Aveling v UBS Capital Markets Australia Holdings Ltd

APPLICANT: Mr I M Neil of counsel and Mr D Chin of counsel Solicitors: Toomey Pegg Drevikovsky (Mr E Haggerty) LEGAL REPRESENTATIVES: RESPONDENT: Mr H J Dixon SC and Mr A B Gotting of counsel Solicitors: Shanahan Tudhope (Mr D Fitzharris)

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION FULL BENCH

CORAM: WRIGHT J, President WALTON J, Vice-President MARKS J BOLAND J STAFF J Wednesday 15 September 2004

Matter No IRC 3419 of 2003 ANTHONY AVELING v UBS CAPITAL MARKETS AUSTRALIA HOLDINGS LTD

Application under s 106 of the Industrial Relations Act 1996 JUDGMENT OF THE COURT [2004] NSWIRComm 261

1 In 2002 the New South Wales Parliament enacted the Industrial Relations Amendment (Unfair Contracts) Act 2002 which took effect from 24 June 2002. This is the third judgment at the appellate or Full Bench level of this Court concerning the amendments made to the Industrial Relations Act 1996 by the 2002 amending statute. The earlier judgments are those in Crowe v UCS Developments Pty Ltd [2003] NSWIRComm 234; (2003) 130 IR 266 and Commander Australia Limited v Kerr [2004] NSWIRComm 74. The present proceedings result from a reference to the Full Bench pursuant to s 193 of Industrial Relations Act 1996.

The issue in the proceedings 2 The issue in these proceedings may be shortly stated in this way. Whether s 108A applied to the applicant's contract of employment; because, in circumstances where the applicant's contract of employment with the respondent commenced on 1 April 2000 and was terminated by the respondent on 24 July 2002 with effect from 23 August 2002 (the last two dates being subsequent to the relevant legislative amendment taking effect on 24 June 2002), if s 108A had any relevant application, the applicant's remuneration package under his contract relevantly exceeded the cap fixed for the purposes of s 108A.

3 The application made by the applicant under s 106 alleges that his contract was unfair as it stood before s 108A commenced on 24 June 2002. He submits that he relies on facts and matters that occurred on and after 24 June 2002 only to demonstrate and quantify the unfairness in the contract as it stood before that date. It is contended that it would have been open to him to bring an application making the same allegations of contractual unfairness before the termination of his employment, and in any event before 24 June 2002. The applicant's submission is that, in these circumstances, s 108A has no retrospective operation such that it would operate to preclude his application under s 106 (the formulation of this and the preceding paragraph derives from paragraphs 3 to 5 of the applicant's submissions).

4 The applicant also casts his argument in another way; he says that the right to make an application under s 106 accrued to him when he entered into a contract of the relevant kind, without any other act being required of him. Thus, it is said, that right having accrued to him prior to the enactment of s 108A, he is entitled to commence s 106 proceedings at any time subsequent to the time the right accrued notwithstanding the terms of s108A.

Reconstitution of Full Bench of the Court 5 On 3 June 2004, counsel for the applicant sought leave to make further submissions in the proceedings because of the delivery by Marks J (a member of the Full Bench) of his Honour's judgment in Larsen v Ondeo Nalco Australia Pty Ltd [2004] NSWIRComm 123. What then occurred is sufficiently detailed in the Statement subsequently made by the President which is set out in para [6].

6 On 11 June 2004 the Full Bench as then constituted (the President, the Vice-President and Marks J) sat and the President issued a statement in these terms: 1. This Statement is made with the concurrence of the other members of the Full Bench.

Subsequent to the Full Bench reserving judgment in this matter a request from counsel for the applicant was received on 3 June 2004 requesting leave to make further submissions in the proceedings in the light of the delivery of judgment by Marks J (a member of this Full Bench) in the matter of Larsen v Ondeo Nalco Australia Pty Ltd [2004] NSWIRComm 123 on 20 May 2004.

The request was granted on 4 June, albeit not in the terms requested which involved the relisting of the proceedings for further argument. Directions were given that if either party wished to make submissions concerning the judgment in Larsen v Ondeo Nalco Australia Pty Ltd any such submissions were to be filed and served no later than 4.00pm on Tuesday 8 June 2004.

On the afternoon of 8 June 2004: (a) a notice of appeal was filed in respect of the judgment of Marks J in Larsen v Ondeo Nalco Australia Pty Ltd ;

(b) submissions were filed by counsel for the applicant pursuant to the directions made on 4 June.

On 10 June 2004 submissions were received from junior counsel for the respondent. Counsel had not become aware of the earlier submissions filed until 3.30pm on 9 June 2004 (although they had been provided to his Chambers on 8 June) and since senior counsel for the respondent was currently overseas until 21 June 2004, the letter containing the submissions "has been prepared without input" from senior counsel.

I have decided, having regard to all relevant circumstances including the filing of the appeal in Larsen v Ondeo Nalco Australia Pty Ltd , to reconstitute the Full Bench hearing this matter to include an additional two judges. The proceedings will be listed for a short re-hearing at 10.30am on Friday 30 July 2004 before the reconstituted Full Bench. It is not, regrettably, feasible because of other commitments, for the hearing to occur earlier.

The Full Bench will now give directions to facilitate that course. Such directions will include liberty to apply, if necessary, on application to the Associate to the Acting President.

7 The Full Bench was then reconstituted and the further hearing foreshadowed in paragraph 6 of the above Statement took place on 30 July 2004. Judgment in the proceedings was again reserved.

The relevant statutory provisions 8 It is convenient to set out the terms of the statutory provisions upon which the present proceedings turn, that is, ss 108A and 108B of the Industrial Relations Act, the provisions inserted in 2002. Those sections are in the following terms: 108A Employment contracts in respect of which applications cannot be made (1) An application cannot be made for an order under this Division if the application relates to a contract of employment under which: (a) a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination), or (b) a remuneration package is paid or received (or is payable or receivable) during a period of less than 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) that would, if the remuneration package had been paid or received (or been payable or receivable) for a period of 12 months, have exceeded the remuneration cap. (2) An application cannot be made for an order under this Division by a person who is a partner carrying on a business if: (a) the application relates to a contract between that partner and the other persons carrying on that business in partnership, and (b) the share of the net profits, or payments contingent on the net profits, of the business that are paid to or received by (or payable to or receivable by) the applicant during the period of 12 months immediately before the application is made (or, if the application relates to a contract that has been terminated, immediately before the termination) exceed: (i) $200,000, or (ii) if an amount is prescribed for the purposes of paragraph (b) of the definition of "remuneration cap" in subsection (3) - that amount. (3) In this section: contract of employment means any contract or arrangement under which work is done by a person in the capacity of an employee, and includes a related condition or collateral arrangement with respect to such a contract. employment benefit means a benefit provided to an employee at the cost of his or her employer (being a benefit of a private nature) and, without limitation, includes: (a) contributions payable to a superannuation scheme by an employer in respect of the employee, including any liability of that employer to make any such contributions or to pay costs associated with that scheme, or (b) the provision by an employer of a motor vehicle for private use by the employee, or (c) any other benefit prescribed by the regulations for the purposes of this definition. monetary remuneration includes any performance-related bonus or incentive payment. remuneration cap means: (a) $200,000, except as provided by paragraph (b), or (b) any greater amount prescribed by the regulations (being a regulation that increases the amount by reference to increases in the amount referred to in section 83 (1) (b)). remuneration package means the total value of monetary remuneration and employment benefits payable or receivable under a contract of employment. 108B Time for making application (1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. (2) The Commission does not have jurisdiction to extend the time for making any such application or to accept an application made after the time prescribed by subsection (1).

Crowe v UCS Developments 9 Crowe v UCS Developments was concerned with whether the Court has jurisdiction to permit amendment of an application filed before the pending legislation came into force when the application to amend sought that additional respondents be joined to the proceedings and at the time of the hearing of the notice of motion more than 12 months had elapsed since the termination of the contract of employment the subject of the proceedings. There was a related question as to whether the limitation period in s 108B applied to the motion to amend the summons to join additional respondents.

10 The Full Bench described the legislative amendments made in 2002 in the following way: [34] Section 108B was enacted as a part of the amendments made to the Industrial Relations Act by the Industrial Relations Amendment (Unfair Contracts) Act 2002 which took effect on 24 June 2002. The intention of the amending Act in relevant respects is reasonably plain on its face. It was intended that applications seeking orders directed towards contracts of certain identified types and satisfying certain conditions, should be removed from the scope of the unfair contracts provisions of the Act; namely, those applications which seek to vary or avoid contracts (as defined) providing a remuneration package that exceeds an identified "remuneration cap", or those which seek an order to vary or avoid the terms of certain kinds of partnership agreements. The amending Act also required that any application for an order under s 106(1) be brought within 12 months of the termination of the relevant contract or arrangement. Those observations seem to be confirmed by the objects of the amending Act, identified in this way in the Explanatory Memorandum to the Bill: (a) to prevent an application being made to set aside or vary a contract of employment by the making of an unfair contract order if the remuneration package paid or receivable under the contract during the 12 months preceding the application (or, if paid or receivable for a shorter period, that would have been paid or receivable if converted to an annual basis) exceeds $200,000 (or a greater indexed amount), and

(b) to prevent an application being made to set aside or vary a contract between partners in a partnership by the making of an unfair contract order, and

(c) to require the Commission to take into account whether or not an applicant (or person on behalf of whom an application is made) took any action to mitigate loss in assessing the amount of money payable in connection with a contract that is set aside or varied by an unfair contract order, and

(d) to require an application for an unfair contract order in relation to a contract that has been terminated to be made within a period of 12 months after termination. Further confirmation is to be found in the Minister's Second Reading speech in the Legislative Council on 11 April 2002 (Hansard, Legislative Council, at pp 1399 - 1400):

11 The Court then observed: [35] While it is clear that the amendments were intended to, and will, have significant effects on any application for an order made after 24 June 2002, the present case cannot be described as simply or merely as "an application for an order" made after 24 June 2002. In substance, the questions referred require consideration of the effect of s 108B on proceedings commenced prior to 24 June 2002 and, in particular, the effect of s 108B on an application seeking to amend proceedings presently on foot so as to add additional respondents, in circumstances where more than 12 months have elapsed following the termination of the contract to which the proceedings relate.

12 The Full Bench then gave consideration to a judgment which has been heavily relied on in these proceedings, that is the judgment of the High Court in Attorney-General (Qld) v Australian Industrial Relations Commission (2002) 213 CLR 485; (2002) 76 ALJR 1502, and expressed some doubt as to the applicability of the "well known principles of construction which would point against giving any retrospective effect" to the 2002 amendments. Again, what was said by their Honours is relevant to the present proceedings and may conveniently be set out: [36] The High Court has recently considered many of the issues which arise from the enactment of amending legislation in Attorney-General (Qld) v Australian Industrial Relations Commission; Minister for Employment and Workplace Relations v Australian Industrial Relations Commission (2002) 76 ALJR 1502. As was emphasised by Gleeson CJ at [6]: When a statute changes the law, the effect of the change upon existing rights, liabilities, claims or proceedings is determined by the meaning of the statute.

[37] Regard should also be paid to the important observations of Kirby J in that case (at [74] - [77], footnotes omitted): [74] Amendment and repeal of legislation are inherent features of the representative democracy established by the Constitution. Such changes have an impact upon rights and obligations expressed in the law as it previously stood. A question commonly arises as to how pre-existing rights and duties are to be accommodated to the new law. This is the question raised by the five appeals before the Court in these proceedings. [75] The primary rule for resolving such questions is that, if the new legislative requirements are valid, the decision-maker must obey and give effect to them according to their terms. When the new law is clear there is no problem. Thus, provisions in the new law may deal with transitional cases explicitly. However, it is often suggested that the new law has failed to address transitional cases, or at least to do so clearly. In such circumstances, subject to any contrary indication, both the common law and statute have established principles to help decision-makers reconcile any continuing effect of the repealed law with the duty of obedience to the law that has taken its place. [76] The reconciliation of the applicable rules, and the derivation of the consequences they mandate in a particular case, are often matters of doubt and uncertainty. They have resulted in divisions of opinion within this Court and differences in judicial views in federal and State appellate courts. Such differences of approach have arisen between successive members and Full Benches of the Australian Industrial Relations Commission ("the Commission"), concerning the requirements of a supervening law as it affects the powers and duties of the Commission. It now falls to this Court, in the context of the present appeals, to resolve some of the points of difference. [77] Two important but potentially conflicting principles of statutory construction are involved. The first concerns the extent to which legislation will be construed in accordance with a presumption that, in the absence of very clear language, amendments and repeals do not alter legal entitlements that accrued before the amendment or repeal in question took effect. The second concerns the duty of a court to uphold the stated command of the Parliament, expressed in valid legislation, clearly designed to achieve important legislative objectives.

[38] It is elementary that it is the provisions of the amending Act to which consideration must be first given. The parties were ad idem in the view that s 108B interfered with the right to seek relief under s 106 of the statute, and as a consequence should be strictly construed. However, on the respondents' contentions, there was to be found in s 108B a "clearly expressed" intention that the Commission must not make orders under Division 2 of Part 9 of Chapter 2 of the Act where an application for such an order has been made later than 12 months after the termination of the contract. This, on the respondents' contention, would comprehend the amended summons for relief that would issue in these proceedings if the amendment sought in the notice of motion were granted. [39] On its face, s 108B has the effect of imposing a time limitation on the filing of a summons seeking relief in respect of a particular or identifiable contract. That is, on and after 24 June 2002, a summons cannot be filed in the Court seeking relief under s 106 "in relation to a contract" terminated more than 12 months prior to the filing of the summons and there is no jurisdiction to extend the time so limited. [40] Although there are well known principles of construction which would point against giving any retrospective effect to the amendment made by s 108B, to apply that principle broadly would result in s 108B applying only to contracts terminated on and after 24 June 2002. Whilst we consider that there may be some difficulties with such a construction, it is unnecessary to deal with this matter on that precise basis as it was not in issue that both the substantive proceedings and the notice of motion seeking to join additional respondents were filed prior to the commencement of s 108B. (emphasis added)

13 The Full Bench reached the conclusion that the 2002 amendments did not affect the application to amend because: [55] ... [T]he application to amend the summons and the proposed amended summons do not constitute a fresh application for an order, but are in substance an amendment to an application for an order made under s 106(1) prior to s 108B coming into effect. The amendment sought and, if granted, the resulting amended summons are therefore not precluded by s 108B.

[56] There may be circumstances in which an amendment to an original application may be so substantial or its nature such as to warrant the conclusion that it could be characterised as an application for an order caught by s 108B. That is not the situation here.

14 Their Honours observed, however, that it was not necessary to pass upon the correctness of two judgments which had been relied on in these proceedings; that is, the judgment of Peterson J in Kennedy v Contract Transport Solutions Pty Ltd [2003] NSWIRComm 158 and that of Schmidt J in Bowker v Software Engineers Australia (NSW) Pty Limited [2003] NSWIRComm 213. Their Honours made the following observation at the end of the judgment in para [63] of Crowe v UCS Developments which is pertinent to these proceedings: We would emphasise, as we have done, that the operation of s 108B is a question of statutory construction which, as with any issue of construction, may often be resolved by ascertaining the intention of the legislature from the express words of the instrument viewed in their context.

Commander Australia Limited v Kerr 15 The proceedings in Commander Australia Limited v Kerr concerned a successful appeal from a judgment of Glynn J. Her Honour had dismissed a motion filed by the respondent in the s 106 proceedings in which it had been alleged that the Court did not have jurisdiction to deal with the application because the applicant's "remuneration package" for the purposes of s 108A placed his contract of employment outside the jurisdiction of the Court under s 106 since the package exceeded the salary cap specified in s 108A. The issue in the appeal was expressed in the judgment in this way: [41] The present appeal raises for determination the question of what were the relevant components of the remuneration package of the respondent in terms of the relevant statutory definition. The question requires the consideration of the effect of s 108A(1)(a) as earlier set out.

16 The pertinent factual circumstances were set out in the judgment as follows: [2] The applicant commenced employment with the appellant on 6 November 2000 and his position was made redundant as from 5 July 2002. The applicant's total remuneration consisted of a base salary of $180,000 and a management incentive payment, which was dependent on the appellant company's financial results. The relevant 12 month period, for the purposes of s 108A(1) of the statute, to which further reference will be later made, is 6 July 2001 to 5 July 2002. The issue before her Honour was whether an incentive payment of $39,860 for the period of 1 July 2000 to 30 June 2001 paid in September 2001 was part of the remuneration package, as defined in that section.

17 The Full Bench in Commander Australia Limited v Kerr described the statutory scheme relevant to the proceedings as follows: [30] It may be observed that the legislature has imposed a particular limit on the jurisdiction of the Commission in relation to s 106 proceedings and has done so in, relatively speaking, peremptory terms. Significantly, the limitation is expressed not in respect of the capacity or power of the Commission to hear, or to hear and determine, or to make orders in, proceedings under s 106. Rather the limitation is specified on the basis that applications of a certain class or of certain classes "cannot be made"; that is, applications cannot be made which seek orders under the relevant Division of the statute; that is, relevantly, applications for orders under s 106. [31] The prohibited class of applications includes those where the application relates to a contract of employment where (specific to the present proceedings) the contract of employment is one under which "… a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) …". [32] The question that then arises is the nature or character of a contract of the prescribed class. The key phrases or expressions are "contract of employment", "remuneration package", "monthly remuneration" and "remuneration cap". The phrase "remuneration cap" does not raise any present issue since the way in which it is defined provides sufficient precision for present purposes. The contentious expressions are those defined as "contract of employment", "monthly remuneration" and "remuneration package". The question then is: is the contract the subject of the proceedings one which, during the relevant period, has a remuneration package, that is paid or received or that is payable or receivable, which exceeds the remuneration cap? Because of the interlocking nature of the relevant definitions, conceptually the enquiry commences with the definition of "remuneration package" which is defined as meaning the total value of the "monetary remuneration" and the "employment benefits payable or receivable under a contract of employment". [33] The expression "monetary remuneration" is, in turn, defined to include any performance related bonus or incentive payment and the expression "employment benefits" is relevantly defined to mean a benefit provided to an employee at the cost of the employer, provided it is a benefit of a private nature. These benefits, without limitation to the breadth of the words so defined, include superannuation contributions made by an employer; provision of a motor vehicle for private use (presumably this means to the extent that the vehicle is provided for private use) and any other prescribed benefit. [34] The next aspect to be noticed is the way in which the remuneration package is related to the contract of employment. The way in which this relationship is framed by the statute or framed in the statute is significant. The words used involve a degree of repetition. It seems to us that the intention of the legislature in using language which is both broad and somewhat circular is to emphasise the already plain intention to cover a relevant field and to prescribe, with some particularity, and in a way which is not capable of ready avoidance or evasion, prohibitions on the making of applications under s 106.

18 Their Honours observed that it was not necessary for the purpose of the proceedings to refer in detail to the relevant approach to statutory construction except for the following principles which were described as "clear-cut": [35] ... First, to paraphrase what was said in the recent Full Bench judgment of this Court in Crowe v UCS Developments Pty Ltd [2003] NSWIRComm 234 at [63], albeit in respect of another part of the 2002 amending legislation (s 108B), the operation of the relevant provision is a question which, as with any issue of construction, may often be resolved by ascertaining the intention of the legislature from the express words of the instrument viewed in their context. [36] Second, a statutory provision must not be construed in isolation but in the context in which it appears as part of the whole instrument. Third, courts are obliged by statutory injunction to prefer a construction which would promote the purpose of a statute to one which would not. Fourth, the requirement to look to the purpose or object of the statute transcends the former obligation to adopt the traditional mischief or purpose rule in preference to the literal rule of construction because the earlier rule required the identification of an ambiguity or inconsistency before the court could have regard to purpose. Further, if the language of the statute or statutory provision is not ambiguous or uncertain, the court will apply its ordinary and grammatical meaning unless to do so will give the statute an operation that was obviously not intended: Mills v Meeking [(1990) 169 CLR 214] at 223. [37] The approach that is now required does not presuppose the existence of ambiguity or inconsistency; rather, it permits and requires the court to consider the purpose of the Act in determining whether there is more than one possible construction. In that respect, the context in which the relevant provision appears must be considered as part of the process of interpretation itself, and not merely at some later stage when ambiguity might be thought to arise. Finally, the reference of context is to be taken in its wider sense to include such matters as the existing state of the law and the mischief which, by reference to permissible extrinsic material such as explanatory memoranda and law reform reports, it might be discerned that the statute was intended to remedy: see, for example, CIC Insurance Limited v Bankstown Football Club (1997) 187 CLR 384 at 408; Mills v Meeking at 223; Police Association of New South Wales v Commissioner of Police (2002) 123 IR 301 at 312 - 317; Re Club Employees (State) Award and other Awards (2002) 122 IR 272; Fox v GIO Australia Limited [2002] 56 NSWLR 512; (2002) 120 IR 410 at [45] to [47]; Mitchforce Pty Ltd v Starkey (No 2) [2003] NSWIRComm 458 at [104]; Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Delta Electricity [2003] NSWIRComm 135 at [44] to [46]; and Re Crown Employees (New South Wales Fisheries Salaries and Conditions of Employment) Award [2003] NSWIRComm 405 at [66]. [38] Section 33 of the Interpretation Act provides that: In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object. We shall approach the construction of s 108A accordingly.

[39] In Crowe v UCS Developments Pty Ltd the Full Bench referred to the Explanatory Memorandum to the Industrial Relations Amendment (Unfair Contracts) Act 2002. It is plain that reference to extrinsic material, such as parliamentary debates and papers, is permissible in the process of statutory interpretation: see s 34 of the Interpretation Act 1987. The intention of the Bill and of the Explanatory Memorandum to the Bill was considered in Crowe v UCS Developments Pty Ltd at [34] in the following way: Section 108B was enacted as a part of the amendments made to the Industrial Relations Act by the Industrial Relations Amendment (Unfair Contracts) Act 2002 which took effect on 24 June 2002. The intention of the amending Act in relevant respects is reasonably plain on its face. It was intended that applications seeking orders directed towards contracts of certain identified types and satisfying certain conditions, should be removed from the scope of the unfair contracts provisions of the Act; namely, those applications which seek to vary or avoid contracts (as defined) providing a remuneration package that exceeds an identified "remuneration cap", or those which seek an order to vary or avoid the terms of certain kinds of partnership agreements. The amending Act also required that any application for an order under s 106(1) be brought within 12 months of the termination of the relevant contract or arrangement. Those observations seem to be confirmed by the objects of the amending Act, identified in this way in the Explanatory Memorandum to the Bill: (a) to prevent an application being made to set aside or vary a contract of employment by the making of an unfair contract order if the remuneration package paid or receivable under the contract during the 12 months preceding the application (or, if paid or receivable for a shorter period, that would have been paid or receivable if converted to an annual basis) exceeds $200,000 (or a greater indexed amount), and (b) to prevent an application being made to set aside or vary a contract between partners in a partnership by the making of an unfair contract order, and (c) to require the Commission to take into account whether or not an applicant (or person on behalf of whom an application is made) took any action to mitigate loss in assessing the amount of money payable in connection with a contract that is set aside or varied by an unfair contract order, and (d) to require an application for an unfair contract order in relation to a contract that has been terminated to be made within a period of 12 months after termination. [40] The intention of the Bill was stated in the Second Reading speech which introduced the relevant Bill into the Legislative Council on 11 April 2002 as addressing the issue of "the unfair contracts jurisdiction [having been] utilised overwhelmingly as a means of obtaining compensation in connection with the termination of employment of highly paid executives" (at 1398). The Minister for Mineral Resources, and Minister for Fisheries, speaking on behalf of the relevant Minister, the Hon John Della Bosca MLC, then said, at 1399: By narrowing the application of the unfair contracts provisions of the Industrial Relations Act 1996, greater certainty will be introduced into their operation, and the more extravagant and speculative claims will be prevented. The Industrial Relations Amendment (Unfair Contracts) Bill 2002 will introduce the following limitations on the operation of the existing unfair contracts provisions. An employee earning an annual remuneration package in excess of $200,000 will not be able to make an application under the unfair contracts provisions. "Remuneration package" will be defined to mean the total value of the monetary remuneration and employment benefits that are payable or receivable under a contract of employment. Bonuses and other performance-related or incentive payments will be included in the meaning of monetary remuneration. "Employment benefits" will mean all those benefits of a private nature that are provided to an employee at the cost of his or her employer. The bill spells out that this includes superannuation contributions and motor vehicles, but makes it clear that this is not an exhaustive list. The bill also empowers the making of regulations to prescribe any new types of employment benefits that might emerge. The $200,000 cap on applicants will be annually indexed by reference to the percentage increase from year to year of the cap on access to the unfair dismissal provisions. The unfair dismissal cap increases on an annual basis by reference to the increase in the Federal unfair dismissal cap. That increase is worked out on the basis of increases in weekly earnings, as published by the Australian Statistician.

19 In reaching the conclusion that the appeal should be upheld, the Full Bench said: [52] We consider that, in light of the structure and effect of s 108A and its surrounding provisions, the intention of the legislature was to include all amounts paid or received during the period of 12 months immediately before the termination. Similarly, in some cases the period to which a bonus payment relates may not be specified, with the result that the parties would have great difficulty applying the interpretation accepted by her Honour. In our view, parties need to be able to determine with objective certainty whether an application may be brought. The construction proposed by the appellant gives litigants and potential litigants greater certainty regarding the application of the section. [53] We consider that it is clear that s 108A has the purpose of removing from the unfair contracts jurisdiction those contracts where the remuneration package paid or received during the 12 months preceding the application exceeds the salary cap which is presently $200,000. [54] Finally, we observe in passing that the interpretation determined by her Honour would create similar difficulties if applied to s 108A(2) of the Industrial Relations Act . That interpretation would require partners to determine what net profits are referable to the period of 12 months immediately before an application or determination of a partnership rather than simply looking at the amounts actually paid or received (or payable or receivable) during that period.

The effect of the judgments in Crowe and Kerr 20 As was emphasised in the judgments in both Crowe v UCS Developments and Commander Australia Limited v Kerr, the operation of the 2002 statutory amendments is a question which, as with any issue of construction, may often be resolved by ascertaining the intention of the legislature from the express words of the instrument viewed in their context: cf the observations of Gleeson CJ in Attorney-General (Qld) at [6]. The intention of the amendment is reasonably plain on its face (Crowe v UCS Developments at [34]); the limitation on the Court's powers under s 106 has been imposed by s 108A in relatively peremptory terms (Commander Australia Limited v Kerr at [30]). It is difficult to conceive of more straightforward language being used than the words actually used in s 108A ("[a]n application cannot be made for an order [pursuant to s 106] if the application relates to a contract of employment ..." of a specified class). Reference is to be made to the purpose or object of the enactment (whether expressly stated or not) so that a construction which promotes the purpose or object is to be preferred (Interpretation Act 1987 s 33). Any ambiguity is to be resolved by reference to extrinsic material such as explanatory memoranda or Second Reading speeches (Interpretation Act s 34) although the rule must be applied cautiously and its application does not necessarily require the demonstration of ambiguity.

Nature of the power exercised under s 106 21 There was also, subject to some particular nuances, divergence in the respective submissions as to the nature of the power exercised by the Court under s 106 of the Industrial Relations Act: the applicant contending that the power exercised was judicial (relying on Heath v Hanning [1999] NSWSC 719 at [51] and [54]; Burgess v Mount Thorley Operations Pty Ltd (1999) 100 IR 260 at 268 - 269; and Taudevin v Egis Consulting Australia Pty Limited and the Commonwealth (No 1) [2001] NSWIRComm 340), whereas the respondent contended that the powers represented the exercise of non-judicial power although the respondent also emphasised that its primary approach did not depend on that distinction being resolved in its favour.

22 The issue as to the judicial/non-judicial dichotomy was raised essentially as to the question of whether an action under s 106 represented a "right" or "right accrued" both under s 30 of the Interpretation Act and under the counterpart common law doctrine where the legal considerations are essentially the same as those relevant to the statutory provision.

23 It is not appropriate or necessary to consider in detail the parties' respective approaches on this issue for two reasons. First, because there is clear Full Bench authority on the issue which we are not persuaded by the judgments referred to, such as Mullins v Peoplebank Australia Pty Ltd [2003] NSWIRComm 457, requires re-consideration. Second, the issue does not ultimately require consideration, or re-consideration, to enable the Court to reach its conclusion in these proceedings.

Section 30 of the Interpretation Act 1987 and the presumption against retrospectivity

24 Section 30 of the Interpretation Act creates a presumption against retrospective operation of statutes. However, as with any presumption, it is no more than a conceptual or analytic starting point and must give way to the obligation to construe the plain words of the instrument in context and, particularly so, if there is a contrary intention expressed in the Act (see s 5(2) of the Interpretation Act).

25 There was a substantial debate between the parties as to the relevance of the presumption against the retrospective operation of legislation. The applicant relied on a range of authorities on the issue particularly Wright v Hale (1860) 6 H & N 227, Maxwell v Murphy (1957) 96 CLR 261, Dossett v TKJ Nominees Pty Limited (2003) 78 ALJR 161, Shaw v Minister for Immigration and Multicultural Affairs (2003) 78 ALJR 203, Browne v Commissioner for Railways (1935) 36 SR (NSW) 21, Fisher v Madden (2001) 54 NSWLR 179, Bowker v Software Engineers Australia Pty Limited [2003] NSWIRComm 213 and Yrttiaho v The Public Curator of Queensland (1971) 125 CLR 228.

26 In advancing his arguments based on these authorities, the applicant sought to distinguish those cases relied on by the respondent, such as The Commonwealth v SCI Operations Pty Limited (1998) 192 CLR 285, Abbott v Minister of Lands [1895] AC 425, Collector of Customs v Albany International Pty Limited (1991) 31 FCR 194, Continental Liqueurs Pty Limited v G F Heublin and Bro Inc (1960) 103 CLR 422, Director of Public Works v Ho Po Sang [1961] AC 901, Robertson v City of Nunawading [1973] VR 819, Hamilton Gell v White [1922] 2 KB 422, Mathieson v Burton (1971) 124 CLR 1, New South Wales Aboriginal Land Council v Minister Administering the Crown Lands (Consolidation) Act and the Western Lands Act (1988) 14 NSWLR 685, Esber v The Commonwealth (1992) 174 CLR 430, and Resort Management Services Limited v Noosa Shire Council [1997] 2 Qd R 291.

27 Many of the authorities relied on by the parties relate to circumstances significantly different to those before the Court in these proceedings. For example, Gerrard v Mayne Nickless Ltd (1996) 135 ALR 494, and the cases relied on by the Full Federal Court in that judgment (Esber v Commonwealth (1992) 174 CLR 430; R v Judges of Commonwealth Industrial Court; Ex parte Amalgamated Engineering Union Australian Section (1960) 103 CLR 368; Director of Public Works v Ho Po Sang [1961] AC 901; Free Lanka Insurance Co Ltd v Ranasinghe [1964] AC 541) substantially dealt with situations where, prior to the legislative amendment or repeal, proceedings had been commenced in the particular court or tribunal and the question determined was whether the statutory equivalent to s 30 of the Interpretation Act had maintained the jurisdiction to hear and determine the proceedings. In Gerrard v Mayne Nickless the issue was answered affirmatively as it was in the New South Wales Aboriginal Land Council case.

28 The situation here is tangibly different. Section 108A expressly deals with the temporal perspective crucial to its operation in its opening words: "[a]n application cannot be made for an order under this Division if the application relates to a contract of employment under which" the putative applicant received (in broad terms) a salary package over the relevant period that exceeded the remuneration cap, as defined.

29 The effect of these words on what may be referred to as transitional situations is plain. If an application has been made prior to the section coming into effect, the section does not affect the application since the section cannot be said to apply to an application which was made before it became law.

Conclusions 30 The opening words of s 108A plainly demonstrate that the section is intended to operate in futuro from the enactment of the section. The provision has no operation in respect of applications made before it commenced; that is, the kinds of circumstances considered in Gerrard v Mayne Nickless and Esber v The Commonwealth apply equally here but without the need to resort to s 30 of the Interpretation Act or its common law counterparts. But that conclusion has an important consequence. That is, s 108A not only precludes, but prevents, an application being made in respect of a contract with the indicia specified in the section; that is, it prevents an application being made of the relevant class or classes from the time the section operated. This analysis leads comfortably to the conclusion that the "drafter" of the legislation framed it in this way to demonstrate on its face the intention to exclude the operation of s 30 of the Interpretation Act.

31 Section 34 of the Interpretation Act, which is referred to in para [20], provides: 34 Use of extrinsic material in the interpretation of Acts and statutory rules

(1) In the interpretation of a provision of an Act or statutory rule, if any material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:

(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made), or (b) to determine the meaning of the provision:

(i) if the provision is ambiguous or obscure, or (ii) if the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made) leads to a result that is manifestly absurd or is unreasonable.

(2) Without limiting the effect of subsection (1), the material that may be considered in the interpretation of a provision of an Act, or a statutory rule made under the Act, includes:

(a) all matters not forming part of the Act that are set out in the document containing the text of the Act as printed by the Government Printer, (b) any relevant report of a Royal Commission, Law Reform Commission, committee of inquiry or other similar body that was laid before either House of Parliament before the provision was enacted or made, (c) any relevant report of a committee of Parliament or of either House of Parliament before the provision was enacted or made, (d) any treaty or other international agreement that is referred to in the Act, (e) any explanatory note or memorandum relating to the Bill for the Act, or any other relevant document, that was laid before, or furnished to the members of, either House of Parliament by a Minister or other member of Parliament introducing the Bill before the provision was enacted or made, (f) the speech made to a House of Parliament by a Minister or other member of Parliament on the occasion of the moving by that Minister or member of a motion that the Bill for the Act be read a second time in that House, (g) any document (whether or not a document to which a preceding paragraph applies) that is declared by the Act to be a relevant document for the purposes of this section, and (h) any relevant material in the Minutes of Proceedings or the Votes and Proceedings of either House of Parliament or in any official record of debates in Parliament or either House of Parliament.

(3) In determining whether consideration should be given to any material, or in considering the weight to be given to any material, regard shall be had, in addition to any other relevant matters, to:

(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made), and (b) the need to avoid prolonging legal or other proceedings without compensating advantage.

32 It will be observed from s 34 that reference may be made to various kinds of extrinsic materials to ascertain the meaning of a statutory provision. One of the uses for which such materials may be put is to ensure that the interpretation accords with the purpose or object underlying the particular statute. Section 34 provides that the available extrinsic material includes explanatory notes to the Bill introduced into Parliament. The explanatory note relevant to the Industrial Relations Amendment (Unfair Contracts) Bill 2002 provided an "Overview of the Bill" in these terms (emphasis supplied): The object of this Bill is to amend the Industrial Relations Act 1996: (a) to prevent an application being made to set aside or vary a contract of employment by the making of an unfair contract order if the remuneration package paid or receivable under the contract during the 12 months preceding the application (or, if paid or receivable for a shorter period, that would have been paid or receivable if converted to an annual basis) exceeds $200,000 (or a greater indexed amount), and (b) to prevent an application being made to set aside or vary a contract between partners in a partnership by the making of an unfair contract order, and (c) to require the Commission to take into account whether or not an applicant (or person on behalf of whom an application is made) took any action to mitigate loss in assessing the amount of money payable in connection with a contract that is set aside or varied by an unfair contract order, and (d) to require an application for an unfair contract order in relation to a contract that has been terminated to be made within a period of 12 months after termination.

33 Once analysed as it has been above, the terms of s 108A starkly show that it was intended to bring about significant changes and limits to the Court's jurisdiction pursuant to s 106 from a particular time; the particular time being the date of s 108A's operation.

34 The ways in which the applicant frames his case have been noted earlier in paras [3] and [4]. There are a number of difficulties in accepting the correctness of the applicant's approach. First, it would frustrate the plain intention of s 108A and, as has already been noted (para [20]), it is difficult to conceive of more straightforward language than that used in the opening words of s 108A.

35 Second, if the applicant's contentions were accepted it would mean that any contract entered into prior to 24 June 2002 could potentially be the subject of s 106 proceedings subject only to it being held, presumably at trial, that the contract was, or was arguably, an unfair contract for the purpose of ss 105 and 106 either at its inception or it became an unfair contract some time between inception and 24 June 2002. Such a construction would make nonsense of the plain terms of s 108A and a fortiori, when regard is paid to the plain purpose of the provision and to the available extrinsic materials.

36 Once the abundantly plain meaning of s 108A is accepted, the contrary intention for the purpose of s 5(2) of the Interpretation Act is manifest. So too is the apt parallel provided by the passage entitled "Contrary intention" in paras [51] and following of the judgment of Gleeson CJ in Attorney-General (Qld) where his Honour held: [51] In any event, s 111AAA speaks in imperative terms with respect to proceedings pending at the commencement of its operation on 1 January 1997. Even if there had been "accrued rights" then subsisting, in the sense of s 8 of the Interpretation Act [the Commonwealth equivalent to s 30 of the Interpretation Act 1987 (NSW)], s 111AAA itself and together with other provisions of Sched 5 to the WROLA Act evinces a contrary intention to the saving operation of s 8. We turn to explain why this is so.

[52] The operation of the presumption that accrued rights are unaffected by a repealing statute is, by s 8 of the Interpretation Act , expressly subject to the appearance of a "contrary intention". Therefore, where the provisions of a repealing statute are clearly inconsistent with the survival of accrued rights, those provisions are controlling, and any presumption erected by s 8 is displaced.

[53] Although it received little attention in the Federal Court, the text of s 111AAA itself indicates a contrary intention. The expression "must cease dealing with" assumes the existence of pending proceedings. It postulates the prior continuation of those proceedings, to which the provision then attaches, requiring, in terms, that those proceedings cease. One can only "cease dealing with" a matter if one is already dealing with it. This construction, consistent with the natural meaning of the words used in s 111AAA(1), is reinforced by s 111AAA(4). That sub-section relevantly provides that the definition of "cease dealing", in relation to an industrial dispute, includes " to refrain from further hearing or from determining the industrial dispute or part of the industrial dispute" (emphasis added).

[54] "Must cease" is a legislative command of a particular emphatic kind. Those words permit no derogation from, or qualification to, the direction conveyed. Where it applies, and subject only to the "public interest" qualification in the closing words of sub-s (1), s 111AAA requires the Commission immediately to withdraw from the industrial dispute.

[55] Further, "dealing with" is an expression of considerable scope. On its face, it embraces the entire spectrum of ways in which the Commission's dispute prevention and settlement procedures may be engaged. The phrases "deal with" and "dealing with" are used repeatedly throughout Pt VI of the Workplace Relations Act to identify a broad range of activities on the part of the Commission. Indeed, Div 2 of that Part is headed "Powers and procedures of Commission for dealing with industrial disputes". This indicates that "dealing with" is confined neither to conciliation nor arbitration. Rather, it covers all the techniques, actions and processes by which the Commission may respond to, or become involved with, an industrial dispute to which Pt VI applies. "Dealing with" is an expression that is apt to cover every stage of the process put in motion by Div 2 of Pt VI of the 1988 Act, and the corresponding provisions of the Workplace Relations Act . Indeed, a Full Bench of the Commission has held ( Australian Workers' Union of Employees (Qld) v Australian Maritime Officers Union (1997) 75 IR 227) that the requirement in s 111AAA to "cease dealing with the industrial dispute" extends to refraining from finding that an industrial dispute exists, a finding which ordinarily is anterior to all other steps that may be taken under Div 2.

[56] The language of s 111AAA is clearly broad enough to encompass all proceedings before the Commission, whenever commenced. The respondent unions sought to introduce into the provision an unexpressed temporal limitation on its operation. That submission should be rejected.

[57] The legislative context of s 111AAA confirms, rather than denies, this contrary intention to the operation of s 8. As was noted in Re Pacific Coal Pty Ltd; Ex parte CFMEU (2000) 203 CLR 346 at 355 - 356 [7], 408 [193], 449 [302], the WROLA Act effects, in some respects at least, a contraction in the operation of the federal regime for the conciliation and arbitration of interstate industrial disputes. Schedule 5 to the WROLA Act, which contains the Item that inserts s 111AAA, is headed "Awards". It reduces, in various ways, the circumstances within which the Commission may exercise its powers. Various amendments effected by that Schedule require the Commission to defer to other bodies (including State industrial bodies) or to instruments created otherwise than pursuant to its own arbitral powers (including agreements between employers and employees at the workplace or enterprise level). (emphasis supplied; footnotes omitted)

37 It must be noticed that the High Court in Attorney-General (Qld) was dealing with quite a different statutory scheme and, significantly, one where the High Court held that the effect of the amendments was to terminate even pending proceedings. Nevertheless, useful analogies may be drawn between s 108A of the Industrial Relations Act and the legislation analysed by Gleeson CJ. One example is the reference by his Honour to the words "must cease" being "a legislative command of a particular emphatic kind"; compare the words "an application cannot be made" in s 108A.

38 Similarly, his Honour's reference to the pivotal nature of the words in the legislation there considered "must cease dealing with" has a parallel to the pivotal role of the phrase in s 108A "if the application relates to a contract of employment under which ... a remuneration package that exceeds the remuneration cap is paid or received ..." etc. Finally, his Honour's reference, in para [56], to the language of the particular statutory provision being "clearly broad enough to encompass all proceedings before the [federal] Commission" and the related rejection of the attempt to introduce into the provision "an unexpressed temporal limitation on its operation" have respective parallels in this case to the breadth of s 108A and the contentions of the applicant.

39 It is also appropriate that the judgment of Peterson J in Kennedy v Contract Transport Solutions be overruled. His Honour did not, in those proceedings, have the benefit of the detailed submissions that were available to the Full Bench in this matter.

Orders 40 The questions referred should be remitted to the trial judge, Marks J (who made the reference under s 193), to make orders in the motions before his Honour in terms of the reasons of the Full Bench. If, as is likely, his Honour is not available because of leave to make the necessary orders, the remitter should be made to Boland J. Orders should be made accordingly.

41 The costs of the reference and of the motion before his Honour should be reserved. _____________________

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