Batterham v QSR Limited

Batterham v QSR Limited - [2006] HCA 23 - HCA 2006 case summary — Zoe

[14]

GLEESON CJ, GUMMOW, HAYNE, CALLINAN AND CRENNAN JJ. In November 1999, QSR Ltd ("QSR") sought to raise capital to acquire the business and property interests of 41 KFC, or Kentucky Fried Chicken, stores in New South Wales from Tricon Global Restaurants Inc, the owner of the KFC brand. QSR's directors included the first appellant (Mr Peter James Batterham), Mr Steven Gillard and Mr Anthony Veale. Messrs Batterham, Gillard and Veale were the promoters of QSR.
The prospectus issued by QSR for its raising capital, by a public issue of shares, disclosed that the directors of QSR (including the three promoters) had been issued options at $0.01 each, exercisable at $0.50 between 15 February 2003 and 15 March 2003, to acquire shares in the company. The exercise of options was said to be conditional upon QSR meeting predefined performance criteria for the period up to 31 December 2002. In the prospectus those criteria were said to be that the company achieved the earnings per share, and the dividends per share, that had been forecast in the prospectus (forecasts for the financial years ending 30 June 2000 and 30 June 2001) and that the company achieved earnings, before interest, taxation, depreciation and amortisation (EBITDA) of at least 18 per cent of equity subscribed plus debt for the calendar years 2000, 2001 and 2002.
In the case of Mr Batterham, the terms on which options were issued were recorded in a deed made between QSR and Woodglint Pty Ltd ("Woodglint") and dated 2 November 1999 (the day before QSR lodged its prospectus). The deed described the second condition for exercise of the options as achieving EBITDA in each of the calendar years 2000, 2001 and 2002 of 18 per cent of Average Funds Invested. The expression "Average Funds Invested" was defined in the deed, in respect of a calendar year, as "the average daily balance of Funds Invested during that calendar year".
Woodglint is alleged to have been trustee of a trust called the Batterham Retirement Trust. The second appellant (Maylord Equity Management Pty Ltd - "Maylord") is alleged to have replaced Woodglint as trustee of that trust in about September 2002.
As a director of QSR, Mr Batterham undertook various work for the company. He was involved in what was described as "the preparatory work necessary to achieve the public offering of equity" in QSR. He alleges that he established corporate systems for the use of QSR. For seven months between December 1999 and July 2000 Mr Batterham did some work for QSR in relation to its property holdings. In February 2000, he and two other directors who had been appointed after the capital raising (Mr Peter Copulos and Mr Stephen Copulos) formed a property sub‑committee of the board and were each paid for these duties.
By January 2000 interests associated with Peter and Stephen Copulos had significant shareholdings in QSR. By late 2001 or early 2002 they controlled the board. In April 2002, Mr Batterham resigned as a director of QSR. He contends that he was forced to resign.
QSR achieved EBITDA between 1 January 2000 and 31 December 2002 which, on average, exceeded 18 per cent of Average Funds Invested per annum. Its first two years were very successful; 2002 was less so. In 2002 it achieved EBITDA of 16.2 per cent. Thus, although QSR achieved an average EBITDA of 18 per cent of funds invested over the three year period from 2000 to 2002, it did not achieve EBITDA of 18 per cent in each of those three critical years.
Mr Batterham points to what he says is a disconformity between what was said in the prospectus about the option deed and the provision, in the option deed, that the stated level of return be achieved in each of the three nominated years. He has not, however, mounted any case for rectification of the option deed. Instead, he applied to the Industrial Relations Commission of New South Wales ("the Commission") under s 106 of the Industrial Relations Act 1996 (NSW) ("the Act") alleging that the option deed is unfair, harsh or unconscionable, or is contrary to the public interest. Mr Batterham's trust company, Maylord, was named as first applicant.
Mr Batterham and Maylord sought orders declaring the option deed to be unfair, harsh, unconscionable and contrary to the public interest and varying the deed. In addition, they sought orders that the contract, arrangement, condition, or collateral arrangement between Mr Batterham and QSR whereby the former performed work for QSR in an industry "including but not limited to the provision of management and administrative services to the property sub‑committee of the Board" of QSR was unfair, harsh and unconscionable in that it permitted QSR to terminate the arrangement without reasonable notice or payment in lieu of reasonable notice. A further order was sought that the contract, arrangement, condition, or collateral arrangement be varied to include a term requiring 12 months' notice of termination.
QSR applied to the Commission for orders dismissing the proceedings for want of jurisdiction. This application was treated, in the Commission, as a "strike‑out motion", and the parties argued it on the basis that the principles to be applied were those stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW)[1] as applying to the summary determination of proceedings. Peterson J refused to dismiss the proceedings, holding[2] that QSR had "not established in the overwhelming way necessary at an interlocutory stage that the summons is beyond the reach of the jurisdiction of the Commission".
QSR then applied to the Court of Appeal of New South Wales for prohibition directed to the Commission, and certiorari removing the proceedings pending in the Commission into the Court of Appeal for the purpose of dismissing the proceedings. QSR also sought a declaration that s 179 of the Act (the privative clause) is invalid. By majority, the Court of Appeal (Mason P and Handley JA; Spigelman CJ dissenting) ordered[3] that the Commission be prohibited from hearing and determining the proceedings instituted in the Commission in respect of the option deed "except insofar as those proceedings may be based on a contract [or] arrangement whereby the person performed work in an industry which came into existence after the incorporation of [QSR] and before the execution of the Option Deed". Although argument was directed to the question raised about the validity of the privative clause, no order was made about that issue.
Mr Batterham and Maylord, by special leave, now appeal to this Court. QSR did not cross‑appeal seeking some wider form of order than that made by the Court of Appeal. No question about the validity of the privative provision was argued. The appeal by Mr Batterham and Maylord was heard at the same time as the appeals in Fish v Solution 6 Holdings Ltd[4] and Old UGC, Inc v Industrial Relations Commission of New South Wales in Court Session[5].
The relevant provisions of the Act, and their history, are set out in the reasons given in Fish v Solution 6 Holdings Ltd. Those matters need not be repeated here. As explained in Fish v Solution 6 Holdings Ltd[6], to decide whether the Commission had jurisdiction to make the orders which the appellants seek, it is necessary first to identify whether Mr Batterham performs (or in this case, did perform) work in any industry. (It was not argued that anything turns on the fact that Mr Batterham was no longer performing the relevant work when he applied to the Commission.) Having identified the work that Mr Batterham performed, the next inquiry is what was the contract or arrangement (and any related condition or collateral arrangement) according to which (or in fulfilment of which, or in consequence of which) that work was performed? It is only that contract or arrangement which the Commission may declare void or vary.
It not being submitted that the Court of Appeal should have made a wider form of order than it did, the particular question that arises in the appeal to this Court is whether the option deed was a contract or arrangement according to which Mr Batterham performed work in any industry.
In the Commission, in the Court of Appeal, and again in this Court, the appellants accepted that the option deed was not an agreement whereby Mr Batterham had performed work in an industry. Rather, their submission, both here and below, was that the option deed "constituted either part of the remuneration for work performed under a relevant contract or arrangement or was collateral to an arrangement for the performance of work".
The second part of that submission (that the option deed was collateral to an arrangement for the performance of work) is an argument that depended upon first identifying whether contractual stipulations (or other arrangements) can be described as related, or collateral, one to another. Then, so long as one or more of those stipulations or arrangements concerns the performance of work in an industry, the submission asserts that the Commission has jurisdiction to avoid or vary any element of the related stipulations or arrangements. For the reasons given in Fish v Solution 6 Holdings Ltd, that inverts the proper order of inquiry about the application of s 106. This aspect of the appellants' submissions should be rejected.
The first part of the appellants' argument (that the option deed constituted part of the remuneration for work performed under a relevant contract or arrangement) requires more detailed examination. It will be recalled that the critical statutory phrase is "any contract whereby a person performs work". The work to which the appellants point in this case was the work the promoters, and Mr Batterham in particular, performed in first negotiating, and then carrying into effect, the transaction by which QSR acquired the KFC stores. That work was said to include the work of promoting, incorporating, and raising capital for, QSR, as well as the work of negotiating the contract with the vendor, and once the purchase agreement had been completed, working as a director of QSR. The appellants submitted that it was arguable that some or all of that work was performed under an overall arrangement in which the option deed formed part of the remuneration for the work that was performed.
In the Court of Appeal this contention was understood as requiring identification of the parties to the arrangement and then, because the hypothesised arrangement was one for the promotion of the venture (and QSR in particular), as requiring consideration of whether QSR could be treated as party to, or adopting the benefit of, an arrangement that was made before it was incorporated. Handley JA (with whose reasons Mason P agreed) considered[7] that the option deed could only be within the jurisdiction of the Commission "if it formed part of some earlier, informal, arrangement of the requisite character to which [QSR] was a party" (emphasis added). His Honour concluded[8] that before QSR was incorporated "[i]t was not in any sense 'an actor'". Following its incorporation QSR accepted the benefit of the work that had been done before incorporation "but any contract or arrangement to this effect was not one whereby a person performed the pre‑incorporation work"[9]. By contrast, Spigelman CJ considered[10] that this analysis of the matter was one which had not sufficiently been raised in argument to allow the Court of Appeal to act on it in granting relief.
In this Court it was not submitted that any separate question arises about whether the analysis which the majority of the Court of Appeal adopted had been sufficiently raised in argument in that Court to allow that Court to act on it. Rather, the burden of the appellants' argument was directed to two principal propositions. First, it was said that the proceedings in the Court of Appeal called into question the decision of Peterson J, contrary to the privative provisions of s 179 of the Act. Secondly, it was submitted that the Court of Appeal had not only misunderstood the breadth of the appellants' case, it had made a number of particular errors in dealing with the appellants' contentions. It is convenient to defer consideration of the issues presented by the privative provisions of s 179 and to focus first upon what the appellants contended to have been the relevant contract which founded the jurisdiction of the Commission to make orders varying the option deed.
The appellants directed particular attention to par [74] of the reasons of Handley JA. That paragraph read:

[20]

For present purposes, however, there are two features of such an arrangement that are of particular importance. First, the agreement for performance of pre‑incorporation work cannot be made with the company that is to be incorporated. No doubt that is why the submission now under consideration accepted that the arrangement asserted was, in the first instance, an arrangement to which QSR was not a party. Thus, when, as here, the agreement conferring a benefit on the promoter (the option deed) is made after incorporation, it is an agreement that is made as recompense for work that has already been done. But because the work has already been done, the agreement conferring the benefit cannot be described as a contract, or an arrangement, whereby a person performs work in an industry. The work that was done was not done according to, or in fulfilment of, or in consequence of, that agreement. And as noted earlier the appellants have at all times accepted that the option deed was not an agreement whereby Mr Batterham performed work in an industry. The second point to be made is that the option deed was tied in no respect to the later performance of work. The grant of the options was complete upon the execution of the deed. Whether Mr Batterham thereafter did any work for, or retained any connection with, QSR was irrelevant to the grant of the options or their exercise. The work that was done after the execution of the option deed could not be said to be done according to, or in consequence of, or in fulfilment of, the option deed.
What then follows is that it is apparent that this method of putting the appellants' argument again depends on first relating contracts and arrangements one to another and then asking whether any of the terms or provisions of the related arrangements provide for the performance of work. And it is also apparent that the appellants' reference to the option deed as "remuneration" for work done under an arrangement first made between parties other than QSR, but to or of which QSR either later became a party or took the benefit, is a restatement of the argument that the Commission's jurisdiction extends to any and every contractual stipulation or other arrangement that can be described as related or collateral to a contract for the performance of work in an industry. By describing the option deed as "remuneration" for work done the appellants seek to connect the option deed with the performance of that work. But for the reasons given earlier, neither the work that was done before the option deed was made, nor the work that was done after it was made, was done according to, in fulfilment of, or in consequence of, that agreement. This second way in which the appellants put their argument should be rejected.
It is necessary then to deal with the arguments about the operation of the privative provisions of s 179 of the Act and to begin by setting out its text. Section 179, at the times relevant to this matter, provided:

[25]

Questions about the operation of the privative provisions of s 179 of the Act in this case are to be approached from some established principles. Section 179 is not to be interpreted "as meaning to set at large"[14] the court or tribunal to which it relates. Rather, because the Act limits the jurisdiction of the Commission, but also contains the privative provisions of s 179, an attempt must be made to reconcile what appear to be conflicting legislative provisions[15]. Thus the meaning and application of s 179 must be ascertained from its terms[16] set in the context of the Act as a whole.
Next it is important to recognise that a privative clause will have no work to do if the decision in question was a decision made according to law. The hypothesis for consideration is that the decision in question is infirm in some respect. It therefore follows that the reference in s 179 to "purported" decisions of the Commission is properly seen as inserted for more abundant caution. As was pointed out in O'Toole v Charles David Pty Ltd[17], in relation to the then provisions of s 60 of the Conciliation and Arbitration Act 1904 (Cth), an "award", on the true construction of that provision, referred to at least some purported awards[18]. Were it otherwise s 60 would have been essentially nugatory. Reference in s 179 to "purported" decisions of the Commission makes explicit what would otherwise have been the necessary reading of the provision.
In the present matter, however, it is not necessary to pursue further the resolution of the tension between the limitations on the Commission's jurisdiction and the provisions of s 179. The appellants contend that QSR's application to the Court of Appeal for prohibition called in question the decision of Peterson J dismissing QSR's application for summary termination of the proceedings in the Commission. They submitted that the application for prohibition constituted, or amounted to, an attack on the reasoning and basis of the decision of Peterson J and, in that sense, called the decision into question.
That analysis of the matter should not be accepted. Peterson J did not decide that the proceedings were, or were not, within the Commission's jurisdiction. The only decision made was that the proceedings instituted in the Commission had not been shown to be unarguably beyond jurisdiction. There is a real and radical difference between deciding that a point is arguable and deciding the point. All that Peterson J decided was the former. To hold, as the Court of Appeal did, that some, but not all, of the claims made in those proceedings were beyond jurisdiction did not question the decision of Peterson J or the reasoning that supported it. Whether the words "decision or purported decision" in s 179(1) extend to the steps in reasoning that support the outcome at which the Commission arrives in an application is a question that would require close consideration of the reconciliation between s 179 and those provisions of the Act that limit the Commission's jurisdiction. At first sight there seems no reason to give "decision or purported decision" a meaning that would encompass steps in reasoning. This, however, is not a question that needs to be resolved. It is enough to say that in this case there was no "decision or purported decision" of the Commission, "whether on an issue of fact, law, jurisdiction or otherwise", that was called in question by the proceedings in the Court of Appeal. Rather, in the light of this Court's decision in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd[19], the Court of Appeal was right to grant the relief it did, and right to grant that relief when it did. As was pointed out in the Melbourne Stevedoring Case[20], prohibition is not a writ of course but "it is a writ which goes as of right when the prosecutor is directly affected by the course pursued by a tribunal to which the writ lies and the prosecutor shows satisfactorily that the tribunal is about to act to his detriment in excess of its authority". And again, as pointed out in the Melbourne Stevedoring Case[21], the privative clause shows that to defer the grant of the remedy until the Commission decides whether it has jurisdiction, if QSR is otherwise entitled to it, "may and perhaps must operate to the prejudice" of QSR. Proceedings in the Commission having taken the course they had, there was a real likelihood of an order being made in excess of the Commission's jurisdiction. And that being so, the Court of Appeal was right to grant the relief it did.
For these reasons the appeal to this Court should be dismissed with costs.
The considerations mentioned in our reasons in Fish v Solution 6 Holdings Ltd about the Industrial Relations Amendment Act 2005 (NSW) apply equally in this case to so much of the proceedings instituted in the Commission as was the subject of the Court of Appeal's order prohibiting the Commission from their further hearing and determination.
KIRBY J. This is an appeal from orders of the New South Wales Court of Appeal[22]. It is one of three matters heard by this Court to be decided at the same time[23].
The appeals present common points. Each of the cases concerns the meaning and application of s 106 of the Industrial Relations Act 1996 (NSW) ("the IR Act"). Each relates to the jurisdiction and powers of the Industrial Relations Commission of New South Wales ("the Commission") under that provision. Each raises a question as to the issue by the Court of Appeal of a writ in the nature of prohibition, addressed to the Commission, in relation to the continued hearing and determination of proceedings commenced before it.
However, whilst the Court of Appeal accepted as applicable in the present case the principles expounded by it in Fish[24], decided on the same day, there were two significant differences from that case.
The first difference was that, unlike Fish, the proceedings in the present case challenging the jurisdiction of the Commission had been argued before, and decided by, a judicial member of the Commission (Peterson J)[25]. His Honour exercised the powers of the Commission in Court Session as it was then described[26]. He dismissed with costs the application for pre-emptory relief. That order contemplated that the Commission would proceed to exercise its jurisdiction and powers in this case. His Honour recognised that the conclusion expressed by him on the summons might not survive a full hearing "in the light of the evidence ultimately adduced". The ultimate conclusion, he declared, "remains open"[27].
Secondly, in this case, unlike Fish, the Court of Appeal was divided. The majority reasons, supporting the order for prohibition directed to the Commission, were given by Handley JA (with whom Mason P agreed). However, Spigelman CJ dissented. He concluded that questions as to the jurisdiction of the Commission should be left to be decided within the Commission. He would have dismissed the proceedings in the Court of Appeal.
Spigelman CJ's reasons for reaching his conclusion were, essentially, three-fold. First, he concluded that there were certain questions, relevant to the jurisdiction of the Commission, that had not earlier been broached by either party, which should first be decided by the Commission. One was whether the conduct of a person as a promoter of a company could satisfy the concept of "work in an industry" in the context of the IR Act[28]. Secondly, he expressed doubt that the argument upon which the application for prohibition succeeded in the Court of Appeal had been the subject of submissions to that Court[29]. Thirdly, and most importantly, he was affected by the identification of the legal principles concerning s 106 of the IR Act, expressed in the reasons of Peterson J in the Commission, upon which (he thought) evidence would be necessary and eventually determinative. Such principles concerned[30] the extent to which a company, not originally a party to an "arrangement" whereby a person performed work in any industry, might later become such a party or, although not a party to the original arrangement, might yet be the subject of orders against it made under the IR Act.
The first and second reasons expressed by Spigelman CJ played little part in the argument before this Court. However, the third reason was critical and is decisive. Both for the proper application of the privative provision in the IR Act[31] and for the observance of the correct relationship between the Court of Appeal and the Commission, the approach adopted by Spigelman CJ was the correct one. It should be confirmed by this Court. The hearing in the Commission should proceed. To allow that to happen, this Court must uphold the appeal.

[26]

The background facts: The general background facts are stated in the reasons of Gleeson CJ, Gummow, Hayne, Callinan and Crennan JJ ("the joint reasons")[32]. For the most part, it is sufficient to refer to the activities of the first appellant, Mr Peter Batterham, and the first respondent, QSR Limited ("QSR"). The Commission, the second respondent, submitted to the orders of this Court.
In late 1998, Mr Batterham discovered that Tricon Global Restaurants Inc ("Tricon"), the owner of the KFC and Pizza Hut brands in Australia, desired to sell its business and property interests in forty-one KFC stores in New South Wales and to grant the purchaser a long-term franchise agreement with the right to operate a business utilising the KFC brand name. Mr Batterham and a colleague, Mr Steven Gillard, negotiated heads of agreement with Tricon to purchase the stores. The two men then involved Mr Anthony Veale in the acquisition proposal. Mr Veale had extensive experience in property syndication.
The three promoters engaged lawyers and other advisers to provide advice about the suitable means to be utilised both to purchase and operate the restaurants. The promoters incurred expenses. They agreed amongst themselves to share these expenses in the event that the deal did not proceed.
QSR was then established as the corporate vehicle to carry the negotiations forward. The three promoters became the foundation shareholders and directors of QSR. They undertook substantial work to make the project a reality. Through QSR, they raised approximately $40 million to finance the deal.
The promoters' option deed: The promoters agreed that they should be remunerated for the work that they had undertaken before the incorporation of QSR. They were also to be remunerated for work done on behalf of QSR in bringing the deal to fruition. They were to be remunerated further for work that they would undertake for QSR on an ongoing basis as agreed prior to the issue of a prospectus on 3 November 1999. An understanding was reached amongst them whereby QSR would pay directors' fees and charges. Details of the proposed remuneration and commitments of QSR were duly published in the prospectus. Tricon insisted, and Mr Batterham agreed, that QSR could not approve the resignation, replacement or removal of any of the three promoters, except as required by law, without its prior written approval. Moreover, in so far as Mr Batterham's agreed remuneration was in the form of options in QSR, his entitlements were set out in an Option Deed. This deed was executed by Mr Batterham and QSR on 2 November 1999, the day before the prospectus was issued. Mr Batterham thereafter continued to work for QSR until, in April 2002, he was allegedly forced to resign.
The dispute between Mr Batterham and QSR arose after interests hostile to Mr Batterham gained control of QSR and progressively marginalised him from its affairs[33]. It was at this point that a provision in the Option Deed, containing the "trigger" for the right of Mr Batterham's trust company, now Maylord Equity Management Pty Ltd ("Maylord"), to take up options of great value in QSR, became crucial to his entitlements. The provision in question concerned a "performance benchmark"[34]. The right to take up options was dependent upon the achievement by QSR of earnings (before interest, tax, depreciation and amortisation) of at least 18% on equity in the ensuing three calendar years.
In the event, an average return of over 18% for the three years, and well over 18% in the first two years (2000 and 2001), was achieved. However, in 2002, the return on equity was 16.2%. QSR therefore contended that the condition precedent to enliven the right to take up the options had not been met. It was this dispute that led Mr Batterham and Maylord to commence proceedings in the Commission for relief against the suggested "unfairness" of the foregoing arrangements. Mr Batterham and Maylord submitted that the Commission had jurisdiction under s 106 of the IR Act to provide relief against QSR.
The parties' arguments: For Mr Batterham and Maylord it was argued that, although the Option Deed did not per se constitute a contract within s 106, it either represented part of the remuneration for work performed under a relevant contract or arrangement or was collateral to an arrangement whereby work was to be performed in an industry. Moreover, QSR had secured the benefit of Mr Batterham's work prior to, and after, its formation and had sought to take unfair advantage of a provision in the Option Deed which related directly to his remuneration for such work.
QSR, on the other hand, portrayed the work performed, and the benefits under the Option Deed, as separate from the earlier contract or arrangement. QSR suggested that Mr Batterham's employment had been terminated by agreement and that complaints about the Option Deed were no more than arguments about a business deal that had proved disappointing in the circumstances.

[27]

The objection to jurisdiction: QSR did not delay in contesting the jurisdiction of the Commission. No sooner had the initiating documents been filed for Mr Batterham and Maylord but QSR lodged a notice of motion for pre-emptory relief against the proceedings. Both in the Commission, and later in the Court of Appeal, QSR indicated that it was content to accept as true the facts stated in Mr Batterham's originating process and verifying affidavit.
Mr Batterham resisted QSR's objection to the jurisdiction of the Commission. He argued that the unwritten contract of employment and the Option Deed amounted together to an "arrangement" whereby work was performed in an industry in New South Wales, including the promotion and establishment of the KFC acquisition and the subsequent work performed, once the deal was agreed, as a director of QSR and otherwise. Mr Batterham also submitted that the remuneration for his work under the "contract or arrangement" was the grant of options to Maylord, together with the payment of directors' fees and the issue of shares. In the alternative, he argued that the grant of options, as part of his remuneration, was a "collateral arrangement or a condition" related to the "arrangement" for the performance by him of work. He contended that the "arrangement" in question included the incorporation of QSR as the vehicle to obtain the benefit of the acquisition of the KFC stores and that, upon such incorporation, QSR became a party to that "arrangement", took advantage of it and was thus susceptible to orders of the Commission directed to it, addressed specifically to the provisions of the Option Deed complained of as "unfair".
QSR advanced many arguments to contest the jurisdiction of the Commission[35]. In particular, QSR disputed any unfairness of the "contract or arrangement" relied upon; distinguished the work performed by Mr Batterham as a promoter of the "deal" before formation of QSR and as a director thereafter; divided the alleged "work" into these two distinct phases; and contended that the Option Deed referred, and referred only, to the earlier phase as promoter and thus could not, before QSR was formed, result in any legal liability in that company in respect of which relief could be thereafter given under s 106 of the IR Act.
Rejection by the Commission: In his reasons for dismissing the application for pre-emptory relief, Peterson J referred to decisional authority both as to the ambit of s 106 (and its predecessors) and as to the approach to be applied to such an interlocutory claim for relief terminating the proceedings[36]. In the course of his reasons, Peterson J referred to some observations of my own in the Court of Appeal of New South Wales, to which I adhere[37]:

[39]

The validity of s 179: In the proceedings before the Court of Appeal in the present case, QSR originally contended that s 179 was invalid, as beyond the legislative powers of the New South Wales Parliament. Notices in respect of a constitutional issue were duly given[43]. The State Attorney-General intervened before the Court of Appeal to support the constitutional validity of the section. In the result, QSR did not press its constitutional objection. The Court of Appeal did not rule on it. The point was not revived in this Court. It can be ignored in deciding this appeal.
The breadth of s 179: The extremely broad ambit of s 179 is apparent from its terms. It is concerned to protect not only a "decision" but also a "purported decision" of the Commission. It is not confined to the Commission in its then judicial manifestation (the Court Session). It is addressed to the Commission "however constituted". The prohibition is not only against "appeal". It extends to the review of such "decisions" of the Commission. But it also extends to calling any such decisions "in question". It goes further to forbid the making of a judgment or orders in the nature of prohibition, certiorari, mandamus, injunction, declaration or otherwise, which might, but for the section, have been made or given, relevantly by the Court of Appeal. The section extends to any order of the Commission. It thus extends to the decision of Peterson J in the present case, exercising the jurisdiction of the Court Session. Specifically, it applies to his Honour's order dismissing QSR's interlocutory objection to the jurisdiction of the Commission. Manifestly, decisions and purported decisions on "jurisdiction" are within s 179(1)(b).
Whilst, under s 48 of the Supreme Court Act, actions in the Supreme Court seeking orders to prohibit a "specified tribunal" from proceeding in any matter before it are assigned to the Court of Appeal, and whilst "the Industrial Relations Commission or a member of that Commission" are included in the "specified tribunals" so affected[44], this provision is no more than an intra-mural identification of venue. It is not a grant of jurisdiction or power to the Supreme Court, inconsistent with s 179 of the IR Act.
The broadest prohibition in s 179(1)(b) is that forbidding a court from calling in question any "decision or purported decision" of the Commission. The breadth of such language has been noted many times. Like terms appeared in s 29(3)(a) of the Industrial Relations Act 1967 of Malaysia, ousting the jurisdiction of the Malaysian High Court to issue writs of certiorari to the Industrial Court of that country. Such provisions have a long history in the relations between industrial tribunals and the general courts. They are common throughout the Commonwealth of Nations. In South East Asia Fire Bricks Sdn Bhd v Non-Metallic Mineral Products Manufacturing Employees Union, dealing with s 29(3)(a) of the Industrial Relations Act 1967 (Malaysia), Lord Fraser of Tullybelton, delivering the judgment of the Privy Council, observed[45]:

[41]

In the present proceedings, the relief claimed in, and granted by, the Court of Appeal was a writ in the nature of the writ of prohibition. However, the point concerning the phrase "called in question" remains good. The IR Act deliberately uses wide language. Against the background of this history in New South Wales law and like laws in other countries, the interdiction is designed to discourage any interfering inclination on the part of a general appellate court. To the extent that the provision is valid, and cannot be confined by legitimate techniques of statutory construction, it is the duty of courts to give it effect. There will lie outside such prohibitions cases involving fundamental affronts to jurisdiction, such that what has occurred does not answer to the statutory expression "decision or purported decision" or "award or order"[46]. However, the present is not such a case.
Section 179 is attracted: Because of the procedures followed in this case, s 179 of the IR Act was enlivened. In the Court of Appeal, Handley JA accepted that Peterson J had given a "decision" of the Commission within the terms of s 179(1)[47]. That was a correct holding. I would reject submissions to the contrary, on the alleged grounds that Peterson J's decision was not a "decision" within s 179(1) because it was procedural in nature and merely a decision to defer a "decision". In this, I agree in the reasons given by Heydon J[48].
Being a "decision", Peterson J's "order" was liable, once made, to an application to a Full Bench of the Commission in Court Session for leave to appeal. Instead of taking that course, which was the regular one contemplated by the IR Act[49], QSR invoked the suggested powers of the Court of Appeal. But those powers lie outside the system of industrial tribunals, specifically the Commission. On the face of things, at least, this involved proceeding to the Court of Appeal to "call in question" the decision of the Commission given by Peterson J.
The essential issue raised, and argued, before the Court of Appeal was relevantly the same as that before Peterson J. So much is disclosed by a comparison of that Court's reasons with those of Peterson J. If this is so, the challenge in the Court of Appeal was effectively an attempt to exercise a right of "appeal" contrary to the line of appeal expressly provided by Parliament. If it did not literally seek "review" of the decision of Peterson J, as such, it certainly called that decision "in question". It did so by challenging it on the core conclusion to which it gave effect. This was that, on the facts common at this stage to the proceeding both in the Commission and the Court of Appeal, a reasonably arguable case of jurisdiction in the Commission had been shown. Peterson J decided that it had. The majority of the Court of Appeal decided that it had not. By going over the same ground and reaching their contrary conclusion, the majority in the Court of Appeal "called in question" Peterson J's "decision" and "order".
If any new points were raised in the Court of Appeal, the scheme of the IR Act, contemplated by the terms of s 179(1), is that any such points should be advanced on appeal, by leave, to the Full Bench of the Commission in Court Session, not to the Court of Appeal.
An erroneous intervention: In his reasons, Handley JA[50], for the majority, concluded that no barrier to the intervention of the Court of Appeal was presented by s 179 of the IR Act. The joint reasons in this Court appear to endorse his Honour's approach[51]. I disagree.
Handley JA advanced two reasons as to why s 179 did not apply. Neither of these is convincing:

[43]

It was then suggested that the fact that the Court of Appeal "after fuller argument" concluded that the Commission's jurisdiction did not extend to any relevant contract or arrangement would not "call in question" the interlocutory decision[53]. However, the place for "fuller argument", contemplated by s 179 (in its language, history and purpose), was not the Court of Appeal. It was either in the Commission when it conducted the hearing, or in the Full Bench of the Commission in Court Session, as the IR Act provides[54]. The very mischief addressed by s 179 is the conduct of "fuller argument" in a court of general jurisdiction, separate from the industrial tribunal which Parliament has entrusted with jurisdiction under s 106 of the IR Act, including decisions as to whether it has jurisdiction in the particular case or not. In so far as Handley JA's reasoning contained a suggestion that the Court of Appeal's position was effectively no different from that of the Commission at a final hearing, that suggestion was incorrect. In a final hearing of the proceeding in the Commission all the evidence that the parties considered relevant would be tendered; the admissibility of that evidence would be decided by the judicial member of the Commission hearing the case; and findings and rulings would be made by that judicial member, who could also make orders to give effect to such conclusions. In the event, the Court of Appeal was obliged to reach its decision on materials more abbreviated than those available in a final hearing before the Commission. That is a procedure which, even when legally permissible, is reserved to very clear cases. By reaching a different conclusion on the jurisdiction question, the Court of Appeal did not suggest any identified error on the part of Peterson J. It simply substituted its own opinion on the same substantive issues, using effectively identical material and reaching its conclusion in a like pre-emptory process. The only suggested advantage of the Court of Appeal was "fuller argument". However, that does not authorise circumvention of s 179(1) of the IR Act and the legislative policy that it expresses.

[56]

To similar effect are the words of Brennan J in this Court in Attorney-General (Cth) v Finch [No 2][65]. And as McHugh J suggested in Re Tyler; Ex parte Foley[66], uniformity and regularity in the making of judicial decisions is a matter of great importance to the administration of the law. Absent such an approach, confidence in the administration of justice might dissolve or be impaired. The feeling that, where Parliament has provided a venue for the determination of the unusual and expansive jurisdiction afforded by s 106 of the IR Act, the jurisdiction, once invoked, will be allowed to take its ordinary course, is an understandable one. The notion that those with deep pockets can contest the jurisdiction and then, despite the privative clause, secure intervention by the Court of Appeal or this Court, is one liable to be disturbing to informed observers[67].
The foregoing conclusion is especially applicable where the outcome of the intervention is to deprive a person of the right normal to a litigant in this country, even when unprotected by a provision such as s 179 of the IR Act, namely to be entitled to present all of the facts of an arguable claim and to secure a decision on that claim by a qualified and independent court or tribunal with the jurisdiction and powers to apply the law to the facts and to provide reasons for its outcome[68]. A litigant would be entitled to feel especially disturbed where, as here, a challenge to jurisdiction has been rejected by the body designated by Parliament as having the exclusive jurisdiction and power to decide such a claim.
Against the long history in Australia and elsewhere of statutory limits on the intrusion of the general courts into the jurisdiction and power of industrial tribunals, and the suspicion that such intrusion has sometimes favoured commercial interests over claimants before industrial tribunals, the intervention by the Court of Appeal merely adds to legitimate feelings of resentment[69]. The rule of law relies on obedience to the law by courts and tribunals and the attention of those bodies, as the law provides, to the justice of the individual case.
Industrial v commercial arrangements: In the present proceedings, as in Fish[70], I infer that part of the willingness of the Court of Appeal to circumvent the provisions of s 179 of the IR Act, and to provide relief in advance of a final hearing, findings and orders of the Commission as determined on the merits, derives from a belief that "commercial contracts", of the kind illustrated by the Option Deed, ought not properly to be before a specialised tribunal, the colour and flavour of whose jurisdiction is normally "industrial" in the traditional sense[71].
To the extent that any such attitude affected the approach to the present and like cases, it must, in my opinion, be eradicated. It is incompatible with the status of the Commission in Court Session (now once again the Industrial Court) and of its judges. It is inconsistent with the wide definition of "industry" and the large powers over "unfair contracts" provided by the IR Act[72]. It is not consonant with the language and purpose of s 179 of that Act. It destabilises the affected institutions[73].
Moreover, the separation of the Option Deed and other arrangements, evidenced in the present case, is not compatible with legislation addressed, as s 106 of the IR Act is, to relief against contemporary unfair employment contracts. Such contracts are bound, increasingly, to involve agreements that, for taxation or other purposes, include collateral, supplementary, later and related conditions and "arrangements". The IR Act recognises this in its terms[74]. So does the past authority of this Court[75]. The Court of Appeal should have done likewise.
The imposition of an artificial exclusion of "commercial contracts", for whatever reason, is impermissible as a matter of legal construction. It is an invitation to the very kind of contractual subterfuge against which this Court earlier, and correctly, set its face.
The correct approach: The Court of Appeal has sometimes adopted the correct approach to the foregoing questions. However, the majority decision did not do so in this case. The approach of Spigelman CJ correctly reflects, and gives effect to, the applicable principle of restraint that, quite apart from s 179 of the IR Act, should govern the issue of orders in the nature of prohibition to the Commission in Court Session[76]. Such restraint used to be the approach of the Court of Appeal in such matters[77]. It was so even before the enactment of s 179, the expansion of its terms and the development of a culture of pre-emptive review[78].
The proper approach is that expressed by Giles JA in the Court of Appeal in a more recent case in the present series. In Alliance Motor Auctions Pty Ltd v Industrial Relations Commission (NSW)[79], Giles JA, giving the principal reasons of the Court of Appeal for refusing prohibition to the Commission for want of jurisdiction to hear and determine a claim under s 106 of the IR Act, said[80]:

[59]

The residual question: Assuming, however, that the foregoing impediments of s 179 of the IR Act and the principles of institutional comity could be lawfully circumvented, should the appeal to this Court nonetheless be dismissed because any appeal by QSR to the Full Bench of the Commission in Court Session was ultimately bound to succeed?
The joint reasons in this Court find no error in the approach of the majority of the Court of Appeal to the claim brought by Mr Batterham and Maylord[81]. In part, the approach of the joint reasons rests on the applicability to claims for relief under s 106 of the IR Act of the law governing the liability of corporations, once formed, for the performance by promoters of their agreed pre-incorporation functions[82]. The joint reasons are also influenced by the form of the Option Deed with QSR and the view that any work done by Mr Batterham, after the execution of that deed, could not be said to be done according to the deed and hence that the deed was not a contract "whereby" work was performed in an industry[83].
Much of the reasoning that leads to these conclusions is similar to that expressed in the joint reasons in Fish[84]. I adhere to the views that I expressed in that appeal. The approach taken in the joint reasons has many flaws, as explained in Fish. Above all, it amounts to a narrowing of the application of the deliberately broad language of s 106 for reasons that I regard as unpersuasive and contrary to Parliament's purpose and a turning away from the past authority of this Court. I will not repeat what I said in Fish. I incorporate it by reference.
Even if, however, a narrower view were taken of the meaning and application of s 106 of the IR Act than that formerly adopted with respect to like statutory language by this Court and by the Privy Council[85], basic questions would remain as to whether, in the facts of the present case, the Court of Appeal was correct to apply such narrower test and to reach the conclusion that the claim of Mr Batterham and Maylord to enlist the jurisdiction of the Commission, is not reasonably arguable so far as it related to the Option Deed. Only such a firm conclusion would have warranted the provision of the relief granted to QSR in terms of the Court of Appeal's order.
There are several reasons why the majority in the Court of Appeal were wrong to find that it was not reasonably arguable that the Commission enjoyed the jurisdiction to determine the claims for relief brought by Mr Batterham and Maylord. Their finding involved a misunderstanding of the nature of the claim brought. It entailed legal errors in analysis. And it resulted in an order which, at the very least, was premature and therefore inappropriate. I will explain these errors in turn.
Misunderstanding of the claim: So far as the misunderstanding of the claim brought by Mr Batterham and Maylord is concerned, the reasons of the majority in the Court of Appeal suggest a belief on Handley JA's part that the claim was narrower than in fact it was[86]. Contrary to Handley JA's description of the claim, Mr Batterham and Maylord were clearly attempting to support a case relying on an "arrangement" for the performance of work pre-dating the formation of QSR. So much appears in the submission of counsel, recorded elsewhere in the reasons of Handley JA[87]. Moreover, Mr Batterham and Maylord were also advancing the case that the "arrangement" involved QSR taking the benefit not only of pre-incorporation work but also post-incorporation work in an industry. This fact had been noticed by Peterson J in his reasons[88], in turn actually extracted in Handley JA's reasons[89].
It is against this background, of the misunderstanding of the ambit of the claim advanced by Mr Batterham and Maylord, that the majority in the Court of Appeal proceeded to a misapplication of the word "whereby" in s 106(1) of the IR Act. They suggested that it was essential that there be a temporal operation obliging any "contract or arrangement" relied on to pre-date the relevant work before any order could be made under the section against QSR[90]. With all respect, this suggestion involves an incorrect application of the IR Act.
Mr Batterham and Maylord argued that the Option Deed was "collateral" to the "arrangement" for the performance of work. This argument was disposed of by the majority in the Court of Appeal on the mistaken basis that the case as to what constituted the "arrangement" was somehow circumscribed or confined by the date of QSR's incorporation[91]. Because of these mistakes, the majority in the Court of Appeal deprived Mr Batterham and Maylord of the opportunity, by their evidence, to establish the existence of an "arrangement" within the IR Act, which included the incorporation of QSR and which, although an "arrangement" made before incorporation, continued to exist after such incorporation.
Legal errors in the analysis: The fundamental flaw in the foregoing reasoning is that it departs from past elaborations of an "arrangement" where that word is used in s 105 of the IR Act and its predecessors. "Arrangement" has repeatedly been given a broad meaning, when appearing in statutes designed (as the IR Act here is) to cast a wide net of operation[92]. Against the deliberate use in the IR Act of a word that may conventionally apply to conduct having no legal consequences, the approach of the Court of Appeal was seriously constricted. When the relationship between entitlements under the Option Deed and both the pre- and post-incorporation work of Mr Batterham is kept in mind, it is strongly arguable that this was precisely the kind of "arrangement" to which ss 105 and 106 of the IR Act were addressed. To impose a strict temporal sequence, as favoured by the majority in the Court of Appeal, is contrary to the statutory language. It is also contrary to the purpose of the facility afforded by these provisions, being to permit the Commission to look in a sensible way at any related and collateral "arrangements"[93]. The strict temporal sequence is now endorsed by the joint reasons in this Court. That conclusion constricts the capacity of s 106 to afford remedies against unfair employment contracts as the broad language adopted by Parliament intended. It inflicts a needless wound on the IR Act's remedial provisions.
To the present time, the case law of this Court and of the Privy Council concerning the meaning of the word "whereby" in the context of provisions such as s 106 of the IR Act (in relation to a "contract" or "arrangement") consistently holds that the claimant must show that work in any industry is performed "in consequence of" or "in fulfilment of" the "contract" or "arrangement". The use of the word "arrangement" in the legislation gives emphasis to the contemplation of two features. The first is that the "arrangement" might not be a contract in the legal sense. Indeed, it might be an agreement or set of actions that would have no legal consequences at all[94]. Secondly, the word "arrangement" contemplates something more fluid and uncertain than a "contract" enforceable at law[95]. It envisages the integration of related conditions and collateral terms, including some agreed at a time later than the formal contract, but which must be taken into account if the "arrangement" is to be understood in its entirety[96]. Attempts to impose upon such statutory language rigidities, formalities and a strict time sequence are not only inconsistent with the words chosen. They are incompatible with the achievement of the purposes of the novel remedies provided in the IR Act.
There is yet a further legal error in this approach. The Commission has been given power to make orders against parties to the proceedings who may not have been parties to the contracts or arrangements whereby work was performed. This has obviously been done to permit orders to be made against persons and corporations that have benefited from the work performed under such contracts or arrangements, although not ultimately parties to them. Such a facility was essential to respond to the dangers inherent in "clever" legal drafting. The ambit of the power was explained in Brown v Rezitis[97]. It is conditioned only on the requirement that the order must be made "in connection with" a contract or arrangement. There is no other jurisdictional precondition[98]. "Connection" is not limited to legally enforceable contractual connection. It is a basic error to so suppose.
It follows that Handley JA was in error in introducing a temporal requirement as a precondition to recovery in respect of the "pre-incorporation work" relying on the conjunction "whereby" to carry that burden. There is no such temporal requirement in the IR Act. In fact, the Act distinguishes between the existence of the "contract" or "arrangement" whereby a person performs work and the provision of relief. By the settled authority of this Court, that relief can be granted, in terms of the legislation, against non-parties to the contract or arrangement. It can be granted in an "arrangement" where no legal obligation whatever existed.
This is why, in his reasons rejecting the challenge to the jurisdiction of the Commission, Peterson J correctly said[99]:

[63]

The reason why the appeal should be allowed is that s 179 of the Industrial Relations Act 1996 (NSW) operated to prevent the Court of Appeal making an order prohibiting the Industrial Relations Commission of New South Wales from continuing to hear the proceedings instituted by the appellants' summons.
The following arguments for the proposition that s 179 does not apply need to be considered.
No decision. The first respondent filed a notice of motion in the Industrial Relations Commission of New South Wales seeking dismissal of the appellants' summons "for want of jurisdiction". It agreed[103] with the appellants that the relevant legal principles to be applied were those stated by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW)[104]. Peterson J dismissed the notice of motion because he considered that the first respondent had "not established in the overwhelming way necessary at an interlocutory stage that the summons is beyond the reach of the jurisdiction of the Commission." He also said: "Whether that remains so in the light of the evidence ultimately adduced remains open."[105] He therefore dismissed the notice of motion with costs.
The Court of Appeal held that while Peterson J did not decide that the Commission had jurisdiction, he did make a decision when he dismissed the first respondent's notice of motion for summary dismissal[106]. The majority judgment in this Court states that Peterson J made a decision that the proceedings instituted in the Commission had not been shown to be unarguably beyond jurisdiction[107]. Contrary to its position in the Court of Appeal, where the first respondent more than once described Peterson J as having made a "decision", in this Court, without relying on a notice of contention, the first respondent challenged the proposition that Peterson J had made a decision. The basis of the challenge was that to defer a decision is not to make a decision. However, it is possible to make particular decisions in the course of concluding that another decision should be deferred. That is what Peterson J did. Each of the conclusions that Peterson J made a decision is correct. Indeed, as the Court of Appeal recognised, he made another decision as well - that the proceedings should go to trial[108]. That decision was called into question by the Court of Appeal's decision that they should not go to trial.
Procedural decisions outside s 179? The first respondent also submitted that even if Peterson J had made a decision, it was outside s 179 because it was merely procedural, and s 179 is directed to decisions on matters of substance. There is nothing in s 179(1) and (2) to suggest that a procedural decision is of necessity outside those sub-sections, and that is a conclusion supported by s 179(3)[109]. In any event, the rejection of a notice of motion seeking summary dismissal on the ground of want of jurisdiction was not, in this case, merely procedural. It rested on matters of substance.
The Melbourne Stevedoring Case. The majority in this Court[110], and apparently the majority in the Court of Appeal[111], considered that the reasoning in R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd[112] prevents s 179 from being applicable. Kirby J has accepted a submission of the appellants distinguishing that case on the ground that the delegate there made a "fundamental error" as to jurisdiction, while any error by Peterson J was not fundamental[113]. However, nothing in the language of s 179(1) and (2) supports a distinction between fundamental and other errors, and s 179(3) points against it.
The case is, however, distinguishable on another ground: s 179 is much wider than the privative provision in the Melbourne Stevedoring Case (s 52 of the Stevedoring Industry Act 1949 (Cth)). Section 52 protected an "order" and a "direction", but nothing else. Section 179 protects "a decision or purported decision", and here Peterson J made a decision. On the basis of the first respondent's summons the Court of Appeal made an order that the Industrial Relations Commission be prohibited from hearing and determining certain aspects of the proceedings. That order could only be made by reviewing or calling into question Peterson J's decision that the first respondent had not established to the appropriate standard that the appellants' summons in the Industrial Relations Commission was outside its jurisdiction. The Court of Appeal did call the decision into question by directly challenging the correctness of the reasoning leading to that conclusion and the orders Peterson J made as a result of reaching it. And Peterson J's interlocutory decision that the case should go to trial was called into question by the Court of Appeal's decision that the case should not proceed further.
Absence of res judicata and issue estoppel. The majority of the Court of Appeal drew attention to the fact that Peterson J dismissed the notice of motion because the first respondent had failed to discharge the heavy burden created by General Steel Industries Inc v Commissioner for Railways (NSW)[114]. The majority continued[115]:

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