, that is the end of the proper construction of the three agreements. They either are a contract as a whole or they relate so clearly to the employment of work in an industry that they fall within the full purview of 105 and hence 106.

Our learned friend’s principal problem is the way in which he approaches the question of jurisdiction and he does that backwards. It is inherent in the way in which the appellant says this is a law with respect to contracts. It is not a law with respect to contracts. The fact that it has been described in various judgments to this day as being concerned with contracts takes the matter nowhere. Not until this day has the matter of what really is meant by “contract” ever been really examined. One is dealing in 106 with a statutory construct. Certainly it covers contracts at common law but it covers a good deal else.

Once that is realised, what one is dealing with here is unfair work arrangements. The context in which 106 appears as being one part of 10 parts of Chapter 2 of the New South Wales legislation makes it clear that what that chapter deals with is work arrangements under awards, industrial agreements, it deals with their fairness, it requires that terms of awards be just and fair. Industrial agreements are to be negotiated but they do not come into effect unless they are approved. One of the gateways through which the approval process is to be driven is one in which the Court is required to consider its fairness.

The provisions of another part of the section deal with unfair dismissal, that is, the protection of rights of employees who are dealt with unfairly and terminated. The unfair contracts part can be seen in exactly the same light. Its context is work arrangements, the conditions which apply to them, their preservation and their enforcement. So understood the Court of Appeal, with respect, was correct when the court said that this is not a law with respect to contracts. It is a law with respect to unfair work arrangements.

So then what is the correct way to interpret section 106 from the point of view of searching for jurisdiction? The answer lies in the phrase “whereby work is performed in an industry”. One asks the question, “industry”, what does that mean? In our respectful submission, the answer is supplied by the Interpretation Act. It is industry in and of New South Wales. There is no contextual necessity to interpret in any different way. There is no counter indication anywhere in the Industrial Relations Act that the word “industry” should be read differently, thus Wanganui has nothing to say to the question other than to be understood in conformity with such an interpretation. Similarly, Kay’s Leasing v Fletcher and that is the way in which the New South Wales courts from 1972 onwards, starting with Re Hildred; Ex parte Richardson interpreted the matter.

There are issues about Chief Justice Kerr’s judgment, whether there were two rationes or but one. There was one, because his Honour agreed with Justice Asprey who did not decide the case at all on the basis of choice of law clauses or choice of law as a whole. He decided on the basis of work in and of New South Wales and that has been the way in which the matter has worked through the New South Wales cases and now it becomes enshrined in the latest of the Full Court judgments in that court in Chrysler Jeep v Canberra Star Motors.

Now, your Honours, there are serious difficulties, in our respectful submission, with the proposition that the proper law of a contract determines jurisdiction under section 106. Once it is accepted that it does not deal with contracts, save only to the extent of one out of four of these relationships in 105, proper law has no work to do, in which case a jurisdictional test would fail at the threshold in three out of four cases. That does not look like a test for jurisdiction, but industry in and of New South Wales looks very much like a test for jurisdiction.

HAYNE J: If the performance of work in New South Wales or in an industry in and of New South Wales is the hinge about which 106 turns, is a severance arrangement whereby an employer agrees to give the employee six months pay in lieu of notice of termination, early termination, of a contract of employment for a term of years, a contract whereby a person performs work in an industry in and of New South Wales?

MR WEST: The giving of a termination notice may itself not be such a contract, but it may be part of it because what it would do, your Honour, is have a direct effect upon another term of the contract, either express or implied, in which case it is reviewable under section 106.

HAYNE J: But an essential step in your argument is, as I understand it, to characterise what you say are the related – I use the term neutrally – arrangements recorded in the letter dated 30 June and the compensation and release agreement as agreements whereby a person performs work in an industry.

MR WEST: Thank you, your Honour. What we were seeking to do by that characterisation is through the notice of contention to preserve a piece of land we were happy to stand on and did not wish to have taken off us as the Court of Appeal judgment did. For that purpose we contended, and do, that the compensation and release agreement has from its terms work plainly envisaged because so much of it as is related to the payment of the incentive compensation payment is a benefit paid in replacement for a benefit to which the employee was otherwise prior entitled for the performance of work in an industry.

HAYNE J: Do you dispute the characterisation of the two documents together as severance terms?

MR WEST: Yes, your Honour, with respect, we do. Whilst it may be that part of the agreement relates to severance, part of it does not.

HAYNE J: What is the part that does not?

MR WEST: The fact that the benefits provided under the incentive agreement are to be paid and accrued during the currency of employment. All that has happened is that the employment by another agreement is to be brought to an end a month after the compensation and release agreement first vests a right to equity in Mr McRann. Under his prior regime he was accruing equity rights with the passage of time and all this did was to replace one multiplier with another, as well as include for the first time a choice of law clause – it only appears in the compensation and release agreement; there are none in the others – and it would be a real question as to what the proper law of these contracts was.

Just because the choice of law clause says it was Colorado does not mean it was, if that is disputed, and indeed one might ask the question and answer it that the proper law of the employment contract was not Colorado anyway. Mr McRann was then a Californian citizen, the company was a Delaware corporation carrying on business in Australia through Australian affiliates, and it was to them and in their care that he was to be entrusted when he came to Australia and perform work in those companies.

KIRBY J: But in the world of growing inter-jurisdictional obligations, if parties of full capacity agree upon a choice of law provision and fix it between them, is there not a high legal policy for upholding that, subject always to statutory provisions that may allow you to go around it? Otherwise you are going to have to litigate in California, in Colorado, in Delaware and in New South Wales, and that is a very expensive business.

MR WEST: Either that, your Honour, or the point would be put that in proceedings before either a court or the Industrial Commission, whichever received the matter, that the choice of law clause should be ignored because it does not properly represent the proper law of the contract. If it were to be asserted in a case that jurisdiction of a domestic court could be defeated by the mere presence in a document without more, without any explanation as to its presence, how it got there, what its provenance was or anything else, that its mere presence, which is the case here, displaces jurisdiction of a statutory court, it would be a remarkable position, in our respectful submission.

Our learned friend’s submission and his approach to jurisdiction simply reads out of section 106 everything other than common law contract and it ignores the context, and for those reasons alone, in our respectful submission, it is demonstrably wrong. Our learned friend’s resting point ends up as Gosper v Sawyer. That appears to be the high-water mark of his case, seemingly for the proposition that proper law of the contract determines jurisdiction.

Now, that case says nothing of the kind. Nowhere in it will one find a statement that if the proper law of the contract is not New South Wales the Industrial Commission does not have power or jurisdiction under section 106 or its predecessor. That case, as your Honours have heard, dealt with two special questions: extraterritorial service of the court’s process at a time when the court’s rules did not permit it and there was an attempt then to rely upon the Service and Execution of Process Act to authorise it. That gave it its federal characteristic and hence came here, and it was found that that was inappropriate because what was being done in Gosper v Sawyer was an attempt to sue the trustees of an oil company’s superannuation fund. The trust which established the fund was in Victoria. It was administered under the Trustee Act 1958 (Vic).

The trustees were located in Victoria and elsewhere and there were three possible ways of attacking the problem. One was to attack the employment contract and say because, as Mr Sawyer did, he had been injured and he had been dismissed because the employer determined he was totally and permanently incapacitated and under the trust for the superannuation rights the employer had the sole decision-making power in relation to his status. He said that was unfair and all he got back out of the fund was his own contributions plus 3 per cent.

He did not attack the employment agreement, nor did he attack the arrangement under which he became a member of the fund. What he attacked, or sought to attack, was the trust fund itself – the trust deed. He sought to have the rights, the equity rights of beneficiaries including himself, readjusted into (c). Now, that he could not do. He could not start process by using the Service and Execution of Process Act because it was a Victorian trust deed, and if he wished to sue out of New South Wales it had to be a contract of a New South Wales kind and it was not. So he failed.

The majority in this Court went on and said not only are those two reasons enough to dispose of it, but even if the trustees had submitted to jurisdiction, there was no jurisdiction in the State Industrial Commission to vary the trusts in the fund. Their Honours did not say precisely why, other
than that it was a Victorian trust. The answer, we suggest, was that the only court then and now with power to vary the Victorian trusts in that fund was the Victorian Supreme Court, under section 63 and I think 63A of the Trustee Act (Vic). For those reasons he failed. That case does not stand as authority for anything of any relevance in our learned friend’s case.

Unless there is something else, your Honours, we rely upon our written submissions. We wish to associate ourselves with the submissions of Mr Jackson, particularly in relation to paragraph 40 of his written submissions dealing with the relationship between the qualifier “whereby” in relation to the four parts of section 105, and also we wish to associate ourselves with so much of Mr Kenzie’s submissions as dealt with that, and otherwise they are the submissions we make and we rely upon our written submissions.

GLEESON CJ: Thank you, Mr West. Yes, Mr Jackson.

MR JACKSON: Your Honours, may I deal first with one matter. We have filed submissions in reply which set out a reply to a number of matters in our learned friends’ submissions, both written and oral, and I simply wish to rely on those without going to the detail of them.

The second matter, your Honours, concerns the arrangement, if I can put it loosely for the moment. I wanted to deal with two aspects. The first is that the evidence before the Court of Appeal went beyond the material that was set out in the amended summons. It included three passages of evidence, to which I will come in just a moment, which demonstrated, in our submission, that the two agreements – the share sale agreement and the employment contract – were part of the one arrangement.

May I go, your Honours, first to page 342. The three documents I am going to refer to were tendered as exhibits before the Court of Appeal on the question of jurisdiction. Your Honours will see at page 342 there is an extract from an affidavit of Mr Fish and, in particular, looking at paragraph 2, there is a reference to a meeting on 9 January between Mr Tyler and Mr Fish, and Mr Tyler was asserted to have said – and your Honours will see the paragraph there saying, amongst other things:

The deal is contingent on you accepting a role with Solution 6. You will be responsible for delivering the strategy, beginning in Australia. I will deliver strategy in the US - - -

GLEESON CJ: I see that “incent” is a transitive verb.

MR JACKSON: Your Honour, language, I sometimes regret to say, appears to move on, not always in directions one would approve, but it does, your Honour, including things like the word “of” before “whether”. Now, your Honours, if one were to look at the next paragraph, you will see that later in the same meeting Mr Tyler said:

One of the key elements of the deal is you agreeing to the terms of an executive employment contract. It is important to Solution 6 that you are signed on to Solution 6 for a minimum period of three years . . . Over the next three years –

and your Honours will see the remainder of it:

to ensure you remain incented and focused on the performance of Solution 6.

CALLINAN J: That seems to offend the parol evidence ruling, Mr Jackson.

MR JACKSON: Well, your Honour, it might. It might if one were suing on the contract, but of course the jurisdiction that is being spoken of is a jurisdiction which requires an examination to see whether things are unfair, et cetera.

CALLINAN J: But applying the rules of evidence. It was not a rectification suit, was it?

MR JACKSON: No, your Honour. Could I put it this way? The position under section 106 is not that one is enforcing the contract or claim in the sense of claiming damages for breach or seeking to have it rectified in that sense. What one is seeking is the exercise of a new statutory power to avoid it ab initio or in futuro or from a particular time in the past or to have it varied for the purpose of its future.

Now, in looking at all those matters in deciding those matters, the Court is entitled to look, in our submission - - -

CALLINAN J: I must say, Mr Jackson, it looks to me as if this is aimed at the construction of the two contracts as an aid to their construction.

MR JACKSON: What I am seeking to put, your Honour, is this. An issue which would have to be decided is whether there was an arrangement. If the arrangement consists of two agreements then, in our submission, it is necessary to look to see at the evidence which may tie them together, and that may be evidence contained from the contracts themselves - - -

CALLINAN J: Anyway, the position is it does not seem to have been objected to, Mr Jackson.

MR JACKSON: No.

KIRBY J: The Commission has that usual bag of powers to deal with matters according to the general fairness of the case, does it not? I think - - -

CALLINAN J: I do not know that the rules of evidence apply - - -

MR JACKSON: No, no - - -

GUMMOW J: Section 163(2) - - -

CALLINAN J: It is in the court session.

MR JACKSON: Your Honour, it deals with matters on the rules of evidence, but what the rules of evidence would say must depend on the subject matter with which it is dealing. If the issue is one of the unfairness of contracts or they are harsh or unconscionable, et cetera, then one looks to see what matters are germane to that issue. Now, these matters, in our submission, plainly would be. It may be that in the end a different conclusion is arrived at about whether relief should be granted or whether relief is appropriate, perhaps I should say, but it does not affect, in our submission, the question of the jurisdiction to consider it.

KIRBY J: My concern was a little different to Justice Callinan’s. It is adding to the record for the purpose of getting relief prerogative in nature. You are not seeking to get that relief solely on the record but you are supplementing the record of the Commission, and this notwithstanding a privative provision in a statute which imposes what appears to be a fairly strict regime for interfering at all.

MR JACKSON: Your Honour, the privative clause had no direct application to this case because there had been no decision.

KIRBY J: No, but I am talking about the principle of supplementing the record of the Commission.

MR JACKSON: It would depend on at what stage of the proceedings the matter came into being. Generally speaking and in part for constitutional reasons, section 75(v) prohibition is something where there can be supplementation of the record. It depends of course on the stage the matter is at. Even sometimes when a matter has come to an end, it may be possible to have supplementation in this Court but - - -

KIRBY J: I remember we had an awful lot of cases in the New South Wales Court of Appeal as to whether the transcript of argument was part of the record.

MR JACKSON: That is for certiorari on the face of the record, your Honour, normally. That is where the issue would ordinarily arise and that in most cases in New South Wales was cured by a provision of the Supreme Court Act 1970, but that is an issue. Craig in South Australia that is dealt with in and so on, but that is in a slightly different area.

KIRBY J: Anyway, you tell us we need not worry about any of that. There is no formal impediment to receiving the supplementary material.

MR JACKSON: That is the view I invite your Honours to adopt, if I could put it that way. I will deal with this very quickly if I may. At page 343 your Honours will see at paragraph (d) further matters set out. You will see a particular passage emphasised and at paragraph 3 on the next page you will see a reference to two other documents. Those two other documents are first at page 323, and that is an email from Mr Fish to his solicitor setting out his record of the transaction. You will see commencing about line 25 that he says:

100% Acquisition of FishTech . . .
Consideration is Cash and Shares . . .
Nick Fish to be a member of the Executive team with a direct report to –

You will see the responsibilities that he is to have and the role that he is to play. Then she is to put together, at the bottom of the page, the documentation. Then, your Honours, one sees an outline at page 326 of the heads of agreement, as it were, as prepared by her. Amongst other things, you will see it is divided up into two parts. If I could go to page 327, paragraph 14, under the heading:

EXECUTIVE SERVICES AGREEMENT

The Share Sale Agreement is subject to agreement on the terms of an Executive Services Agreement between Nick Fish and Solution 6 which will provide as follows:

1. Nick Fish will head a new division of –

and then your Honours will see that dealt with throughout the top half of the next page. Paragraphs 4 and 5 set out the ambit of his responsibilities and paragraph 7 initial term of one year.

Your Honours, the point I am seeking to make is that it is apparent, in our submission, that the two issues were linked together and some other evidence that was before the Court of Appeal can be seen at page 40, paragraph 5(k) of a reply to a summons for relief alleged, that without admitting liability there was a proposed pay rise to be – it was suggested to Mr Fish because of, in effect, the low price of the shares. Now, your Honour, that a small thing in the scheme of things but it is not antithetical to the notion that there was a relationship – and I use the term neutrally for the moment – between the two.

Your Honours, if it be that the two agreements were part of the one arrangement then, in our submission, why would not the Commission have jurisdiction over the lot? Now, your Honours, I will come in a moment, if I may, to the question whether the term “arrangement” used in sections 105 and 106 includes contracts or is something else, but before doing so, could I just say three more things in relation to these circumstances. First of all, your Honours will see there is a chronology attached to our written submissions. All I want to say about it first is that there were discussions over some time and it was in January 2000 that the involvement – it was not until January 2000 that the involvement of Mr Fish personally as an employee was mooted, the notion, the relationship, the agreements were developed. That is the first thing, your Honours. Perhaps I should have said the notions were developing, the notions became sale, earlier mooted and then his employment.

The second thing, your Honour, is that the notion advanced by my learned friends that clause 2.1(a) might be waived, waived away really, is in the circumstances, with respect, somewhat bizarre and it is somewhat bizarre because the two agreements were exchanged at the same time on 2 March. Your Honours will see that referred to in the chronology. So they are contemporaneous documents. One can see, in fact – I will not need to take your Honours to the precise page, but at page 338 you will see where Mr Fish has signed the employment agreement on the 1^st, the day before.

The third thing, your Honours, is that there was a somewhat dark, if I can put it that way, suggestion in relation to tax effectiveness or tax consequences. No, not a fragment of evidence to support that, with respect, but if the case had proceeded, if I could add another fragment, there may well have been evidence dealing with the taxation reasons for structuring the arrangement in the way it was. Your Honours, returning to the word “arrangement” - - -

KIRBY J: How does that help you though?

MR JACKSON: Your Honour, all I am seeking to say is that your Honours may have been left with the suggestion that Mr Fish was in some way trying to get a situation where this was not – the money he got for the shares would not be taxable or it was not wages or remuneration. All I am seeking to say is there is no evidence on the point really, and what does it matter anyway? It did not matter, and my learned friend says it does not matter at all.

Your Honours, returning to the word or the term “arrangement” used in the provisions, in our submission, it is clear enough that an arrangement may be constituted by one or more contracts. The concept of “arrangement”, for the purposes of the provision, was discussed at some length with reference to various cases by the Commission in Court Session when Mitchforce came back to it. It is Mitchforce (No 2) [2003] NSWIRComm 458; [2003] 130 IR 378. At page 415 there is a discussion of the term “arrangement” in paragraphs 132 through to 135.

I wanted, if I may, to give your Honours particular references to just some aspects of those passages. Your Honours will see in paragraph 132 in the quoted passage, particularly subparagraphs (6) and (8) of that:

There may exist two separate contracts each forming part of a specific arrangement –

and then paragraph (8) to the same effect. That is the first thing. That is from that case. But could I say, your Honours, if one goes then to paragraph 133 you will see a number of cases there referred to. May I say in relation to paragraph 133, one of the decisions there referred to is that in Hall v Alison Clint Floral Delivery Pty Ltd, the decision of Justice Sheppard, to which I referred earlier, the arrangement which he there found, as your Honours will recall, involved three contracts – one of them being in relation to the shares.

The third thing, your Honours, is if one goes then to paragraph 135 you will see a reference to Custom Credit v Goldsmith and in the passage there quoted, particularly the second half, there is a reference to the fact that arrangements may involve a combination of contracts. Your Honours, that, in our submission, is a perfectly intelligible way of looking at the concept of what is an arrangement. Certainly an arrangement may go beyond contracts. There is no reason why it does not include them, and the discussion of the term “arrangement” in the taxation cases, when it speaks, I think, of an ascending scale, simply means that the term is looser than “contract”, but it comprehends within it in appropriate cases contracts.

Now, your Honours, it may well be that in the case of some arrangements in terms of section 105 that there is no contract involved. That would be unusual – very unusual indeed – because there would be no binding obligation, but it is possible, your Honours, and particularly if one looks at people who work in, say, sweatshops or areas where threats are made. Take, for example, people who are illegal immigrants who are told that unless they produce 50 shirts in every 10-hour day on the sewing machine then their illegality will be disclosed, and there is no salary, and they have to keep on doing that for six months.

Take on the other hand people who are legal immigrants but whose fare has been paid by someone who does that and says they will not get their passports back until they have done 50 shirts in a 10-hour day for six months. Now, your Honours, in those circumstances, there would be an arrangement without there being, one would think, a contract, and a declaration of voidness in cases of that kind would serve a declamatory and perhaps declaratory end, but orders for payment of money might be made. They would be perhaps a solatium or a quantum meruit or both. But, your Honours, that is the unusual case.

In the usual case of arrangements, arrangements like this involve a number of contractual arrangements often with promises which may be dehors the agreements themselves as to the availability of work or the terms on which it is to be carried out and, your Honours, an effect of the extended definition of “contract” is to cover situations of that kind.

Now, your Honours, if I could seek to apply those things to this case. My learned friend, Mr Walker, a person not lacking in ingenious views he is able to submit sometimes to your Honours, had difficulty in identifying why, if the two agreements were one, the question your Honour the Chief Justice put, the whole agreement could not be the subject of section 106 orders. In our submission, it is difficult to see why the same result would not follow if there were two agreements and they are, on the evidence, interdependent.

Your Honours, may I turn from that to something about the jurisdiction of the Commission. Could I go to section 146(1)(e) and I am using the Act in the form in which we gave it to you. Under section 146(1)(e) of the Act your Honours will see that the Commission has the following functions – various functions are listed and you will see under 146(1)(e) that it has functions which include those conferred on it by this Act or any other Act and your Honours will also see section 153(1)(c) which makes a function of the Commission in Court Session to be dealing with proceedings under Part 9 of Chapter 2.

Now, your Honour Justice Gummow said why do they not confer jurisdiction? Could I say, your Honours, the term “function” is actually defined. It is defined by the dictionary to the Act to include “a power, authority or duty”. The term “exercise” in relation to a function is also defined in the dictionary to include “perform a duty”. So, your Honour, the word “jurisdiction” is not used, but “function” is clearly a term of some width.

Your Honours, whilst I am with section 146, may I say this, that considerable reference has been made to the objects of the Act which are seen in section 3 but, your Honours, with respect, one should be careful about excessive reliance on them, if I could say so, for relevant purposes and that is because of section 146(2). If one goes to section 146(2) it says two things. The first is that:

The Commission must take into account the public interest . . . must have regard to:

(a) the objects of this Act, and

(b) the state of the economy of New South Wales –

What one sees then is that there are also concluding words to the provision. It says:

This subsection –

and no doubt that refers to the whole of the subsection, including the reference to “objects” –

does not apply to proceedings before the Commission in Court Session that are criminal proceedings or that it determines are not appropriate.

A certain economy of language but it is clear, in our submission, that when it speaks of it not being appropriate, what it is conveying is that there will be cases where it is and cases where it is not appropriate to take those matters into account.

Your Honours, some of the cases falling within the definition of “unfair contract” will be appropriate for taking into account those matters, some will not. If one looks at the terms of section 105, it is clear enough, in our submission, that paragraph (b), “against the public interest”, and paragraphs (c) and (d) are ones where it is likely to be, in particular the public interest cases, necessary to, likely to be germane to consider those matters but others such as this case, it probably is not.

KIRBY J: You would have to have a determination. That sounds as if it is a formal step.

MR JACKSON: Yes, your Honour. It is a provision meaning that the Commission takes into account matters referred to in section 146(2) where it is satisfied that it is appropriate to do so. That is no more than saying, I suppose, in a list of matters to be taken into account by a court exercising a power, that in exercising this power the court is to take into account (a), (b), (c) and (d) where it is appropriate to do so, whatever the subject matter of (d) is, but of course it involves a consideration of that issue. The consideration of that issue is one that depends so much on the subject matter of particular application.

KIRBY J: I was really just saying that you could not, as it were, determine it by subsuming the determination in the decision of the case, I would think.

MR JACKSON: No.

KIRBY J: You would have to formally determine that it is not appropriate in this case to make the application.

MR JACKSON: Yes, of course. Those things apply if the Commission does not determine it. Your Honours, could I say that in relation to section 105 and section 106 the presence of those words in section 146(2) has, in our submission, two related consequences. One is that it does make apparent, we would submit, that in relation to reliance on the matters referred to in 146(2)(a) and (2)(b) that one should not place excessive reliance upon the objects of the Act or public interest. The second is that it does support the view that the relevant part of the Act in which sections 105 and 106 appear is in relevant respects freestanding.

Your Honours, that takes me if I may to the next aspect of which I want to deal. That is the question of conciliation. There was a reference made earlier to the requirement for conciliation in section 109. May I just say two things about it. The first is that conciliation in relation to settling industrial disputes is dealt with elsewhere in the Act. Your Honours will see that referred to in sections 133 and134. It is a different thing altogether. “Industrial disputes” is defined by the dictionary. To put it shortly and perhaps slightly inaccurately, disputes in relation to industrial matters, a term itself defined. It is Chapter 3 of the Act which deals with those things. It is a quite separate area of the Act and the assumption which may sometimes be made a priori that the Act is only concerned with that topic, in our submission, is one that should not be made.

The second thing I wanted to say about it, your Honours, was this. It is common for there to be provisions requiring compulsory mediation in disputes in ordinary civil litigation – not necessarily every case, but it is common these days for courts in various jurisdictions to have a power to require the parties to mediate. The most current provision that adopted in New South Wales one sees in the Civil Procedure Act 2005, section 26. It is Part 4 of that Act which deals with that topic. So it is not very surprising to see that someone is a conciliator or a mediator.

If I could move to another topic, your Honour the Chief Justice asked about the transitional provision for the amendments that brought in section 108A. We have referred to that, your Honours, and the cases on it in our written submissions in-chief at paragraph 56.

Your Honours, my learned friend said that I made a concession. May I just say your Honours will see the discussion of that topic at pages 11 and 19 of the transcript. Your Honours, could I move - - -

KIRBY J: Does that mean you do not concede that you conceded?

MR JACKSON: That is so, your Honours, yes. I ask your Honours, if I could adopt a word someone used earlier, to parse and analyse what I said. Your Honours, could I come to a really important question and that is the Court’s function in relation to this matter. It encompasses a number of aspects. Your Honours, in our submission, this is an area of law where the Court should be reluctant to turn back the clock, as we would submit argumentatively. It is an area which has received legislative consideration and re-enactment by Parliament from time to time over the period since the original enactment of section 88F. Further, the Parliament, when it considered that the jurisdiction went too far, acted to impose limits upon it – that is section 108A – but also there have been changes in it from time to time. This is not something Parliament has left alone. It has tinkered with it. It is an area where Parliament has turned its attention to the issues and the parliamentary materials demonstrate that the breadth of the provision has been recognised.

A second factor, your Honours, is the existence of the previous decisions of this Court and of the Privy Council which give a broad interpretation to the provisions, their decisions in the light of which Parliament has re-enacted the provision and on two occasions. Parliament has also expressed its preference for there to be only limited, that is Hickman-type, review of decisions on the provision, and Parliament, in our submission, is entitled to do that.

May I refer to the observations of Justice Gaudron and your Honour Justice Gummow in Darling Casino Limited v New South Wales Control Authority [1997] HCA 11; (1997) 191 CLR 602. At page 634, at the top of the page, your Honour said:

However and provided the intention is clear, a privative clause in a valid State enactment may preclude review for errors of any kind. And if it does, the decision is entirely beyond review so long as it satisfies the Hickman principle.

This is speaking about State jurisdiction as this is. Your Honours, there is not really anything very new about that. One can see it referred to in very early cases in the Court. Clancy v Butchers’ Shop Employees Union [1904] HCA 9; (1904) 1 CLR 181 – your Honours, I will not go to the passages – at page 204 Justice O’Connor and Baxter v New South Wales Clickers’ Association [1909] HCA 90; (1909) 10 CLR 114 at 140 Justice Barton, 146 Justice O’Connor.

Now, of course, your Honours, as those cases demonstrate and as does Plaintiff S157/2002 v Commonwealth 211 CLR 476, one has to construe the statute as a whole, but – and this is directed, if I may say so, with respect, to something your Honour Justice Kirby said – in cases where the substantive provisions – that is 105 and 106 and their predecessors – have not changed in ambit but there have been some changes in the privative clause, there is really, with respect, very little reason for saying that the meaning to be attributed to the substantive provision should be altered.

KIRBY J: Mr Jackson, I was with that submission earlier on but I am now – you will remember Justice Gummow raised the constitutional implications and, I mean, we live in an age, the times you quoted, the early 1900s, no one would have thought of setting up separate tribunals and bodies that would effectively take parties in complex ordinary litigation by today’s standards into special tribunals and thereby put them out of the line of authority of the integrated judicature of the Commonwealth which is such an important and useful feature of our Constitution.

MR JACKSON: Well, could I just say, your Honours, that really, in a sense, the very thing your Honour is referring to is referred to, in passing of course, in those early cases. When your Honour says no one would have thought of it, people did, with respect.

KIRBY J: Yes, but we are living in a time where a lot of people might be thinking of it because this Court’s supervision is confined to the federal jurisdiction and offices of the Commonwealth and to appeals that come up in the ordinary line through the ordinary course. Now, the problem that I see that it stands against the broad interpretation that you have stated, at least if there is ambiguity.

MR JACKSON: Your Honour, could I say this in relation to it. In relation to the particular case, of course, except in relation to discretion to issue the writ of prohibition there is not any issue about jurisdiction because we accept that the Court of Appeal had jurisdiction. In the ordinary case where the matter has been determined or there has been a decision of the Industrial Commission the position is that the ability to deal with the matter is confined to Hickman-like grounds. There is nothing surprising about that, your Honour.

KIRBY J: I understand all that, but the suggestion is if you are on the brink and you have the word “whereby” and you can give it an interpretation that takes the Industrial Commission off into what have traditionally been the areas of law that have been dealt with by the Supreme Courts, the District Court and come up in the judicature of the Commonwealth to this Court and you can have another interpretation that takes them off into their own sphere protected by a privative clause that means that except whereas in this case you go to the Court of Appeal there is no line of appeal to this Court. That is not a very congenial result as far as I am concerned. You have to look down the track in this Court. You have to look at what might happen.

MR JACKSON: Your Honour, could I just say in relation to what your Honour has put to me that underlying that is the assumption that this type of jurisdiction is traditional in that kind. Now, the only part of it that you would find to which one could attract that label at all is the harsh and unconscionable part. The rest of it is all you and what it is doing is saying it is to reformulate contract. It is not deciding what rights were except to the extent of deciding whether they should be changed.

So, your Honour, one is not talking about at all the traditional aspects of the law, with respect, or in any significant fashion but what one is talking about is a new jurisdiction, a jurisdiction to reform or avoid contracts.

CALLINAN J: It is rectification upon a certain basis, a basis of harshness or unconscionability, but it is still rewriting the contract.

MR JACKSON: It is rewriting the contract.

CALLINAN J: That is what happens with rectification.

MR JACKSON: Your Honour, it is not, with respect. I do not mean to quibble with your Honour of course, but what one is saying in relation to rectification is that rectification assumes there was an agreement or a common understanding which the form of contract entered into did not bring about. This is not the case of - the way in which the jurisdiction is framed is one which perhaps may include that but in reality it is far different and does not have to have that at all. Your Honours, I do not know that I can advance that beyond that.

Could I just say that the fact that the Court has power to change its previous decisions does not mean that it is appropriate for it to do so whenever it might take a view of the matter different from the predecessors on the Court. That, in our submission, is a proposition that was well put by Justice Gibbs in the second Territorial Senators Case [1977] HCA 60; (1977) 139 CLR 585. I wanted to refer particularly to what he said at page 599 in the middle of the page. It is a relatively well-known passage:

No Justice is entitled to ignore the decisions and reasoning of his predecessors –

and so on. It goes through the remainder of that.

GUMMOW J: We referred to it recently in McNamara, I think.

MR JACKSON: Yes. It is a shade of view, I accept, but it is a matter of some importance. If one looks at the criteria often adopted in deciding whether to overrule previous decisions such as John v Commissioner of Taxation [1989] HCA 5; 166 CLR 417 at 438 – I will not go to them now, but none of them is present in this case.

CALLINAN J: I dealt with that in the legal professional privilege case.

MR JACKSON: Your Honour, they are indications. They are not binding on the Court, I accept, but they are considerations to be borne in mind.

Your Honours, could I finally say two things. First of all, is that after the decision of the Court of Appeal in Mitchforce, the Commission in Court Session reopened the matter and granted leave to appeal. I gave your Honours the reference to Mitchforce (No 2) earlier. There is a discussion commencing I think at about paragraph 38 of that and following really of the matters presently – many of the matters presently at issue, and they really in a sense put the argument the other way, if I can say that. Your Honours may find that of some assistance. In our submission, it is a fairly measured view of things. Finally, your Honours asked - - -

KIRBY J: One of the members of the Court Session in that case said he simply thought that the Court of Appeal was just wrong, and he would not follow them.

MR JACKSON: Well, your Honour, it is obviously a subject on which there may be difference of views.

KIRBY J: That is another reason maybe why it should be kept within the general judicature, and under our supervision – unless it is very, very clear.

MR JACKSON: Well, your Honour, it is under the Court’s supervision. We are here, an appeal in the ordinary way and - - -

KIRBY J: Only because it went exceptionally past the privative clause into the general court system.

MR JACKSON: Well, within an area not touched by the privative clause, in other cases, the Hickman cases. Hickman has been around, your Honour, for a long time – and one adopted by the court. Your Honour has asked for an endeavour to arrive at – identify what the issues are. I am in a position where I am able to give your Honours a copy which we submit – I do not think it is right to say there is agreement about those being the issues and I give your Honours our submission about - - -

KIRBY J: Did Mr Grieve agree to it? I see him frowning very seriously.

MR JACKSON: Those are our submissions.

GLEESON CJ: Thank you Mr Jackson. Yes Mr Kenzie.

MR KENZIE: Your Honours, our learned friend, Mr Grieve, said that if section 106 was to be read so that the words “whereby”, et cetera, qualified all four limbs it was effectively the end of our case in circumstances where it was conceded that the deed on its own would not qualify. Your Honours, of course that is not so. All that it means is that on that analysis that the submissions in relation to collateral arrangement would be qualified as well, but our case of course proceeds and has always proceeded on the basis that the deed was part of an overall arrangement and I put submissions about that. What that arrangement was I have also put submissions on and that arrangement, broadly speaking, which was initially between three persons for the acquisition and operation of the 41 KFC restaurants was an arrangement to which QSR subsequently became a party or took the benefit on our submission.

The arrangement, if it please the Court, was one that was looked at by Justice Peterson. He looked at it in terms of the Production Spray decisions and said that on the materials before the Commission the arrangement was not one in respect of which the work was simply an accidental incident or consequence of the transaction. That has been the only decision taken in relation to the arrangement as such. In other words, submissions about the arrangement did not lead the Court of Appeal to come to a different conclusion about that arrangement but our friend again here is making submissions about Production Spray notwithstanding the fact that the Court of Appeal did not deal with that matter and there of course has been no notice of contention filed.

Your Honours, part of that arrangement, as we have put, was the receipt of options reflecting the performance of a company over three years on an average basis. Our learned friend appears to be submitting again that the option agreement cannot be recognised as part of the remuneration for the arrangement.

Your Honours, all I want to say about that is that there is no decision of the Court of Appeal to that effect. That is completely unsurprising in circumstances where the arrangement relevantly was identified in the summons on appeal book pages 4 and 5, and I refer in general to paragraphs 19 through to 22. The summons has been the subject of a reply. Paragraph 19 deals with the steps taken in relation to the formation of the respondent. Paragraph 20, and particularly 21, deal with the remuneration arrangement. Paragraph 21 provided that:

each of the founding directors –

of course, including Mr Batterham –

was to receive the following by way of remuneration:

That included:

(c) one million options exercisable at 50 cents in three years after issue upon the achievement of a performance benchmark –

and your Honours might note from pages 218 and 19 of the reply of our learned friend that paragraphs 18 and 19 were admitted, and paragraph 21 was admitted, so that on the pleadings before the Court, and indeed taking our case at its highest, it is common ground that the options were remuneration in relation to the arrangement. Your Honours, otherwise in relation to the submissions that we made about Brown v Rezitis and the taking of benefit by the company, our friend made one submission. He submitted that the company was a complete stranger to the arrangement.

Your Honours, can we just submit to your Honours that that submission should be rejected out of hand. That is a completely unreal submission. The company was contemplated by the arrangement and, indeed, on the submissions of the appellants, was part and parcel of the arrangement. That is the only submission that appears to be advanced in relation to our submissions in this regard. There do not appear to have been submissions advanced in response to the matters that we raised in relation to paragraph 66 of Justice Handley’s judgment. There do not appear to be any submissions in relation to the implications flowing from Unitedglobalcom. Those submissions have just not been answered.

So, your Honours, the response of our learned friend appears to be to attempt to re-agitate matters which either were not found in his favour before the Court of Appeal or, in the case of remuneration, to attempt to litigate matters in respect of which there is common ground. Those are the submissions, if it please your Honours.

KIRBY J: Mr Kenzie, I realise that my request for a schedule setting out the common issues was made on the run yesterday and you have all been busy presenting it, but really if we had to organise this case in a way that was helpful to the Court one would have tried to do that I think. If you have had a chance to look, and the other parties, at the schedule arranged by Mr Jackson and wish to add or subtract anything to that schedule – I am not asking you to do it now because the hour is late, but if that could be done that would be certainly helpful to me.

MR KENZIE: Yes, your Honour. I was shown a schedule this morning that was going to be tendered and I agreed with it. I understand there were disagreements by some of the other parties. I think at the commencement of my submissions - - -

GLEESON CJ: Any party who wants to express disagreement in writing can do so within three days.

MR KENZIE: Indeed, your Honour.

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

MR HATCHER: May it please the Court. Our learned friend suggested that the nomination of the law of Colorado in the compensation and release agreement was somehow blown in by a side wind and he invited attention to the appeal book to support that proposition. If one has regard to Justice Peterson’s judgment, Justice Peterson takes extracts from Judge Nottingham’s judgment in the anti-suit proceedings in Colorado. In those anti-suit proceedings, our learned friend’s client had argued not only that the law of Colorado applied but that it would be applied by the Industrial Commission of New South Wales and that the Industrial Commission of New South Wales, exercising jurisdiction that it had found to exist in a case known as Reich, would proceed to interpret and enforce the compensation and release agreement.

Now, the Reich jurisdiction has disappeared. Justice Peterson found that it was still open to Mr McRann to agitate a claim that the contract was unfair because such a claim could not have been before the court in Colorado. That was the source of some agitation before Justice Peterson and before the Court of Appeal; it does not arise here. To suggest against that background that the law of Colorado had somehow blown in by a side wind is, with respect, not appropriate.

The parties nominated the law. They had a choice of law to apply to their contract. Now, whether that choice of law affects the jurisdiction of the Industrial Commission to deal with it is determined by what 106 does. In our respectful submission, 106 requires a finding that there is a contract or arrangement whereby work is performed, that is, attention is focused on the contract. It confers power to vary or avoid that contract. All of these things indicate that it is a law in relation to contracts. If it is a law in relation to contracts, on the authorities that are set forth in our written submissions, the parties’ choice of law would be a guidance to whether this law applied to that contract.

KIRBY J: You do not put it so high as to say conclusive. You say it is just a factor to be taken into account by the Commission?

MR HATCHER: We say conclusively, your Honour, subject to - - -

KIRBY J: But it is only one of the three documents?

MR HATCHER: But, your Honour, that is the document that is attacked.

KIRBY J: I know, but at least arguably you have to look at the whole.

MR HATCHER: Your Honour, they need to look at the contract or arrangement under which work is performed – whereby work is performed. What is the instrument that leads to work being performed, and on any view it is not the compensation and release agreement. If the construction that our friend urges that the employment letter agreement is varied by the compensation and release agreement it becomes very hard to see how that is now as varied the contract under which work is performed. It provides a release from any obligation arising under it forever resolving all disputes.

GLEESON CJ: Is the heading of Part 9 part of the Act?

MR HATCHER: I am sorry, your Honour.

KIRBY J: I think we have been there before on this, that it is in the Interpretation Act but I think it is not part of the Act but it can used in some way.

MR HATCHER: It is not part of the Act. It can be used as an aid in interpretation, my recollection is, your Honour.

KIRBY J: You had better check it out.

GUMMOW J: Section 34.

MR HATCHER: Yes, I am indebted to my friend. Section 35 of the Interpretation Act:

Headings . . . being headings to:

(a) Parts . . .

shall be taken to be part of the Act or instrument.

KIRBY J: Maybe in the federal sphere that it is not.

MR HATCHER: That is the Interpretation Act (NSW).

GLEESON CJ: I just thought that might have a relevance to the submission you were making a moment ago.

MR HATCHER: Yes, your Honour. Yes, it is a section clearly directed to contracts and the parties have a right, as they do with any legislation that is dealing with contracts, to nominate their preferred choice of law.

GLEESON CJ: There is nothing artificial about the choice of law in this case, is there?

MR HATCHER: Well, there has never been a suggestion to that effect, your Honour. It certainly was not argued in Colorado where there was litigation in relation to exactly this contract, not some variation of some other contract.

KIRBY J: Except that your client is a citizen, we are told, of California and the company is - - -

MR HATCHER: I am sorry, your Honour, my client is a company operating out of Delaware.

KIRBY J: Delaware, that is right. I got it the wrong way round.

MR HATCHER: Registered in Delaware - - -

KIRBY J: Mr McRann is a citizen of California.

MR HATCHER: Our principal place of business is Colorado, your Honour. The other thing that we would wish to conclude in saying is that Mr Jackson in his submissions at page 8, line 20 asks in a way that we
must say we asked ourselves, what is the difference between this case and Solution 6? There are several contracts. One led to the performance of work. It is terminated by another contract, expressly so. The rights under it are extinguished by another contract and that contract must be, as we have already put, the antithesis of a contract under which work is performed and seeks to bring it to an end. May it please the Court.

GLEESON CJ: Thank you, Mr Hatcher. We will reserve our decision in these three matters and we will adjourn until 10.15 tomorrow morning.

AT 4.26 PM THE MATTERS WERE ADJOURNED