Batterham & Anor v QSR Ltd & Anor, Fish & Anor v Solution 6 Holdings Ltd & Ors, Old UGC Inc & Ors v IRC (NSW) & Anor

[2005] HCATrans 236

[2005] HCATrans 236

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S296 of 2004

B e t w e e n -

PETER JAMES BATTERHAM

First Applicant

MAYLORD EQUITY MANAGEMENT PTY LTD

Second Applicant

and

QSR LIMITED

First Respondent

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Second Respondent

Office of the Registry
  Sydney  No S298 of 2004

B e t w e e n -

NICHOLAS TERRENCE FISH

First Applicant

NISHA NOMINEES PTY LIMITED

Second Applicant

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 S297 of 2004

B e t w e e n -

OLD UGC INC

First Applicant

UIH ASIA/PACIFIC COMMUNICATIONS INC

Second Applicant

AUSTAR UNITED COMMUNICATIONS LIMITED

Third Applicant

AUSTAR ENTERTAINMENT PTY LIMITED

Fourth Applicant

CTV PTY LIMITED

Fifth Applicant

STV PTY LIMITED

Sixth Applicant

and

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

First Respondent

ROBERT McRANN

Second Respondent

Applications for special leave to appeal

GLEESON CJ
McHUGH J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 22 APRIL 2005, AT 10.02 AM

Copyright in the High Court of Australia

__________________

MR S.C. ROTHMAN, SC:   If the Court pleases, I appear for the applicant with my learned friend, MS W.G. THOMPSON.  (instructed by Clayton Utz)

MR D.E. GRIEVE, QC:   May it please your Honours, I appear with MR J.M, MILLER for the first respondent.  (instructed by Pryor, Tzannes & Wallis)

GLEESON CJ:   There is a certificate from the Deputy Registrar that he has been informed by the second respondent in the matter that the second respondent submits to the orders of the Court, save as to costs.  Yes, Mr Rothman.

MR ROTHMAN:   If your Honours please ‑ ‑ ‑

McHUGH J:   Before you start, Mr Rothman, there is a matter I must draw your attention to.  Yesterday, it was announced you were going to be appointed to the Supreme Court and it is very difficult, no doubt, in the circumstances, to get another counsel to do these cases, but the tradition in New South Wales, Victoria and Western Australia, at least to my knowledge, is that counsel do not appear in cases after they have been appointed to the Bench.  That tradition has been breached on at least another occasion in recent times.

MR ROTHMAN:   I apologise to the Court if it has caused any embarrassment.  I have to say, I did seek some indication from the Chief Justice of New South Wales, who indicated that it was appropriate.  So I had that in mind and I apologise if it has caused any embarrassment, your Honours.

GLEESON CJ:   Anyway, go ahead with your argument.

MR ROTHMAN:   If your Honours please.

GLEESON CJ:   And congratulations on your appointment.

McHUGH J:   Yes.

MR ROTHMAN:   Your Honours, obviously, we rely upon the summary of argument, which commences at application book page 249.  The matter that is before the Court in this matter – that is, in Batterham – is a matter in which, in our respectful submission, the Court of Appeal by majority, his Honour the Chief Justice dissenting, departed from, certainly, the way in which the Commission, a superior court of record, has dealt with the exercise of its jurisdiction under section 106 or its predecessors over a significant period of time and, indeed, in our respectful submission, puts a gloss on and adopts different tests from the way in which the jurisdiction of the Commission under section 88F, section 275 and section 106 of the various Acts has been described by this Court and, indeed, the Privy Council.

GLEESON CJ:   I realise that there is a different representation on the other side in the matter of Solution 6, but, unless I am misunderstanding what has been going on here, Solution 6 seems to be the case that raises what might be called the major issue.  What is it about this particular case that is different from Solution 6?

MR ROTHMAN:   It may be appropriate, your Honour, if I might, to deal with both of them in that sense.  Solution 6 deals squarely with the construction of section 106, as does this case.  They both in that sense overlap.  Section 106 turns, as does this case in part, on the question of the meaning of the words “collateral arrangement or related condition”.  Their Honours in the Court of Appeal determined that the qualification whereby work is performed in an industry is relevant to and qualifies “collateral arrangement” as it does “contract or arrangement”. 

In that sense we say in each case what the Court of Appeal has done is, with respect to them, read out or render otiose the words “related condition or collateral arrangement” as is defined in section 105.  The difference between the two cases is this.  While both of them in part deal with collateral contracts, in each case there are different issues.  In Fish the issue that is raised is the question squarely of the relationship between the share sale agreement, so‑called, and the employment agreement, in circumstances where the share sale agreement requires for its completion the execution of an employment contract and both contracts refer to each other.

In this case, your Honours, the issue turns upon the identity of the respondent and whether or not, in the ultimate, orders can be made against a company which came in prior to the option deed being executed, but after some of the work, at least, was done in fulfilment of an arrangement that existed prior thereto.  The argument that the applicant – and, indeed, the recitation in the summons in relation to Batterham was that QSR, upon its formation – QSR being, in essence, part of the arrangement in and of itself – adopted and/or the arrangement was novated, to take a term out of the contract area, and QSR became a party to, in every sense, the arrangement that had hitherto existed and continued during the existence of QSR.

Further, it is said that QSR was a beneficiary of the arrangement.  In reliance upon the recitation of principle in this Court in Brown v Rezitis, Stevenson v Barham and the other cases which predate it, we say that a proper respondent to the proceedings under section 106 is a person or party that has derived a benefit from the arrangement which is sought to be impugned.  If in fact that is wrong, then, frankly, this Court would have to overturn Stevenson and Brown v Rezitis.

McHUGH J:   The Court might.

MR ROTHMAN:   It might, but it nevertheless means that it is a matter the Court has to determine.

McHUGH J:   The purposive construction was not the accepted method of statutory construction when those cases were decided.  A literalist approach was the favoured approach.

GUMMOW J:   Sir Garfield said in one of the cases that the language appeared intractable. 

MR ROTHMAN:   Yes, your Honour, Brown v Rezitis. 

GUMMOW J:   He did not seem to consider the possibility that that intractability might be approached by what are now current methods of statutory construction.

MR ROTHMAN:   Your Honour, I can recall in Electrolux this Court took the view, at least in the industrial area, that if there is one area of legislation in which the legislature was fully aware of the decisions of the various courts, it was the area of industrial legislation.  That, with respect to the history of this piece of legislation ‑ ‑ ‑

McHUGH J:   That was talking about Federal Ministers.

MR ROTHMAN:   Indeed, your Honour, but the same rationale, in my respectful submission, applies equally to the State Ministers and/or the State Government and the history of this legislation bears that out.  Every time there has been a decision of the Commission, let alone of the Court of Appeal or High Court, which the legislature has thought departed from the principles it sought to deal with, it has legislated accordingly.  So in the area of the State industrial relations legislation, it imposed limits on salary for persons who could apply under section 106.  When a decision came down which it felt was inappropriate or dealt with a matter that they thought was not covered, they have brought in 12 month limitation periods when issues such as that were brought in.  So it cannot be said that the legislature was not cognisant of the judgments of the Industrial Relations Commission or its predecessors.

GLEESON CJ:   Am I right in thinking that as between Batterham on the one hand and Fish on the other, the Chief Justice thought that the outcome should be different?

MR ROTHMAN:   Yes, your Honour.  That is summarised, I suppose, in the Chief Justice at paragraphs 46 and following.  That is at application book page 228 in the Batterham matter. 

McHUGH J:   Fish?

MR ROTHMAN:   In the Batterham matter, your Honour.  They were both handed down at or about the same time, but Fish is referred to in Batterham rather than the other way round.  The Chief Justice in paragraphs 46, 47, 49, 53 and 54 deals with his departure from the judgment of his Honour Justice Handley and concurred in by his Honour the President, Justice Mason.  At paragraph 54, referring to the judgment of his Honour Justice Peterson at first instance, his Honour says, quoting it:

“[31] . . . While it is apparently true that (at least some of) this work was performed before QSR came into existence, I am not persuaded at this stage that QSR could not have become a party to the arrangement and accepted some burden thereunder or, alternatively could not be made a party to the proceedings, even if not a party to the arrangement, if it may be shown that QSR took the, or some, benefit under it.”

Given the state of the submissions in this Court, this jurisdictional issue should also be left to be argued in the Commission.

That is, in essence, where his Honour departed from the majority.

GUMMOW J:   The trouble is – I appreciate the constraints under which the Court of Appeal had to operate, but what it all illustrates is a burgeoning jurisprudence with a lot of distinctions that appear formalistic rather than substantive.

MR ROTHMAN:   Your Honour, in my respectful submission, the only distinctions that are formalistic are those that have been imposed by the Court of Appeal, with respect.  In my respectful submission, what is intended with the operation of section 106 ‑ ‑ ‑

GUMMOW J:   They were constrained by what they perceived as the necessary construction of the section.

MR ROTHMAN:   Yes, your Honour, but, in my respectful submission, in so construing the section they were departing from previous constructions of this Court.  Even if they were correct in it, it is necessary for this Court to deal with it given, firstly, the operation of the privative clause and the difficulty – I put it no higher than that – of an appeal from the Commission, and, secondly, the fact that there is clearly a distinction between the two courts that are dealing with the jurisdiction and a difference, it seems, on the face of it, between the adumbration of principle dealing with the jurisprudence in this Court and that in the Court of Appeal.

McHUGH J:   If we take this case on, it would really require a major examination of all the cases.  We would have to look at cases like Mitchforce, would we not, and Production Spray Painting and Majik Markets, because they formulate different tests concerning connection.  In Production Spray Painting Justice Mahoney used a purposive test, concerning whether work was to be performed.  On the other hand, Justice Priestley, I think, and whoever was the other judge spoke about direct requirement.  We would have to look at the whole area, I think.

MR ROTHMAN:   Your Honour, this Court has looked at the whole area on a number of occasions.

McHUGH J:   Yes, but since the Court last looked at it, there are a large number of cases in the Court of Appeal.

MR ROTHMAN:   There are, your Honour, but ultimately it is a question of statutory construction.  It would not be unusual for this Court to have to deal conceptually with a statutory construction point on which there have been a number of decisions by lower courts in the meantime.

McHUGH J:   It is rather becoming like the Workers Compensation Act and it is really a question of interpreting the decision, is it not?  We might have to throw them away and go back to the text itself.

MR ROTHMAN:   That may indeed be a proper result.  In my respectful submission, it is not one which departs from the strength of the argument that we are putting.  We say, on the proper construction of 106, there are not the limitations that are imposed by the Court of Appeal and those limitations are, in any event, limitations not previously found in judgments of this Court.  In our respectful submission, it is a matter that is fundamentally concerned with the administration of justice in this State.

McHUGH J:   Intuitively, you think there has to be something wrong with the Industrial Commission under 106 having jurisdiction in respect of a $19 million purchase price of a business and shares having an attributed value of $9.75 at the relevant time and then dropping to around about $3.00 and then you want to vary that contract.  Really. 

MR ROTHMAN:   Your Honour, the actual employment contract, on which the Court of Appeal made no orders, also deals with the strike price and is also sought to be looked at from the point of view of the strike price and its appropriateness and the like and a floor price in relation to it, because it forms directly part of the remuneration in the employment contract and the bonus.  So a strike price issue is found, your Honour, in both the employment contract and the share sale agreement.

GLEESON CJ:   It seems to be the tail wagging the dog, does it not?

MR ROTHMAN:   No, your Honour, in my respectful submission.  It is not uncommon in the executive employment area – I use the word “employment” in inverted commas – in the executive engagement area, for there to be a series of interlocked contracts involving share price and remuneration to be based not on what we would traditionally call hourly rate of pay or weekly rate of pay or even annual salary.

McHUGH J:   They have gone a long way from protecting blue collar workers.

MR ROTHMAN:   Yes, your Honour.  Your Honour, of course, was in one of the famous ones in dealing with bricklayers, but even bricklayers now are engaged under contracts which involve a whole range of arrangements, including, from time to time, profit shares and the like.  A number of the executive contracts deal with a method of engagement by which an interposed corporate entity provides the services of the executive and there are a series of relationships between the interposed company and the company for whom work is performed which ensure the work is performed by the particular executive.  The matter is the subject of, as I said, share price arrangements and the whole gamut.

McHUGH J:   I know, but one of the principal goals of these proceedings is to secure orders varying a trust deed so as to make options exercisable for the benefit of a proprietary company, which happens to be the current trustee of Mr Batterham’s retirement trust.  Intuitively or instinctively, you feel this cannot be within 106.

MR ROTHMAN:   But, your Honour, in our respectful submission, that intuitive judgment is an intuitive judgment within the jurisdiction of the Commission and for it to determine whether or not, in exercise of its primary purpose, it should interfere in these sorts of arrangements.  In our respectful submission, the way to deal with what your Honour feels is intuitively an excess of the operation of the discretion is not to impose upon it a casuistic exercise in jurisdiction, when what is in fact needed, to use the Brown v Rezitis line, is the good sense of the Commission. 

What is happening here, in our respectful submission, is that well prior to the exercise of any discretion or jurisdiction – indeed, well prior to the determination by the Commission that there is jurisdiction – the Court of Appeal has issued prerogative relief in circumstances where it ought not.  Justice Peterson, having been faced with a notice of motion in relation to jurisdiction, ultimately determined it was premature to determine it at that stage and he should await the evidence to see what in fact were the arrangements and what was the relationship between the various parties and the various contracts.  In our respectful submission, that was the appropriate course.  Having made that judgment, it was premature for the Court of Appeal to exercise its jurisdiction on prerogative relief.

GUMMOW J:   But that seems to assume that the jurisdiction existed.  You challenge that as well, do you not?

MR ROTHMAN:   The jurisdiction to issue prerogative relief?

GUMMOW J:   Yes.

MR ROTHMAN:   Yes, your Honour.  We say that 179 operates to oust the jurisdiction in 106 matters.

GUMMOW J:   Even at this stage?

MR ROTHMAN:   Even at this stage, your Honour.  We rely on what is in Batterham, we rely on that which is in the written submission.  We say it is a matter that deals with the administration of justice in the State.  We say it is a matter in which the Court of Appeal itself has a different opinion.  It clearly has a different opinion from the way in which the Commission is operating.  These differences need to be resolved and each of those differences fits within a matrix of High Court and Privy Council judgments which themselves, given what has already fallen, would, in our respectful submission, need to be reconsidered.  For those reasons, we say special leave ‑ ‑ ‑

McHUGH J:   On your argument, would cases like Caltex v Feenan need to be reconsidered if the Court was against you?

MR ROTHMAN:   Your Honour, in our respectful submission, the judgment of the Court of Appeal is contrary to Caltex v Feenan.  We have given your Honours a reference to it.  That is the passage in Caltex v Feenan.  I am happy to take your Honour to it if you wish.

McHUGH J:   No.

MR ROTHMAN:   Contrary to Brown v Rezitis and Stevenson v Barham, and, indeed, contrary to earlier Court of Appeal judgments, particularly your Honour’s when your Honour was a judge of the Court of Appeal in the Health and Research Employees’ Association Case.  The suite of judgments – and it is a suite – shows a varying line of reasoning by the Court of Appeal, starting with Mitchforce and going through till the later cases, even later than this one, Mayne Nickless and such cases, and, in our respectful submission, is required to be clarified.

McHUGH J:   Can I just get this clear.  You accept, do you not, that the deed was not itself a contract or arrangement whereby a person performed work in industry, but you say it is sufficient that it was collateral to the ‑ ‑ ‑

MR ROTHMAN:   Yes, your Honour.

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

MR GRIEVE:   In this matter all that the Court of Appeal did was to decide, with reference to the particular facts of the case as put forward by the applicants in their summons, that, prior to its incorporation, QSR was not, and could not have been, a party to any contract or arrangement whereby Mr Batterham performed work in an industry.  It is apparent from paragraphs 2.3 and 2.4 of the application for special leave and the draft notice of appeal that the application for special leave and any consequent appeal rests on one point and one point only, that being whether or not a corporation may adopt an arrangement – semble not a contract – made before its incorporation, with the consequence, so far as we understand the argument, that in some way it is deemed to have been a party to that arrangement from the inception of the arrangement.

In paragraph 31 of their summary of argument at application book 256, the applicants assert that that question is capable of an affirmative answer, but cite no authority at all in support of that proposition.  In our submission, the question self‑evidently admits of a negative answer and is thus not a question of public importance so as to warrant the grant of special leave.  There is a distinct lack of precision in the applicants’ material on the following matters.  First, when did the arrangement which they assert come into existence?  Secondly, who were the parties to that arrangement?  Thirdly, what were the terms of the arrangement?  Fourthly, and most importantly, when and in what manner did QSR after its incorporation become a party to the arrangement?

It is, under section 133 of the Corporations Act, permissible for a company to ratify a contract made prior to its incorporation, but that provision makes no accommodation for the supposed ratification of an “arrangement”, which seemingly is a word to be understood in contradistinction to the notion of a contract.  We submit that the grant of the options by QSR was gratuitous.  It was effected by a deed and thus did not call for consideration.  QSR was under no obligation to grant the option at law and it received no consideration for the grant of the option.  All of the considerations supposedly given, as the applicants’ argument runs, by Mr Batterham’s performance of work, were antecedent.

At application book 143, one finds the applicants’ summons.  The relief claimed by the applicants in the Commission includes as a threshold order:

An order declaring void in whole or in part or varying in whole or in part either ab initio or from some other time, the contracts, arrangements, conditions or collateral arrangements between the First and Second Applicants . . . and the Respondent –

There is a certain incongruity in that claim in the sense that they say that there existed some arrangement to which our client, following its incorporation, in some fashion became a party, but they desire the Commission to declare that arrangement void either in whole or in part, either ab initio or from some other time.

It is upon the strength of that prefatory claim that the applicants then go on to claim specific orders in relation to the option deed.  Our friends have conceded that the option deed itself cannot be characterised in any sense as a contract or arrangement whereby a person performs work in an industry.  It is apparent from an examination of the applicants’ summons that they attempt to attract the jurisdiction of the IRC by making a general assertion that at some point some person performed work in an industry. 

Following that activity, options were granted by a company which came into existence after the work was performed.  That, they say, is a sufficient link.  We submit that on no view could that be so and that it is incumbent upon the applicants to demonstrate the events by which it was at all conceivable for a company to ratify some arrangement made prior to its existence.  That they have not attempted to do and we submit that it is a matter of impossibility to discharge that burden.

So far as the special leave point with reference to section 179 of the Industrial Relations Act is concerned, we submit that that has no bearing for the simple reason that there was no decision or purported decision made in the IRC so as to bring section 179 into play. All that had happened was that a judge of the Commission had declined to rule one way or the other on the question of whether or not the Commission had jurisdiction. In Hohfeldian terms he made a non‑decision or a non‑purported decision and there was nothing to invoke section 179. We were therefore entitled, in our submission, to invoke the Court of Appeal’s supervisory powers to rule on the matter as it did. May it please your Honours.

GLEESON CJ:   Yes, Mr Rothman.

MR ROTHMAN:   Your Honours, very briefly.  In our respectful submission, “arrangement” is not used in contradistinction to “contract”, but “arrangement” is a broader term than “contract”.  A contract may be part of an arrangement or, indeed, may itself be an arrangement.  Likewise, in terms of the consideration for the adoption of the arrangement, we say the consideration, amongst other things, was the benefit of the arrangement, being the right to purchase the business of Tricon or that was under licence to Tricon. 

Lastly, in terms of the concession of the option deed not itself being a contract whereby a person performs work in an industry, the position of the applicants both here and below was that, firstly, there was only one arrangement which included the option deed, and, secondly, if we are wrong in that, the option deed was collateral to the contract of employment.  The other matters have been dealt with in the discussion with the Court, if the Court pleases.

GLEESON CJ:   Yes, Mr Rothman.  Call matter No 4, please.

At 10.30 am Fish & Anor v Solution 6 Holdings Limited & Ors

MR S.C. ROTHMAN, SC:   If the Court pleases, I appear with my learned friend, MR S.J. BURCHETT, for the applicant.  (instructed by Clayton Utz)

MR F.M. DOUGLAS, QC:   If the Court pleases, I appear with my learned friend, MR B.J.A. SHIELDS, for the respondents.  (instructed by Deacons)

GLEESON CJ:   In this matter there is a certificate from the Deputy Registrar that he has been informed by the solicitor for the fifth respondent

that the fifth respondent submits to the orders of the Court, save as to costs.  Yes, Mr Rothman.

MR ROTHMAN:   If your Honour pleases, many of the matters that we wish to agitate have been agitated already in the discussion with the Court. We do say this, of the three matters, is the one which deals primarily with the issues of principle which are then adopted in Batterham.

GLEESON CJ:   Yes, it is slightly unfortunate that we did not list this as the first of the trilogy.

MR ROTHMAN:   It matters not for my purposes, your Honour.  In our respectful submission, we have, in the applicant’s summary of argument which commences at page 438, set out the matters upon which we rely.  We have made it clear in this case that both as a matter of reality – that is, practical reality – and as a matter of law the share sale agreement was very much collateral to and part of the entirety of the arrangement made between Mr Fish, the first applicant, and Solution 6.

GLEESON CJ:   Your approach, as I understand it, is that if any part of the arrangement involves an employment contract, the Industrial Relations Commission can review and reshape the lot.

MR ROTHMAN:   Subject to its discretion, yes, your Honour.

GLEESON CJ:   Even if, for example, a contract for the sale and purchase of land was part of the arrangement?

MR ROTHMAN:   That has been done and upheld by this Court in one of the share farming arrangements which was – and that is a normal – it was not a sale, I think it was a lease in that case, but it was, nevertheless ‑ ‑ ‑

GUMMOW J:   There was some difficulty in working out the orders in that case.

MR ROTHMAN:   As there may well be in a number of cases.  In this case, of course, we did not come to that point because, on a preliminary basis, the Court of Appeal ‑ ‑ ‑

GLEESON CJ:   What is it that guides the good sense of the Commission when it decides whether or not to become involved in what I will call commercial arrangements extending beyond employment contracts?

MR ROTHMAN:   Your Honour, in the past, there were a number of issues that have been held to guide that good sense.  One of them was whether the parties entered the arrangement equally or without any

impediment.  The second was whether, on a balance, it is more a business contract than it is a contract for the sale of labour.  There were a range of issues such as that.  I am reminded of various judgments.  I have not referred to them, I apologise, but they are judgments in the exercise of the discretion of the Commission relating to a purchase of a pottery shop or the like, in which one of the requirements was work ‑ ‑ ‑

GUMMOW J:   That decision to take jurisdiction is then protected by the privative clause, is it not?

MR ROTHMAN:   Yes, your Honour.  Subject to the Hickman principles, yes, your Honour.

GUMMOW J:   That is a question, too.

MR ROTHMAN:   Yes, your Honour.  There are also issues associated with – in terms of a privative clause – whether section 106 is in fact the exercise of judicial power.  They are issues that have not arisen in this case so far, but may if anyone wishes to raise the validity of 179 – that is the privative clause, I apologise.  In our respectful submission, this is a case which, on its face, the Court of Appeal departs from a variety of principles adumbrated in this Court on the operation of 106 and its predecessors.  I did say before that 106 has been the subject of re‑enactment by both sides of the political ledger – if there are only two sides – in various forms, all of them substantially the same and each of them dependent upon the broad principles espoused in Brown v Rezitis and the like. 

Other than the matters that I have otherwise raised and the particular matters of the judgment, which I am assuming the Court has read, as they have my outline, those are the matters we would wish to be putting on special leave.

GLEESON CJ:   Thank you, Mr Rothman.  Yes, Mr Douglas.

MR DOUGLAS:   If the Court pleases, the real issue, as we would see it, arising in this case is not whether it is an appropriate vehicle, because it does raise some interesting and important questions of law, but whether it is likely to be successful in any event.  Essentially, what my learned friend would be seeking to urge this Court to do is to adopt a process of construction of section 106 whereby the word “contract” which is then defined in section 105 as meaning:

any contract or arrangement, or any related condition or collateral arrangement –

that the only word which is in fact qualified in that definition by the succeeding words: 

whereby a person performs work in any industry –

is the word “contract”.  In other words, they would seek to say that a collateral arrangement does not have to be one whereby a person performs work in any industry, and as Justice Handley said in the Court of Appeal:

Such a result may be achieved by surgery but not by construction.

It would be unusual, one would have thought, if in fact the jurisdiction of the Commission extended to a contract such as a share sale agreement, which is the one which we are dealing with here, where losses of something like $19 million are claimed in circumstances where it is acknowledged, and in fact it is the ground for relief, that there were negotiations prior to contract for the installation of what one might describe as a “floor price” for the shares and in the process of negotiations Mr Fish accepted that the contract should be in the terms which it was in.  Nonetheless, he then says that the Commission can turn around subsequently and award him $19 million in respect of something which he gave away in negotiations. 

The only mention of employment or work in the share sale agreement itself, as emerges from the share sale agreement, is clause 2.1(a), which made it a condition precedent to the completion of the agreement that Mr Fish be employed by a company associated with the purchaser.

GLEESON CJ:   What are the rights of appeal that apply following the decision by the Commission in a matter like that?

MR DOUGLAS:   There are no rights of appeal, your Honour. You can go to the Full Bench and then you have section 179.

GUMMOW J:   You have an appeal to the Full Bench, do you not?

MR DOUGLAS:   There is an appeal to a Full Bench from a single ‑ ‑ ‑

McHUGH J:   Is it by leave?

MR DOUGLAS:   I think Mr Rothman would know that better than I would, your Honour.  I do not think you need leave to go to a Full Bench, but from there – if it is a purported decision of the Commission.

GUMMOW J:   Yes, well, unless there is federal jurisdiction.

MR DOUGLAS:   Unless there is federal jurisdiction.

GUMMOW J:   Which would mean it can come here.

MR DOUGLAS:   Yes. Which there may very well be, but, absent that, the argument then is that your right to access is choked off by section 179, unless there is federal jurisdiction or unless constitutionally you cannot have a State privative clause which applies to purported decisions of the Commission.

GLEESON CJ:   What does the Commission aim its examination at?  The fairness of the contract?

MR DOUGLAS:   In this particular case the Commission has not had a chance to aim its considerations at all, because what we did in this case, in light of the previous principle of restraint, which applied both in the Court of Appeal and in the Commission, was to go directly to the Court of Appeal seeking prohibition on the basis that it was a patent defect in their jurisdiction.

GLEESON CJ:   But if the Commission has jurisdiction and exercises it, what is the criterion that it brings to bear for the purpose of its judgment upon this share sale arrangement?

MR DOUGLAS:   That it is unfair in the broader sense of the word, as we would ‑ ‑ ‑

GLEESON CJ:   What, the price?

MR DOUGLAS:   As to price, yes, your Honour.

McHUGH J:   That is part of the problem of the Commission dealing with this type of transaction because, in the central type of contract with which the Commission is concerned, a frame of reference for fairness would be other awards, industrial awards and agreements and conditions of employment, but it seems to me, in this area, it is at large.

MR DOUGLAS:   There would be a strong argument, in our respectful submission, that the section should be restricted to – when it refers to a person it means an individual person.  Your Honour made a comment before concerning the fact that one of the applicants for relief is the trustee of a discretionary trust.  We have that situation here, too, of course, because the shares were held by a discretionary trust for Mr Fish and, of course, Mr Fish has no vested interest in it.  One would then have to say, well, ultimately, he was going to get the benefit of that in some way.

There is simply no criterion of fairness which one can apply once one steps outside the area of industrial awards and agreements.  As Justice Mahoney said in his decision Production Spray Painting v Newham, if you adopt a construction of a section similar to that which my learned friend contends for on this occasion and his predecessor contended for in the Court of Appeal, there are very few contracts in commerce which are not contracts whereby a person performs work in an industry.

GLEESON CJ:   Is one of the matters that the Commission takes into account the importance of freedom of contract?

MR DOUGLAS:   Your Honour, that is one of the matters which one sees referred to from time to time, but ‑ ‑ ‑

GLEESON CJ:   That, you would have thought – industrial considerations to one side – would be an overwhelming consideration.

MR DOUGLAS:   Because in a society which ‑ ‑ ‑

GLEESON CJ:   Because that is the way our system works.

MR DOUGLAS:   It does, yes.  Unless one was constrained by that principle in some way, this is just a jurisdiction at large to interfere with any contract whereby, in the vaguest possible sense, a person performs work.  That is why the courts have adopted this principle of “directly” or the test of “directly” or, as Justice McHugh said before, in Production Spray Painting v Newham Justice Mahoney adumbrated a purposive test.  So a lot comes down to how one interprets this requirement, which was first set out, I think, in the VG Haulage Case and then picked up by Justice Jacobs and Justice Mason in the decision of Stevenson v Barham, of “directly”.

GUMMOW J:   Justice Aickin dissented in one of those cases.

MR DOUGLAS:   Yes, Justice Stephen and – that was a sharecropping arrangement.  The majority was the Chief Justice, Sir Garfield Barwick, and Justice Mason and Justice Jacobs, both of whom, I think, participated in the decision in VH Haulage in the Court of Appeal, and the two dissentients were Justices Stephen and Aickin, but that was a sharecropping case.  This is a case of a man who says, “Well, I was negotiating to sell my business for $19 million.  I wanted a floor price.  I did not get it in the negotiations.  I agreed to sell the business anyway at a time when the price was about half the price it was” – when he was negotiating the floor price – “and I now want the floor price which I sought to negotiate”.

McHUGH J:   The other case, Batterham, was concerned with the sale of 44 restaurants, I think ‑ ‑ ‑

MR DOUGLAS:   Exactly.  The only reason why this Court would take this matter up, in our respectful submission, is because it would wish to look at this jurisdiction and see whether in light of, I think, as Justice Gummow said before, the purposive approach to the interpretation of statutes, which has become far more entrenched than it was at the time when Stevenson v Barham was decided, the principles should be restated in such a way as to ensure that cases such as this do not end up before the Industrial Relations Commission again.  That is all we would wish to say.

GLEESON CJ:   Yes, Mr Rothman.

MR ROTHMAN:   Your Honour, in relation to the penultimate matter raised by my learned friend, it is not suggested in any recitation of the facts that the negotiation for the sale of agreement formed a separate part of any negotiation whatsoever.  Indeed, quite the contrary.  The summons, the facts of which my learned friend accepts and must accept for the purposes of the application, both in the Court of Appeal and here, recites that the negotiations were about the future work of the first applicant and the way in which that would be remunerated, and part of that was the taking over of the business and his employment by the business in one single arrangement.

The other matter that ought be dealt with is the last matter my learned – the matter before that – the question of whether or not a person in section 106 is required to be an individual.  With respect to my friend, that does not take the matter any further because even a contract with a company, if it required work to be done, must of necessity require it to be done by a person.  The Act does not go so far as to say that the person must be the person with whom the arrangement is made or the contract is made, and that, of course, was the ratio of the judgment in VG Haulage.  In that case, of course, that was a sale of a truck in work.  The truck was sold quite separately, I might add, in similar terms to this, from the engagement contract and the person who undertook the work was in fact an employee of the principal who entered into the contract.

McHUGH J:   I know, but one can understand the approach of the court in VG Haulage.  Correct me if I am wrong, this section, the old 88F, was really put in there in the context of transport workers, was it not, of lobbying by the TWU to deal with these owner‑driver situations, unfair contracts?  Now, it has just blossomed.

MR ROTHMAN:   Your Honour, it may have blossomed.  I am not here to defend in every sense the exercise of the discretion of the Commission or to go behind what his Honour Chief Justice Barwick said was the good sense of the Commission, but the reality is, as a matter of principle, it is impossible to distinguish between the sale of a business which created software and the employment of the person who did it with the sale of a truck in work, because both of them are the sale of the business or property at the same time as the engagement of a person under a condition of work, and the rest of it, with respect, does depend very much upon the exercise of the discretion of the Commission and leaving it to its good sense.

Now, if in the end that good sense is not exercised, the legislature has to deal with that in a separate way, and the legislature has not been reticent in dealing with every aspect of what it sees as an excess of the proper purview of section 106 or its predecessors.  In our respectful submission, that is a fundamentally different question from that which emanates from the judgment of the Court of Appeal.

Frankly, the Court of Appeal is imposing a policy decision about its “feeling” about what are or are not appropriate contracts to be dealt with, without in fact dealing with the issue of a contract whereby a person performs work in an industry.  In our respectful submission, what is required is, with respect, not the centrality of awards.  The whole rationale of 88F, as your Honour pointed out, was that the people who were covered by it were not covered by awards, and even those that are covered by awards are rarely, in current industrial climate, actually remunerated in accordance with the terms of those awards.

In answer to your Honour the Chief Justice’s question, leave is required in all appeals before the Full Bench of the Commission, except criminal matters.

McHUGH J:   Yes.

MR ROTHMAN:   That is section 188 of the Act.  As to the share sale agreement, again, the remuneration and the requirement to be employed was part of that which the first applicant negotiated, his remuneration is there set out.  A share price is set out in his remuneration package as part of his bonus system and that is the basis upon which his bonus system is worked out, so that, even dealing only with his remuneration under his employment contract, the very same questions would have to be determined by the Commission.

Your Honour the Chief Justice’s question, the question of freedom of contract is necessarily involved in the determination of the discretion and the public interest is one of the elements ‑ ‑ ‑

GLEESON CJ:   Yes, we are operating in what we are pleased to think is a market economy and it may be that the very method of operation of the Industrial Relations Commission, under its legislation – it may be that the

very name of the Industrial Relations Commission is part of the context in which section 106 has to be construed.

MR ROTHMAN:   Indeed, your Honour, but if it is to be construed that way – and this is a point we make – it has to be construed that way by this Court, because the Court of Appeal, in essence, has departed from the adumbration of principle about jurisdiction that this Court has made on a number of occasions.  If the Court pleases.

GLEESON CJ:   Thank you, Mr Rothman. Call matter No 5, please.

At 10.51 am Old UGC Inc & Ors v Industrial Relations Commission of New South Wales in Court Session & Anor

MR G.J. HATCHER, SC:   May it please the Court, I appear with my learned friend, MR C.S. WARD, for the applicants.  (instructed by Thomson Playford)

MR J.N. WEST, QC:   May it please the Court, I appear with my learned friend, MR J.D. SMITH, for the second respondent.  (instructed by Harmers Workplace Lawyers)

GLEESON CJ:   There is a certificate from the Deputy Registrar saying that she has been informed by the solicitor for the first respondent that the first respondent submits to the orders of the Court, save as to costs.  Yes, Mr Hatcher.

MR HATCHER:   May it please the Court, this case raises some circumstances similar to the previous two and some quite separate.  It was heard at about the same time, judgment was delivered on the same day and, in our respectful submission, the judgment needs to be understood against the other two judgments to understand the existing jurisprudence.

GUMMOW J:   Putting aside the choice of law point, if I can use that expression, what is it you say that made this case go the other direction to the other two in the Court of Appeal?

MR HATCHER:   If it please your Honour, what appears to have occurred, our learned friends argued both before Justice Peterson in the Commission and before the Court of Appeal that the Compensation and Release Agreement, the release of the rights arising under the employment agreement, was part of an overall arrangement, the arrangement being constituted by the original employment agreement, the agreement to terminate that employment agreement and the deed of release that accompanied it, and a new employment agreement for work with another affiliate of the first applicant in Holland. 

That was the way in which they adumbrated their case.  They had not done it in the pleading.  The pleading before the Industrial Relations Commission simply referred to the Compensation and Release Agreement and asked that it be avoided or varied.  In the Court of Appeal and in the Commission below, they pressed this argument that jurisdiction was to be found in the overall arrangement. 

Now, the Court of Appeal having, in Solution 6 and QSR, two cases that were heard afterwards but in which judgment was delivered on the same day, found that it was a necessary precondition that the element that was sought to be varied be an element under which work was performed and having found, as they did in this case, that no work was performed under that Compensation and Release Agreement, turned their mind to whether the Compensation and Release Agreement might have been a variation of the contract of employment, the contract under which work was done.  They did it without the benefit of address and his Honour the Chief Justice determines that the Compensation and Release Agreement is a variation of the pre‑existing employment agreement.

Now, that is an interesting result for a number of reasons.  One is that the parties expressly say that it is entered into in contemplation of the existing employment agreement and is intended to release all claims arising from the existing employment agreement.

GUMMOW J:   I am looking at the application book at page 56 and 57, which is the summary put out by the Court of Appeal, which perhaps encapsulates it under B and C.

MR HATCHER:   Yes, your Honour.

GUMMOW J:  

The Compensation and Release Agreement did not, alone, lead directly . . . It did, however, operate as a variation . . . There was a single contract . . . The character of an employment contract . . . is not altered by the fact that an amendment takes effect a the time when employment is to cease –

What is wrong with that reasoning?

MR HATCHER:   Nothing wrong with that proposition, your Honour.  It is the preceding proposition, that an agreement to release parties from the rights under a contract and an agreement whereby a new party becomes obliged to make payments varies the contract in respect of which there is sought to be a release.  It can be understood against the background facts, if it please.  The first applicant is a major player in the international cable television market.  CTV and STV ‑ ‑ ‑

GUMMOW J:   Just stopping for a minute, it would not be a variation in accordance with orthodox contract ideas, would it, because there is a change in party?

MR HATCHER:   That is quite so, your Honour, but none of that was canvassed before the Court of Appeal and his Honour the Chief Justice is expressly not embracing our learned friend’s proposition that it was part of an arrangement.  He says there is no need for an arrangement, this is a variation of the employment contract.  If it please the Court, the fifth and sixth applicants were companies established by Australian investors with a view to bidding for licences that became available for pay television in Australia.  They sought out and obtained the involvement of the first applicant in establishing the pay television business in Australia, the business that has become known as Austar. 

The first applicant was to provide the skill and expertise to run the cable television operation.  To that end, it sought out the second respondent, Mr McRann, recruited him as the managing director.  He was in California, working in the cable television business at the time, and he entered a contract while he was in the United States whereby he would be employed by the first applicant, but for five years would be seconded to the Australian operations.  When he came to Australia, for one reason or another, after two years in the job, he heard of an opportunity in Amsterdam, another cable television operation in which the first claimant had an interest.  He heard about it through an executive recruiter, he asked whether the first applicant would be receptive to him applying for that position.  The first applicant had no objection, he applied for the position.

In the course of taking up that position, he sought to negotiate, as he calls it, the buyout of his existing employment agreement and that is the purpose of the Compensation and Release Agreement.  The discussions were somewhat complex because the existing employment agreement had an incentive payment formula in it, but at the time, because of various complications, apart from it being a start-up business only two years into its operation – your Honours may recall that the Galaxy business had collapsed at about this time – that meant that a pay television business was going to be in some financial difficulties – it was difficult to put a valuation on his incentive payment component.  He, not unreasonably, asked for a minimum payment and, correspondingly, the applicants asked for a maximum payment.  So a formula was arrived at, minimum/maximum, and an agreement was reached.

Mr McRann then went to Holland to take up the position.  He went there without having an agreement in writing, without having concluded, as it was subsequently found, any employment agreement other than an agreement terminable at will.  After about 12 or 14 months over there, there was a falling out and his services were terminated.  He litigated in the United States both over what he said was his contract in Holland and asking that the Compensation and Release Agreement, as a separate agreement, be declared void or be found to be void by reason of fraud, misrepresentation, promissory estoppel and a number of other reasons.

GUMMOW J:   That all failed in Colorado.

MR HATCHER:   That all failed.  He then commenced 106 proceedings in Australia and in those 106 proceedings he directed his attention simply to the Compensation and Release Agreement.  Our clients sought prohibition in the Court of Appeal on two bases.  Firstly, it is a deed of release, it forms no part of an arrangement under which work is performed.  It is the absolute antithesis of an arrangement under which work is performed.  It is a release of any obligations arising from that contract.  Secondly, there is an express term in the Compensation and Release Agreement that the law of the contract will be the law of Colorado, and section 106 forms no part of the law of Colorado.

GUMMOW J:   Well, that begs the question of what the territorial reach of the Act is.

MR HATCHER:   Indeed, it does, your Honour.

GUMMOW J:   That is another question.

MR HATCHER:   That is another question, but, when the case came to be argued before the Court of Appeal, our learned friends adhered to their earlier arguments.  They maintained the proposition that the Compensation and Release Agreement was part of this overarching arrangement whereby Mr McRann came to perform work and was thereby within jurisdiction.  Now, that would seem to, in the face of Solution 6 and QSR, no longer be an available way of characterising a case, but the Court of Appeal then find that the Compensation and Release Agreement – and it is reproduced in the application book at paragraph 11 on page 60 of the application book, in terms that do not seem to reveal any contemplation of a variation of an employment contract.  It says:

The purpose of this Agreement is to forever resolve any and all legal disputes between the Company and the Employee –

and I should say “Company” was defined to include all subsidiaries –

with respect to the Employment Letter Agreement between the Employee and UIH dated February 21, 1995 and any amendments thereto . . . 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 arising out of the Existing Agreement.

In paragraph 2 of Clause II it is clear that the payments are now moving from Austar rather than the party to the ‑ ‑ ‑

GUMMOW J:   Does the expression in 106(1):

whereby a person performs work in any industry –

mean “is performing at the time the Commission makes the order”?

MR HATCHER:   On the authorities, no, your Honour.

GUMMOW J:   It does not, does it?

MR HATCHER:   No.  This Court so found in relation to the federal equivalent legislation, which appears to have withered on the vine since.  On the existing authorities on 106, that has not been conclusive.

GUMMOW J:   What does it mean, then, on the authorities?

MR HATCHER:   It just means that if you can find a contract or arrangement in the way it had been interpreted until Solution 6 and QSR came along, it just meant that if you could point to some work being done under ‑ ‑ ‑

GUMMOW J:   Being done when?

MR HATCHER:   At any stage.

GLEESON CJ:   Including having been done?

MR HATCHER:   Having been done, yes, your Honour.  Then it was within jurisdiction and one was left to the good sense of the Commission.  So that is where we say there is a very real point, that goes well beyond 106, that warrants special leave to appeal.  If a deed of release, a contract releasing all rights and obligations in an employment agreement, is meant to be a variation and is to be regarded as a variation of the contract of employment, it has quite some consequences beyond section 106. 

Now, our friends will say, as his Honour the Chief Justice said, no doubt, that this varied the compensation arrangement.  Well, that is hardly surprising.  In any termination of an employment that has an incentive component, there will often be – in fact, almost inevitably be – some debate about what is due and owing under the incentive payments.  If the parties reach an accommodation to release all claims, there will likely be a component in there for incentive payments.  That does not indicate that there is an intention to vary the existing arrangement, but rather to contract out of the obligations under the existing arrangement. 

The other point on which we say special leave is warranted in this case is the governing law point.  We have provided a bundle of authorities; they are not meant to be provided in terrorem, but simply to found this proposition.  In Re Hildred; Ex parte Richardson the Court of Appeal, certainly the then Chief Justice, Justice Kerr, expressly, and we say implicitly in the judgments of their Honours Justice Asprey and Justice Manning, found that the indicator for territorial jurisdiction of 106 was the proper law of the contract.  Whilst Justice Asprey and Justice Manning do not use that term, they both point to the place where the contract was made.

McHUGH J:   That was an entertainment contract case overseas, was it not, in Asia?

MR HATCHER:   It was, your Honour, where work was to be performed in Vietnam.  After that case, when it got back to the Industrial Commission, Justice Watson handed down judgment in Cosgrove where his Honour found he was bound by Ex parte Richardson; Re Hildred to find that the law of the contract dictated whether it was within the territorial jurisdiction of section 88F.

GUMMOW J:   Well, you could walk out of the Act, could you not?

MR HATCHER:   Well, his Honour made that observation, but his Honour equally said, of course, if it is simply a device to evade the jurisdiction of section 88F, it will not be a legitimate law of the contract and it will fall down there – a point that we make in our submissions, relying on Queensland Properties.  The next step was in Maloney v Hoffman where, again, his Honour Justice Watson visited the area, this time after the judgment of the High Court in Kay’s Leasing and his Honour said, “Well, looking at this section, section 88F, I am rather more inclined to the view that the territorial nexus is the work performed rather than the contract”. 

His Honour there found against jurisdiction, something that is not often noted.  The contract there was a contract the proper law of which was New South Wales, but the work was to be performed in the ACT, and his Honour found there was no jurisdiction because whether or not the proper law of the contract was necessary for territorial jurisdiction – and his Honour says that – the work was not performed in New South Wales.  So his Honour says, “The law of the contract may be, but is not a sufficient, indicator of jurisdiction”, and the irony in that is, when one looks at all subsequent authorities in the Industrial Relations Commission that have expanded the territorial jurisdiction somewhat, they all go back to Maloney v Hoffman, but never pick up those passages.

One then has this Court consider the territorial limitations of section 88F in passing in Gosper v Sawyer, and we refer to the passage in our written submissions.  It will be said against us that it is obiter.  Well, we can have that debate.  I think it is not a particularly helpful debate.  The fact is, this Court, when looking at the section, assumed the trustee to be otherwise within the jurisdictional reach of section 88F.

GUMMOW J:   It had a Victorian proper law, did it not?

MR HATCHER:   Yes. 

McHUGH J:   I said it was an assumption, did I not, in the Minister for Health Case, I think.  I said the Court assumed ‑ ‑ ‑

MR HATCHER:   You did, your Honour, yes, and since Gosper v Sawyer, well, immediately after Gosper v Sawyer, a Full Bench of the Industrial Relations Commission in Australian Entre Business Centres say, well, we are bound by Gosper v Sawyer.  They do not say it expressly, but they clearly refer to Gosper v Sawyer and the test is the proper law of the contract.  That is the test they apply.  And thereafter ‑ ‑ ‑

GUMMOW J:   Can you have a proper law of an arrangement?

MR HATCHER:   Your Honour, this Court seemed to think so in Gosper v Sawyer.  You may, you may not, I think is the answer to it.

GUMMOW J:   It was a trust deed, was it not?

MR HATCHER:   Yes.

GUMMOW J:   Well, that is not an arrangement.

GLEESON CJ:   Could you have a proper law of something that is not legally enforceable?

MR HATCHER:   You can have a logical connection with a place, your Honour, and his Honour the Chief Justice acknowledged that in his judgment.  The irony of where the territorial jurisdiction has gone is that it has travelled beyond the Commission’s award‑making power.  Justice Beattie in J G and A M Todd v Rieher, which is referred to in our submissions, said, “Well, the legislature could hardly have intended to bind people in Taiwan or Paris who enter into contracts of employment, even if the people sometimes come into Australia”.  That line of territory has been blurred to the point where now we see an accountant, working for a Singapore company, coming within the territorial reach, because the Singapore company is affiliated with an Australian company and he once worked for the Australian company. 

We see investment bankers in Hong Kong – I am sorry, that is one of the cases in our bundle, Brent v Bastian – investment bankers in Hong Kong in Bell v Macquarie Bank are within the territorial reach and, as your Honour Justice McHugh heard, in Cathay Pacific v Evans it is argued that pilots engaged to fly Cathay Pacific planes who land and take off from Sydney Airport are within the territorial reach of section 106 and that matter proceeds to trial.  All the expense involved in defending the question of whether their contract is fair is embarked upon without any consideration of the territorial reach of the section.  May it please the Court.

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

MR WEST:   The territorial reach of the section is provided by the Interpretation Act itself.  It makes it clear that it is talking about an industry.  That is the provision in the statute, 106.  It is industry “in and of New South Wales”.  It is a question of fact whether or not a particular occupation, activity, is within that or it is not.  It is not surprising that the jurisdictional reach, as it were, may permit an examination of contractual arrangements with people who work out of the jurisdiction if in truth they are working in the industry “in and of New South Wales”, which can be conducted across borders in this country and overseas.  That is just a question of the proper examination of the facts.  None of that is surprising.

GUMMOW J:   Well, the Interpretation Act is only provisional, is it not?

MR WEST:   Indeed, your Honour, but here it is clear ‑ ‑ ‑

GUMMOW J:   How do these orders work then?  How do these Commission’s orders in fact work, if someone turns up in Hong Kong and waves it at an employer?

MR WEST:   Your Honour, they work this way.  What the Commission does is to look at the contract or the arrangement which is before it and it usually varies it.  It can entirely abrogate it and treat the parties as though they had never had been in contractual relations, allowing for the fact that payments have passed from one to the other during the course of their relationship, but, normally, it varies the contract and then, notionally, it assesses what is an appropriate amount of money to be paid in the light of the contract as varied.  Hence it deals with contracts which are no longer on foot, which have been terminated or which have just come to an end by effluxion of time. 

That is how it gives effect to its orders.  Now, our learned friend’s choice of law proposition has the remarkable result that parties can, even in good faith, enter into a contract which refers to the proper law of it being a foreign state and yet be immune from examination of the fairness of that contract at the suit of one of them, where the contract is to be performed in an industry “in and of New South Wales”.  It is not right to just look at the matter and say, well, the Commission will accommodate that by saying if the choice of law clause is done for an ulterior purpose, then, of course, one can ignore it.  Section 106 entitles the Commission to look at contracts which were perfectly fair at their inception, but which through the passage of time and the occurrence of events during the currency of the contract have rendered it unfair.  That is, in the circumstances as they come to pass, the terms and conditions of the contract are no longer fair. 

Now, your Honour Justice McHugh led, as it were, the establishment of that principle in the Health and Research Employees’ Case in the Court of Appeal.  In 106 the New South Wales Parliament has in fact codified that proposition and written it into the Act.  So that the matters our learned friend points to as being strange or unusual or allowing for remarkable results are really not so at all, whether or not this jurisdiction is assessed on traditional grounds.  There is no basis for saying that Cosgrove’s Case lays down some proposition, even by way of obiter, that the proper law of the contract determines jurisdiction.  It was a case about extraterritorial service.

GUMMOW J:   What is to be done about what is taken to be said in Gosper v Sawyer?

MR WEST:   Your Honour, in Gosper v Sawyer the Court was concerned only with ‑ ‑ ‑

GUMMOW J:   It is easy enough for us to say what it meant, but it can be embarrassing for bodies lower in the hierarchy.

MR WEST:   Well, your Honour, the Industrial Commission now is applying a decision of its Full Court in a case called Chrysler Jeep in which Gosper v Sawyer has no role to play, and that looks at what is the geographical nexus.  Is there a contract “in and of New South Wales”?  And if there is, then there is jurisdiction.  In that case, it concerned the ACT and a motor dealership in the ACT.  Under its overarching arrangements with a supplier of vehicles, the ACT dealership was required to solicit for work and carry out work in New South Wales and so they had no difficulty saying that that is what we have done in the industry “in and of New South Wales”, as well as the fact that it was conducting business elsewhere. 

Gosper v Sawyer is not the harbinger of disaster that our learned friends would have it painted as, nothing of the kind.  With respect, as we put in our written submissions, it turns on a very narrow question, namely, extraterritorial service under the rules of the Commission as they stood at its date and since then, of course, they have changed.  In our respectful submission, there is no special leave point.  There is no point which has sufficient prospects of success in relation to the Court of Appeal’s judgment on the jurisdictional point. 

As to the second, it is unremarkable – what the Court of Appeal found was that the employment contract in fact consisted of two documents, that it was not necessary for us to rely, as we had come to court in our pleadings so doing, claiming there was an arrangement broader than the mere contract, because there was an employment agreement.  There could be no doubt about that.  Subsequent to it, there had come into existence a further agreement between the same parties as had made the employment agreement, plus some more. 

It is not correct to say that the parties, as it were, are relevantly different.  The two parties, A and B who made the contract, made a further agreement between A, B and C and the effect of that was that the rights and obligations of A and B were varied as between themselves.  That was the transmogrification and replacement of equity rights which Mr McRann had, up until the date of that agreement, with new ones, and the new ones contemplated that if Austar floated, then there would be further equity rights. 

Now, none of that is surprising.  The Court of Appeal found, we submit correctly, that if you read those two together, you found there was a contract and it catered for all of the terms and conditions attendant upon the performance of work.  Indeed, after the execution of the Compensation and Release Agreement, Mr McRann continued in the employment and worked but accruing different rights for a month before he left.  So we respectfully submit, there is no point there either.  Your Honours, they are the submissions, with respect, we wish to put.

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

MR HATCHER:   If it please the Court, our learned friend says the test in Chrysler Jeep is a contract “in and of New South Wales” and an industry “in and of New South Wales”.  We accept the latter as stating the test as applied in the Commission, but not the former.  My friend accepts that that is not the test, it is now an industry “in and of New South Wales” and, as my friend says, industries of New South Wales travel well beyond borders. 

One can conceive of a situation where an Australian manufacturer of shirts determines to cease manufacturing in Sydney and manufacture in Fiji.  On the construction of 106 which is applied by the Commission and urged by our friends, that contract in Fiji, whereby the employees are employed to manufacture shirts, becomes subject to the jurisdiction of the Industrial Commission of New South Wales, one of the heads of power being whether they receive below award remuneration.  Well, they may well, because an award would never apply in Fiji.  It is curious, if one says the principal purpose of section 106 was to protect the industrial jurisdiction of New South Wales, that it would travel so much further than the traditional industrial jurisdiction of New South Wales. 

Now, it may be that the proper test is the test that Justice Watson envisaged in Maloney v Hoffman, that is, whether work is done in New South Wales.  Certainly, that would be the test to determine award coverage.  We urge that the section is directed to contracts and it should be the proper law of the contract, assuming that is a valid choice of proper law.  We urge that test, but surely ‑ ‑ ‑

GUMMOW J:   The “industrial instrument” referred to in paragraph (d) of the definition of “unfair contract” – is that a New South Wales industrial instrument or a federal industrial instrument or both? 

MR HATCHER:   My recollection, your Honour, is that the definition is a New South Wales industrial instrument, but we will ‑ ‑ ‑

GUMMOW J:   I thought so.

MR HATCHER:   Yes.  The other point I should say in reply is the point our learned friend first raised on, that is, the Interpretation Act supplies the context.  His Honour the Chief Justice in his judgment below says that there is no need to resort to principles of general construction as Justice Dixon did in Wanganui, but, when one goes to Wanganui, Justice Dixon refers to section 17 of the Interpretation Act and says, well, that is well and good but what does it work upon?  What is this section directed to?  Is it directed to work?  Is it directed to contracts?  Or is it directed to industry?  And that is the question that we say, respectfully, is an appropriate question for this Court to pass upon.

McHUGH J:   That is always the problem with section 17, as to where it bites.

MR HATCHER:   Yes, at the moment we say its bite is too large.

GLEESON CJ:   Thank you, Mr Hatcher.  We will adjourn for a short time to consider the course we will take in these three matters. 

AT 11.20 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.26 AM:  

GLEESON CJ:   In each of the matters of Batterham & Anor v QSR Limited & Anor, Fish & Anor v Solution 6 Holdings Pty Limited & Ors and Old UGC Inc & Ors v Industrial Relations Commission of New South Wales in Court Session & Anor, there will be a grant of special leave to appeal.  We will list the cases following one another and we will allow two days for all three cases.  We will expect counsel in the three cases to agree between themselves on a division of time. 

Was there some question about the necessity for a stay of proceedings in the third matter? 

MR HATCHER:   There is, if it please the Court.  The Industrial Commission has set the matter down for hearing in two weeks in June.  They were asked to stay their hand pending the application for special leave and the disposition of that, and the dates were set regardless.  We ask that a stay issue as to those proceedings. 

GLEESON CJ:   Yes.  Do you resist that, Mr West? 

MR WEST:   No.  I am in your Honour’s hands. 

GLEESON CJ:   Very well.  What is the exact order that you want from us? 

MR HATCHER:   That the proceedings before the Industrial Relations Commission ‑ ‑ ‑

GUMMOW J:   You have a summons, have you not? 

MR HATCHER:   Yes, order No 2 in the summons, if it please the Court. 

GLEESON CJ:   All right.  We will order that the proceedings No IRC/3104 of 2001 before the Industrial Relations Commission of New South Wales In Court Session be stayed pending the determination of the appeal. 

MR HATCHER:   May it please the Court.

AT 11.28 AM THE MATTERS WERE CONCLUDED