Fish & Anor v Solution 6 Holdings Ltd

[2005] HCATrans 917

[2005] HCATrans 917

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S206 of 2005

B e t w e e n -

NICHOLAS TERRENCE FISH

First Appellant

NISHA NOMINEES PTY LIMITED

Second Appellant

and

SOLUTION 6 HOLDINGS LIMITED

First Respondent

SOLUTION 6 PTY LIMITED

Second Respondent

NEVILLE BUCH

Third Respondent

NEIL GAMBLE

Fourth Respondent

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Fifth Respondent

Office of the Registry
  Sydney  No S207 of 2005

B e t w e e n -

PETER JAMES BATTERHAM

First Appellant

MAYLORD EQUITY MANAGEMENT PTY LTD

Second Appellant

and

QSR LIMITED

First Respondent

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Second Respondent

Office of the Registry
  Sydney  No S209 of 2005

B e t w e e n -

OLD UGC INC

First Appellant

UIH ASIA/PACIFIC COMMUNICATIONS INC

Second Appellant

AUSTAR ENTERTAINMENT PTY LIMITED

Third Appellant

CTV PTY LIMITED

Fourth Appellant

STV PTY LIMITED

Fifth Appellant

and

THE INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

First Respondent

ROBERT McRANN

Second Respondent

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

TRANSCRIPT OF PROCEEDINGS

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

(Continued from 8/11/05)

Copyright in the High Court of Australia

GLEESON CJ:   Yes, Mr Kenzie.

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

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

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

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

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

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

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

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

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

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

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

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

GUMMOW J:   By the Supreme Court?

MR KENZIE:   By the Supreme Court.

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

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

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

MR KENZIE:   The provisions of section ‑ ‑ ‑

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

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

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

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

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

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

GUMMOW J:   That was Gosper v Sawyer. 

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

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

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

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

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

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

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

Now, your Honours ‑ ‑ ‑

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

MR KENZIE:   Correct.

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

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

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

MR KENZIE:   You do not get to it.

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

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

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

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

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

KIRBY J:   Well, just give it some thought.

MR KENZIE:   Thank you, your Honour.

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

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

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

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

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

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

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

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

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

so his Honour had no difficulty in accepting that –

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MR KENZIE:   Yes.

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

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

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

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

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

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

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

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

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

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

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

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

GUMMOW J:   How do you vary it?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MR KENZIE:   Subject to 108A.

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

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

GUMMOW J:   The answer is yes.

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

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

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

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

MR KENZIE:   The other one was July 2004.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HEYDON J:   Thank you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

GUMMOW J:   What about section 6(2)?

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

KIRBY J:   That is the only analogous provision.

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

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

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

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

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

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

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

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

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

MR KENZIE:   Amcor perhaps.

KIRBY J:   Yes.

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

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

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

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

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

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

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

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

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

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

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

MR WALKER:   Yes.

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

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

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

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

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

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

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

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

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

MR JACKSON:   It is rewriting the contract.

CALLINAN J:   That is what happens with rectification.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MR JACKSON:   Those are our submissions.

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

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

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

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

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

each of the founding directors –

of course, including Mr Batterham –

was to receive the following by way of remuneration:

That included:

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

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

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

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

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

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

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

MR KENZIE:   Indeed, your Honour.

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

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

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

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

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

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

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

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

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

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

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

MR HATCHER:   I am sorry, your Honour.

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

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

KIRBY J:   You had better check it out.

GUMMOW J:   Section 34.

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

Headings . . . being headings to:

(a)      Parts . . . 

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

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

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

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

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

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

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

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

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

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

MR HATCHER:   Registered in Delaware ‑ ‑ ‑

KIRBY J:   Mr McRann is a citizen of California.

MR HATCHER:   Our principal place of business is Colorado, your Honour.  The other thing that we would wish to conclude in saying is that Mr Jackson in his submissions at page 8, line 20 asks in a way that we

must say we asked ourselves, what is the difference between this case and Solution 6?  There are several contracts.  One led to the performance of work.  It is terminated by another contract, expressly so.  The rights under it are extinguished by another contract and that contract must be, as we have already put, the antithesis of a contract under which work is performed and seeks to bring it to an end.  May it please the Court.

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

AT 4.26 PM THE MATTERS WERE ADJOURNED