Mitchforce Pty Ltd v Industrial Relations Commission CaseBase | (2003) 57 NSWLR 212 | (2003) 124 IR 79 | [2003] NSWCA 151 | BC200303052 MITCHFORCE PTY LTD v INDUSTRIAL RELATIONS COMMISSION (NSW); A- G (NSW) (Intervenor) BC200303052 Unreported Judgments NSW · 224 Paragraphs SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SPIGELMAN CJ, MASON P AND HANDLEY JA CA 40440/02 16 December 2002, 13 June 2003 Mitchforce v Industrial Relations Commission & Ors [2003] NSWCA 151 Headnotes CONSTITUTIONAL LAW (C'WLTH) — validity of privative clause — indirect effect on appellate jurisdiction of High Court INDUSTRIAL ARBITRATION (NSW) — contract whereby work performed in industry JUDICIAL REVIEW — privative clause — Hickman principles UNFAIR CONTRACTS — contracts whereby work is performed in industry Legislation cited Contracts Review Act 1980 Industrial Arbitration Act 1940 Industrial Relations Act 1991 Industrial Relations Act 1996 Interpretation Act 1987 (NSW) Supreme Court Act 1970 Industrial Relations Commission of New South Wales, Keith Abner Sidney Starkey Dawn Nell Starkey (Opponents) The claimant was the owner of a hotel leased for 10 years with an option of renewal for a further 10 years. The second opponents, experienced hoteliers, became lessees by assignment from the original tenant paying $650,000 for the lease. They intended to be and were working proprietors. The rent payable under the lease was indexed to the Consumer Price Index or 8% per annum, whichever was the greater. Additional rent was payable at the rate of 4% of the cost of liquor purchased under the licence. When the rate of inflation fell the indexation formula in the lease increased the rent to uneconomic levels which the business could not support. The second opponents got further and further behind with the rent and the arrears were further increased by interest payable under the lease. When the second opponents attempted to exercise their option of renewal, the claimant relied on the arrears to deny their right to a new lease. Page 2 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 The second opponents applied to the Industrial Relations Commission for relief under s106 of the Industrial Relations Act 1996 on the ground that the lease was a contract whereby work was performed in an industry. Hungerford J upheld the claim, varied the lease to reduce the rent and declared that the second opponents were entitled to a renewed lease. The Full Bench of the Commission refused the claimant leave to appeal. The claimant then applied to the Court of Appeal for prerogative relief on the ground that the Commission lacked jurisdiction because the lease was not a contract whereby work was performed in an industry. The opponents relied on the privative clause in s179 of the Act, but the claimant asserted that the orders of the Commission were either not protected by the Hickman principles or the section was invalid. HELD: (1) The effect of the privative clause in s179 was to extend the jurisdiction of the Commission in accordance with the Hickman principles. (2) The lease did not contain an implied term that the lessees would carry on the business and could not be a contract whereby work was performed in an industry on that basis. (3) The express covenants by the tenants to repair and maintain the premises could not make the lease a contract whereby work was performed in an industry. (4) (By majority) The work undertaken by the tenants in carrying on the business of the hotel did not make the lease a contract whereby work was performed in an industry. (5) (By majority) The Commission did not have jurisdiction under s106 with respect to the lease, but the principal orders made by the Commission were protected and validated by s179. (6) The orders of the Commission for specific performance of the option for a renewed lease were made without jurisdiction and were not protected by s179. (7) (By majority) The Court should not decide whether s179 was contrary to Chapter III of the Commonwealth Constitution until the Full Bench of the Industrial Relations Commission had had an opportunity to reconsider its interlocutory decision refusing the claimant leave to appeal. (8) (By majority) The summons should be adjourned until the outcome of such an application was known. Spigelman CJ [1] I have read the judgment of Handley JA in draft. His Honour outlines the issues. I adopt his Honour's summary of the relevant facts subject to the addition of more detailed reference to the terms of the lease agreement which I set out below. The Jurisdiction of the Industrial Relations Commission [2] The first issue that requires consideration is whether or not the lease agreement is a contract or arrangement "whereby a person performs work in an industry" within the meaning of s106(1) of the Industrial Relations Act 1996 ("the Act"). [3] There is no judgment binding on this Court which holds that a lease agreement of the character presently under consideration is a contract or arrangement "whereby a person performs work in an industry". Decisions that are binding on this Court establish that the statutory formulation is satisfied by a share farming agreement (Stevenson v Barham (1977) 136 CLR 190) and by agreements between a petroleum company and a service station operator (Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169). To the same effect was the franchise agreement for retail petroleum sales considered by this Court in Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443. Despite changes in the statutes, notably the introduction of an objects clause in s3 of the Act, the submissions proceeded on the basis that this line of authority still applied. [4] The word "whereby" is not a term of art. It must take its colour from its surroundings. That that is so is a matter of significance for the determination of whether or not the requisite connection between the contract or arrangement, or any related condition or collateral arrangement, and the performance of work does in fact exist on the facts of the particular case. [5] Authoritative reasoning has substituted other formulations for the word "whereby", albeit in terms that are no less indeterminate. In Caltex Oil v Feenan the Privy Council at 173G said that the word "whereby" was used in either the sense of "in consequence of which" or "in fulfilment of which". In Stevenson v Barham, Mason and Jacobs JJ, with whom Barwick CJ at 192 somewhat reluctantly agreed, adopted the formulation of whether or not the contract "leads directly to a person working in an industry" (see at 200.10, 201.6 and 202.3). Mason and Jacobs JJ referred with approval to, and explained, a judgment in which both of their Honours had joined when members of this Court. (Ex parte VG Haulage Services Pty Ltd; Re The Industrial Commission of New South Wales [1972] 2 NSWLR 81.) [6] The determination of when a contract may be said to lead "directly" to the performance of work is not, on its face, of a lesser order of difficulty than the determination of whether or not a contract may be characterised as one "whereby" a person performs work in an industry. However, the explanation given by their Honours for adopting the Page 3 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 terminology that they did is of some assistance. This is because of the emphasis their Honours gave to the scope and purpose of the legislative scheme in which a word of such indeterminate content as "whereby" appears. Their Honours said at 200.10, "... so long as the transaction leads directly to work in any industry it has the necessary 'industrial colour or flavour'". [7] In VG Haulage and Stevenson v Barham the reference to "industrial colour or flavour" reflected the reasons delivered in one of the foundation judgments on s88F of the Industrial Arbitration Act 1940, the predecessor provision of s106, which was expressed in relevantly identical terms. In Davies v General Transport Development Pty Ltd [1967] AR 371, Sheldon J referred to s88F in the following terms: "its basic purpose is industrial" (at 373.2). His Honour spoke of the section being "confined within its proper industrial context" (at 373.5). [8] In the VG Haulage case Jacobs JA, with whom Mason JA and Hardie AJA agreed, said at 86-87: "It is in my view certainly sufficient in such a contract as the present one, dealing with the use of one truck sold with a work agreement relating thereto, that the contract or arrangement envisages that the party to the contract or arrangement will during its currency perform work in the industry. Once this factor is present, certainly the Commission has jurisdiction, provided the contract and arrangement has an industrial colour or flavour, if I may so describe it." [Emphasis added] [9] His Honour went on to say at 88A: "... the transaction must directly lead to work in the industry - that is what gives the industrial colour or flavour - ..." [10] In Stevenson v Barham at 200 the joint judgment referred to the relevant passage from VG Haulage culminating in this proposition and explained it at 200.10 in the way I have quoted in para[6] above. [11] The significance of the characterisation of the contract as "industrial" was reiterated in the joint judgment at 201.5 when their Honours said: "It follows, then, that if the contract is one which leads directly to a person working in any industry it has the requisite industrial character - it is a contract 'whereby a person performs work in any industry'. This is the relevant jurisdictional fact which needs to be established." [12] The industrial context in which the word "whereby" appears, and which is described as a 'necessity' and a 'requirement' by the High Court, had been the subject of further comment by Jacobs JA in VG Haulage, in terms not expressly adopted in the High Court, but which are consistent with the High Court judgment. His Honour said at 88B-C: "It seems to me that the legislature was concerned to empower the industrial tribunals ... to examine contracts and arrangements which led directly to the employment of persons and the performance of work in any industry, not simply because the contract or arrangement in the commercial sense involves the provision of goods and services, with a consequent performance of work in an industry, but rather because the impugned agreement or arrangement itself directly envisages the employment of a person or persons in industry and has a recognisable impact upon the conditions of that employment, and, whether or not it envisages that a contracting party will perform the work, discloses a purpose that by the adoption of the arrangement the industrial objectives of the legislation will be more or less defeated." [13] This passage suggests three elements are required to conclude that a contract, etc leads "directly" to the performance of work in an industry: (i) The contract itself "directly envisages" performance of work. (ii) The contract has a "recognisable impact on the conditions of that employment" and "work". (iii) A purpose that would defeat the industrial objectives of the legislation is discernible. [14] The joint judgment in which his Honour joined in Stevenson v Barham suggests that his Honour no longer maintained (iii). However, (i) and (ii) are consistent with the latter decision as elucidated by the identification therein of the "direct" relationship between the contract and the performance of work as supplying the requisite "industrial colour or flavour". [15] In both VG Haulage and in Stevenson v Barham the test of 'directness' was satisfied. It is not the case, as is sometimes suggested, that Stevenson v Barham removed the element of "industrial flavour or colour" from s88F. The word "directly" was employed so as to support a conclusion about the "industrial colour or flavour" of the relevant contract, etc. That purpose assists in determining whether the requisite connection between the contract and the performance of work in a particular case can be characterised as sufficiently "direct". Nevertheless, the word to be interpreted is "whereby". Page 4 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 [16] The meaning of a word as general and as indeterminate as "whereby" can only be established by considering the context in which it appears. As Lord Simon of Glaisdale said in Maunsell v Olins [1975] AC 373 at 391: "Statutory language, like all language, is capable of an almost infinite gradation of 'register' - ie, it will be used at the semantic level appropriate to the subject matter and to the audience addressed (the man in the street, lawyers, merchants, etc). It is the duty of a court of construction to tune in to such register and so to interpret the statutory language as to give to it the primary meaning which is appropriate in that register (unless it is clear that some other meaning must be given in order to carry out the statutory purpose or to avoid injustice, anomaly, absurdity or contradiction). In other words statutory language must always be given presumptively the most natural and ordinary meaning which is appropriate in the circumstances." (See also Farrell v Alexander [1977] AC 59 at 84; Black-Clawson International Ltd v Papierwerke Waldhof- Aschaffenburg AG [1975] AC 591 at 645). [17] It is the context of the Act, and of its predecessors, which has led to the emphasis on "industrial colour or flavour". Such an approach was adopted, with respect to s88F, in both judgments delivered in this Court in Production Spray Painting & Panel Beating Pty Ltd v Newnhan (1991) 27 NSWLR 644, see esp at 647F-650D per Mahoney JA and 656F-657G per Priestley and Handley JJA. [18] Mahoney JA identified the relevant context as capable of being described "compendiously" as "employee protection" (649C). His Honour directed attention to whether or not "the purpose of the transaction itself" was "that relevant work be performed" (649G). It was in contrast with such a purpose that his Honour identified certain transactions, without purporting to be exhaustive, as not satisfying the relevant statutory description, ie where performance of work "was merely an accidental incident or consequence" of a transaction (649E) or where performance of work was "merely 'contemplated' or 'envisaged' as a possible consequence of the transaction" (649F). [19] Priestley and Handley JJA referred to the formulation to the effect that a contract is only within the section if it has an "industrial colour or flavour" (at 657). Their Honours added: "It is not sufficient to establish jurisdiction that a contract 'involves the provision of goods and services with a consequent performance of work in an industry': Ex parte VG Haulage Services Pty Ltd (at 88) (our emphasis). The impugned contract, etc, therefore must directly, that is under or pursuant to its terms, provide for the performance of work in an industry. Accordingly the contrast drawn by this Court in Ex parte VG Haulage Services Pty Ltd and approved by the High Court in Stevenson v Barham is between a contract which leads directly to the performance of work in an industry on the one hand, and on the other a contract which does so only indirectly or in a remote or consequential manner." (657C-D). [20] On the facts of the case before them, their Honours concluded: "In our opinion the contract of the sale of the business in the present case was not within s88F. Although Mrs Newnham intended to work in the business, she intended to do so as a working proprietor, working for her husband and herself. The contract of sale did not require the purchasers to work in the business, or to employ others to do so. Unlike Stevenson v Barham and Caltex Oil (Australia) Pty Ltd v Feenan the work done by Mrs Newnham was not done 'in accordance with the provisions of the agreement', was not 'required' by the agreement, and did not 'fulfil' the purchasers' contractual obligations to the vendor. In no sense was Mrs Newnham working for the vendor. This was an outright sale. The vendors retained no interest in the business after completion. They had no interest in the land on which the business was conducted and there was no contract, etc, under which the purchasers were to obtain goods or services from the vendors or associated persons. The contract for sale was not a franchise agreement or associated with a franchise agreement. Moreover as already mentioned, the commission did not find that an agreement or arrangement existed outside the contract of sale." (657E-G) [21] In Majik Markets, Mahoney JA did not adopt the "industrial colour or flavour" test, but found that in any event it would be satisfied on the facts of the case before him (at 458C-D). His Honour applied his own test from Production Spray Painting to hold that it was "the purpose of the franchise agreement that persons ... should ... perform work in the activities referred to in the franchise agreement" (459A). [22] Handley JA, with whom Kirby P agreed at 447B, said in Majik Markets: "The form of agreement requires the franchisee to perform work in the retail industry either personally or through employees and therefore it leads directly to the performance of work in that industry. The franchisor has a real interest in the performance of that work. It results in the sale of motor fuel purchased from the franchisor and tends to maintain and improve both the value of its general goodwill, and the value of the local goodwill attached to its premises. Page 5 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 While the franchisees, if not natural persons, are working for themselves, they are also in a very real sense working for the franchisor. If the business was not operated by some franchisee, the franchisor would either have to employ staff of its own or sell or lease the site to an independent purchaser or lessee." (465A-B) [23] The present case involves a lease to such an "independent lessee". Proceedings in the Industrial Relations Commission [24] Orders pursuant to s106 of the Act were made by Hungerford J in the Industrial Commission of New South Wales (Starkey v Mitchforce Pty Ltd (2000) 101 IR 177). The Full Bench of the Industrial Relations Commission refused leave to appeal (Mitchforce v Starkey & Anor (2002) 117 IR 122). [25] In its judgment, the Full Bench particularly emphasised (at [34]) a finding by Hungerford J at [77] that: "In my view, the relationship between the applicants and the respondent here under the lease constituted an ongoing relationship with the clear purpose, on the facts, that the applicants would conduct the business of an hotel from the Tavern for the duration of the lease term and that necessarily contemplated the performance of work, including as to the maintenance of the premises in good order and repair." [26] The Full Bench said at [35]: "We consider that, on the facts, this finding was entirely open to his Honour. It follows that the performance of work under the deed, incorporating as it did the terms of the original lease, was a direct result of an obligation imposed by the deed and not an "accidental consequence" (see Production Spray Painting & Panel Beating v Newnham at 649 per Mahoney JA) or an 'indirect, remote or consequential' result of the deed, see Kostakis v New World Oil & Developments Ltd at 10. [27] The structure of the reasoning of Hungerford J in this respect was to set out the submissions of the Claimant contending that there was no jurisdiction under s106 at [73]; then to set out the submissions of the Second Opponent on this matter at [74]; then to identify the relevant principles by reference to a number of authorities at [75]-[78], during the course of which he made the finding which I have quoted above. His Honour then expressed the conclusion that the contract was a contract whereby work was performed in the hotel industry and dismissed the Appellant's jurisdictional argument at [79]. [28] During the course of his Honour's summary of the submissions on behalf of the Second Opponent, he noted counsel's reference to an authority in the court to the effect that an obligation to perform work under a challenged contract did not need to be set out in express terms (referring to Harris v Hammon (No 2) (1995) 59 IR 232 at 241). His Honour also noted the alternative submission on behalf of the Second Opponent that a term should be implied into the lease requiring the Second Opponent to operate the hotel business, referring to the test for such implications in BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 180 CLR 266 at 283. However, his Honour did not, in terms, adopt either submission. [29] Although Handley JA proceeds on the basis that his Honour made the implication contended for, it does not appear to me that he did so. It is not so expressed in his reasons. In any event I agree with Handley JA that no such implication was necessary to give business efficacy to a contract with the detailed terms and conditions contained in the lease presently under consideration. [30] Other than the statement in the extract from para[77] of his Honour's judgment quoted above, as emphasised in the Full Bench, his Honour did not identify why it is that the lease, as applied to the circumstances of the parties by the deed of assignment, constituted a contract "whereby a person performed work in any industry". [31] With respect to the challenge to jurisdiction, the Full Bench refused to grant leave to appeal on the basis that it did not consider that there were any jurisdictional issues that raised matters of such importance as to warrant the granting of leave (at [33]). The Full Bench expressed the view that the law on the issue was well settled (at [36]). The Full Bench referred to a number of judgments in the Industrial Commission in which s106 of the Act or its predecessors had been applied to lease arrangements. (Jennings v Auto Plaza Ltd (1993) 46 IR 413; Booth v Kritikos Developments Pty Ltd (1995) 59 IR 298; Kostakis v New World Oil & Developments Pty Ltd [1997] NSWIRComm 84 (25 July 1997, Schmidt J) and Australian Institute of Music Ltd v LM Investment Management Ltd [2000] NSWIRComm 201. The decisions to which the Full Bench referred were all first instance decisions in the Commission. [32] The first of the cases in which the Commission found a lease agreement to fall within the scope of legislation was the judgment of Cahill DCJ in Jennings v Auto Plaza Ltd. Operative at that time was s275 of the Industrial Relations Act 1991, being intermediate between s88F of the Industrial Arbitration Act 1940 and s106 of the Act presently under consideration. During that intermediate period the formulation of "whereby" had been altered to read "under which". Cahill DCJ regarded the formulation there under consideration as broader than the formulation under the preceding and subsequent legislation. He referred to it as meaning "in accordance with which" and that it Page 6 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 was such as "to include within such meaning the purposive or causal sense which ... the Court of Appeal attributed to 'whereby' in Production Spray Painting" (at 415.5, emphasis added). [33] Cahill DCJ set out the relevant extracts from Production Spray Painting and VG Haulage and concluded at 421: "... the contract here under consideration is substantially different from the contract in Production Spray Painting. That contract, which involved the sale of a business for a consideration calculated by reference to several factors, the most important being goodwill, was characterised by (a) the absence of any ongoing relationship between the parties upon completion and (b) a complete indifference, so far as the vendor was concerned, as to whether the purchaser continued to carry on the business, as no doubt was the purchaser's intention, or not. In the present case, however, the contract is a lease between the parties of part of large shopping premises obviously at least intended by both parties to be used by the lessees for the conduct of a restaurant business. The lease prescribes a term of years (with provision for the exercise of an option of renewal), during which the provisions of the lease are to govern and bind the relationship of the parties: it thus postulates and requires an ongoing relationship. It imposes a restriction on the lessees as to the use of the premises. Except with consent the premises are not to be used otherwise than as a licensed restaurant and takeaway food outlet ... That restrictive provision is expressed in the negative and, of itself, does not require that the lessees shall use the premises for the carrying on of a business so described. To that negative provision is added another ... to the effect that the lessees 'shall not occupy or permit the premises to be occupied or used outside the hours as are from time to time stipulated by law'. The second part of that subclause, however, is expressed in positive terms it requires the lessees to 'keep the demised premises (Unit 11 of the Autoplaza Centre) open for business during normal trading hours for such business'. Reference is also made to clXI ... under which the lessees 'shall be responsible for and shall attend to' the full fitout of the demised premises as a restaurant. In my view, the terms of the lease, and particularly those to which reference has been made, require the lessees to establish the demised premises in restaurant mode and to carry on therein a restaurant business during lawful trading hours. I also consider that the carrying on of such a business in accordance with that obligation necessarily requires and results in the performance of work in the restaurant industry by the lessees themselves and/or by other persons whom the lessees engage to work in the business. Furthermore, that work provides any necessary 'industrial colour or flavour' which might be needed in order that s275 should apply." [34] Most of this passage was set out by Hungerford J in the present case. He regarded the reasoning as applicable to the case before him. [35] His Honour also referred to the judgment of Schmidt J in Booth v Kritikos. That case also involved the lease of a hotel including a range of obligations about the conduct of the hotel and the maintenance of the licenses. One provision required the lessee to "carry on the business of an hotel-keeper" - the liquor industry appears to habitually drop h - and another required the lessee to cause a competent Licensee "to reside upon the said premises and manage and conduct the said business thereof in a proper, orderly and competent manner". Another clause specified certain renovation work which the lessee was required to undertake. Her Honour posed the matter for her consideration in the following terms at 303-304: "If, as is the case here, there are express terms requiring the performance of work, those terms must be considered, to determine whether a purpose of the contract or arrangement is the performance of work or whether that is a direct, as opposed to a merely indirect or consequential result of the contract or arrangement." [36] Her Honour went on to distinguish Production Spray Painting in the following terms at 303-304: "After the sale was concluded there was no continuing relationship between the partes, it was an outright sale. The position was quite different to this case where the respondents had a commercial interest in the continuation of the business after the termination of the lease, which they took steps to protect. Unlike the situation in Production Spray Painting, the applicant here could not simply close the business up, that being a matter of no interest to the respondents. The continued operation of the hotel as a business was assured by the contractual obligations imposed on the applicant to ensure the performance of work in the business during the term of the lease. This was of real interest to the respondents, as was the performance of the renovation work which reflected the agreed reduction in the purchase price of the business. This arrangement involved not merely the sale of a business by an outgoing proprietor, but an ongoing relationship. Properly analysed, one of the purposes of the arrangement between the parties, namely what was sought to be achieved, was to ensure the Page 7 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 performance of certain work in the business during the continuation of the parties' relationship under the lease. Another purpose was to ensure that the specified renovation work was carried out to the premises the subject of the lease ... The arrangement between the parties contained express written terms requiring the applicant to conduct a hotel business at the premises and to ensure that particular work was performed. Those terms directly required the performance of work. The obligations imposed upon the applicant by the lease ... are not properly described as merely indirect, remote or consequential ... They were specific and positive obligations requiring the applicant to ensure that particular work was performed during the term of the lease. Its obligations reflected the respondent's continuing interest in the land and the premises, the continuing relationship between the parties and the respondent's interest in the continuation of the business sold to the applicant during the term of the lease." [37] Her Honour's consideration of the issues in Kostakis v New World Oil & Developments Pty Ltd was to similar effect. Her Honour said: "This was not a lease where all that was involved was a lease of premises, it being thereafter a matter of no concern to the lessor whether the lessees put the property to the use specified in the lease. Here the terms of the lease not only specified the use to which the property would be put, it also contained detailed requirements as to how the lessees would conduct the business, particularly the hours during which the business would be kept open. It also required that necessary staff, contractors and subcontractors would be provided to adequately carry on the business. Specific obligations were imposed which required work to be performed in redecorating, repairing and cleaning the premises over the period of the lease. The lease also imposed a positive obligation upon the lessor to operate a promotional fund to promote and advertise the retail sections of Glasshouse on the Mall and the businesses conducted there, including the coffee lounge in question. ... Here there are a number of obligations arising from the terms of the lease which directly require the performance of work. Such work is necessary for the terms of the lease to be satisfied and is not merely an indirect or remote or consequential result of that contract. This is not a case where the lessee could have closed up the business and continued paying rent and thereby have satisfied the terms of the lease. ... This was not the mere lease of a piece of property by a lessor, but an ongoing relationship with obligations for the performance of work on both sides." [38] In the Australian Institute of Music case, Peterson J referred to the earlier authorities. The lease obliged either the lessor or lessee to conduct a music education facility on the premises and contained covenants which, his Honour concluded, "necessarily require work to be performed": [39] It is apparent that the jurisprudence of the Commission has travelled a long way from an "industrial" context to encompass arrangements which would not ordinarily be described as having an "industrial colour or flavour". The present case has taken a further step in that s106 has been applied, for the first time, to a lease agreement which does not contain an express obligation to conduct a business. It is necessary to consider the lease agreement in some detail. The Terms of the Lease [40] The lease was plainly concerned, and concerned only, with property to be used for the specific purpose of a hotel. The description of the land in the Real Property Act lease was expressed in the following terms: "... being the Hotel/Tavern premises erected upon the land situate on Lot 1 Cnr Empire Bay Drive and Wards Hill Road, Empire Bay." [41] Numerous specific provisions of the lease are concerned to regulate, as between lessor and lessee, matters associated with the use of the premises as a hotel. In addition to the usual kind of conditions concerned with rent, repair and maintenance, insurance and a range of covenants, a number of provisions of the lease are tailored to the particular use of the premises as a hotel. These include the following obligations: • To use best endeavours to secure renewal of the Hotelier's Licence, and to pay Licence Fees as assessed pursuant to the Liquor Act (cl5.12). • Not to do anything whereby the Licence may become liable to be forfeited or suspended (cl5.13). • To ensure that the Licensee will be upon the premises "at all necessary times" (cl5.14). Page 8 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 • To ensure the Licensee maintains a proper record for information required to be filed under the Liquor Act 1982 (cl5.15). • To do all that is necessary for transferring and assigning the Hotelier's Licence to the Lessor's nominee at the expiration of the lease (cl5.16). • Not to apply to remove the Licence from the premises without the written consent of the Lessor (cl5.17). • To pay public utility charges such as gas, electricity, water and telephone services in a common form was extended to encompass an obligation to pay trade creditors and other persons supplying goods and services to the lessee "in the carrying on of the Hotel business upon the premises" (cl5.8). • Provision that, upon the expiration or termination of the lease, certain fixtures would become the property of the lessor, including bar joinery, refrigeration, cool rooms and kitchen equipment. (cl9.3(i)). • Acts of default under the lease include conviction of an offence under the Liquor Act 1982 by the Licensee (cl10.1.4) and failure to pay the annual Licence Fee (cl10.1.5). • Upon any assignment of the lease, as occurred in this case, the usual covenant that the assignee agrees to observe the terms and conditions of the lease expressly extends to an obligation to appoint the lessor as the attorney of the assignee "in respect of the Licence" (cl11.4 and cl11.7). • In the case of an assignment, the lessee is required to carry out repairs, renovations, painting and papering as considered reasonably necessary by an Inspector appointed by the lessor (cl11.5). [42] The commercial significance of the Licence to the Lessor is clear from the above. This is further confirmed in cl10.7 by which certain powers are conferred on the Lessor by the Lessee for a purpose stated to be "for the more effective preservation of the licence". The Lessor is appointed as the attorney of the Lessee under this clause to transfer the licence, to apply for renewal or removal of the licence and to execute all relevant documents and give all relevant instructions and perform all other acts necessary to obtain transfer of the licence and to carry on the business in the name of the Lessee. [43] The improvements on the land are, of course, purpose built. The maintenance of the licence is a crucial aspect of the capital value of the Lessor's asset. [44] Furthermore, in addition to the rent identified expressly in the lease, together with an escalation provision, an amount of "additional rent" is payable in the amount equivalent to $4 for every $100 of liquor purchased pursuant to the licence (cl3.3). In this indirect sense, the Lessor has an interest in the operation of the hotel. [45] Several provisions in the lease contemplate the lessee conducting physical activity on the premises: • The covenant to repair and maintain, fair wear and tear excepted, extended beyond the hotel premises to encompass plant, equipment and fixtures as well as "stock-in-trade" (cl5.1). • The obligation to make good any "breakage, defect or damage" occasioned by want of care extended to the "premises or any facility or appurtenance" (cl5.10). • The obligation to repair and replace broken glass and damaged or broken heating, lighting, electrical equipment and plumbing installed on the premises (cl5.11). • The obligation to maintain the premises extended to an express obligation to keep gutters, drains and pipes free from obstruction and in good working condition and also to keep yards, gardens, shrubs and lawns in good, clean and tidy condition (cl5.2). • The obligation to maintain also encompasses an obligation to paint the premises when required by the lessor or by the licensing or other authority (cl5.3). • To make alterations and repairs other than structural repairs which are required under any statute or bylaw (cl5.4). • On transfer of the lease the lessee was obliged to carry out repairs, renovations, painting and papering as considered necessary in a report of an architect appointed by the lessor (cl5.18). Application of the Statutory Test Page 9 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 [46] The reasoning of Hungerford J at [77] focussed on four matters: (i) An ongoing relationship; (ii) A "purpose" that the Second Opponents would conduct the business of a hotel; (iii) That "purpose" of the lease "necessarily contemplated the performance of work"; and (iv) The work so "contemplated" included work to maintain the premises "in good order and repair". [47] His Honour did not, in terms, apply the authoritative formulation in either Caltex Oil v Feenan or Stevenson v Barham. His reference to "purpose" suggests the approach of Mahoney JA in Production Spray Painting. [48] The lease in this case stands on its own as a lease of property. It is not part of a broader arrangement involving the supply of goods as may arise in the case of a hotel owned by a brewery. A case of that character may prove to be more closely analogous to the arrangements considered in Caltex Oil v Feenan and Majik Markets. In those cases, like Stevenson v Barham, the ongoing relationship between the parties was multi-dimensional covering a number of different aspects of the conduct of a business. Here the relationship is one dimensional. [49] There can be no doubt that his Honour was correct to say that the lease "contemplated" the performance of work by or on behalf of the lessee. This was, as I have said, a purpose built structure the value of which depended on the maintenance of a licence attached to the premises. However, mere "contemplation" that work will be done is not enough. The additional element is the finding that the conduct of the business was a "purpose" of the agreement. I am unable to agree that there was such a "purpose", nor that the agreement led "directly" to the performance of work in an industry. [50] The relevant "purpose" of the agreement was to provide one part of the means for conducting a business by the Lessee. However, that business was to be conducted on the Lessee's own account. I do not see how it could be said that the Lessee was in any sense working for, or even with, the Lessor. Accordingly, when the Second Opponents paid a capital sum to the original Lessee for the sale of the business, the Lessor received no part of the sum. That the conduct of the business was, subject to the Lessee's other sources of income, the means by which the rent could be paid does not, in my opinion, establish such a connection. [51] Handley JA concludes that although it could be said that at the outset the Second Opponents were working for themselves, as the rent escalated they were, in substance, working for the Claimant. I do not agree that that is an appropriate characterisation. Their obligations became onerous and they were making a loss, but it is not correct to say that they were working "for" any other person (eg suppliers of liquor) who provided goods or services essential for the conduct of the business. S106 is not a guarantee against bankruptcy of every commercial enterprise in this State. [52] In any event, in my opinion, a contract or arrangement which was not at the outset a contract "whereby a person performs work in any industry" cannot subsequently be transformed into one by reason of a change in economic or commercial circumstances. By s106(2) a contract may become "unfair" by reason of subsequent events, but that does not affect the characterisation of the contract or arrangement. [53] In this case, unlike other lease cases determined by the Commission, there is no express term obliging the lessee to conduct the business, save insofar as the obligation to have a licensee be on the premises "at all necessary times" can be so regarded. I do not see any proper basis on which a term to that effect could be implied. Even if such a term did exist I would not see it as determinative. [54] Such a provision is often inserted to protect a Lessor's legitimate interests as the owner of property, whether of the demised premises or of associated property. Such provisions do no more than restrain the lessee departing from the common assumption upon which the lease was based. They do not necessarily mean that work is "performed" under the agreement itself. In particular it cannot be said that a contract containing such a provision leads "directly" to the performance of work. The word "directly", in the case law, is to be regarded as an essential part of the process of determining that the contract can be said to have the requisite "industrial colour or flavour". [55] Nor, in my opinion, do the obligations to repair and maintain the premises, as variously provided for, establish any such 'direct' link. Whether, and if so, to what degree, any of those covenants require physical activity is contingent on future events, eg whether some deterioration beyond "fair wear and tear" occurs or whether there was breakage or obstruction or other deficiency. The contract requires the restoration of a state of affairs of a physical character. The linkage between the contract and the physical activity in the nature of works is, in my opinion, indirect. [56] That a contract envisages that physical activity may need to occur is insufficient to draw the conclusion that the contract is one "whereby" work is to be performed, in the sense that it leads "directly" to that work. There is probably no commercial lease in New South Wales which does not have a covenant for repair. Nothing in the scope, purpose or subject matter of the legislative scheme suggests that the concept of "work in an industry" could Page 10 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 extend to any activity under a commercial lease which involves physical work. Such work is not performed "in" the hotel "industry". It is performed under the lease to maintain the value of the asset to the owner, as a lessor of property. [57] Since writing the two immediately preceding paragraphs, I have read para[184] to para[187] of Handley JA's judgment. I agree with his Honour's observations. [58] There is not, in my opinion, anything which provides an "industrial flavour of colour" to the arrangement presently under consideration. Nor is there anything which has a "recognisable impact on the conditions of ... work", to use the formulation of Jacobs JA in VG Haulage. Nor is the "purpose" of the transaction that work be performed, to use Mahoney JA's formulation in Production Spray Painting. The sole purpose of the agreement is the occupation of premises. It does not lead directly to the performance of work in an industry. [59] In my opinion, the jurisdictional fact in s106(1) of the Act was not established. On that basis, it is necessary to determine whether this Court can exercise its supervisory jurisdiction to rectify the jurisdictional error. The Operation of the Privative Provision [60] The Second Opponents rely on s179 of the Act to deny this Court authority to grant the relief sought by the Claimant. S179 provides: "179 (1) Subject to the exercise of a right of appeal to a Full Bench of the Commission conferred by this or any other Act or law, a decision or purported decision of the Commission (however constituted): (a) is final, and (b) may not be appealed against, reviewed, quashed or called in question by any court or tribunal (whether on an issue of fact, law, jurisdiction or otherwise). (2) A judgment or order that, but for this section, might be given or made in order to grant a relief or remedy (whether by order in the nature of prohibition, certiorari or mandamus, by injunction or declaration or otherwise) may not be given or made in relation to a decision or purported decision of the Commission, however constituted. (3) To avoid doubt, this section extends to any decision or purported decision of the Commission, including an award or order of the Commission." [61] Privative provisions in prior NSW industrial legislation have frequently fallen for consideration by the courts. The various formulations were interpreted so as not to protect the Court or Commission, in its various manifestations over the century, from review for jurisdictional error. (Clancy v Butchers Shop Employees' Union (1904) 1 CLR 181; Baxter v New South Wales Clickers' Association (1909) 10 CLR 114.) [62] The predecessor provisions of s179 of the Act, ie s84 of the Industrial Arbitration Act 1940 and s301 of the Industrial Relations Act 1991, protected "decisions" of the Commission or Court. That protection did not extend to jurisdictional error. (See Brown v Rezitis (1970) 127 CLR 157 esp at 172; Walker v Industrial Court of NSW (1994) 53 IR 121 esp at 137-138, 149.) [63] The second reading speech for the 1996 Act did not suggest that a dramatic change was intended. The Minister said: "The clause dealing with finality of decisions is a bolstered version of the privative clause presently contained within the 1991 Act. The Government is of the view that where a specialist court or tribunal is established to deal with a particular area of the law, then that is the forum where the particular body of law ordinarily should be determined." [64] The reference to "ordinarily" suggests that there will be scope for review. Furthermore, the reference to "specialist tribunal" reinforces the significance of the industrial context of the legislative scheme manifest in the pertinent words of limitation in s106: "whereby a person performs work in an industry". [65] The extension of the scope of s179 beyond a "decision" to encompass a "purported decision" was intended to afford decisions of the Commission protection from jurisdictional error to a substantial degree. Nevertheless, this Court's supervisory jurisdiction is not wholly extinguished. Indeed, the submissions of the Second Opponents in this Court accepted that it had not been. [66] It is necessary to reconcile the terms of s179 of the Act and the provisions of the Supreme Court Act 1970 which expressly contemplate the exercise of such a jurisdiction. By s48 of that Act, proceedings by way of judicial review are assigned to the Court of Appeal with respect to certain "specified tribunals". By s48(1)(a)(ii) "the Industrial Relations Commission or a member of that Commission" is identified as such a Tribunal. [67] Australian jurisprudence identifies a core content of supervisory jurisdiction which has come to be referred to as "the Hickman principle". Both the Second Opponents and the Attorney General intervening accepted that s179 Page 11 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 did not impinge on the Hickman principle. This core content is capable of providing the reconciliation between s179 of the Act and s48 of the Supreme Court Act. [68] The most recent authoritative statement of the Hickman principle, albeit in the context of the Commonwealth Constitution, is the decision of the High Court in Plaintiff S157/2002 v The Commonwealth (2003) 77 ALJR 454. The judgments in that case affirm a number of propositions applicable where an issue arises as to the interaction between a jurisdictional limit and a privative provision in the legislation of a State Parliament: • The co-existence of two such provisions gives rise to an issue of inconsistency requiring reconciliation between the provisions (at [10], [17], [19], [58], [59], [60]). • The issue is one of statutory construction and all the relevant rules of construction apply, notably the rule that particular provisions must be construed in the context of the whole of the Act (at [17], [19], [26], [27], [33], [58], [72], [159]) and that one provision, including the privative provision, cannot be construed as controlling the meaning of the remainder of the Act ([35]). • A privative provision on its proper construction will not protect a "manifest" defect, in the sense that a decision is not a bona fide attempt to exercise the power; that it does not relate to the subject matter of the legislation and that it is not reasonably capable of reference to the power given to the decision-maker ([13], [18], [56], [57]). • A provision containing a restriction or requirement may, on the proper construction of the Act as a whole including the privative provision, be construed as being of such significance in the legislative scheme that it constitutes a limitation or requirement that is, as variously expressed in the authorities, "essential", "indispensable", "imperative" or "inviolable" ([20], [21], [26], [65], [66], [70], [76], [157], [159], [160]). [69] Plaintiff S157 invoked the special considerations which arise under the Commonwealth Constitution. The principles I have highlighted above are, in my opinion, applicable to privative provisions in legislation of a State Parliament. [70] The actual decision in the joint judgment in Plaintiff S157 turned on the provisions of the particular statute there under consideration. The privative clause in that case protected decisions "made under this Act". That was held not to extend to purported decisions ([75], [76] and [89]). S179 of the Act now under consideration has an extended operation, in each of its three subsections, beyond "a decision of the Commission" to encompass a "purported decision". The extended operation is affirmed by the express reference to "jurisdiction" in s179(1)(b). [71] Two of the five authors of the joint judgment in Plaintiff S157 had, in an earlier judgment concerned with State legislation, referred to with approval in Plaintiff S157, expressly qualified their comment on the ability of a State Parliament to preclude review for jurisdictional error in the following terms: "However and provided the intention is clear, a privative clause in a valid State enactment may preclude review for errors of any kind. And if it does, the decision in question is entirely beyond review so long as it satisfies the Hickman principle." (Darling Casino Ltd v New South Wales Casino Control Authority (1997) 191 CLR 602 at 634 per Gaudron and Gummow JJ, emphasis added.) [72] In the context of State legislation, the Hickman principle to which their Honours referred operates by a process of statutory construction without a constitutional overlay. In the respects identified as "the Hickman principle" the strict construction always given to a privative provision is applied with particular stringency. If their Honours intended the reference to the Hickman principle to prevent a State Parliament expressing a 'clear intention' that not even that principle should be applicable, then only an implication from the Commonwealth Constitution could supply the jurisprudential basis for such a conclusion. [73] The Hickman principle applies to "purported" decisions. (See O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 285-287). As originally formulated in R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 esp at 614- 615, the principle was threefold to which, arguably, additional propositions have been added by subsequent authority. I note that the references in Plaintiff S157/2002 to "the three Hickman provisos" reflected a submission made in those terms (eg at [63], [64]). [74] In Mark Aronson and Bruce Dyer, Judicial Review of Administrative Action (2nd ed), LBC, Sydney, 2000 at 691, the authors state that a privative provision is effective to protect from jurisdictional error provided the impugned decision: "(a) was a bona fide attempt to exercise its power; (b) relates to the subject matter of the legislation; Page 12 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 (c) is reasonably capable of reference to the power given to the tribunal; (d) does not display a jurisdictional error on its face; and (e) did not breach a statutory constraint regarded as being so important as to be unprotected in any way by the operation of the clause." [75] In Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78 at 108, I envisaged the possibility of other categories. [76] Propositions (a), (b) and (c) are the original threefold formulation in Hickman itself. I note that Dixon CJ appeared to prefer his subsequent formulation of the same threefold principle in R v Murray; Ex parte Proctor (1949) 77 CLR 387 at 398. (See Coal Miners' Industrial Union of Workers of Western Australia v Amalgamated Collieries of Western Australia Ltd (1960) 104 CLR 437 at 442-443). [77] Proposition (d) is not clearly established. The authorities cited by Aronson and Dyer at fn 127 and 128 do not appear to me to support it. However, Kitto J defined proposition (c) in those terms when he said in R v Commonwealth Conciliation and Arbitration Commission; Ex parte Amalgamated Engineering Union (Australian Section) (1967) 118 CLR 219 at 252-253: "... a problem of this general kind is solved by construing the privative provision as having a validating operation where, but only where, three conditions are fulfilled, namely that the purported exercise is a bona fide attempt to exercise the power, it relates to the subject matter of the legislation, and it is reasonably capable of being referred to the power (ie does not on its face go beyond the power)". (Emphasis added.) [78] It is not apparent that his Honour intended the words in parentheses to be words of limitation. Most subsequent authorities do not refer to the Hickman principle in this way. However, this particular passage has been subsequently referred to with approval. (See R v Coldham; Ex parte Australian Workers' Union (1983) 153 CLR 415 at 418 per Mason ACJ and Brennan J and O'Toole v Charles David Pty Ltd at 287 per Deane, Gaudron and McHugh JJ.) [79] In O'Toole v Charles David Pty Ltd their Honours cited Kitto J as authority for the proposition: "Putting to one side breach of the rules of procedural fairness, the requirement that the award be "reasonably capable of being referred to the power" will be satisfied if, on the face of the record, it appears that the award was made by the Commission in purported exercise of the power of conciliation or arbitration conferred by the Act ..." [80] There is a tension between the proposition in the way Kitto J expresses it and the reference to "in purported exercise" in the joint judgment in O'Toole v Charles David. The objective test inherent in the long standing formulation - "reasonably capable" of reference to the power - does not suggest that merely purporting to exercise a power is sufficient. [81] References to the "face of the record" in these authorities invoked a narrow conception of "record". There were historical and policy reasons for this narrow approach so that, as the High Court acknowledged in Craig v South Australia (1995) 184 CLR 163 at 180-181), an extension of the concept with consequential expansion of intervention by the courts, should be left to the legislature. [82] In New South Wales, the Parliament has, in response, enacted s69(3), (4) and (5) of the Supreme Court Act 1970 to provide: "69(3) It is declared that the jurisdiction of the Court to grant any relief or remedy in the nature of a writ of certiorari includes jurisdiction to quash the ultimate determination of a court or tribunal in any proceedings if that determination has been made on the basis of an error of law that appears on the face of the record of the proceedings. (4) For the purposes of subs(3), the face of the record includes the reasons expressed by the court or tribunal for its determination. (5) Subs(3) and subs(4) do not affect the operation of any legislative provision to the extent to which the provision is, according to common law principles and disregarding those subsections, effective to prevent the court from exercising its powers to quash or otherwise review a decision." [83] S179 of the Act, enacted earlier in the same year, is a "legislative provision" within subs69(5). The Hickman principle is a "common law principle" within the same subsection. The requirement that subs(3) and subs(4) of s69 be 'disregarded', for purposes of applying the Hickman principle to a "legislative provision", leads to the conclusion that the extended conception of the "record" does not apply in such a case. Page 13 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 [84] The proposition in (e) is well established in the authorities. Brennan J described it as a "fourth condition", if not inherent in the threefold Hickman formulation. (See O'Toole v Charles David Pty Ltd at 274.) [85] The most frequent expression of the proposition is in terms of the existence of "inviolable limitations or restraints" on jurisdiction. (See R v Metal Trades Employers' Association; Ex parte Amalgamated Engineering Union, Australian Section (1951) 82 CLR 208 at 248; referred to with approval in R v Coldham; Ex parte Australian Workers' Union at 419; Darling Casino at 632). Other formulations include: "a final and definitive limitation" (R v Central Reference Board; Ex parte Thiess (Repairs) Pty Ltd (1948) 77 CLR 123 at 140); "essential to valid action" (R v Murray; Ex Parte Proctor at 400) and where statutory powers "definitely ... are not exercisable in other cases" (R v Commonwealth Rent Controller; Ex parte National Mutual Life Association of Australasia Ltd (1947) 75 CLR 361 at 369). [86] The very characterisation of a "restriction or restraint" as "inviolable" represents the culmination of a process of statutory interpretation in which the terms of a privative provision are reconciled with the "restriction or restraint". That appears to me to be an alternative mechanism of reconciliation to that identified in the threefold statement of the Hickman principle. [87] Dixon J refers to the threefold expression of the Hickman principle as a "first step" and the "inviolable restriction" point as "a second step". (See R v Murray Ex parte Proctor at 399-400, adopted in Plaintiff S157 at [20] per Gleeson CJ.) Nothing turns on whether the latter is distinct from the former. Each represents a means of reading down the general words of a privative provision to reconcile an apparent inconsistency with another statutory provision. Other than the reference to "so long as it satisfies the Hickman principle" in the relevant passage from Darling Casino, quoted in [71] above, nothing turns on the characterisation of proposition (e). [88] On the reasoning of the joint judgment in Plaintiff S157 at [76] a failure to observe "inviolable limitations or restraints", (adopting the terminology of Dixon J in R v Metal Trades Employers' Association), was a jurisdictional error and, accordingly, not a "decision under this Act". Reconciliation of a privative provision extending to "purported decisions" and an "inviolable limitation" did not arise for consideration. [89] The judgment of Gleeson CJ in Plaintiff S157 turned on a broader process of statutory construction of the scheme of the Act as a whole. His Honour posed the question in these terms: whether or not the relevant requirement - in that case the requirement of a fair hearing - was "of such a nature that it is inviolable" (at [26] and see at [27] and [38]). The positive answer to that question led to his Honour's concurrence with the answers proposed in the joint judgment to the questions before the Court. [90] Nothing in the joint judgment suggests that the intention of Parliament to protect decisions from jurisdictional error will necessarily extend the protection of the privative provision to a decision under another section which can be characterised as offending an "inviolable restriction or restraint" or equivalent. The inconsistency requiring reconciliation is simply more acute where both provisions have to be regarded as manifesting a similarly forceful expression of Parliamentary intention. [91] There may be circumstances in which the exercise of a power or discretion will be held not to be a "decision or purported decision" within the privative provision. Reading down of general words in this way is a process of statutory construction that is frequently undertaken. See, eg Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 and other authorities discussed in R v Young (1999) 46 NSWLR 681 at 688- 690). Here that process is required in order to reconcile s179 with other provisions of the Act and with s48 of the Supreme Court Act 1970. [92] S179 should be construed so as not to protect from review a "purported decision" which fails to satisfy the threefold Hickman principle or, if it be a separate proposition, which fails to observe an inviolable restriction or restraint. However, jurisdictional error that cannot be so categorised is exempt from review. Exercise of the Supervisory Jurisdiction [93] The Appellant sought to challenge the finding by Hungerford J that the contract or arrangement was unfair. I agree with Handley JA that the matters relied on did not give rise to a jurisdictional issue, let alone one which would not be protected from supervisory review by s179. That is not to say that every legal error in making the finding of unfairness is protected. For example, I would wish to leave open the Commission's jurisprudence that a contract can be found to be unfair because of conduct which is in breach of contract. (See Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 per Wright, Walton and Hungerford JJ at [2], [26]-[32], Glynn and Schmidt JJ dissenting at [154]-[177], [187].) [94] The issue which requires determination is whether the jurisdictional error I have identified above, with regard to the decision that the lease agreement was a contract whereby work was to be performed in an industry, is within the remaining supervisory jurisdiction that this Court may exercise. [95] Applying the original threefold Hickman proviso to this matter, it is plain that no issue of bona fides arises. Furthermore, the decision cannot be said not to relate to the subject matter of the legislation. The third proviso is not so obviously satisfied. Page 14 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 [96] The power given to the Commission by s106 is a power to declare a contract void or to vary a contract. That power is conditioned on the objective existence of a jurisdictional fact, ie that the contract is a contract "whereby a person performs work in any industry". Questions of fact and degree necessarily arise when determining whether a jurisdictional fact expressed in such general terms has been satisfied. I am not prepared to hold that the lease agreement is not reasonably capable of answering the statutory description, although I find the proposition to be only barely tenable. [97] The next issue is whether the reference to "performs work in any industry" is an "inviolable restriction or restraint". I have not found this matter easy to determine. [98] There is no textual indication in s106 of the Act of the kind found to arise from the use of terminology of 'validity' in the quorum provision which was held to be essential, and thus to prevail over the privative provision, in R v Murray; Ex parte Proctor. Nevertheless, s106(1) does contain a contrast between the terminology of the two distinct preconditions to the exercise of the power which it confers: (i) "whereby a person performs work in an industry". (ii) "if the Commission finds the contract is an unfair contract". The former is an objective test, the latter turns on the formation of an opinion by the Commission. [99] The industrial context of s106 is clear. (See [6]-[22] above.) Pt9 of the Act is entitled "Unfair Contracts" and is part of Chapter 2 of the Act entitled "Employment". The other Parts of Chapter 2 have titles such as "Awards"; "Part- time work"; "Parental leave"; "Unfair dismissals"; "Protection of injured employees"; "Payment of remuneration", etc [100] The objects of the Act are set out in s3 in terms which do not suggest an intention to regulate matters that do not in fact constitute 'performance of work in an industry': "3 The objects of this Act are as follows: (a) to provide a framework for the conduct of industrial relations that is fair and just, (b) to promote efficiency and productivity in the economy of the State, (c) to promote participation in industrial relations by employees and employers at an enterprise or workplace level, (d) to encourage participation in industrial relations by representative bodies of employees and employers and to encourage the responsible management and democratic control of those bodies, (e) to facilitate appropriate regulation of employment through awards, enterprise agreements and other industrial instruments, (f) to prevent and eliminate discrimination in the workplace and in particular to ensure equal remuneration for men and women doing work of equal or comparable value, (g) to provide for the resolution of industrial disputes by conciliation and, if necessary, by arbitration in a prompt and fair manner and with a minimum of legal technicality, (h) to encourage and facilitate co-operative workplace reform and equitable, innovative and productive workplace relations." [101] The significance of "work in any industry" in s106 is emphasised by the very circularity of the definition of "industry" in s7 of the Act: "... industry includes ... any trade, manufacture, business, project or occupation in which persons work". (Emphasis added.) [102] Although the terminology does not appear in Pt9, the theme is reinforced by the definition of "industrial matters" in s6: "In this Act, industrial matters means matters or things affecting or relating to work done or to be done in any industry, or the privileges, rights, duties or obligations of employers or employees in any industry." [103] S179 appears in Chapter 4 of the Act which provides for the establishment, constitution and operations of the Industrial Relations Commission. The Commission, constituted by a judicial member or members, sits in Court Session as a superior court record (s151, s152). The power conferred by s106 can only be exercised by the Page 15 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 Commission in Court Session (s153). By cl7 of Schedule 2, a judicial member is given the same status and remuneration as a judge of the Supreme Court. [104] It is necessary to reconcile the inconsistency between the centrality of the concept of 'performance of work' in s106, in the context of the whole Act, and the breadth of s179. The issue is whether Parliament intended that the Commission could operate without review directed to ensuring that it adhered to the conditions which Parliament had itself prescribed. Is the requirement that the contract be one "whereby a person performs work in an industry an "inviolable limitation"? [105] On balance, I have reached the conclusion that it should not be so regarded. Parliament intended the Industrial Commission to be the sole judge of its jurisdiction. [106] In reaching this conclusion I have been particularly influenced by the express reference to "jurisdiction" and the three references to a "purported decision" in s106; by the status of the Commission; by the history of prior legislation and of its interpretation, to which I have briefly referred. [107] There are few contemporary instances in which this Court reviewed, for jurisdictional error, a decision of the Commission in a matter that could be characterised as "industrial" in the traditional sense. (See eg Svecova v Industrial Commission of New South Wales (unreported, NSW Court of Appeal, 5 September 1991). The cases in which a challenge based on jurisdictional error had arisen were generally under s106 and its predecessor provisions. Accordingly, when, in the 1996 Act, Parliament extended the privative provision to encompass "purported decisions", it had s106 in mind. [108] It is open to conclude that that protection did not go further than the subjective element in s106(1), ie the finding that the contract is an unfair contract. However, the force of the factors to which I have referred is such that I conclude that the objective condition in s106(1) - ie 'whereby a person performs work in any industry' - was not intended to be an inviolable restriction in the relevant sense. [109] The position is as described by Barwick CJ in Stevenson v Barham at 192: "The legislature has apparently left it to the good sense of the Industrial Commission not to use its extensive discretion to interfere with bargains freely made by a person who was under no constraint or inequality, or whose labour was not being exploited." Orders 11 and 12 [110] Handley JA refers to Orders 11 and 12 made by Hungerford J and notes that there was no express statutory power which authorised the Commission to make orders requiring the Claimant to prepare a new lease for a term of ten years. [111] The lease under consideration is for a period of ten years with a ten year option. As is customary, the option was only exercisable if, on the date of the exercise of the option, there was no subsisting breach or non-observance of covenants of the lease. By the time the proceedings were conducted before Hungerford J, the original term had expired and the Appellant had rejected the Second Opponent's assertion that it had a right to exercise the option. [112] After the Second Opponents got into financial difficulties in the operation of the hotel/tavern, a consensual arrangement was made for the deferral of rent. The precise terms and conditions of that arrangement were the subject of factual disputation resolved by his Honour, inter alia for the purposes of deciding whether or not the conduct of the Claimant was such as to render the contract unfair at a time subsequent to its having been entered into. (See s106(2) of the Act.) The rental arrears at the expiration of the original ten year term were substantial and the Claimant asserted that interest had accrued on the deferred rental amount in accordance with the lease. The existence of these arrears was said by the Claimant to constitute a relevant default which denied the Second Opponents the right to exercise the option. [113] On the basis of the findings of fact that his Honour made, on the conflicting evidence before him, he held that the arrangement constituted a waiver by the Claimant of the obligation to pay on the due date and, accordingly, that there was no proper basis upon which the Claimant could decline to grant the Second Opponents a further lease of ten years on the expiration of the original period (see at [65]). His Honour found, perhaps in the alternative to that finding, that the failure to vary the lease to reflect the rent deferral arrangement was itself unfair and the prejudice had come home upon the service of a Notice of Default under the lease for payment of the accrued rent plus interest ([65]). [114] His Honour originally proposed to make a declaration with respect to this matter but, as Handley JA noted, eventually made Orders 11 and 12 as set out in the judgment of Handley JA. The basis of the jurisdiction to make declarations was explained by Hungerford J as follows at [86]: "I might interpose and deal first with an appropriate order relating to the finding that the rent deferral arrangement was not a breach or non-observance by the applicants of the lease terms but a waiver by the respondent of the applicants' obligations. As such, the respondent could not properly decline to grant the applicants a new lease term on the exercise by them of the option. The further amended summons claimed a declaration in this respect, in terms Page 16 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 that the applicants validly exercised their option under the lease to have the respondent grant to them a lease of the subject premises for a further period of 10 years commencing on 10 July 1999; a further declaration was sought for that purpose that the current market rental be $169,520 per annum. S154 of the Industrial Relations Act enables the Court to make binding declarations of right in relation to a matter in which it has jurisdiction and it may do so whether or not any consequential relief is or could be claimed: see Ford v SAS Trustee Corp (2000) 98 IR 444 at 476, para76. The matter here in which the Court has jurisdiction is the unfair contract under s106. In my view, the declarations sought are in relation to that matter and so power exists to make them. I propose to do so, subject to considering later the amount of the current market rental." [115] I agree with Handley JA that these orders manifest a form of jurisdictional error that is not protected by s179. [116] It is wrong to describe the "matter" with respect to which the Commission has jurisdiction as an "unfair contract". The "matter" is further confined to a power to declare such a contract void or to vary it. The Commission has jurisdiction to decide whether "conduct of any of the parties" etc was such as to render a contract unfair after it was entered into (s106(2)) and some of the findings of Hungerford J may relate to this. The express power in s106(5) to make an order for payment of money is also confined to circumstances "in connection with any contract declared wholly or partly void, or varied". [117] His Honour plainly exceeded his jurisdiction when he purported to decide, on a binding basis, whether the Second Opponents were entitled to exercise the option to renew the lease and to order them to do so. [118] I agree with Handley JA that these orders, on their face, were not reasonably capable of reference to a power to declare an unfair contract void or to vary it. They offended the Hickman principle. [119] Mr D Jackson QC, who appeared for the Second Opponents, sought to support Orders 11 and 12 on the basis that a superior court has "such powers as are incidental and necessary to the exercise of the jurisdiction or the powers conferred" (Parsons v Martin (1985) 5 FCR 235 at 241; relying also on Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 630-631; Harris v Caladine (1991) 172 CLR 84 at 136; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 561). In my opinion, Orders 11 and 12 cannot be said to be "incidental and necessary" to the exercise of a jurisdiction to find a contract to be unfair and to declare it void or to vary it. In terms, they are directed to the execution of a new contract. These orders cannot be supported. The Constitutional Issue [120] The Claimant seeks an order that s179 of the Act is invalid. Reliance is placed on the judgment of the High Court in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. In particular reliance is placed on an obiter dictum of McHugh J in that case at 114: "Without the continued existence of a right of appeal from the Supreme Court of each State to the High Court, it would be difficult, indeed probably impossible, to have the unified system of common law that the Constitution intended should govern the people of Australia. Moreover, although it is not necessary to decide the point in the present case, a State law that prevented a right of appeal to the Supreme Court from, or a review of, a decision of an inferior State court, however described, would seem inconsistent with the principle expressed in s73 and the integrated system State and Federal Courts that covering cl5 and Ch III envisages." [121] His Honour had earlier said at 110: "The working of the Constitution requires and implies the continued existence of a system of State courts with a Supreme Court at the head of the State judicial system". And at 111: "... the Constitution requires a judicial system and a Supreme Court for each State and, if there is a system of State courts in addition to the Supreme Court, the Supreme Court must be at the apex of the system." [122] There is support for the views of McHugh J in the observations of Gummow J at 139 and 141. See also his Honour's observations in Gould v Brown (1998) 193 CLR 346 at [194]-[195]. [123] The constitutional issues that arise under s73(ii) of the Constitution are novel. There is little pertinent case law. This Court should not decide them unless it has to. [124] If the decisions of the Industrial Commission are not liable to appeal or review, even by the High Court, there are significant implications for the rule of law in Australia. The rule of law is "part of the fabric on which the written words of the Constitution are superimposed" (to adapt the phrase of Isaacs J in Commonwealth v Kreglinger & Fernau Ltd (1926) 37 CLR 393 at 413; see Australian Communist Party v The Commonwealth (1951) 83 CLR 1 at 193). The existence of a statutory court of limited jurisdiction, which is exempt from review for jurisdictional error, may not be consistent with the rule of law. [125] The Supreme Court of each State, from which appeals lie to the High Court by force of s73(ii), was the Court designated as such, or a court with similar functions, and being the highest court in the judicial hierarchy of the Page 17 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 State. (See Parkin & Cowper v James (1905) 2 CLR 315 at 329-330; Carson v John Fairfax & Sons Ltd (1991) 173 CLR 194 at 211; Commonwealth v Kreglinger & Fernau at 417; Kotsis v Kotsis (1971) 122 CLR 69 at 77. See also Byrnes v The Queen (1999) 199 CLR 1 at [10]; Stewart v R (1921) 29 CLR 234 at 240; R v Gee (2003) 196 ALR 282 at [56].) [126] A State Parliament may make a specialist tribunal like the Industrial Commission the sole judge of its jurisdiction. (See Clancy v Butchers Shop Employees' Union at 204 per O'Connor J; Baxter v NSW Clickers' Association at 140 per Barton J and 146 per O'Connor J.) However, there may be a fundamental distinction between statutory rights and matters at the heart of the exercise of the judicial power, such as the law of torts or of contracts or the criminal law. (See H A Bachrach Pty Ltd v Queensland (1998) 195 CLR 547 at [15], and also Federal Commissioner of Taxation v Munro (1926) 38 CLR 153 at 175; Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 258.) [127] These are matters in the heartland of the "civil rights" which the Constitution envisaged would be within the jurisdiction of the Supreme Court, and, therefore, part of the integrated system of law enforced by the High Court. (See Holmes v Angwin (1906) 4 CLR 297 at 303 per Griffith CJ.) A law which enables a court to set at nought the whole of the law of contract does not create mere statutory rights. It is concerned with a core component of the civil rights envisaged by the framers of the Constitution to form part of the integrated Australian system of law. [128] It may be that only the Commonwealth Parliament, to the exclusion of the State Parliaments, can identify what is to be regarded as an "exception" to the original jurisdiction of the High Court under s73(ii) with respect to these core matters. (See Cockle v Isaksen (1957) 99 CLR 155 at 174 per Webb J.) [129] The Second Opponents submitted that the Industrial Commission of New South Wales could constitute the "Supreme Court" for purposes of s73(ii) and that, accordingly, an appeal may lie from the Industrial Commission to the High Court. (The Attorney General, intervening, submitted the contrary.) If that were so there would be no inhibition on the ability of the High Court to operate as the ultimate court of appeal for Australia. S179 would be read down so that the word "court" is construed not to include the High Court. (See Wishart v Fraser (1941) 64 CLR 470 at 483; Zarb v Kennedy (1967) 121 CLR 283 at 288; see also Solomons v District Court of New South (2002) 76 ALJR 1601 esp at [9] and s12(1) Interpretation Act 1987 (NSW).) [130] On this basis the judgment of the Full Bench in the present matter would be open to appeal to the High Court, by special leave, on both fact and law. [131] There is one instance in which a judge of the High Court has used plural terminology consistent with the Second Opponents' submission. (See Commonwealth v Hospital Contribution Fund (1982) 150 CLR 49 at 63 per Mason J.) However, the singular has been employed more frequently. (Commonwealth v Kreglinger & Fernau Ltd at 417; Kotsis v Kotsis at 77 and the extracts from Kable referred to above.) In no case was the issue now raised before the Court. [132] It is not desirable to express a final view on this matter unless compelled to do so. The argument of the Second Opponents would have to overcome a number of difficulties: (i) The use of the definite article in s73(ii) itself and also in each later paragraph in s73. (Noting that the plural in the last paragraph relates to "the several States".) (ii) The reference to "any Court of a State" in s72(iii), picked up in s73(ii) by the words "courts exercising Federal jurisdiction", indicating that where the framers wished to refer to more than one State court they did so expressly. (iii) The identification of the High Court itself as "a Federal Supreme Court" in s71, indicating that the idea of a "Supreme Court" refers, within the relevant polity, to a single institution. (iv) The extended application of s73(ii) from the Supreme Court of the State to "any other Court ... from which an appeal lies to the Queen in Council", would not have been required. (Note Parkin & Cowper v James at 330; Quick and Garran, The Annotated Constitution of the Australian Commonwealth, Legal Books, Sydney, 1901 at 742-747; P H Lane, Lane's Commentary on The Australian Constitution (2nd ed), LBC, Sydney, 1997 at 541.) [133] For the reasons advanced by Mason P, these difficult issues do not necessarily arise. The Full Bench refused leave. As his Honour indicates, the Commission is able to consider the position in the light of the reasons of this Court. It may also be the case that, in view of this Court's decision with respect to Orders 11 and 12, a commercial resolution of the dispute is now feasible. [134] I agree with the orders proposed by Mason P. Mason P Page 18 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 [135] I have had the advantage of reading in draft the judgments of Spigleman CJ and Handley JA. [136] I agree with each of their Honours that, for the reasons they give, Orders 11 and 12 made by Hungerford J on 14 November 2000 manifest jurisdictional error unprotected by s179 of the Industrial Relations Act 1996 (the Act). [137] As regards Hungerford J's substantive orders varying the contractual arrangements between the parties (ie O7 and O8) I have concluded that, subject to the constitutional issue referred to below, those orders have not been shown to be invalid for want of jurisdiction. My reasons follow. [138] So far as those orders rested upon Hungerford J's finding that the contract was "unfair", this was the very matter committed to him for decision by s106 and s153 (1) (c) of the Act. For the reasons given by Handley JA there is no basis for challenge on this account. [139] So far as those orders rested upon his Honour's finding that the contract was one "whereby a person performs work in any industry", such orders were within power because Hungerford J's jurisdiction under s106 was expanded by s179 and because his Honour's decision-making came within the scope of the Hickman principle. This conclusion requires some elaboration. [140] In my view, the contract was not one "whereby" a person performed work in an industry. I agree with what the Chief Justice has written in this regard. I merely add that the reasoning that sustains the primary judge's conclusion would mean that every conceivable contract for the supply of goods or services or leasing of commercial premises would fall within the Commission's jurisdiction to avoid or vary it for unfairness, since it is impossible to conceive of any such contract that will not lead to work being done by human agents in its performance. Whatever directness or other relationship Parliament intended by the use of the word "whereby "in s106 will have been completely dispensed with in the steady but exponential march of jurisdiction under the prevailing interpretation of that section. Something has gone seriously wrong somewhere in the process. I agree with the Chief Justice's identification of the error. I would however add that this seems to be one of those situations not unknown to the law in which it is difficult to draw a precise descriptive line, but not so difficult to know whether it has been crossed in the particular case (cf Ridge v Baldwin [1964] AC 40 at 64-5 per Lord Reid, Ex parte Professional Engineers' Association (1959) 107 CLR 208 at 269 per Windeyer J). [141] I say something about the disturbing consequences of this development later in these reasons. [142] However, and it is a significant "however", s179 has effectively withdrawn from the Court of Appeal any basis for challenging Hungerford J's purported exercise of power in this matter. As the legislation presently stands, the only Court with jurisdiction to do anything about the matter is the Full Bench of the Industrial Commission in Court Session. We are dealing with a contestable exercise of jurisdiction under s106 that involves no constitutional issue. In these circumstances, it is well established that the principles expounded by Dixon J in R v Hickman; ex parte Fox and Clinton (1945) 70 CLR 598 apply as the means whereby the broad claims of the privative or ouster clause are reconciled with the legislative intent expressed elsewhere in the statute to confer a jurisdiction that is not unlimited or capable of arbitrary abuse. Hickman has been applied repeatedly to privative clauses in State legislation (see Aronson and Dyer, Judicial Review of Administrative Action, 2nd ed, 2000, p690 fn 125). Where Hickman applies and is satisfied, the basis for challenge to a purported exercise of power is withdrawn because "the validity of acts done by the repository is expanded" (Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 at 193-5; Plaintiff S157/2002 v Commonwealth of Australia [2003] HCA 2, 195 ALR 24 at [19], [56]-[60],[64]). [143] Hungerford J approached the task before him in such a way as to have satisfied the Hickman requirements in their application to s179, for the reasons given by the Chief Justice. The fact that I respectfully and firmly disagree with Hungerford J on legal grounds is irrelevant in the circumstances. [144] The propositions stated in the last two paragraphs are necessarily subject to any added restraint stemming from the federal Constitution, including any separation of powers principle affecting the relationship between the Commission, this Court and the High Court (cf Kable v Director of Public Prosecutions (NSW) (1997) 189 CLR 51). [145] It is nevertheless most relevant to such constitutional caveat to observe that a privative clause like s179 is treated in the final analysis as expanding the validity of the acts of the repository of the power exercised or purportedly exercised. That is because s179 (construed in the light of the Hickman analysis) decrees that the impugned orders of Hungerford J must be treated as valid by the Supreme Court, so long as Hungerford J complied with the Hickman provisos. [146] I wish to emphasise that this approach to s179 does not mean that the Commission may adopt a near enough is good enough approach. I do not suggest that this is the case. If a judicial officer is fortunate or unfortunate enough not to be amenable to appellate or other accountability for legal error does this not relieve him or her of the duty to strive conscientiously to avoid it. I reiterate that I am not suggesting that the Commission has departed in any way from these duties. [147] Like the Chief Justice, I am profoundly troubled by the march of the Commission's jurisdiction into the heartland of commercial contracts that Hungerford J's decision and other single instance decisions in the Commission represent. This is a significant inroad into the effective and efficient exercise of the Supreme Court's Page 19 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 jurisdiction in commercial causes. The matter is all the more troubling because I strongly disagree with the pattern of first instance jurisdictional decisions culminating in the one presently under consideration (while acknowledging that s179 - subject to the constitutional issue - offers a sufficient penumbra of jurisdictional expansion to preclude this Court from doing anything about the matter, regardless of its views). The matter is also troubling because it must frankly be stated that the members of the Commission do not generally have the experience of the judges of the Equity Division in such matters and because, on the same hypothesis, the Commission lacks the ongoing assistance of appellate and other supervision by the Court of Appeal or the High Court in such matters. [148] There are also indications that litigants involved in commercial disputes are removing from the apple of the dispute the partial core that attracts the Commission's jurisdiction (sometimes only arguably so), thereby splitting essentially contractual disputes so that part is litigated in the Commission and the remainder (if the Supreme Court stays its hand) handed back to the Supreme Court for final resolution. Delays in the Commission's lists - which are increasingly clogged with such disputes - increase costs and offer opportunities for the unscrupulous to frustrate and delay the general interests of justice. A Commission that invests a lengthy hearing in an essentially commercial dispute which is found to attract its jurisdiction is bound to feel considerable pressure to exercise its residual discretion (cf Stevenson v Barham (1977) 136 CLR 190 at 192). In turn, the Equity Division's lists are interrupted by unproductive squabbles about the precedence of two competing and largely overlapping sets of proceedings. (Cf L & W Developments Pty Ltd v Della [2003] NSWCA 140 and the cases therein discussed. I do not suggest that any particular case bears all the hallmarks of the situation I have endeavoured to depict.) [149] Subject to one matter, I am therefore driven to grapple with the constitutional issue about the valid scope of s179. It is however well established that such issues should be avoided unless and until necessary to do so. It is not necessary, at least not yet. That is because internal appellate rights within the Commission have not yet been exhausted. The Full Bench has not heard and determined an appeal from the decision of Hungerford J. It has refused leave, but such decision is interlocutory. It is open to be Full Bench to revisit the matter. I would respectfully invite it to do so in light of the reasons in this Court if leave is sought afresh by the present claimant. The Full Bench refused leave to appeal on the basis that the law was well settled, see 117 IR 122 at 135 [36]. It perceived no jurisdictional problem with Orders 11 and 12 and consequently saw no need to consider the impact of excising those orders from the package of relief granted by Hungerford J. Implicitly, the Full Bench was also not of the opinion that the matter was of such importance that, in the public interest, leave should be granted (cf s188 (2)). The matters raised in the reasons of the Chief Justice and myself demonstrate, I trust, why I profoundly disagree with the Commission on these matters. [150] I propose the quashing of Orders 11 and 12 made by Hungerford J on 14 November 2000 and the standing over of the balance of the summons for further argument in light of the majority reasons in this Court and the further steps (if any) taken in the Commission. [151] The constitutional issues are serious, as are the consequences of any prolonged uncertainty about the true scope of the Commission's jurisdiction with respect to commercial contracts that do not by their terms or direct effect require the performance of work in an industry. Only if the Full Bench of the Commission remains of the view that it has jurisdiction to vary or avoid such commercial contracts will it be the occasion for the vexing constitutional issues touching the respective roles of the Commission, this Court and the High Court to be addressed. Handley JA [152] The claimant, the landlord of the Empire Bay Tavern on the Central Coast, has sought prerogative relief in the nature of prohibition and certiorari directed to the Industrial Relations Commission to quash, for absence or excess of jurisdiction, orders under s106 of the Industrial Relations Act 1996 (the Act). The orders varied a lease of the tavern to reduce the rent and included associated declarations and orders for the repayment of overpaid rent. [153] The lease was originally granted, at a premium of $400,000, to Sherwood Trading Pty Ltd for a 10 year term commencing on 10 July 1989 with an option of renewal at a market rent for a further 10 years. In May 1990 the lease, which was registered under the Real Property Act, was assigned with the landlord's consent to Mr and Mrs Starkey for a payment of $650,000 to the assignor. The Starkeys had had considerable experience in the hotel industry dating back to 1963. [154] The initial rent was $156,000 per annum which was to increase each year on the anniversary date in line with the consumer price index (cpi) or 8%, whichever was the higher. In July 1990 the rent increased by 8.1% in accordance with the cpi, but in later years as inflation declined the automatic increases of 8% exceeded the cpi by a considerable margin. On the findings in the Commission the cpi increases in the later years of the lease were: | 1990-91 | 4.9 | Page 20 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 | 1991-92 | 1.7 | | 1992-93 | 0.9 | | 1993-94 | 1.4 | | 1994-95 | 3.5 | | 1995-96 | 5.0 | | 1996-97 | 1.4 | | 1997-98 | 0.1 | | 1998-99 | 1.7 | |_____________ ____|_______| [155] The lease was granted in the boom conditions accompanied by high inflation in 1989 when it was expected that a substantial housing development and associated shopping centre complex would soon be built in the area. The provision for automatic escalation of the rent at a minimum rate of 8% pa appeared then to be commercial and reasonable. [156] The housing and shopping developments did not proceed and after 1990 the economy went into recession, and inflation collapsed. In time the recession gave way to another boom but without inflation. Thus the expectations of the original parties and the Starkeys as assignees were falsified but the rent continued to escalate at 8% compound per annum. [157] The Starkeys soon had difficulties paying the increased rent and from 1992 onwards they were granted substantial rent deferments by the landlord. However the deferred rent attracted interest under the lease and year after year the debt increased. On 31 March 1999 the Starkeys gave notice exercising their option of renewal which the landlord rejected. It claimed that the option had been lost because of the unpaid rent. The arrears were $329,316 and the accrued interest some $130,000. [158] On 25 June 1999 the Starkeys commenced proceedings in the Commission claiming relief under s106 on the basis that their contract with the landlord was unfair. The case was heard by Hungerford J who, in a reserved judgment delivered on 3 November 2000, overruled objections to the Commission's jurisdiction and held that the contract had subsequently become unfair within s106(2). He granted relief by reducing the rent as from 10 July 1992 subject to escalation in accordance with the lease. He foreshadowed declarations under s154 that the option had been validly exercised, that the market rent as at 10 July 1999 was $195,000, and that this should be the rent for the renewed lease subject to indexation at 4% pa. He also foreshadowed an order for the repayment to the Starkeys of the excess rent. The proceedings were adjourned to enable the Starkeys to bring in draft orders. Final orders were made on 14 November as follows: "The Court declares that: 1. The contracts or arrangements constituted by the Deed of Consent to Assignment between the Applicants and the Respondent dated 1 May 1990 (the "Deed of Consent"), incorporating the Lease between the Respondent and Sherwood Trading Pty Ltd dated 1 May 1990 (the "Deed of Variation"), is an unfair contract for the purposes of s106 of the Industrial Relations Act 1996 (NSW). 2. The Applicants validly exercised the option by notice dated 31 March 1999 in cl15 of the Lease for the Respondent to grant them a lease of the land contained in Certificate of Title Folio Identifier 1/718165 (the "Land") and improvements on the Land (including residential flat accommodation) known as Empire Bay Tavern (the "Improvements") for a further period of 10 years commencing 10 July 1999 and there is no basis on which the Respondent is entitled to refuse to grant the new lease. 3. For the purposes of cl15 of the Lease, there was no subsisting breach or non-observance of any of the covenants of the Lease by the Lessee so as to entitle the Lessor to refuse the granting of a new lease or any relief as at 31 March 1999 to 9 July 1999, both dates inclusive. Page 21 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 4. For the purposes of cl15 of the Lease, the current market rental under the new lease between the Applicants and the Respondent in respect of the Land and the Improvements was at 10 July 1999, $195,000 per annum. The Court orders that: ... 7. The Deed of Consent, incorporating the Lease as varied by the Deed of Variation, be varied from 10 July 1992 so that the rent payable by the Applicants to the Respondent in respect of the Land and the Improvements was: (a) in the period 10 July 1992 to 9 July 1993 the sum of $124,000 per annum; (b) in the period 10 July 1993 to 9 July 1994 the sum of $134,168 per annum; (c) in the period 10 July 1994 to 9 July 1995 the sum of $144,902 per annum; (d) in the period 10 July 1995 to 9 July 1996 the sum of $156,494 per annum; (e) in the period 10 July 1996 to 9 July 1997 the sum of $169,014 per annum; (f) in the period 10 July 1997 to 9 July 1998 the sum of $182,535 per annum; (g) in the period 10 July 1998 to 9 July 1999 the sum of $197,138 per annum; 8. The new lease between the Applicants and the Respondent be varied from 10 July 1999 so that the rent payable by the Applicants to the Respondent in respect of the Land and the Improvement is: (a) in the period 10 July 1999 to 9 July 2000 the sum of $195,000 per annum; (b) in the period 10 July 2000 to 9 July 2001 the sum of $202,800 per annum; (c) in the period 10 July 2001 to 9 July 2002 the sum of $210,912 per annum; (d) in the period 10 July 2002 to 9 July 2003 the sum of $219,348 per annum; (e) in the period 10 July 2003 to 9 July 2004 the sum of $228,122 per annum; (f) in the period 10 July 2004 to 9 July 2005 the sum of $237,247 per annum; (g) in the period 10 July 2005 to 9 July 2006 the sum of $246,737 per annum; (h) in the period 10 July 2006 to 9 July 2007 the sum of $256,607 per annum; (i) in the period 10 July 2007 to 9 July 2008 the sum of $266,871 per annum; and (j) in the period 10 July 2008 to 9 July 2009 the sum of $277,546 per annum; 9. The Respondent pay the Applicants the sum of $557,553. 10. Costs be reserved, with liberty to apply on reasonable notice. 11. That the Respondent, within 28 days, prepare and submit to the Applicants, a new lease for a term of 10 years commencing 10 July 1999 on terms consistent with the orders above. 12. That the Respondent procure the stamping and registration of the new lease within 2 months of receipt of the executed lease from the Applicants and the Applicant's cheque in payment of stamp duty". [159] The landlord appealed to a Full Bench of the Commission. S188(1) provides that an appeal only lies by leave of the Full Bench. The application for leave, conducted as an appeal, was heard on 10 May 2001 by a Full Bench comprising Wright P, Walton VP, and Boland J. At the end of the hearing the Full Bench gave short extempore reasons and refused leave to appeal on the non jurisdictional issues. These included challenges to the findings of unfairness and the relief granted by the trial Judge. [160] The Full Bench reserved its decision on the jurisdictional issues and delivered judgment on 30 April 2002. Leave to appeal was refused and the appeal was dismissed with costs. [161] The landlord commenced proceedings for prerogative relief in this Court on 29 May 2002 joining the Industrial Relations Commission and the Starkeys as opponents. The issues in this Court were - (a) The claimant's claim that the Commission had no jurisdiction under s106, (b) The claimant's claim that the Commission's orders were made without, or in excess of its jurisdiction, Page 22 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 (c) The opponents' claim that the privative provisions in s179 deprived this Court of jurisdiction to review the decision of the Full Bench, and (d) The claimant's claim that s179 is inconsistent with Chapter III of the Commonwealth Constitution. [162] S106, so far as relevant, provides: "(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) 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. (3) The contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) ... (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case". [163] S105 defines contract as meaning: "Any contract or arrangement, or any related condition or collateral arrangement"; and an unfair contract as meaning, so far as relevant, one that is "unfair, harsh or unconscionable". [164] The contract found to be within s106 was the lease as incorporated in the deed of consent. The Starkeys as assignees covenanted in the deed that they would "hereinafter duly perform and observe all terms, conditions and covenants expressed or implied in the lease and on the part of the assignee to be performed in the same manner as if the assignee had been a party to the lease". This covenant may have been unnecessary because s51 of the Real Property Act provides that upon registration of a transfer of lease the transferee becomes liable under the lease as if he had been the original lessee. The point was not argued but there is no reason to think that statutory privity of contract would deprive the Commission of jurisdiction under s106. [165] Mr Grieve QC, who appeared for the claimant, submitted that the contract was not within s106 because of its commercial character, and because it created an interest in land. The original parties had bargained at arm's length on equal terms, without any misrepresentation or unfairness in the negotiations. The original lessee thought the lease was worth a premium of $400,000. [166] The Starkeys did not claim that there had been any misrepresentation or other unfairness in the negotiations leading to the assignment and the landlord's consent. They thought the lease was worth the premium of $650,000 they paid the assignor. [167] The decision in Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644 (Newnham), which the High Court declined to review, establishes that the contract of sale to the Starkeys was not one whereby work was performed in an industry. [168] Mr Grieve submitted that the original lease and the assignment, including the deed of consent, constituted a contract under which the Starkeys, with a view to profit, obtained long term benefits and accepted long term risks and that it could not be unfair for the purposes of this section. [169] However whether or not a contract is unfair for the purposes of s106 is the very question committed to the decision of the Commission. This is made clear by subs(1) which empowers the Commission to make orders in respect of a relevant contract "if [it] finds that the contract is an unfair contract". The Commission has been given jurisdiction to determine whether a contract is "unfair". [170] In Stevenson v Barham (1977) 136 CLR 190 Mason and Jacobs JJ, with the concurrence of Barwick CJ (192), said (201): "... if the contract is one which leads directly to a person working in any industry it has the requisite industrial character - it is a contract 'whereby a person performs work in any industry'. This is the relevant jurisdictional fact which needs to be established. An error of law whereby the Commission assumes or declines jurisdiction may be corrected by the Supreme Court; but once the jurisdiction is established the Industrial Commission is the final arbiter both on matters of law and on matters of fact. Its decision cannot, except by way of appeal to the Commission in court session ... be challenged". (Emphasis supplied). [171] In Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169 Lord Diplock said (171): "Mr Justice Macken found the Solus Contract to be harsh, unfair and unconscionable and [that it] provided a total Page 23 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 remuneration to the Feenans that was less than persons who performed the work ... would have been paid ... as employees. These findings are open neither to appeal nor to review by the Supreme Court or by their Lordships. The only question open to review is whether the Industrial Commission had jurisdiction under the section to entertain an application to declare the Solus Contract void upon these grounds; and this turns upon whether it was a 'contract ... whereby a person performs work in any industry'." [172] Thus as Sheller JA said in Walker v Industrial Court of NSW (1994) 53 IR 121, 155: "There could be no doubt that the Full Industrial Court had authority to decide whether or not the contract of employment was unfair, harsh or unconscionable". [173] Stevenson v Barham also makes it clear that the commercial character of this lease, and its lengthy term with an option for renewal, did not prevent it being a contract whereby work was performed in an industry. Barwick CJ said (192) that contracts are within the section although they may be "agreements for business ventures", and the result of "bargains freely made by a person who was under no constraint or inequality ... whose labour was not being oppressively exploited". [174] The Commission therefore had jurisdiction to determine whether the contract was unfair, and the relief, if any, to be granted. Any error, assuming one were made, would be within jurisdiction. Error within jurisdiction "is a wrong exercise of a jurisdiction [the Court] has, and not a usurpation of a jurisdiction which [it] has not" (per Lord Sumner in R v Nat Bell Liquors Ltd [1922] 2 AC 128, 151-2). The same point was made in Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369, 374 by Latham CJ who said: "When jurisdiction is given to decide a question, there is power to decide it, rightly or wrongly, and not only power to decide it rightly". [175] Mr Grieve submitted that this lease was either not relevantly a contract, or not merely a contract, because it created an estate in land. There is substantial authority in the Commission and its predecessors that a lease may be a contract whereby work is performed in an industry but there is, as yet, no authority in the higher courts on this question. A share farming agreement, which creates a licence, and not a lease (Dudgeon v Chie (1955) 92 CLR 342) was held to be within the section in Stevenson v Barham and a licence to operate a service station was held to be within the section in Caltex Oil (Australia) Pty Ltd v Feenan. [176] Any doubts which once may have existed as to whether a lease was a contract have been resolved by the decision in National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 that a lease may be frustrated, and by the decision in Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 that it may be repudiated so as to entitle the innocent party to rescind for breach. As Mason J said in the latter case (29): "... as the law of landlord and tenant has outgrown its origins in feudal tenure, it was more appropriate in the light of the essential elements of the bargain, the modern money economy and the modern development of contract law that leases should be regulated by the principles of the law of contract". [177] There is no discernible reason why a lease of land should not be a contract for the purposes of s106. [178] The jurisdictional fact for the purposes of s106 is the existence of a "contract whereby a person performs work in any industry". It will be necessary to consider this requirement in more detail later in these reasons, but for the moment it will be sufficient to note that the established test is whether the contract leads directly to a person working in any industry [para19]. There was no dispute that work in a hotel is work in an industry for this purpose. The issue in the Commission, and now in this Court, is whether this was a contract "whereby" such work was performed. [179] This lease did not impose an express contractual obligation on the lessee to keep the hotel open for business, or to carry on the business. There is no obligation on a licensee under the Liquor Act or the standard hotel licence to carry on the hotel business and keep it open for trading during licensed hours. [180] There is no authority in the higher courts that a contract will only be one whereby work is performed in an industry if the work is performed pursuant to an express or implied term. The section covers arrangements, related conditions, and collateral arrangements as well as contracts, and as Barwick CJ said in Brown v Rezitis (1970) 127 CLR 157, 164: "One of the purposes of the section is to deal with subterfuges". It is clearly concerned with issues of substance and not of form. Any requirement that the work be performed pursuant to an express or implied term would be formalistic and would allow the section to be avoided by subterfuges. [181] Hungerford J held that the lease contained an implied term that the lessee would carry on the hotel business and keep it open for trading. However such an implication in a 17 page lease with a multiplicity of express terms cannot be supported. It was not "necessary" to give business efficacy to the lease which was quite effective without it, it was not so obvious that it went without saying, and it was not capable of clear expression. What opening and closing times were implied and for what days of the week? What sections of the Hotel had to be kept open? What types of meals had to be served, in what parts of the Hotel and during what hours? The implied term found by Page 24 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 Hungerford J did not satisfy the tests in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 282-283. [182] It is not clear that the Full Bench upheld the implied term found by Hungerford J. They may have based themselves solely on the express obligations of the tenant with respect to repairs and maintenance. In para34 they upheld the Judge's finding that the lease "constituted an ongoing relationship with the clear purpose, on the facts, that the applicants would conduct the business of an hotel ... and that necessarily contemplated the performance of work, including as to the maintenance of the premises in good order and repair" (emphasis supplied). Then in para35 they held "that the performance of work under the deed, incorporating as it did, the terms of the original lease, was a direct result of an obligation imposed by the deed" (emphasis supplied). [183] If the Full Bench intended to endorse the implied term found by the Judge, then, as I have already held, they fell into error that would have gone to jurisdiction had no other jurisdictional basis been shown. However Hungerford J also found that the lease fell within s106 because (para74, para77) "it contained "various obligations ... to perform a significant amount of physical work so as to ensure the premises were kept in a fit state" and that "the express work obligations imposed by the lease could not be characterised as being only incidental or peripheral". [184] The Full Bench appear to endorse the Judge's finding (para77) that the tenants' obligations for the maintenance and repair of the premises brought the lease within the section. They also appear to have found (para35) that the performance of such work was a direct result of an obligation imposed by the deed, and not an accidental consequence. [185] With respect a decision that work done in performance of repairing obligations under a contract brings that contract within s106 cannot be supported. Obligations to repair and maintain are commonly, if not invariably, found in real estate mortgages, long term residential leases, equipment leases, leases hire purchase agreements and chattel mortgages over motor vehicles farm equipment and other chattels, and long term commercial leases including head leases of office buildings, shopping centres and industrial buildings. Leases of Crown land in rural areas commonly contain covenants by the tenant to carry out improvements and to work the land. It cannot be supposed that Parliament intended that all these contracts would be within the jurisdiction of the Commission under s106. [186] There is a further difficulty. In the present case the tenants were bound to repair and maintain the hotel in accordance with the covenants in the lease, but were not bound to do the necessary work personally, and there was no finding that they ever did so. Indeed it would have been surprising if the tenants had done the work themselves because in the ordinary course such work would be done by skilled tradesmen engaged as independent contractors. Since the tenants were neither required nor expected to do the work themselves, the lease, in this respect, did not lead directly to the performance of work in an industry. [187] It is established by Barham [para19] which is binding on the Commission and this Court, that a contract which only leads indirectly to the performance of work in an industry is not within the jurisdiction of the Commission. Practically every contract leads indirectly to the performance of work in an industry. Thus a contract of insurance will result in clerical work being performed in the office of the insurance company, there will be work in banks as the cheque for the premium is collected and credited, and work in the post office as the cheque and the policy are sent and received. The same can be said of a sale of securities on the stock exchange, or a contract of loan including all contracts between banker and customer. [188] I would therefore reject two of the bases for jurisdiction accepted by Hungerford J and the Full Bench, but there was a further ground accepted by the Full Bench (34) which was based on the following finding of Hungerford J (77): "...the relationship between the applicants and the respondent here under the lease constituted an ongoing relationship with a clear purpose on the facts, that the applicants would conduct the business of an hotel ... for the duration of the lease term and that necessarily contemplated the performance of work". [189] If the arrangements considered in Barham and Caltex Oil (Aust) Pty Ltd v Feenan [para20] had been entered into by way of lease instead of licence, they would still, in my judgment, have been contracts whereby work was performed in an industry because they would have led directly to the performance of such work. For the same reasons the ordinary brewery lease would also be such a contract. Accordingly it is impossible to maintain as a general proposition that a lease of business premises to a working tenant cannot be a contract whereby work is performed in an industry. On the other hand the converse is also true, because in my judgment it cannot be said that every lease of that kind is such a contract. Unfortunately there appears to be no bright line which distinguishes the leases which are, and those which are not, contracts whereby work is performed in an industry. [190] In this case the landlord had the hotel constructed as a purpose built building (Hungerford J para4). He then had the option, assuming he did not wish to conduct the business himself, of employing a manager to run the business on his behalf, or leasing the property to a tenant who would conduct his own business on the premises. The tenants of this hotel did not sell goods which their landlord had produced, and they could not be said, for that reason, to be working for their landlord like a tenant from a brewery or an oil company. However this landlord still Page 25 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 had quite an interest in the goods sold at the hotel because cl3.3 of the lease contained a covenant by the tenant to pay an additional rent of 4% of the value of the liquor purchased by the tenants under the liquor licence. [191] There are several factors which, in combination, made this a contract whereby work was performed in an industry, if not from the outset then certainly at a later stage. The Starkeys always intended to be working proprietors, and that is what they were throughout. When they took over the lease the rent was not unreasonable, and the lease was in fact a valuable asset for which they, as experienced hoteliers, were prepared to pay $650,000. At that stage the rent was simply a normal overhead and the Starkeys could earn a reasonable living from the business. At that stage one could fairly say that the Starkeys were working for themselves. [192] However as time went on and the rent escalated remorselessly, the Starkeys were not able to pay the rent in full, and the arrears mounted. The rent became a rack rent and ceased to be a normal overhead. When the arrears are taken into account, the tenants must have been operating the business at a substantial continuing loss. By this stage they were, in a real sense, working for the landlord. The lease was unsaleable, they were locked in, and they had been reduced to the role of managers because the landlord was taking all the profits of the business and leaving them with a loss. They continued to live off the business but in economic terms they were working for nothing because their losses must have substantially exceeded their drawings. [193] By this time, if not before, the lease had become a contract whereby work was being performed in an industry, because it led directly to the performance of such work in circumstances where the Starkeys were at best working for themselves and the landlord, but in reality they were working for the landlord. In my judgment a contract which, at its inception, was not one whereby work was performed in an industry can become such during its performance so as to fall within the Commission's jurisdiction under s106, and this case is a good example of how this can occur. [194] In the words of Jacobs JA in Ex Parte VG Haulage Services Pty Ltd; Re The Industrial Commission of NSW [1972] 2 NSWLR 81, 88, which were quoted by Priestley JA and myself in Production Spray Painting and Panel Beating v Newnham (1991) 27 NSWLR 644, 656, this lease "itself directly envisages the employment of a person or persons in industry and has a recognisable impact upon the conditions of that employment". Once the rent of this hotel reached the point where the Starkeys were falling into arrears and making losses the lease had a recognisable impact upon the conditions of their continued employment at the hotel, and as such it was within the section. [195] Since the Commission in truth had jurisdiction it does not matter that it upheld its jurisdiction on legal grounds which cannot be supported: R v Moore ex parte Graham (1977) 138 CLR 164. [196] In these circumstances it might have been thought that the appropriate relief to be granted under a section in industrial arbitration legislation was to treat the Starkeys from that time onwards as managers employed at a salary and to write off the arrears of rent, rather than to adjust the contract so as to restore to them the chance of profits and a capital gain with the risk of further losses as Hungerford J did. It might have been thought that relief of that kind was more appropriately granted, if at all, under the Contracts Review Act rather than the Industrial Arbitration Act. However it was not suggested by the claimant that this was enough in itself to demonstrate an absence or excess of jurisdiction. [197] The Commission therefore had jurisdiction and the principal challenges to the validity of the orders made by Hungerford J and confirmed by the Full Bench must fail. [198] However Orders 11 and 12, as follows, raise different questions: "11. That the Respondent, within 28 days, prepare and submit to the Applicants, a new lease for a term of 10 years commencing 10 July 1999 on terms consistent with the orders above. 12. That the Respondent procure the stamping and registration of the new lease within 2 months of receipt of the executed leases from the Applicants and the Applicants' cheque in payment of stamp duty". [199] There is no express statutory power which authorised the Commission to make these orders. They were not foreshadowed by Hungerford J in his reserved judgment and were presumably sought by counsel for the Starkeys when he brought in draft formal orders. It does not appear that they were the subject of any argument before Hungerford J, and they were not the subject of any independent challenge in the Full Bench. [200] Those orders are not within the sections which confer power on the Commission to grant injunctions in limited circumstances (s107, s277, s359). They are therefore beyond power unless the Commission has some implied or inherent power or jurisdiction to make orders of this nature. [201] The orders, if valid, would be enforceable by resort to the Commission's powers under s180 to punish for contempt but this cannot confer the power to make them. The Commission does not have the power, which the Supreme Court has under s100 of the Supreme Court Act, and had previously, where a person has failed to comply with an order directing him to execute a document, to authorise someone else to execute it on his behalf. Although the Real Property Act authorises the registration of statutory titles, orders made by the Registrar-General, and some Page 26 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 orders made by courts (s46C, s62(3), s81K(2), s86, s91, s105, s135K, s138), there is no provision which would authorise the registration of an order of the Commission. [202] The Commission is a superior court of record (s152(1)), but as a statutory court it only has the powers conferred on it, expressly or impliedly, by statute. In R v Forbes ex parte Bevan (1972) 127 CLR 1 the High Court held that the Commonwealth Industrial Court had no implied or inherent power to grant an ex parte injunction to prevent a de facto amalgamation of registered organisations and their funds. This is persuasive authority that the Commission had no implied or inherent power to make Orders 11 and 12, whether they are characterised as orders for specific performance, injunctions, or simply as mandatory orders. Accordingly, subject to the privative clause in s179, certiorari should go, but only to quash those orders, which are clearly severable. R v Arundel JJ ex parte Jackson [1959] 2 QB 89. [203] S179 provides so far as relevant: "(1) Subject to the exercise of a right of appeal to a Full Bench of the Commission conferred by this Act ... a decision or purported decision of the Commission ... (a) is final, and (b) may not be appealed against, reviewed, quashed or called in question by any court or tribunal (whether on an issue of fact, law, jurisdiction or otherwise). (2) A judgment or order that, but for this section, might be given or made in order to grant a relief or remedy (whether by order in the nature of prohibition, certiorari or mandamus, by injunction or declaration or otherwise) may not be given or made in relation to a decision or purported decision of the Commission, however constituted. (3) To avoid doubt, this section extends to any decision or purported decision of the Commission, including an award or order of the Commission". [204] This is the widest privative clause I have seen, but in Woolworths Ltd v Hawke (1998) 45 NSWLR 13, 18 this Court doubted whether it could protect orders "made beyond any power to make them". Both Mr Jackson QC for the Starkeys and the Solicitor-General accepted that s179 was subject to the principles stated by Dixon J in R v Hickman ex parte Fox & Clinton (1945) 70 CLR 598. No doubt they were deterred from submitting otherwise by hypothetical examples such as those referred to by Griffith CJ in Baxter v NSW Clickers Association (1909) 10 CLR 114, 131. In the context of an earlier privative clause, in this State's industrial legislation, the Chief Justice instanced trials for indictable offences, the grant of probate, and administration of the trusts of a deed or will, as cases where there would be no "decision" for the purposes of that privative clause. [205] S179 attempts to close this gap by references in each sub section to "a decision or purported decision" and the reference to jurisdiction in subs(1)(b). However the Hickman principle does not depend on the verbal niceties of the privative clause but on the need to reconcile conflicting provisions in the same statute. R v Coldham ex parte AWU (1983) 153 CLR 415, 418 cited in Plaintiff S157/2002 v The Commonwealth (2003) 77 ALJR 454 (Plaintiff S157), 467 [para61] per Gaudron, McHugh, Gummow, Kirby, and Hayne JJ (the joint judgment). [206] Speaking in Hickman of a privative clause in National Security Regulations governing the coal industry, Dixon J said at 614-5, 616: "The particular regulation is expressed in a manner that has grown familiar. ... in jurisdictions where there is a unitary constitution, the interpretation of provisions of the general nature of reg17 is well established. They are not interpreted as meaning to set at large the courts or other judicial bodies to whose decision[s] they relate. Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body ... where the legislature confers authority subject to limitations, and at the same time enacts such a clause ... it becomes a question of interpretation of the whole legislative instrument whether transgression of the limits, so long as done bona fide and bearing on its face every appearance of an attempt to pursue the power, necessarily spells invalidity ... In considering the interpretation of a legislative instrument containing provisions which would contradict one another if to each were attached the full meaning and implications which considered alone it would have, an attempt should be made to reconcile them". (emphasis supplied) [207] The operation of a widely drawn privative clause in a State statute was considered in Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 by Gaudron and Gummow JJ, and their joint judgment was Page 27 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 cited with approval in the joint judgment in Plaintiff S157 (above) at para60, para64, para69, para70, para72 and para76. Gaudron and Gummow JJ said at 630-1, 633-634: "So far as concerned impugned exercises of power the Hickman principle allows the privative clause to operate in the fashion identified by Brennan J in Deputy Commissioner of Taxation v Richard Walter Pty Ltd: 'The privative clause treats an impugned act as if it were valid. In so far as the privative clause withdraws jurisdiction to challenge a purported exercise of power by the repository, the validity of acts done by the repository is expanded'. ... the privative clause operates, in effect, to recast the legislative provision which confer the power in question and which condition its exercise. It is to be remembered that the Hickman principle is a rule of construction ... Accordingly the question ... is not one of the meaning and effect of the Hickman principle which seeks to reconcile 'the prima facie inconsistency between one statutory provision which seems to limit the powers of the [decision maker] and another provision, the privative clause, which seems to contemplate that the [decision] shall operate free from any restriction'. Rather it is one of the meaning and effect of the statutory provisions in question. If there is an inconsistency the Hickman principle requires that it be 'resolved by reading the ... provisions together and giving effect to each' ... The operation of a State privative clause is purely a matter of its proper meaning ascertained in its legislative context ... Provided the intention is clear a privative clause in a valid State enactment may preclude review for errors of any kind. And if it does the decision in question is entirely beyond review so long as it satisfies the Hickman principle". (emphasis supplied) [208] The three conditions of the Hickman test, as they apply in this case, are that Hungerford J and the Full Bench made bona fide attempts to exercise the powers of the Commission, that their orders relate to the subject matter of the legislation, and that they are reasonably capable of reference to the powers given to the Commission. [209] The bona fides of Hungerford J and the Full Bench could not be in question, and the orders related to the subject matter of the legislation because they related to a contract whereby work was performed in an industry. The difficulty arises in relation to the third condition that the decision "is reasonably capable of reference to the power[s]" given to the Commission [para41]. [210] The third requirement directs attention to a source of power to which the order may be referred. In Hickman at 617 Dixon J said that the decisions "should not be considered invalid if they do not upon their face exceed the Board's authority" (emphasis supplied). As Gleeson CJ said in Plaintiff S157 at para12 this requirement can be traced to the statement in the advice of the Privy Council in Colonial Bank of Australia v Willan (1874) LR 5 PC 417, 442 that where there is a wide privative clause the Court will not quash "except upon the ground ... of a manifest defect of jurisdiction". In R v Metal Trades Employers Association ex parte Amalgamated Engineering Union (1951) 82 CLR 208, 249 Dixon J said that the third requirement was satisfied in that case because: "... it appears that the order or award is reasonably capable of reference to a power belonging to the Court ...". [211] He said earlier in that case (248): "Now it cannot be denied that the order impugned was made by the Arbitration Court in purported pursuance of s29(b), that it is an attempt to exercise that power and that upon its face the order appears to be an exercise of the power. It is only when you look behind it at the terms of the award that any ground is disclosed for denying that the order falls within s29(b)". (emphasis supplied) [212] In R v Commonwealth Conciliation and Arbitration Commission ex parte Amalgamated Engineering Union (1967) 118 CLR 219, 253 Kitto J referred to the previous case and Hickman, and expressed the third requirement thus: "... and it is reasonably capable of being referred to the power (ie does not on its face go beyond the power)". The point was emphasised in Plaintiff S157 in the joint judgment at para57 where their Honours said: "... as later decisions of this Court have made clear, the expression 'reasonably capable of reference to the power given to the body' has been treated as signifying that it must not on its face go beyond power. Thus ... a privative clause cannot protect against ... a decision which on its face exceeds jurisdiction". Page 28 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 [213] Accordingly when s179 is invoked to protect Orders 11 and 12, the Court is required to identify "a power belonging to" the Commission to which those orders are "reasonably capable of reference" [para45] in that they do not on their face go beyond the power [para47]. [214] The Commission has been given no power to order specific performance and only defined and limited powers to issue injunctions or mandatory orders. The orders in question are not reasonably capable of reference to those limited powers, and on their face go beyond them. In my judgment therefore the orders are not "reasonably capable of reference to any power" given to the Commission, and certiorari should go to quash them. [215] It is still necessary to consider the claimant's argument that s179, in so far as it effectively excludes judicial review by this Court of decisions of the Commission, is contrary to Chapter III of the Commonwealth Constitution and invalid. I have held that the orders, other than Orders 11 and 12, are within jurisdiction, and to that extent the opponents have no need to rely on the privative clause. I have also held that the fairness or unfairness of the impugned contract, and the relief, if any, to be granted under the section are within the jurisdiction of the Commission. Accordingly they would only be open to review in this Court if a right of appeal had been granted (appellate jurisdiction is always statutory - Victorian Stevedoring & General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73, 108 per Dixon J), or if certiorari for error of law on the face of the record (Houssein v The Under Secretary Department of Industrial Relations and Technology (1982) 148 CLR 88) had not been taken away by s179. [216] Mr Grieve, in support of his argument, cited the following dicta of McHugh J in Kable v DPP (NSW) (1996) 189 CLR 51, 114: "An essential part of the machinery for implementing that supervision of the Australian legal system and maintaining the unity of the common law is the system of State courts under a Supreme Court with an appeal to the High Court under s73 of the Constitution ... Moreover, although it is not necessary to decide the point in the present case, a State law that prevented a right of appeal to the Supreme Court from, or a review of, a decision of an inferior State court, however described, would seem inconsistent with the principle expressed in s73 and the integrated system of State and federal courts that covering Cl5 and Chapter III envisages". [217] The other Judges, except possibly Gaudron J at 102, did not refer to these questions. The dicta suggest that the failure of a State to confer appellate jurisdiction on its Supreme Court would contravene Chapter III but this could not confer a right of appeal where none existed under State law. The invalidity would have to bring down the attempt to confer State jurisdiction without some right of appeal to its Supreme Court. [218] Under New South Wales law there was formerly no appeal (except by stated case in limited circumstances) from a decision of the District Court in the exercise of its appellate criminal jurisdiction and there is no right of appeal from the Commission. Where rights of appeal have been conferred they are often restricted in one way or another. [219] In these situations the right of appeal has been "prevented", because it does not exist or "prevented" pro tanto by being restricted. State Supreme Courts have inherent supervisory jurisdiction and it has been accepted by the High Court since Clancy v Butchers' Shop Employees' Union (1904) 1 CLR 181, although the point has not been taken, that this supervisory jurisdiction can be restricted by privative provisions without restraints flowing from Chapter III. [220] S73(ii) says nothing about rights of appeal to a Supreme Court under State law or the jurisdiction of a Supreme Court to judicially review decisions of other State courts. In my judgment s179 is not invalid in so far as it restricts the inherent jurisdiction of this Court to judicially review decisions of the Commission. [221] A State could not directly abolish or restrict the right of appeal from its Supreme Court to the High Court and could not do this indirectly or by disguised or circuitous means. [222] The former Industrial Commission, one of the Commission's predecessors, was held to be a court exercising Federal jurisdiction for the purposes of s73(ii) and the Judiciary Act in re an application by Public Service Association of NSW (1947) 75 CLR 430, Gosper v Sawyer (1985) 160 CLR 548 and Tana v Baxter (1986) 160 CLR 572. Since the Commission in this area exercises the judicial power of the State (Tszyu v Fightvision Pty Ltd (2001) 104 IR 225 CA, 238) and is not subject to full judicial review, it is conceivable that the High Court has appellate jurisdiction under s73(ii) in respect of its judgments given in the exercise of State jurisdiction, subject to the requirement of special leave. Even if that view were correct, it would have no effect on the jurisdiction of this Court, and I say no more about it. [223] The claimant has had limited success in respect of Orders 11 and 12 but has failed in substance. It did not take any separate point in relation to those orders before the Full Bench or in its written submissions in this Court. The difficulties about those orders were first raised by this Court. The claimant should therefore pay the costs of both opponents of the summons. [224] The following orders should be made: (1) Order that there be removed into this Court the record of matter IRC 5716 of 2000 before the Full Bench of the Page 29 of 29 Mitchforce Pty Ltd v Industrial Relations Commission, [2003] NSWCA 151 Industrial Relations Commission of New South Wales in Court Session for the purpose of quashing Orders 11 and 12 made by Hungerford J on 14 November 2000 confirmed by the Full Bench on 30 April 2002. (2) Orders 11 and 12 as aforesaid quashed. (3) Summons otherwise dismissed. (4) Claimant to pay the costs of the first opponent and the second opponents of the summons. Order (1) Orders 11 and 12 made by Hungerford J on 14 November 2000 quashed. (2) That the balance of the summons be stood over for further argument in light of the majority reasons in this Court and the further steps (if any) taken in the Commission. Counsel for the claimant: D E Grieve QC/J M Miller Solicitors for the claimant: Ian Player Clark by Sydney Agents The Law Partnership Counsel for the opponent (Starkey): D F Jackson QC/A B Gotting Solicitors for the opponent (Starkey): Abbott Tout Counsel for the opponent (A-G (NSW)): M G Sexton SC/N Sharp Solicitors for the opponent (A-G (NSW)): I V Knight Crown Solicitor End of Document