McDonald's Australia Holdings Limited and Anor v Industrial Relations Commission of New South Wales and 2 ors

This matter concerned an application by McDonald's Australia Holdings Limited and another party (the Claimants) seeking to prohibit the Industrial Relations Commission of New South Wales and two other parties (the Opponents) from exercising power under section 106 of the *Industrial Relations Act 1996* (NSW). The dispute arose from franchise agreements, comprising lease and licensing agreements, entered into by the Opponents with a Mr. McLaughlin, who operated a McDonald's restaurant. The Opponents sought relief from the Commission under section 106, which pertains to unfair contracts.

The central legal issues before the court were whether the Industrial Relations Commission had jurisdiction to grant the relief sought by the Opponents. Specifically, the court had to determine if the franchise agreements, which included lease and licensing components, constituted "contracts, agreements or arrangements whereby a person performs work in any industry" within the meaning of section 106(1) of the Act. Furthermore, the court considered whether the relief sought by the Opponents had a sufficiently close relationship to the performance of work to fall within the Commission's jurisdiction under section 106(2).

The court reasoned that for the Commission to have jurisdiction, the connection between the contract and the performance of work needed to be more direct than merely having a consequence on the profitability of the business or the remuneration of employees. The court found that the franchise agreements, despite requiring Mr. McLaughlin to work full-time in the business, did not meet the threshold for being considered contracts whereby he performed work in an industry for the purposes of section 106(1). The court also determined that the relief sought by the Opponents did not have the requisite close relationship with the performance of work.

Consequently, the court upheld the Claimants' case and made orders prohibiting the First Opponent from taking any further steps to exercise its power under section 106 of the *Industrial Relations Act 1996* with respect to the Licence Agreements and the Lease Agreement. The Second and Third Opponents were ordered to pay the Claimants' costs.