Finch v The Herald and Weekly Times Limited ACN 004 113 937
[1996] IRCA 101
•26 March 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 94/5036
B E T W E E N :
LIONEL FINCH & Others
Applicants
AND
THE HERALD & WEEKLY TIMES LIMITED
ACN 004 113 937
Respondent
JUDGE: North J
PLACE: Melbourne
DATE: 26 March 1996
REASONS FOR JUDGMENT
THE PROCEEDINGS
The applicants allege that they each entered into an agreement with the respondent relating to the delivery and distribution of newspapers and other publications and products of the respondent, and that various clauses of the agreement were unfair and/or harsh. By an application made under s.127A of the Industrial Relations Act 1988 (“the Act”) filed with a statement of claim on 16 December 1994, and amended by an amended application filed on 26 June 1995, the applicants sought orders under s.127B(1)(a) of the Act setting aside a number of clauses or subclauses of each agreement.
On 26 June 1995, Northrop J ordered by consent, inter alia, that:
“4.Pursuant to order 29 of the Industrial Relations Court Rules the following question be tried separately before the further trial of the proceeding, namely:
‘Whether sections 127A and 127B of the Industrial Relations Act 1988 are invalid as purporting to invest the Court with a jurisdiction which is not part of the judicial power of the Commonwealth.’
5.The preliminary question be set down for hearing before the Court constituted by a single Judge.”
THE LEGISLATION
It is necessary to set out the terms of s.127A and s.127B of the Act:
“Unfair contracts with independent contractors: Court’s powers
127A (1) In this section and in section 127B:
‘contract’ means:
(a)a contract for services that:
(i)is binding on an independent contractor; and
(ii)relates to the performance of work by the independent contractor, other than work for the private and domestic purposes of the other party to the contract; and
(b)any condition or collateral arrangement relating to such a contract.
(2) Application may be made to the Court to review a contract on either or both of the following grounds:
(a)the contract is unfair;
(b)the contract is harsh.
(3) An application under subsection (2) may be made only by:
(a)a party to the contract; or
(b)an organisation of employees of which the independent contractor is (or has applied to become) a member, if it is acting with the written consent of the independent contractor; or
(c)an organisation or association of employers of which the person contracting for the services is (or has applied to become) a member, if it is acting with the written consent of the person.
(4) In reviewing the contract, the Court may have regard to:
(a)the relative strength of the bargaining positions of the parties to the contract and, if applicable, any persons acting on behalf of the parties; and
(b)whether any undue influence or pressure was exerted on, or any unfair tactics were used against, a party to the contract; and
(d)whether the contract provides total remuneration that is, or is likely to be, less than that of an employee performing similar work; and
(e)any other matter that the Court thinks relevant.
(5) If the Court forms the opinion that a ground referred to in subsection (2) is established in relation to the whole or part of the contract, it must record its opinion, stating whether the opinion relates to the whole or a specified part of the contract.
(6) The Court may form the opinion that a ground referred to in subsection (2) is established in relation to the whole or part of the contract even if the ground was not canvassed in the application.
(7) The Court must exercise its powers under this section in a way that furthers the objects of this Act as far as practicable.
Court may make orders about unfair contracts
127B (1) If the Court records an opinion under section 127A in relation to a contract, it may make one or more of the following orders in relation to the opinion:
(a)an order setting aside the whole or part of the contract, as the case may be;
(b)an order varying the contract.
(2) An order may only be made for the purpose of placing the parties to the contract as nearly as practicable on such a footing that the ground on which the opinion is based no longer applies.
(3) While the application is pending, the Court may make an interim order if it thinks it is desirable to do so to preserve the position of a party to the contract.
(4) An order takes effect from the date of the order or a later date specified in the order.
(5) A party to the contract may apply to the Court to enforce an order by injunction or otherwise as the Court thinks fit.
(6) This section does not limit any other rights of a party to the contract.”
LEGISLATIVE HISTORY
Sections 127A and 127B were originally introduced by Act No 109 of 1992 and commenced operation on 23 July 1992. The original form was amended (“the 1994 amendments”) by the Industrial Relations Reform Act 1993 which commenced operation on 30 March 1994.
There were three relevant changes made by the 1994 amendments:
Wherever the word “Court” now appears in the sections set out above, the word “Commission”, being the Australian Industrial Relations Commission (“the Commission”), appeared in the 1992 Act, except in s.127B(5), which is unchanged.
Section 127A(2)(c) was repealed. It provided an additional ground of review, namely, that:
“(c)the contract is against the public interest”
Section 127A(4)(c) was repealed. It provided for a further matter which the court could take into account in reviewing a contract, namely:
“(c)whether the contract may have an adverse effect on the development of the skills of employees performing work of the relevant kind in the industry, including any system designed to provide a trained labour force (for example, apprenticeship or any arrangement for improving the skills of employees); ....”
Thus, the effect of the 1994 amendments was to vest in this Court the jurisdiction previously vested in the Commission, albeit in a modified form. Mr Friend, who appeared as counsel for the appellant, submitted that the power conferred on the Court was a judicial power. The applicant’s argument was adopted and supplemented by the Attorney-General for the Commonwealth, who was represented by Mr Burmester. Dr Jessup QC, who appeared with Mr O’Grady of counsel, contended that the sections were invalid in that they conferred non-judicial power on the Court.
DINGJAN’S CASE AND THE REPEAL OF THE
PUBLIC INTEREST GROUND OF REVIEW
In Re Dingjan; ex parte Wagner (1995) 128 ALR 81, a majority of the High Court held that s.127C(1)(b) of the Act was invalid as falling outside the constitutional power to legislate with respect to corporations. The prosecutors in that case also argued that ss. 127A and 127B were invalid because they conferred judicial power on the Commission. Gaudron J rejected this argument and Mason CJ, Brennan, Deane and Toohey JJ concurred.
In the present case the respondent argued that the reasoning which led the High Court to the conclusion that ss. 127A and 127B conferred non-judicial power on the Commission applied equally to the sections as amended in 1994. It argued that the changes made by the 1994 amendments did not convert the power to judicial power in the hands of the Court.
Gaudron J found two factors determinative of the non-judicial nature of the power in the hands of the Commission, namely, the power to vary contracts was a power to create new rights and obligations, and the character of the Commission as an arbitral tribunal. She also observed that the power to form an opinion as to what is unfair, harsh or against the public interest was to be exercised to promote the objects of the Act and would therefore often involve policy considerations. A critical passage in the judgment, at 107, is as follows:
“A power to adjudicate ‘a dispute about rights and obligations arising solely from the operation of the law on past events or conduct’ (Precision Data (1991) 173 CLR at 188. See also Re Cram; Ex parte Newcastle Wallsend Coal Co Pty Ltd (1987) 163 CLR 140 at 148-9; 72 ALR 173) is one that is essentially and exclusively judicial. On the other hand, a power to bring a new set of rights and obligations into existence is generally non-judicial, although it may take its character from the tribunal involved (Precision Data (1991) 173 CLR at 189. And see, as to the conferral of such powers on a court, Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25 at 35). Thus, a power to create new rights and obligations, if it is conferred on a court and ‘is to be exercised according to legal principle or by reference to an objective standard or test prescribed by the legislature and not by reference to [unspecified] policy considerations’, (Precision Data (1991) 173 CLR at 191, referring to the discussion by Dixon J in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 165 et seq) will be characterised as judicial power involving the determination of rights and obligations for which the law provides. At least that is so if the subject matter and prescribed procedures are consistent with the nature and functions of a court (see Precision Data (1991) 173 CLR at 191. See also R v Davison (1954) 90 CLR at 369-70; Harris v Caladine (1991) 172 CLR at 150 and the cases there discussed).” (emphasis added)
While, of course, the High Court was not determining the validity of the sections as amended by the 1994 amendments, the reference to the considerations applicable if the powers were to be conferred on a court is especially significant, because the High Court was aware, and expressly adverted to the fact, at 105, that jurisdiction had been conferred on this Court by the time Dingjan was argued before the High Court.
The 1994 amendments did not alter the nature of the power to review contracts - it remained a power to create new rights and obligations by varying contracts. But the amendments did confer the power on the court and did modify the content of the power to some extent. Thus, it becomes important to determine whether there was a significant change in the basis upon which the power was to be exercised. If the power to create new rights and obligations remained exercisable by reference to unspecified policy considerations the power would remain non-judicial. Such a function is legislative or administrative in nature. The dividing line between a judicial power on the one hand, and a legislative or administrative power on the other hand, is often thin. Influential in determining whether a power falls on one side or the other will be the degree of definition given to the task. It is a legislative function to provide a framework within which judicial decisions can be made. It is not a judicial function to provide the framework itself.
In Precision Data Holdings Ltd & Others v Wills & Others (1991) 173 CLR 167, a Corporations and Securities Panel was empowered under s.733(3)(b) of the Corporations Law of Victoria to make declarations of unacceptable conduct in relation to share acquisitions or conduct of the officers of a company where:
“......
(b)having regard to the matters referred to in section 731 and any other matters the Panel considers relevant, that it is in the public interest to do so;”
One of the reasons that the High Court held the power of the Panel to be non-judicial was that this provision required the Panel to determine policy matters on grounds not specified in the legislation. The Court said, at 190:
“It follows from what has already been said that, in creating that new set of rights and obligations, considerations of policy, including commercial policy, as well as factors not specified by the legislature yet deemed relevant by the Panel, on which it may form a subjective judgment, must inevitably play a prominent part.”
The policy matter which the Panel had to determine was whether it was in the public interest to make the declaration. The “public interest” was said, at 187, to be “a concept which is of central importance in section 733(3)(b)”. Part of the passage from the judgment of Gaudron J, to which I referred earlier as a critical passage, and which refers to the role of policy consideration, was based upon the judgment in Precision Data. With that background, the vice in s.127A which led Gaudron J to observe that the exercise of the power would involve policy considerations was in s.127A(2)(c) which gave the Commission a power to review on the ground that the contract was against the public interest. This is the same ground which caused the power in Precision Data to be held non-judicial. Such a ground provides no framework within which the Court may make determinations. It requires the Court to set the framework. As Windeyer J said in R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1969-70) 123 CLR 361, at 400:
“The public interest is a concept which attracts indefinite considerations of policy that are more appropriate to law-making than to adjudication according to existing law.”
Gaudron J was dealing with s.127A which also provided for the unfair and harsh grounds of review. But she dealt with all grounds together and did not consider whether the unfairness and harshness grounds, without the ground relating to the public interest, would constitute a conferral of judicial power.
Gaudron J said, at 107, that the power conferred by ss. 127A and 127B was “precisely analogous with the Commission’s power to make industrial awards”. The analogy is certainly complete in respect of the power to vary on the ground that the contract is against the public interest. In making industrial awards, the Commission was bound to take account of the public interest and have regard to the objects of the Act (see s.90 of the Act). Further, the Commission was empowered to dismiss or refrain from further hearing or determination of an industrial dispute if further proceedings were not desirable in the public interest (see s.111(1)(g)(iii) of the Act). However, once the public interest ground was removed, the analogy was considerably weakened. No longer was the power primarily concerned with the interest of the public and the national economy, but it was primarily concerned with the defined issues of harshness and unfairness - issues which take account of the interests of the parties to the contract. The award-making power of the Commission remains directed to the prevention and settlement of disputes by reference to matters of industrial and economic policy. The power to vary unfair or harsh contracts is directed to the circumstances of the contracting parties. Thus, the repeal of s.127A(2)(c) made a critical difference in the nature of the power conferred by the sections. The removal of “public interest” as a ground of review removed the major factor which had caused the sections to be characterised as conferring non-judicial power in Dingjan.
ARE THE UNFAIRNESS AND HARSHNESS GROUNDS OF REVIEW NON-JUDICIAL IN NATURE? - SECTION 127A(2)
The respondent submitted that the remaining grounds of review - unfairness and harshness - were so vague and ill defined as not to found judicial power.
While there must be a framework provided in which judicial power can operate, the framework may be very broad. In determining whether the particular framework is too broad to found a judicial power, one may look to the powers which courts have traditionally exercised. As Windeyer J said in Tasmanian Breweries, at 394:
“The concept [of judicial power] seems to me to defy, perhaps it were better to say transcend, purely abstract conceptual analysis. It inevitably attracts consideration of predominant characteristics and also invites comparison with the historic functions and processes of courts of law.”
The jurisdiction of courts of equity to set aside contracts on the ground that justice demands such a result is well recognised. In Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 474, Deane J described this jurisdiction as follows:
“The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see O’Rorke v Bolingbroke (1877) 2 App Cas 814, at 822). The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or ‘unconscientious’ that he procure, or accept, the weaker party’s assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: ‘the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract’ (see per Lord Hatherley, O’Rorke v Bolingbroke (1877) 2 App Cas, at 823; Fry v Lane (1888) 40 Ch D 312, at 322; Blomley v Ryan (1956) 99 CLR 362, at 428-429).”
The traditional concern of the courts with unconscionable conduct is now recognised in s.51AA of the Trade Practices Act 1974 (Cth) which prohibits certain conduct that is unconscionable “within the unwritten law, from time to time, of the States or Territories”. Where the conduct is in respect of a contract, the relevant court has power under s.87 to, inter alia, set aside or vary the contract.
Commonwealth and State legislation gives courts power in respect of other unconscionable conduct and allows them to set aside or vary contracts attended by such conduct: see s.51AB(1) of the Trade Practices Act 1974 (Cth), s.39 Fair Trading Act 1989 (Qld), s.57 Fair Trading Act 1989 (SA), s.15 Fair Trading Act 1990 (Tas), s.11A Fair Trading Act 1985 (Vic), s.11 Fair Trading Act 1987 (WA), s.43 Consumer Affairs and Fair Trading Acts 1990 (NT) and s.13 Fair Trading Act 1992 (ACT). Conduct which is unconscionable for the purpose of s.52A of the Trade Practices Act 1974, the predecessor of s.51AB, was described by Hill J in Zoneff v Elcom Credit Union Ltd (1990) ATPR 41‑009 at 51-158, as follows:
“Further the conduct referred to in sec.52A(1) must be, in all the circumstances, unconscionable. The cases have not sought to define unconscionability nor is it appropriate so to do because the criteria to be applied will depend upon all the circumstances. Nevertheless, in general terms, it may be said that conduct will be unconscionable where the conduct can be seen in accordance with the ordinary concepts of mankind to be so against conscience that a court should intervene. At the least the conduct must be unfair. It invites comparison with doctrines of equity: cf. Blomley v Ryan (1954-1956) 99 CLR 362 and Commercial Bank of Australia Ltd v Amadio & Anor (1983) 151 CLR 447 where inequality of bargaining power or absence of the ability to bargain freely will be relevant to the finding that there has been an unfair advantage taken by one person of the other.”
The criterion of unconscionability has been an accepted basis upon which courts have acted to set aside contracts. It provides a framework within which the courts can act. The criterion is, if anything, less defined than the criteria of unfairness and harshness found in the section under consideration.
Further, Victoria, New South Wales and Queensland each have passed consumer credit legislation which invests courts with the power to reopen unjust credit contracts. Each State Act adopts a uniform consumer credit code, which is also expected to be adopted by the remaining Australian States and Territories. In addition, in New South Wales the courts have a general power to set aside or vary an unjust contract under s.7 of the Contracts Review Act 1980.
Thus, the power of courts to review contracts on the grounds of unfairness or harshness or grounds analogous to unfairness or harshness is well known to the law. The power is historically conferred on courts, and is consistent with the nature and functions of a court. The concepts of unfairness and harshness are standards prescribed by the legislature in s.127A(2) of the Act. The court is not left to formulate the appropriate standard without reference to prescribed criteria.
In The Queen v Their Honours the Judges of the Commonwealth Industrial Court and Another; Ex parte The Amalgamated Engineering Union, Australian Section (1960) 103 CLR 368 (Shearer’s case), the High Court considered s.140(1)(c) of the Conciliation and Arbitration Act 1904, which provided, in part, that a rule of an organisation:
“......
(c)shall not impose upon applicants for membership, or members, of the organization, conditions, obligations or restrictions which, having regard to the objects of this Act and the purposes of the registration of organizations under this Act, are oppressive, unreasonable or unjust”.
Kitto J said of this provision, at 383:
“Emphasis has been placed by the prosecutors upon the scope which there is in some of the provisions of sub-s.(1) for uncertainty of opinion. It must be conceded that the words ‘oppressive’, ‘unreasonable’ and ‘unjust’, in relation to conditions, obligations or restrictions imposed by a rule upon applicants for membership or upon members, describe attributes which are not demonstrable with mathematical precision, and are to be recognized only by means of moral judgments according to generally acknowledged standards. There is a degree of vagueness about them which, in the context of the former section, assisted the conclusion that the intention was to confer on the Court a general administrative discretion for the amelioration of rules. But the notions which the words convey, more readily to be associated with administrative than with judicial decisions though they be, must be conceded, having regard to the nature of criteria with which courts are familiar in other fields, to be not so indefinite as to be insusceptible of strictly judicial application; and their employment in the present context is not sufficient to show, against the strong indications which there are to the contrary, that the Court is intended to exercise its power under the section otherwise than judicially.”
The comments made in relation to the use of the words “oppressive, unreasonable or unjust” apply to the use of the words “unfair” and “harsh” in s.127A(2).
The respondent also contended that it was relevant that the power has been treated as non-judicial in the past by being vested in the Commission. There is little force in the argument that the characterisation of the nature of the power should be influenced by the fact that the legislature had previously conferred the power on the Commission. More relevant are the facts that the legislature modified the power thereafter, and transferred the modified power to the Court. These facts support a characterisation of the power as judicial.
WHO CAN INITIATE A REVIEW - SECTION 127A(3)
In Tasmanian Breweries, the Commissioner of Trade Practices alone could initiate proceedings in the Trade Practices Tribunal, and in Precision Data, the Australian Securities Commission alone could initiate proceedings before the Corporations and Securities Panel. In both cases, the tribunal was not involved in determining a controversy between the parties to a transaction, but acting in the public interest at the instance of a public official. This factor indicated that the power of the tribunal was non-judicial in nature. By parity of reasoning, the respondent argued that the right conferred by s.127A(3) on an organisation, in which a contracting party was a member, to initiate a review, indicated that the power in this case was non-judicial. But the situation under s.127A(3) is very different from that in Tasmanian Breweries and Precision Data. Under s.127A(3), a contracting party may initiate a review, and a representative organisation may do so provided that the contracting party has consented in writing. Because the organisation depends on the consent of a party to the contract, the independent intervention of an outsider to the transaction, which marked Tasmanian Breweries and Precision Data is absent.
THE COURT MAY HAVE REGARD TO ANY OTHER MATTER THE COURT THINKS RELEVANT - s.127A(4)(e)
Section 127A(4)(e) allows the Court, in reviewing a contract, to have regard to “any other matter that the Court thinks relevant”. The respondent submitted that the subsection extended the area of the Court’s consideration to a totally undefined extent. It argued that such an extension was inconsistent with judicial power.
The subsection is the final one in a series in which each of the preceding subsections prescribe a specific matter to which the Court may have regard in reviewing the contract. The function of subsection (4)(e) is to emphasise that the previous specific subsections in s.127A(4) do not comprise an exclusive list of relevant matters. Without subsection (4)(e) there may have been scope for an argument that the Court could have regard to no factors other than those referred to in the previous subsections. The whole of s.127A(4) falls under the umbrella of s.127A(2). That is to say, the matters for consideration in s.127A(4) do not stand alone. They are in aid of the review on grounds of unfairness and harshness. These two concepts define the scope of the review. For subsection (4)(e) to state that the Court may consider matters relevant to unfairness or harshness is to state the obvious.
The context of subsection (4)(e) is quite different from the context of a similar provision in s.733(3)(b) of the Corporations Law of Victoria which was considered in Precision Data and which resulted in the High Court determining that the Corporations and Securities Panel exercised non-judicial power. The Panel was required to have regard to any matter it considered relevant in determining whether it was in the public interest to make a declaration of unacceptable conduct. What made the power non-judicial was not the requirement to take into account relevant matters, but the fact that the issue to which the enquiry was directed was the public interest. It was the determination of the public interest, without reference to specified criteria, that rendered the power non-judicial.
RECORDING AN OPINION - s.127A(5)
The respondent contended that the requirement in s.127A(5) that the Court record its opinion whether a contract is unfair or harsh points to the power to review contracts being a non-judicial power. It was argued that the recording of an opinion by the Court does not resolve a controversy between the parties, and has no binding force - both characteristics of judicial power. This argument fails to take account of the full scope of the power invested in the Court. If the Court does form and record an opinion that the contract is unjust or harsh, it is given power to vary or set aside the contract (s.127B(1)) and also to enforce an order by injunction or otherwise (s.127B(5)). Recording an opinion is therefore a step on the way to the creation of rights between the contending parties. When the totality of the power is taken into account, the requirement to record its opinion as part of the process of creating new rights is no barrier to the characterisation of the power as judicial.
A related argument was that the process established by these provisions was indicative of a non-judicial power. The respondent contended that s.127A and s.127B did not prohibit unfair or harsh contracts, did not invest the Court with jurisdiction to determine whether there had been an infringement of the prohibition, and did not provide for the Court to grant a remedy against the infringement. Had the sections made such provision, it was argued, they would have conferred a judicial power. Rather, the sections require the Court to hear an application for review and record its opinion if it finds that the contract was unfair or harsh, and confer a discretion to set aside or vary a contract which was, according to the opinion, unfair or harsh. Ordinarily, judicial power is conferred on a Court in such a case by terminology which specifies a circumstance which is prohibited and which vests in the Court the jurisdiction to determine whether the specified circumstance exists and grant relief. The process established by these provisions was originally applied to the Commission. Whilst this type of terminology is sometimes used for the purpose of conferring powers on the Commission, the type of terminology is unusual for the purpose of conferring a power on a Court. But in large part, the distinction in this case is semantic. If unjust and/or harsh contracts were prohibited and if the Court were invested with jurisdiction to determine whether a contract was unjust or harsh, and given power to grant a remedy, the Court would, in the exercise of that jurisdiction, form an opinion and record it in reasons for judgment. In this case the unusual form of process does not militate so strongly in favour of the non-judicial characterisation as to negative the other characteristics, and the history of the provisions, which favour characterisation as a judicial power. Nonetheless, the draftsperson would have done better to use the traditional form of expression and thereby minimise the scope for argument. The same remarks apply to the way the transfer from the Commission to the Court has been effected. Clearer drafting would have eliminated some of the argument which has occurred. It is symptomatic of the approach taken to the task that ss. 127A and 127B still appear in Part VI Division 3 of the Act. Part VI deals with “Dispute Prevention and Settlement” and Division 3 deals with “Particular powers of the Commission”. There is no reason that ss.127A & B, which deal with the powers of the Court, should appear in a Division titled and otherwise concerned only with the powers of the Commission.
The respondent also submitted that the requirement in s.127A(5) that the Court record its opinion if it comes to the view that a contract is harsh or unfair, is indicative of the arbitral function performed by the Commission, and quite out of place for a court. The function of such a provision, in an arbitral context, was, it was argued, to allow parties to settle their differences after the tribunal has expressed its view by recording its opinion and before a remedy has been granted. This argument depends on a mandatory time gap between the recording of the opinion and the granting of a remedy. The Act does not provide for any such time gap.
REFERENCE TO A GROUND NOT CANVASSED IN THE APPLICATION - s.127A(6)
Section 127A(6) allows the Court to form an opinion that a contract is unfair or harsh, even if the ground was not canvassed in the application. Such a procedure is not inconsistent with judicial power. In ordinary civil litigation, issues not initially raised in pleadings may be canvassed, either orally or by way of amendment to the pleadings. There is no suggestion in s.127A(6) that the Court can proceed on its own motion or without complying with the requirements of natural justice. The subsection is a provision similar in intent to s.418 of the Act, namely, a provision designed to ensure that all issues are dealt with efficiently by way of a single proceeding.
FURTHERING THE OBJECTS OF THE ACT - s.127A(7)
The respondent contended that s.127A(7) would operate to require the Court to fulfil a quasi wage-fixing role, which demonstrated that the powers conferred were non-judicial. To characterise the operation of subsection (7) as permitting the Court to fulfil a quasi wage-fixing role is to elevate the subsection to the position of a grant of power in the terms of the subsection. In truth, the subsection is subservient to the grant of power to review contracts in s.127A(2). The power to review is confined. It is limited to the grounds of unfairness and harshness. The object of the Act may only play a role in the exercise of the limited power. Thus, subsection (7) does not confer a power to review contracts to further the objects of the Act. Rather, it requires the Court, when reviewing contracts on the grounds of unfairness or harshness, to act so as to further the objects of the Act. While a power to review contracts so as to further the objects of the Act may confer a quasi wage-fixing role on the Court, a power to review on the grounds of unfairness and harshness does not. Further, the scope of operation of subsection (7) is expressed in the language of limitation by the words “so far as practical”. Although one would not expect parliament to require an impractical result, and consequently the words may not add anything to the meaning, they are an indication of a subservient or restricted role of the subsection.
Subsection (7) adds greater definition to the concepts of harshness and unfairness than they would have without the subsection. Not only does such definition answer an allegation of vagueness, but it provides a context for the role of the Court in determining what is unfair or harsh. In Shearer’s case, s.140(1)(c) of the Conciliation and Arbitration Act 1904, which contained a similar provision, and which is set out earlier in these reasons, was upheld as the conferral of judicial power. Kitto J said of that provision, at 383-4:
“It must not be overlooked that the adjudication which the Court is required to make in regard to the indicated standards is to be made having regard to the objects of the Act and the purposes of the registration of organizations under it. A contention we have to consider is that this requirement infects the section with one of the ills which beset its predecessor. In the Australian Builders’ Labourers’ Case ((1957) 100 CLR 277) it was considered that the Court was intended to look to the effect which the existence or non-existence of a challenged rule might be expected to have upon the working of the machinery of conciliation and arbitration, so that it should disallow the rule, cause it to be altered, or leave it in force, in the exercise of a discretionary judgment as what would best serve the purposes of the Act. But what is provided in the present section does not make the objects of the Act and the purposes of registration considerations governing or affecting the Court in the exercise of a discretion as to how a rule shall be dealt with, for the Court is given no such discretion. The provision merely makes explicit what in any case would be implicit, that the objects and purposes are to be recognized as germane to the question whether the rule is oppressive, unreasonable or unjust to persons having the character, and in the character, of members or applicants for membership of one of the bodies for which the Act provides, and which it regulates, for the better serving of its purposes. Far from pointing to an intention to confer a discretion of an administrative character, the words in question make the issue which is presented for the Court’s decision, if anything, more concrete and more clearly justiciable.”
SUCCESSIVE APPLICATIONS
The respondent further contended that ss. 127A and 127B permit an applicant to return to the Court with successive applications to review the fairness or harshness of a contract at various times during its currency. In particular, the respondent pointed to the terms of s.127A(4)(d) and argued that the words “is likely to be” indicated that subsequent applications were envisaged, dependent on the movement in wages of the employees doing comparable work.
In terms, subsection (4)(d) gives no indication of a right in an applicant to bring successive applications. On the contrary, it requires the Court, if it takes into account remuneration of employees doing comparable work, to make a forecast of the likely level of remuneration in the future. Further, on an issue such as this the intention of parliament to confer the power on a court is decisive. On its face there is a curiosity about the proposition that a power might be judicial or non-judicial depending on the character of the body in which the power is vested. The validity of the proposition depends on the often unstated accompanying proposition that the rules and practices governing the body in which the power is vested can significantly change the way a given power will be exercised. Where the provisions are silent, as here, on the question whether successive applications may be made, the character of the body may be determinative. For the Court, the operation of the doctrine of res judicata means that the judgment of the Court determines the proceedings once and for all. In the exercise of the quasi legislative power previously vested in the Commission, successive applications could have been brought. The doctrine of res judicata did not apply. The doctrine has been held not to apply to decisions of the Commission in analogous circumstances: Australian Transport Officers’ Federation v State Public Services Federation (1981) 50 FLR 438 at 443-447, and cases cited therein. Thus, by the simple legislative change of taking a power from the Commission and vesting that power in the Court, the legislature achieved a change in the nature of the power, in part, by virtue of the unstated accompanying attributes which attach to the different bodies.
RELEVANCE OF EVENTS OCCURRING AFTER THE CONTRACT WAS MADE
In Minister for Youth & Community Services v Health & Research Employees Association of Australia, NSW Branch and Others (1987) 22 IR 59, the New South Wales Court of Appeal considered whether the Industrial Commission of New South Wales had jurisdiction over two industrial agreements signed by the Minister for Youth & Community Services. Section 158 of the Child Welfare Act 1939 (NSW) prevented a suit or action being brought against the Minister in specified circumstances if the Minister acted in good faith and with reasonable care. The Court determined that an application brought under s.88F of the Industrial Arbitration Act 1940 (NSW) was not such a suit or action within the terms of s.158 of the Child Welfare Act. In reaching that conclusion, McHugh JA said, at 76:
“Moreover, I think that the Commission can exercise its power under s.88F in a case where, although the contract was not unfair or harsh or unconscionable or against the public interest at the time of its making, subsequent events have made it so. The jurisdiction of the Commission to void or vary a contract, independently of the circumstances which existed at the time of its making, indicates conclusively in my opinion that the power conferred by s.88F is not an exercise of judicial power: cf R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361. It is a further indication that the Commission does not hear a suit or action as those expressions are ordinarily understood.”
Section 88F(1) of the Industrial Arbitration Act 1940 provided:
“(1) The commission may make an order or award declaring void in whole or in part or varying in whole or in part and either ab initio or from some other time any contract or arrangement or any condition or collateral arrangement relating thereto whereby a person performs work in any industry on the grounds that the contract or arrangement or any condition or collateral arrangement relating thereto -
(a)is unfair, or
(b)is harsh or unconscionable, or
(c)is against the public interest ....
(d)provides or has provided a total remuneration less than a person performing the work would have received as an employee performing such work, or
(e)was designed to or does avoid the provisions of an award, industrial agreement, agreement registered under Part VIIIA or contract determination.”
His Honour’s reference to events subsequent to the making of the contract is a reference to the terminology of the section, which expressly relates to both the time when the contract was made and subsequently. Section 127A is in a relevantly different form. There is no reference to events subsequent to the date of making the contract. Hence, the observations of McHugh JA do not apply to s.127A. It is concerned only with unfairness and harshness at the time the contract was made.
CONCLUSION
The process of determining whether a power is or is not a judicial power is a difficult one because the concept has not been, and perhaps cannot be, exhaustively defined so as to cover all factual situations which arise. Furthermore, factors may be indicative of judicial power in one context but not in another. Where there are features indicative of judicial power and features indicative of non-judicial power, the Court must weigh all features to determine which predominate. These reasons have largely dealt with the features which the respondent has argued are indicative of the power being non-judicial. These arguments have not been accepted. There are a number of factors which indicate that the power of the Court is judicial. While none alone is determinative, together they predominate so clearly as to leave no real doubt that the power vested in the Court is judicial.
The intention of parliament was to create judicial power. It modified the power previously vested in the Commission in such a way that the non-judicial elements of the pre-existing power were eliminated. Whereas the power was previously vested in an administrative body primarily concerned with the prevention and settlement of interstate industrial disputes, whose members were required to have skills and experience in the field of industrial relations (s.10(1)(b), (2) and (3) of the Act), and which was not bound to apply the rules of evidence (s.110(2)(b) of the Act), the modified power was given to the Court, whose members are judges, whose members are not required by the Act to have skills and experience in the field of industrial relations, and which is bound to apply the rules of evidence. Further, whereas under s.127B the Court has power to enforce its orders, the Commission could not have, and did not have, that power. The subject matter of the review, namely, whether a contract is unjust or harsh, is a traditional subject matter of judicial attention. Finally, the end to which the review is directed, namely, the variation or setting aside of the contract, is an accepted function of a Court.
For these reasons, the question to be tried separately should be answered, “No”.
I certify that this and the preceding twentyfour (24) pages are a true copy of the reasons for judgment of his Honour Justice North.
Associate:
Dated:
Solicitors for the applicant: Maurice Blackburn & Co
Counsel for the applicant: W. Friend
Solicitors for the respondent: Minter Ellison
Counsel for the respondent: C. Jessup QC and C. O’Grady
Solicitors for the intervener: Australian Government Solicitor
Counsel for the intervener: H. Burmester
Dates of hearing: 13 October and 23 November 1995
Date of judgment: 26 March 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 94/5036
B E T W E E N :
LIONEL FINCH & Others
Applicants
AND
THE HERALD & WEEKLY TIMES LIMITED
ACN 004 113 937
Respondent
JUDGE: North J
PLACE: Melbourne
DATE: 26 March 1996
THE COURT ORDERS THAT:
The question set down for hearing separately and before the further trial of the proceeding pursuant to the order made by Northrop J on 26 June 1995 be answered as follows:
Question:Whether sections 127A and 127B of the Industrial Relations Act 1988 are invalid as purporting to invest the Court with a jurisdiction which is not part of the judicial power of the Commonwealth.
Answer: No.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
C A T C H W O R D S
INDUSTRIAL LAW - whether power of courts to REVIEW UNFAIR or HARSH contracts is JUDICIAL - whether PUBLIC INTEREST ground of review renders power NON-JUDICIAL - whether the right of an organisation, in which a contracting party is a member, to MAKE APPLICATION, indicates that the power is NON-JUDICIAL - whether the power to have regard to any other MATTER that the Court thinks RELEVANT is inconsistent with JUDICIAL POWER - whether the requirement that the Court RECORD its OPINION indicates that the power is NON-JUDICIAL - whether the Court’s power to refer to a GROUND NOT CANVASSED IN APPLICATION is inconsistent with JUDICIAL POWER - whether the requirement that the Court FURTHER THE OBJECTS of the Act indicates that the power is NON-JUDICIAL - whether the CHARACTER of the body in which the power is VESTED indicates that the power is JUDICIAL or NON-JUDICIAL
Child Welfare Act 1937 (NSW) s.158
Conciliation and Arbitration Act 1904 (Cth) s.140
Corporations Law of Victoria s.733
Industrial Arbitration Act 1940 (NSW) s.88F
Industrial Relations Act 1988 (Cth) ss. 127A, 127B
Industrial Relations Reform Act 1993 (Cth)
Trade Practices Act 1974 (Cth) ss. 51AA, 51AB
Australian Transport Officers’ Federation (1981) 50 FLR 438;
Commercial Bank of Australia v Amadio (1983) 151 CLR 447;
Re Dingjan; ex parte Wagner (1995) 128 ALR 81;
Minister for Youth & Community Services v Health & Research Employees Association of Australia, NSW Branch and Others (1987) 22 IR 59;
Precision Data Holdings Ltd & Others v Wills & Others (1991) 173 CLR 167;
R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1969-70) 123 CLR 361;
The Queen v Their Honours the Judges of the Commonwealth Industrial Court and Another; Ex parte The Amalgamated Engineering Union, Australian Section (1960) 103 CLR 368 (Shearer’s case);
Zoneff v Elcom Credit Union Ltd (1990) ATPR 41-009
FINCH & Others -v- THE HERALD & WEEKLY TIMES LIMITED (ACN 004 113 937)
No. VI 94/5036
Before: North J
Place: Melbourne
Date: 26 March 1996
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