1. Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd

High Court of Australia|1994-11-29|Before: Mason CJ, McHugh JJ, Gaudron J, Aickin J, Murphy J, Deane J, Latham CJ, Kitto J, Taylor J, Menzies J, Gibbs CJ, Mason J

For the reasons given by Gaudron J, with which I am in general agreement, ss 127A and 127B do not purport to confer judicial power on the Commission.

The third and last question raised by the application is whether the power to set aside or vary the terms of a contract conferred by s 127B(1) may be exercised in relation to a contract that has been discharged.

While I have reached a different conclusion from Gaudron J as to the fate of this application, I agree with her Honour's construction of the relevant provisions where a discharged contract is involved and with her conclusion that ss 127A and 127B are not confined to contracts which are current when the particular power of review or variation comes to be exercised.

For the reasons which appear in my answer to the principal question, I would make absolute the orders nisi.

This case arises out of timber-getting arrangements involving Tasmanian Pulp & Forest Holdings Ltd (the Company), its contractors, Mr and Mrs Wagner (the prosecutors), and their subcontractors, Mr and Mrs Dingjan and Mr and Mrs Ryan. The Company has a woodchip mill at Triabunna on the east coast of Tasmania and has rights over and access to various places in that State for timber getting. These places are known as "coupes". Timber which is suitable for woodchipping is processed at the Company's Triabunna mill; other timber is directed to various sawmills for milling as timber and timber veneer.

For many years, the Company has contracted for the harvesting and transport of timber from its coupes, allocating coupes and quotas to individual harvest contractors. It entered into a harvest contract with the prosecutors who, like others with similar contracts with the Company, performed their obligations partly by their own efforts and partly by subcontracting to owner-drivers. As a general rule, owner-drivers purchased the right to perform the work involved, provided their own machinery and equipment and were licensed by the appropriate State authority to transport the Company's timber.

The prosecutors entered into separate subcontracts with Mr and Mrs Dingjan, who carried on business in partnership as owner-drivers, and with Mr and Mrs Ryan, who were in a similar partnership. Like other owner-drivers in the industry, they carted timber from the Company's coupes and delivered it to the Company's Triabunna mill or other mills as directed by harvest contractors (in their case, the prosecutors) for the Company, using their own prime movers and timber jinkers.

The timber-getting arrangements apparently operated satisfactorily until 1992. During that year, the Company altered its practices and requirements and the prosecutors, in turn, altered their arrangements with the subcontractors. Some little time later, the union to which Mr Dingjan and Mr Ryan belong, the Transport Workers' Union of Australia, and the subcontractors applied under ss 127A and 127B of the Industrial Relations Act 1988 Cth (the Act) for review and variation of the contracts they, the subcontractors, had with the prosecutors.

It will later be necessary to refer to ss 127A, 127B and 127C of the Act in some detail. For the moment, it is sufficient to note that, subject to s 127C, ss 127A and 127B authorise the Australian Industrial Relations Commission (the Commission) to review and vary contracts for services which bind an independent contractor and which relate to "the performance of work by the independent contractor, other than work for the private and domestic purposes of the other party to the contract" [76] .

The prosecutors gave notices terminating their separate contracts with the subcontractors shortly after the applications for review were filed in the Commission. The applications proceeded thereafter on the basis that each contract had come to an end, at least in the sense that neither party was any longer under any obligation to perform the promises which constituted the contract.

The Commission rejected various arguments to the effect that it had no jurisdiction, including an argument that it had no jurisdiction with respect to contracts that had come to an end. Instead, it proceeded to make orders varying the contracts by inserting terms which have the effect of reinstating the contracts and preventing their termination other than in accordance with the terms inserted. The prosecutors obtained an order nisi for prohibition and certiorari from Dawson J They now seek to have that order made absolute.

While the jurisdiction formerly conferred on the Commission has now been conferred, with some modification, on the new Industrial Relations Court of Australia [77] , it is convenient for present purposes to refer to the Commission's jurisdiction in the present tense. The Act, in s 127A(2), confers power on the Commission to review contracts in these terms:

Application may be made to the Commission (constituted by a Presidential Member or a Full Bench) to review a contract on any or all of the following grounds:

See ss 71 and 72 of the Industrial Relations Reform Act 1993 Cth. As to the new Court, see s 361 of the Act.

Section 127A(1) defines the word "contract" within the section to mean:

(ii) relates to the performance of work by the independent contractor, other than work for the private and domestic purposes of the other party to the contract; and

(b) any condition or collateral arrangement relating to such a contract.

The various matters to which the Commission may have regard when reviewing a contract are set out in s 127A(4) as follows:

(a) the relative strength of the bargaining positions of the parties to the contract and, if applicable, any persons acting on behalf of the parties; and

(b) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, a party to the contract; and

(c) whether the contract may have an adverse effect on the development of the skills of employees performing work of the relevant kind in the industry, including any system designed to provide a trained labour force (for example, apprenticeship or any arrangement for improving the skills of employees); and

(d) whether the contract provides total remuneration that is, or is likely to be, less than that of an employee performing similar work; and

(e) any other matter that the Commission thinks relevant.

By s 127A(5), the Commission is required, if it forms the opinion that a contract is unfair, harsh or against the public interest in whole or in part, to record its opinion "stating whether the opinion relates to the whole or a specified part of the contract". And by s 127A(7), the Commission is required to exercise its powers of review "in a way that furthers the objects of [the] Act as far as practicable".

Section 127B provides, in sub-ss (1), (2), (3) and (4), as follows:

(1) If the Commission records an opinion under section 127A in relation to a contract, it may make one or more of the following orders in relation to the opinion:

(a) an order setting aside the whole or part of the contract, as the case may be;

(2) An order may only be made for the purpose of placing the parties to the contract as nearly as practicable on such a footing that the ground on which the opinion is based no longer applies.

(3) While the application is pending, the Commission may make an interim order if it thinks it is desirable to do so to preserve the position of a party to the contract.

(4) An order takes effect from the date of the order or a later date specified in the order.

The power of the Commission to review and vary contracts under ss 127A and 127B is confined by s 127C(1) in these terms:

Sections 127A and 127B apply only as follows, namely:

(a) in relation to a contract to which a constitutional corporation is a party;

(b) in relation to a contract relating to the business of a constitutional corporation;

(c) in relation to a contract entered into by a constitutional corporation for the purposes of the business of the corporation;

(d) in relation to a contract relating to work in trade or commerce to which paragraph 51(i) of the Constitution applies;

(e) in relation to a contract so far as it affects matters that take place in or are otherwise connected with a Territory;

(f) in relation to a contract to which the Commonwealth or a Commonwealth authority is a party.

"Constitutional corporation" is defined in s 127C(2) to mean "a corporation to which paragraph 51(xx) of the Constitution applies". The Commonwealth has power, under s 51(xx), to make laws with respect to "[f]oreign corporations, and trading or financial corporations formed within the limits of the Commonwealth". It is convenient to use the expression "constitutional corporation" in the same way as it is used in the Act.

The case has been conducted at all stages on the basis that, if the Commission has jurisdiction with respect to the contracts involved in this case, that jurisdiction derives solely from s 127C(1)(b) of the Act. In this regard, it is accepted that the Company is a trading corporation formed within the limits of the Commonwealth and that the work performed or to be performed by the prosecutors and the subcontractors constituted and constitutes an integral part of the Company's business activities. However, the prosecutors contend that the Commission has no jurisdiction to review and vary the contracts because ss 127A and 127B, in their application pursuant to s 127C(1)(b), are invalid. In particular, they argue that they are not laws with respect to corporations of the kind specified in s 51(xx) of the Constitution, that being the legislative power on which s 127C(1)(b) plainly relies. Additionally, they argue that ss 127A and 127B are invalid as involving the purported conferral on the Commission of the judicial power of the Commonwealth, contrary to the requirement in Ch III of the Constitution that that power be vested only in the courts therein named or designated. Finally, they claim that ss 127A and 127B, properly construed, do not confer power on the Commission to vary contracts that have come to an end.

It is convenient to deal first with the argument that ss 127A and 127B purport to confer judicial power on the Commission. It is well settled that some powers are essentially judicial so that they can be conferred by the Commonwealth only on courts named or designated in Ch III of the Constitution [78] , while others take their character from the tribunal in which they are reposed and the way in which they are to be exercised and, thus, may be conferred on courts or other tribunals as the Parliament chooses [79] .

Waterside Workers' Federation of Australia v J W Alexander Ltd (1918) 25 CLR 434 at 467 R v Kirby; Ex parte Boilermakers' Society of Australia (the Boilermakers' Case) (1956) 94 CLR 254 at 270, 296, 314, 338. 2. Precision Data Holdings Ltd v Wills (1991) 173 CLR 167 at 189See also R v Davison (1954) 90 CLR 353 at 370 R v Hegarty; Ex parte City of Salisbury (1981) 147 CLR 617 at 628 Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers' Union of Australia (1987) 163 CLR 656 at 665-666 Harris v Caladine (1991) 172 CLR 84 at 93, 147-148.

A power to adjudicate "a dispute about rights and obligations arising solely from the operation of the law on past events or conduct" [80] is one that is essentially and exclusively judicial. On the other hand, a power to bring a new set of rights and obligations into existence is generally non-judicial, although it may take its character from the tribunal involved [81] . Thus, a power to create new rights and obligations, if it is conferred on a court and "is to be exercised according to legal principle or by reference to an objective standard or test prescribed by the legislature and not by reference to [unspecified] policy considerations" [82] , will be characterised as judicial power involving the determination of rights and obligations for which the law provides. At least that is so if the subject matter and prescribed procedures are consistent with the nature and functions of a court [83] .

Precision Data (1991) 173 CLR 167 at 188. See also Re Cram; Ex parte Newcastle Wallsend Coal Co Pty Ltd (1987) 163 CLR 140 at 148-149 2. Precision Data (1991) 173 CLR 167 at 189. And see, as to the conferral of such powers on a court, Peacock v Newtown Marrickville and General Co-operative Building Society (No 4) Ltd (1943) 67 CLR 25 at 35 3. Precision Data (1991) 173 CLR 167 at 191, referring to the discussion by Dixon J in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 165et seq. 4. See Precision Data (1991) 173 CLR 167 at 191. See also R v Davison (1954) 90 CLR 353 at 369-370 Harris v Caladine (1991) 172 CLR 84 at 150and the cases there discussed.

However, if power to bring a new set of rights and obligations into existence is vested in a tribunal which is not a court and policy considerations have a part to play in the tribunal's determination, the power is not judicial [84] . And that is so even if it is necessary for the tribunal to decide disputed facts or to form an opinion as to existing rights and obligations as a step in arriving at its ultimate determination [85] .

Precision Data (1991) 173 CLR 167 at 191. 2. Re Cram; Ex parte Newcastle Wallsend Coal Co Pty Ltd (1987) 163 CLR 140 at 149 Re Ranger Uranium Mines Pty Ltd; Ex parte Federated Miscellaneous Workers' Union of Australia (1987) 163 CLR 656 at 666 Precision Data (1991) 173 CLR 167 at 189.

The power of variation which ss 127A and 127B contemplate is, in essence, a power to create new rights and obligations, even though they are attached to a pre-existing contract for services. In that respect, the power is precisely analogous with the Commission's power to make industrial awards, at least when the award-making power is exercised, as is generally the case, to create new rights and obligations attaching to pre-existing employment relationships.

Quite apart from the fact that the power to form an opinion as to what is unfair, harsh or against the public interest is to be exercised to promote the objects of the Act and, thus, will often involve policy considerations, the nature of the power of variation with which ss 127A and 127B are, in essence, concerned and the character of the Commission as an arbitral tribunal suffice to indicate that that power is not judicial power.

Before turning to the argument that ss 127A and 127B, in their application pursuant to s 127C(1)(b), are not authorised by s 51(xx) of the Constitution, it is necessary to say something of the operation of ss 127A and 127B generally and as applied by s 127C(1)(b). In particular, it is necessary to consider whether ss 127A and 127B apply to contracts that have come to an end and to determine what is meant by the expression "relating to the business of a constitutional corporation" as used in s 127C(1)(b).

The Commission rejected an argument advanced on behalf of the prosecutors that it has no power with respect to contracts that have come to an end, ruling that the powers of review and variation conferred by ss 127A and 127B apply to contracts that are in existence when an application is made. The prosecutors challenge that ruling, arguing that, as a matter of construction, ss 127A and 127B are confined to current contracts.

The argument that the Commission's powers are confined to current contracts was based on the use of the present tense in ss 127A and 127B. In this regard, attention was directed to the definition of contract in s 127A(1), particularly the reference to a contract that " is binding on an independent contractor", and to the grounds of review set forth in s 127A(2), namely that a contract " is unfair" or " is harsh" or " is against the public interest" [86] . The argument also relied on s 127B(3) and (4) which, respectively, authorise the Commission to make an interim order "to preserve the position of a party to the contract" and provide that "[a]n order takes effect from the date of the order or a later date specified in the order". It was argued, in the context of these specific provisions, that the use of the present tense requires ss 127A and 127B to be construed so that the Commission's powers to review and vary a contract extend only to contracts that are current when it exercises the particular power in question.

The present tense may be used descriptively or it may be used to signify contemporaneity. Although there is no fixed rule, the use in a statute of the present tense, simpliciter, generally indicates that it is being used descriptively (the "simple present"), whereas "is" followed by a present participle (the "continuous" or "progressive" present) usually indicates contemporaneity [87] . The descriptive use of the present tense can be seen in s 127B(4) where the words "takes effect" do not indicate that an order then takes effect but, rather, describe and, thus, prescribe the way in which an order must take effect.

See Quirk et al, A Comprehensive Grammar of the English Language (1985) pp 179-180, 197-198.

The power of the Commission under s 127B(3) to make interim orders "to preserve the position of a party to the contract" does not, in my view, provide any reliable guide to the construction of ss 127A and 127B. The power to make interim orders is not confined to orders which operate to keep a contract on foot. Moreover, it is power that might usefully be invoked even if the Commission has power to vary contracts that have come to an end.

The most persuasive of the matters relied on for the argument that the Commission has no power to vary contracts that have come to an end is the definition of "contract" in terms of a contract that "is binding on an independent contractor" (s 127A(1)(a)(i)). As earlier indicated and although there is no fixed rule in that regard, the present participle often imports contemporaneity. However, the use of "binding" as a participial adjective meaning "enforceable" is also well recognised [88] and, when so used, "is binding" is a descriptive use of the simple present, rather than a use of the continuous or progressive present.

See, eg, Peter Long & Partners v Burns [1956] 1 WLR 413 at 414[1956] 2 All ER 25 at 26and generally Rola Co (Australia) Pty Ltd v The Commonwealth (1944) 69 CLR 185 at 190See also the New Shorter Oxford English Dictionary (1993), p 229.

No question arises in this case as to whether the Commission's jurisdiction is confined to contracts that are current when application is made to it under ss 127A and 127B. That question may raise a different issue from that involved in this case. In particular, it may raise the issue whether ss 127A and 127B were intended to have retroactive operation. Whatever the position in that regard, ss 127A and 127B are not, in my view, confined to contracts which are current when the particular power of review or variation comes to be exercised. That construction would allow the Commission to review a contract that is current when the review takes place, but not to vary the contract if it comes to an end or, as is more likely, if it is brought to an end before an order is made under s 127B. It cannot be supposed that Parliament intended that consequence, particularly in the context of contracts relating to the performance of work by an independent contractor where, in the nature of things, the power to terminate without notice or on short notice may well be the very matter which makes the contract unfair, harsh or against the public interest [89] . That being so and given that "binding" is often used to mean "enforceable", the use of the present tense in ss 127A and 127B is merely discriptive of the nature of the contracts which may be the subject of the Commission's powers, namely, contracts enforceable against an independent contractor and whose terms or operation may be described as unfair, harsh or against the public interest. Contrary to the argument advanced on behalf of the prosecutors, its use does not signify that the Commission's powers under ss 127A and 127B are confined to contracts that are current when it comes to exercise those powers.

For a discussion of the illusory nature of certain contractual rights involved in agreements for the performance of work falling within s 88F(1) of the Industrial Arbitration Act 1940 NSW (which is largely reproduced in s 275 of the Industrial Relations Act 1991 NSW), see In re Becker and Harry M Miller [No 2] [1972] AR (NSW) 289 at 310.

The meaning of " relating to the business of a constitutional corporation "

The Commission proceeded to determine the applications for variation on the basis that the words "relating to" in s 127C(1)(b) require a direct relationship with the business of a constitutional corporation, "in the sense of having a basic or relevant connection with it". That connection, in the view of the Commission, was likely to be satisfied by "a contract for the performance of work for the purposes of the trading activities of [a] corporation, including probably the related business activities".

The words "relating to" do not ordinarily require a direct or immediate connection [90] , although they will do so if that is indicated by their context [91] . The relevant context in this case is that of a contract for the performance of work by an independent contractor. Subject to one qualification and leaving aside any reading down that might be required to bring s 127C(1)(b) within constitutional limits, the words "relating to the business of a constitutional corporation" are apt, in the context of a contract for the performance of work by an independent contractor, to extend to a contract for the performance of work by or in consequence of which a constitutional corporation conducts some or all of its business activities.

But cf Redfern v Dunlop Rubber Australia Ltd (1964) 110 CLR 194 at 213, 219; Seamen's Union of Australia v Utah Development Co (1978) 144 CLR 120 at 138-139 2. As to the context in which the words "relating to" appear, see, eg, Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 at 618, 620.

The qualification referred to in the last paragraph is that there may be questions of fact and degree involved in determining whether a contract which is only partly concerned with work by or in consequence of which a constitutional corporation conducts its business activities is "a contract relating to the business of a constitutional corporation". Questions of that kind would arise, for example, with a contract for the delivery of goods, some to be delivered to constitutional corporations and some not. And there may be a question whether s 51(xx) of the Constitution extends to authorise the review and variation of a contract in respect of some obligation or some aspect of it that has no connection with a constitutional corporation.

The argument that ss 127A and 127B, in their operation pursuant to s 127C(1)(b), are not authorised by s 51(xx) was largely made by reference to the nature of the power conferred by that paragraph. In particular, it was emphasised that it is not "expressed as a power with respect to a function of government, a field of activity or a class of relationships but as a power with respect to persons, namely, corporations of the classes therein specified" [92] . Even so, the power is a plenary power and is to be construed according to its terms and not by reference to implications or limitations which those terms do not require [93] .

New South Wales v The Commonwealth (the Incorporation Case) (1990) 169 CLR 482 at 497. See also Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 at 181, 216; The Commonwealth v Tasmania (the Tasmanian Dam Case) (1983) 158 CLR 1 at 157, 202, 240-241, 269, 314-315. 2. See with respect to s 51(xx), Actors and Announcers Equity Association (1982) 150 CLR 169 at 207-208. See with respect to constitutional powers generally, R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225(s 51(xxxvii)); Russell v Russell (1976) 134 CLR 495 at 539and Re F; Ex parte F (1986) 161 CLR 376 at 387(s 51(xxi)).

When s 51(xx) is approached on the basis that it is to be construed according to its terms and not by reference to unnecessary implications and limitations, it is clear that, at the very least, a law which is expressed to operate on or by reference to the business functions, activities or relationships of constitutional corporations is a law with respect to those corporations. In this regard, it is sufficient to note that, although the business activities of trading and financial corporations may be more extensive than their trading or financial activities, those corporations, nonetheless, take their character from their business activities [94] . As was pointed out by Gibbs CJ in Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd [95] , "[i]t is the business of a trading corporation to trade, and its business is its trading". So too, it is the business of a financial corporation to engage in financial transactions and its business consists of the transactions in which it engages [96] . And a foreign corporation is simply a corporation formed outside Australia that carries on business in Australia [97] .

See generally State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 303-306 Fencott v Muller (1983) 152 CLR 570 at 601-602 2. (1982) 150 CLR 169 at 185; see also at 184-185, 195, 203-204, 215, 221-222. 3. See State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 305-306 4. See the Incorporation Case (1990) 169 CLR 482 at 497-498.

As their business activities signify whether or not corporations are trading or financial corporations and the main purpose of the power to legislate with respect to foreign corporations must be directed to their business activities in Australia, it follows that the power conferred by s 51(xx) extends, at the very least, to the business functions and activities of constitutional corporations and to their business relationships. And those functions, activities and relationships will, in the ordinary course, involve individuals, and not merely individuals through whom the corporation acts, as in Fencott v Muller [98] , or the control of whose conduct is directly connected with the regulation or protection of the corporation, as in Actors and Announcers Equity Association [99] .

(1983) 152 CLR 570. See also R v Australian Industrial Court; Ex parte CLM Holdings Pty Ltd (1977) 136 CLR 235 2. (1982) 150 CLR 169.

Once it is accepted that s 51(xx) extends to the business functions, activities and relationships of constitutional corporations, it follows that it also extends to the persons by and through whom they carry out those functions and activities and with whom they enter into those relationships. And when regard is had to the type of contract with which ss 127A and 127B are concerned, namely, a contract for the performance of work by an independent contractor, it is clear that "a contract relating to the business of a constitutional corporation", as those words are used in s 127C(1)(b) of the Act, and which does not fall within s 127C(1)(a) [100] or s 127C(1)(c) [101] , will inevitably have as its other party a person who performs the business functions or carries out the business activities of a constitutional corporation or a person who is in a business relationship with that corporation. That other party is within the reach of the legislative power conferred by s 51(xx) of the Constitution, at least to the extent of those functions and activities or that business relationship.

Section 127C(1)(a) brings contracts "to which a constitutional corporation is a party" within the application of ss 127A and 127B. 2. Section 127C(1)(c) brings contracts "entered into by a constitutional corporation for the purposes of the business of the corporation" within the application of ss 127A and 127B.

It is possible that, as a matter of construction, ss 127A and 127B extend to the review and variation of some aspect of a contract that has no connection with the business activities of a constitutional corporation and which, thus, is separate and distinct from the business functions and activities which an individual performs for the corporation or the business relationship which he or she has with it. If they do, a question arises whether s 51(xx) extends to authorise laws binding on individuals with respect to matters which travel beyond the corporate functions and activities in which they participate or the relationships which they have with a constitutional corporation. The same question arises if ss 127A and 127B allow a contract to be varied so that it has an operation unrelated to the business of a constitutional corporation.

The question whether ss 127A and 127B operate pursuant to s 127C(1)(b) in some respect that is unrelated to the business activities of a constitutional corporation can be put to one side. It does not arise on the facts of this case. So too, the question whether s 51(xx) authorises that operation need not be pursued. Clearly, s 127C(1)(b) can be read down pursuant to s 15A of the Acts Interpretation Act 1901 Cth, if necessary, to apply to contracts only to the extent that they relate to the business of a constitutional corporation [102] . That being so, there is no need to consider s 7A of the Act [103] . As the Commission's powers of variation are confined by s 127B(2) to putting the parties "as nearly as practicable on such a footing" that the ground for the opinion that their contract is unfair, harsh or against the public interest no longer applies, that reading down would preclude the variation of a contract in any way that would give it an operation unrelated to the business activities of a constitutional corporation.

See, as to reading down "general" words, Pidoto v Victoria (1943) 68 CLR 87 at 109-111 Bank of NSW v The Commonwealth (the Bank Nationalization Case) (1948) 76 CLR 1 at 252, 369-372; Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468 at 516-520, 526-527. 2. Section 7A, which came into operation on 31 March 1994 relevantly provides: "(1) Unless the contrary intention appears, if a provision of this Act: (a) would, apart from this section, have an invalid application; but (b) also has at least one valid application; it is the Parliament's intention that the provision is not to have the invalid application, but is to have every valid application. (2) Despite subsection (1), the provision is not to have a particular valid application if: (a) apart from this section, it is clear, taking into account the provision's context and the purpose or object underlying this Act, that the provision was intended to have that valid application only if every invalid application, or a particular invalid application, of the provision had also been within the Commonwealth's legislative power; or (b) the provision's operation in relation to that valid application would be different in a substantial respect from what would have been its operation in relation to that valid application if every invalid application of the provision had been within the Commonwealth's legislative power. (3) Subsection (2) does not limit the cases where a contrary intention may be taken to appear for the purposes of subsection (1). (4) This section applies to a provision of this Act, whether enacted before, at or after the commencement of this section."

As already indicated, even if ss 127A and 127B are construed to operate with respect to matters which travel beyond the business functions and activities which an individual performs for a constitutional corporation or the business relationship he or she has with it, no question of constitutional validity arises in this case. This case is concerned solely with the rights and obligations of persons, namely, the prosecutors, who entered into a contractual relationship with a trading corporation, the Company, for the performance of work by or in consequence of which it, the Company, carries out its business activities. And it is concerned only with that work and the rights and obligations arising out of or in connection with that work. When applied to the facts and circumstances with which this case is concerned, ss 127A and 127B operate no differently from a law providing that a person who contracts with a constitutional corporation to procure the performance of work by or in consequence of which it, the corporation, carries out its business activities shall not procure that work on terms that are unfair, harsh or against the public interest. As already explained, that operation, being an operation on persons who are in a business relationship with a constitutional corporation in respect of matters the subject of their particular relationship, is within the power conferred by s 51(xx).

For the sake of completeness, it should be noted that nothing that the Commission did in this case, including the reinstatement of the contracts between the prosecutors and the subcontractors and the extension of those contracts on newly inserted terms which prevent termination other than as provided by those terms, gives those contracts an operation which travels beyond the work performed or to be performed in satisfaction of the prosecutors' contractual obligations to the Company.

The question in this case is whether s 51(xx) of the Constitution authorises a law that confers jurisdiction on a tribunal to set aside or vary contracts "relating to the business of a constitutional corporation". Section 51(xx) provides that the Parliament of the Commonwealth may make laws with respect to "Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth". Purporting to act under that power, the Parliament enacted ss 127A, 127B and 127C(1)(b) of the Industrial Relations Act 1988 Cth which conferred jurisdiction on the Industrial Relations Commission [104] to set aside or vary a contract "relating to the business of a constitutional corporation" if the contract was unfair, harsh or against the public interest. Constitutional corporation was defined to mean "a corporation to which paragraph 51(xx) of the Constitution applies". In my opinion, s 51(xx) did not authorise this conferral of jurisdiction. Nor do the provisions of s 15A of the Acts Interpretation Act 1901 Cth save any part of the jurisdiction purporting to be conferred by s 127C(1)(b).

The jurisdiction with some amendments is now conferred on the Industrial Relations Court of Australia; Industrial Relations Reform Act 1993 Cth, ss 71 and 72; Industrial Relations Act 1988 Cth, s 361.

The corporations power, like all s 51 powers, is a plenary grant of power. It is to be construed with all the generality that its words will admit [105] . Unlike most of the powers conferred by s 51, however, the corporations power is directed to persons and not subject matters such as trade, commerce, taxation or quarantine [106] . Although laws that regulate the activities, functions, relationships or business of corporations are clearly laws with respect to corporations, the power conferred by s 51(xx) also extends to any subject that affects the corporation. As long as the law in question can be characterised as a law with respect to trading, financial or foreign corporations, the Parliament of the Commonwealth may regulate many subject matters that are otherwise outside the scope of Commonwealth legislative power. Laws that protect s 51(xx) corporations from the conduct of non-corporations, for example, are laws with respect to s 51(xx) corporations. Thus a law that penalises persons who impose secondary boycotts that are designed to and likely to cause substantial damage to the business of corporations is a law with respect to those corporations, notwithstanding that its principal purpose is to outlaw secondary boycotts [107] .

R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 at 225 Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 at 208 2. The aliens power (s 51(xix)) and the race power (s 51(xxvi)) are the exceptions. 3. Actors and Announcers Equity Association (1982) 150 CLR 169.

It does not follow, however, that s 51(xx) authorises any law that operates on conduct that relates to the activities, functions, relationships or business of trading, financial or foreign corporations. The law must be a law "with respect to" a corporation of the kind described by s 51(xx). That means that the law must have "a relevance to or connection with" [108] a s 51(xx) corporation. It is not enough, however, that the law "should refer to the subject matter or apply to the subject matter" [109] .

Grannall v Marrickville Margarine Pty Ltd (1955) 93 CLR 55 at 77 2. Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 186

In determining whether a law is "with respect to" a head of power in s 51 of the Constitution, two steps must be taken. First, the character of the law must be determined. That is done by reference to the rights, powers, liabilities, duties and privileges which it creates [110] . Secondly, a judgment must be made as to whether the law as so characterised so operates that it can be said to be connected to a head of power conferred by s 51. In determining whether the connection exists, the practical, as well as the legal, operation of the law must be examined [111] . If a connection exists between the law and a s 51 head of power, the law will be "with respect to" that head of power unless the connection is, in the words of Dixon J [112] , "so insubstantial, tenuous or distant" that it cannot sensibly be described as a law "with respect to" the head of power.

The Commonwealth v Tasmania (the Tasmanian Dam Case) (1983) 158 CLR 1 at 152. 2. Herald & Weekly Times Ltd v The Commonwealth (1966) 115 CLR 418 at 440the Tasmanian Dam Case (1983) 158 CLR 1 at 152. 3. Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 at 79

Where a law purports to be "with respect to" a s 51(xx) corporation, it is difficult to see how it can have any connection with such a corporation unless, in its legal or practical operation, it has significance for the corporation. That means that it must have some significance for the activities, functions, relationships or business of the corporation. If a law regulates the activities, functions, relationships or business of a s 51(xx) corporation, no more is needed to bring the law within s 51(xx) [113] . That is because the law, by regulating the activities, etc, is regulating the conduct of the corporation or those who deal with it. Further, if, by reference to the activities or functions of s 51(xx) corporations, a law regulates the conduct of those who control, work for, or hold shares or office in those corporations, it is unlikely that any further fact will be needed to bring the law within the reach of s 51(xx).

See Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 348, where Griffith CJ said that any law in the form "No trading or financial corporation formed within the Commonwealth shall" or "Every trading or financial corporation formed, etc, shall" was a law validly made under s 51(xx) unless forbidden by some other provision of the Constitution.

It is not enough, however, to attract the operation of s 51(xx) that the law merely refers to or operates upon the existence of a corporate function or relationship or a category of corporate behaviour. The activities, functions, relationships and business of s 51(xx) corporations are not the constitutional switches that throw open the stream of power conferred by s 51(xx). In Actors and Announcers Equity Association v Fontana Films Pty Ltd [114] , Brennan J said:

It is of the nature of the power that it is a power to make laws with respect to corporate persons, not with respect to functions, activities or relationships. So, where a law seeks to regulate the conduct of persons other than s 51(xx) corporations or the employees, officers or shareholders of those corporations, the law will generally not be authorised by s 51(xx) unless it does more than operate by reference to the activities, functions, relationships or business of such corporations. A law operating on the conduct of outsiders will not be within the power conferred by s 51(xx) unless that conduct has significance for trading, financial or foreign corporations. In most cases, that will mean that the conduct must have some beneficial or detrimental effect on trading, financial or foreign corporations or their officers, employees or shareholders. Thus, laws that regulate conduct that promotes or protects the functions, activities, relationships or business of such corporations or laws that regulate conduct conferring benefits on those corporations are laws with respect to s 51(xx) corporations even though they are also laws with respect to that conduct. 1. (1982) 150 CLR 169 at 222.

But a law that does no more than make some activity of a s 51(xx) corporation the condition for regulating the conduct of an outsider will ordinarily not be a law with respect to those corporations. If a law regulates conduct that has no significance for s 51(xx) corporations, it is not a law with respect to those corporations even if that conduct is connected to or even based on what a corporation does. Thus, a law that sought to regulate the remuneration of employment contracts made by financial analysts would not be a law with respect to s 51(xx) corporations even if the work of the analysts was entirely based upon the business activities of corporations. Laws that seek to regulate such contracts are laws with respect to employment contracts, but they are not laws with respect to corporations.

Sections 127A, 127B, 127C(1)(b) combined to give the Industrial Relations Commission jurisdiction to set aside or vary a contract that was unfair, harsh or against the public interest if the contract was one "relating to the business of" a s 51(xx) corporation. The term "relating to" is extremely wide. But it predicates the existence of a relationship between a contract and the business of a s 51(xx) corporation [115] . In some statutes, the context of the term "relating to" requires that the relationship be substantial or direct. Nothing in s 127C or in the rest of the Act, however, requires that the relationship required by s 127C(1)(b) should be narrowly construed. In its natural and ordinary meaning, the provision requires no more than a relationship, whether direct or indirect, between a contract and the business of a s 51(xx) corporation.

Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 at 620, per Taylor J.

Mr North QC, counsel for the second to sixth respondents, submitted that the term "relating to" required a direct effect on the business of the corporation. He relied upon Redfern v Dunlop Rubber Australia Ltd [116] to support that submission. But that case decided no more than that, upon their proper construction, s 4 and s 11 of the Australian Industries Preservation Act 1906 Cth were a valid exercise of the power to make laws with respect to trade and commerce with other countries and among the States. It is of no assistance in construing s 127C(1)(b). Mr Rose QC, intervening on behalf of the Attorney-General of the Commonwealth, submitted that the contract must have a "direct and immediate relationship" or be "directly concerned" with the business of a s 51(xx) corporation. But I can see nothing in the Act that requires such a restricted meaning to be given to s 127C(1)(b). In any event, in my opinion, the paragraph would not validly confer jurisdiction on the Commission even if the words of s 127C(1)(b) were construed as narrowly as Mr North and Mr Rose contended that they should be construed.

The validity of s 127C(1)(b) does not depend upon the directness or indirectness of the relationship between the contract and the business of a s 51(xx) corporation. The validity of the paragraph depends upon whether a contract referred to in s 127A has significance for such a corporation. A contract would have significance if it conferred some benefit or imposed some detriment on a s 51(xx) corporation or if it affected the activities, functions, relationships or business of such a corporation. But the jurisdiction conferred by s 127C(1)(b) is not dependent upon the contract having any effect on, or any effect on, or any other significance for, the corporation. The Commission is given jurisdiction to intervene and set aside a contract on the bare condition that the contract relates to the business of a s 51(xx) corporation. Whether the unfairness, harshness or contrariety to the public interest of the contract has any consequences or significance for the corporation is of no relevance whatever. Jurisdiction to make orders arises once a relationship between the contract and the business of a s 51(xx) corporation exists. That is not enough in my opinion to make ss 127A, 127B and 127C(1)(b) a law with respect to a s 51(xx) corporation. It follows that s 127C(1)(b), as enacted, was not authorised by s 51(xx) of the Constitution.

The next question is whether, by reason of the operation of s 15A of the Acts Interpretation Act 1901 Cth, the invalid part can be severed from the valid part (if any) of s 127C(1)(b). To that question, I now turn.

I have no doubt that in some circumstances contracts that are unfair, harsh or against the public interest and that relate to the business of a constitutional corporation can be brought within the scope of the power conferred by s 51(xx) even if the corporation is not a party to the contract. To take a clear example: such a contract would be within s 51(xx) if its execution was dependent upon the approval of a constitutional corporation. But to recognise that some contracts that relate to the business of a constitutional corporation are within the scope of s 51(xx) does not itself assist a court to apply the terms of s 15A of the Acts Interpretation Act. Section 15A will not save an enactment that is beyond the power of the Commonwealth unless the enactment contains, expressly or by inference, a standard or test that can be applied so as to confine the enactment within constitutional power [117] . Neither s 127C nor the Act gives any clue as to what standard or test is to be applied in reading down a provision of s 127C that is beyond the power of the Commonwealth to enact. Paragraphs (a) and (c) of s 127B show that s 127C(1)(b) was not intended to be confined to contracts to which a constitutional corporation is a party. On the contrary, the context created by these two paragraphs shows that s 127C(1)(b) was intended to operate on contracts to which constitutional corporations were not parties. Furthermore, nothing in s 127C or the rest of the Act indicates a standard or test that would confine s 127C(1)(b) in a way that would make it operate so as to have significance for constitutional corporations. It follows that s 127C(1)(b) is wholly invalid and inoperative.

After the decision in this case was reserved for judgment, the Court invited argument as to the effect and validity of s 7A of the Act which contains a severance clause that appears to go further in its operation than s 15A. Section 7A came into force after these proceedings were heard in the Commission. Sub-section (4) of s 7A states, however, that the section is to apply "to a provision of this Act, whether enacted before, at or after the commencement of this section". Nevertheless, the section is not expressed to apply retrospectively to events that occurred before s 7A was enacted. It therefore has no application to the question whether the Commission had jurisdiction to make the orders that it did.

The orders nisi made by Dawson J must be made absolute.

High Court of Australia Mason CJ Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ Re Dingjan; Ex parte Wagner [1995] HCA 16

What Lord Diplock in Moschi v Lep Air Services Ltd [1973] AC 331 at 350calls "a secondary obligation". 2. That is, leaving aside contracts which contain clauses intended to survive termination of the substantive provisions of a contract - for example, clauses relating to arbitration (Moschi v Lep Air Services Ltd [1973] AC 331 at 350), confidential information (Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227) and restraint of trade (Home Counties Dairies Ltd v Skilton [1970] 1 WLR 526[1970] 1 All ER 1227). 3. McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 469-470, 476-477; Moschi v Lep Air Services Ltd [1973] AC 331 at 345, 350. 4. McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 469-470, 476-477; cf Lord Porter in Heyman v Darwins Ld [1942] AC 356 at 399 5. Moschi v Lep Air Services Ltd [1973] AC 331 at 345-346, 350-351; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 31, 48.

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