Cornell v Titley

Cornell v Titley - [2002] NSWIRComm 326 - NSWIRComm 1997 case summary — Zoe

[9]

2 A complicating factor in this matter was the failure of the respondent to appear before the Registrar or before the Court. After the application was filed, legal representatives for the applicant encountered difficulties in serving the respondent and ultimately an order for substituted service was granted. An affidavit of service indicated that on 4 September 2002 a sealed copy of the order for substituted service and a sealed copy of the Summons for Relief and an affidavit verifying the Summons for Relief under s 106 sworn by the applicant were served on the respondent. The order for substituted service provided that service could be effected on the respondent by serving the pleadings on Mrs Titley at a specified address. That order arose from indications that the respondent, Mr Titley, appeared not to be at home at that address when visited but that his wife, Mrs Titley, usually answered the door. The affidavit of service recounted a conversation with Mr Titley where he explained that he had been absent in Sydney but he was now available, would accept the documents and would obtain legal advice about the matter. The matter was then listed twice before the Deputy Industrial Registrar on 12 September 2002 and 10 October 2002. On each occasion the respondent failed to appear. The matter was then listed before the Court on 24 October 2002 when the respondent again failed to appear. Directions were given on that occasion for the respondent to be notified that the matter would be listed for conciliation and hearing on an ex parte basis if there was again no appearance by the respondent. When the matter was called on 20 November 2002, the Court file revealed that the respondent had been notified of the place, date, time and purpose of the hearing but again there was no appearance. Counsel for the applicant informed the Court that his instructing solicitor had written to the respondent indicating the place, date, time and purpose of the hearing and further providing an extensive written submission detailing the applicant's case and the orders sought. A request was made for the respondent to telephone the applicant's solicitor but no such contact was made. Having formed the opinion that conciliation had been effectively frustrated, the applicant then moved the Court to make the orders sought in the Application by way of ex parte hearing. That request was acceded to and the matter proceeded to final hearing that day.

[11]

4 By way of verifying affidavit the applicant confirmed the following matters: (a) the respondent was a director and shareholder of a trading corporation known as D.D.S Distribution Consultants Pty Ltd (now de-registered) during the financial year 30 June 1997; (b) on 18 July 1996, the applicant commenced employment, either with D.D.S. Distribution Consultants Pty Ltd or the respondent or both, as a storeman/forklift driver; (c) from no later than 14 November 1997, the respondent commenced trading under the business name D. D. S. Direct Dispatch Service and employed the applicant as a storeman/forklift driver; (d) the applicant continued to work for the respondent, Mr Dennis Titley, trading as D. D. S. Direct Dispatch Service until 28 February 2001; (e) during the term of the applicant's employment with D.D.S. Distribution Consultants Pty Ltd and the respondent, the applicant was paid wages calculated on an hourly rate. The applicant was initially paid in cash and then later by cash cheque; (f) the applicant also worked in a supervisory capacity over other employees of the respondent; (g) during the term of the applicant's employment, the respondent did not make superannuation contributions to a complying superannuation fund on behalf of the applicant, save for some payment made to an MLC Fund sometime in the financial year ended 30 June 1997; (h) the respondent failed to comply with the Superannuation Guarantee Administration Act (Cth) 1992; (i) during the course of the applicant's employment, the applicant was advised by or on behalf of the respondent that the respondent did not have a liability to pay the applicant's superannuation contributions; (j) at a later time, the respondent verbally conceded to the applicant an obligation to pay the superannuation guarantee. The respondent represented to the applicant that the respondent would attend to payment of the superannuation guarantee once they had sold a utility truck. However, the respondent failed to honour his undertaking to the applicant.

[12]

5 At the request of the Court the applicant gave oral evidence. He first obtained employment through the CES which organised an interview with the respondent shortly before 18 July 1996. He regarded the respondent, Mr Dennis John Titley, as being his "boss". Mr Titley was a contractor for Cheetham Salt and the applicant ran the warehouse for Mr Titley. The organisations he worked for were known as D. D. S. Distribution Consultants Pty Ltd and D. D. S. Dispatch Services. He received pay once a week based on an hourly rate. He received five group certificates from Mr Titley - four in relation to Direct Dispatch Service and one for D.D.S. Distribution Consultants Pty Ltd. It was confirmed in evidence through a company search that this employment had gone from the company to the business name. The applicant had received a letter from MLC Ltd that there were some payments made into a superannuation fund on his behalf for the tax year 1996/1997. A statement from the MLC Employee Retirement Plan was sent to the applicant each year during his employment by Mr Titley with D.D.S Distribution Consultants Pty Ltd and D. D. S. Dispatch Services. A Mr Carter had been involved in the business of D.D.S. Distribution Consultants Pty Ltd until about March 1997 with Mr Titley and from then until the end of the employment in March 2000, the applicant worked for Mr Titley. The applicant had assumed that the respondent would pay into a superannuation fund "as per normal". After receiving statements from MLC Ltd showing that the payments were not made he had a discussion with Mr Titley about the matter. Mr Titley told him that he was going to get it all fixed up. There was a conversation in approximately January 2000 where Mr Titley told him that he would "fix it up". This occurred in a face to face conversation where the applicant recalls the following being said: TITLEY: I'm going to have to take the ute off you mate because I can't afford to pay your super. I'm going to have to sell the ute to pay your super. CORNELL: Okay mate, not a problem, take the ute. The applicant had used the utility to make deliveries as part of his employment and he became aware that the utility was sold. However, he was not aware of any amount of money from the sale being paid into a superannuation fund on his behalf.

[18]

The Respondent did not pay the required superannuation contributions on behalf of the Applicant for the period of the Applicant's employment, other than a few contributions made to an MLC Fund in the period ending 30 June 1997. 9. The requirement that the Respondent pay superannuation contributions into a complying fund on behalf of the Applicant is a minimum compulsory superannuation arrangement. 10. Superannuation arrangements including the payment of contributions by an employer into a complying superannuation fund on behalf of an employee arise out of the employment relationship and are at least a collateral arrangement between an employer and an employee. As a collateral arrangement the payment of superannuation contributions is therefore a contract as defined in Section 105 of the Industrial Relations Act (NSW) 1996 ("IR Act"). … 12. Because of the failure of the Respondent to pay the required superannuation contributions into a complying fund on behalf of the Applicant, the contract is or became harsh, unfair, unconscionable and against the public interest and attracts the operation of Section 106 of the IR Act. 13. The Respondent's conduct was also harsh, unfair, unconscionable and against the public interest in that the Respondent initially denied that he was liable to pay contributions into a complying fund. The Respondent subsequently admitted liability but misled the Applicant by representing to the Applicant that he would pay the contributions after he had sold a utility truck. The contributions were never paid other than those referred to in paragraph 8. 14. In Day v Lumley Life Ltd (1999) 90 IR 70, Hungerford J considered in a s 106 case the conduct of the respondent employer in making unilateral decisions affecting the reasonable employment expectations of an employee. His Honour considered the nature of the employment relationship and (at p.71) formulated the following proposition: The employment relationship, I have to say, is a serious relationship with important incidents for both parties. It is a consensual relationship based on contract and with respective rights and obligations. It should not, I think, operate, or to be so seen, in practice in a way which permits one party, here the employer, to act in a one-sided manner contrary to the legitimate expectations and understandings of the other party, here the employee, and particularly where such action damages or detrimentally affects the career interests of the employee. Employees have a corresponding duty to act with fidelity and good faith. Based on the above proposition, His Honour (at p 72) found that: (contract) impliedly requires an employer to act with propriety according to the particular circumstances existing; and held that: Section 106 not only recognises that but reinforces it by enabling an aggrieved employee to obtain relief to remedy any unfairness. 15. The Applicant was employed under the Storeman and Packers General (State) Consolidated Award which provides that eligible employees are covered for superannuation by the Superannuation Guarantee (Administration) Act 1992 Act as well as by the provisions for superannuation under the Award. The notation to Clause 38 of the Award, dealing with superannuation, provides:- NOTATION: Employees covered by this award are also covered by the provisions of the Superannuation Guarantee Charge Act 1992 (Cth.) and the Superannuation Guarantee (Administration) Act 1992 (Cth.) and complementary legislation. Nothing in this notation, however, shall be used to reduce any benefits enjoyed by employees as at the date of the making of this award. 16. The affect of this notation is to ensure that it is a condition of employment that employers pay contributions into a complying superannuation fund on behalf of their employees that are, as a minimum, an amount equal to the percentage set out in the Superannuation Guarantee (Administration) Act 1992 (Cth). 17. Accordingly, the Commission in Court Session also has jurisdiction under Section 368 of the IR Act to order the Respondent to pay the Applicant's contributions into a complying fund. Section 368 provides: (1) An industrial court may, on application, order an employer, who employs any person to do any work for which the employer is required under an industrial instrument to make a contribution to a superannuation fund on behalf of the person, to make a payment to or in respect of that person for the purpose of restoring the person, as far as practicable, to the position that the person would have been in had the employer not failed to make the contribution. (2) Without limiting the generality of subsection (1), an order under this section may direct the employer to pay to the relevant superannuation fund: (a) the amount of the contribution that is unpaid, and (b) the amount that, in the opinion of the industrial court, would have accrued in respect of the contribution in the fund had it been paid to the fund when due. (3) If, at the time an order is made, the employee no longer works for the employer, the industrial court may order the employer to pay the relevant amounts to a superannuation fund nominated by the former employee. (4) A certificate signed, or purporting to be signed, by a trustee of a superannuation fund, or by an agent of such a trustee, as to: (a) the amount of contribution that has been, or should have been, paid in respect of an employee for a particular period of time, or (b) the eligibility of an employee for membership of the fund, or (c) the amount that would have accrued in respect of a contribution or a series of contributions had it been in the fund over a particular period, (5) is evidence of the matters stated in the certificate. 18. There is no Federal legislation that provides the mechanism for the remedy for an aggrieved worker to sue the employer directly for the payment of unpaid contributions into a complying fund. … 20. Section 109 of The Constitution is not applicable to this matter as it is clear that the Superannuation legislation is not intended to cover the field. This is clear not only from the provisions cited above but also from the fact that there is state superannuation legislation such as the Superannuation Administration Act 1996 and the Superannuation Administration Authority Corporatisation Act 1999. … 24. There is no doubt that superannuation claims can be heard under Section 106 of the IR Act. The law has developed through Section 88F of the 1940 Act then through Section 275 of the 1991 Act and now Section 106. It has long been recognised that the nature and scope of Section 106 of the IR Act and its predecessors Section 88F and Section 275 was and is very wide. 25. Section 106, and its predecessors, has always been given a very wide interpretation. 26. The protection and sanction afforded by s.88F was set out in the consistently followed and applied judgment of Sheldon J. in Davies v. General Transport Development Pty. Ltd. [1967] A.R. (N.S.W.) 371 at 373-374, as follows : It is true, however, that, once it has been confined within its proper industrial context, s.88F acts with drastic and pervasive effect. It certainly plays havoc with the classic principles relating to contracts. "In general, unless a contract is vitiated by duress, fraud or mistake, its terms will be enforced though unreasonable or even harsh and unconscionable ... Moreover in the ordinary case the court will not remake a contract; unless in the special case where a contract is severable, it will not strike out one provision as unenforceable and enforce the rest" (Esso Petroleum v. Harper's Garage (per Lord Reid) [1967] 1 All E.R. at p.705). But s.88F has no such inhibitions; for it not only proscribes transactions which directly undermine awards (see (d) and (e)) or threaten general industrial standards (which, I think, is the most relevant "public interest" referred to in (c), but it also, in (a) and (b), strikes separately at those which are "unfair" or "harsh" or "unconscionable". Presumably, this is because any transaction, leading to work in an industry, which can be so described is regarded as inimical to the purposes of the Act. In this setting, these words are probably, for practical purposes, a tautological trinity. To find in relation to a shoddy dealing concerning, say, a motor truck and a promise of carrying work, that it is "unfair" but not "harsh" or "unconscionable" suggests an approach too refined for the subject. But, insofar as there are nuances between these words (as Lord Reid's statement suggests), s.88F makes it clear that, for its purposes, any one will serve. As to remaking contracts, this can be done either by omitting parts and retaining the rest, or by adding new terms. Thus, destruction, dilution, renovation and patching are all weapons in the section's arsenal. Nor does it tolerate argument on such nice questions as whether the contractual relationship has been perfected. It is sufficient that there be an "arrangement" and, for good measure, "conditions and collateral arrangements" are also included. Moreover, there is no loophole available in transactions, so dear to those allergic to awards, under which the working party is not an employee but an independent contractor. Unlike some other sections in the Act, s.88F does not transmute contractors into employees; it takes the contract as it finds it but imperils both its continuance and its prior operation. In the result, when deciding actual cases under this section, to seek assistance from authorities on the general law of contract is an arid exercise, for if ever a law was intended to stand on its own feet it is this one." 27. More specifically in Davies v General Transport Development Pty Ltd [1967] AR NSW 371 at 374, his Honour said of Section 88F(2)(the predecessor of Section 106(5): By adding sub-(2), it gave the Commission power, when avoiding or altering a transaction to 'make such orders as to the payment of money ... as may appear to the Commission to be just in the circumstances of the case. Not only can no wider discretion be conceived, but the whole subject of right and remedy under this section was thus committed exclusively to the Industrial Tribunal'. 28. About Section 88F generally, Barwick CJ in Stevenson v Barham (1977) 136 CLR 190 at 192, stated that: ... the language of Section 88F of the Act is intractable and must be given effect according to its width and generality. At pp 201-202 Mason and Jacobs JJ, with Barwick CJ agreeing held that the necessary jurisdictional requirement to hear and determine a matter under the section existed once it was established that there was a contract or arrangement or any related condition or collateral arrangement under which a person performed work in any industry and this gave a matter the requisite industrial character. 29. The Full Bench (Fisher CJ, Glynn and Cullen JJ) in Incitec Ltd and anor v Barry & ors (1992) 45 IR 148 cited this and applied the above at P 152 of its judgment as authority for its view that: the contract or arrangement whereby a person performs work in an industry has a wide meaning. It covers a large number of business transactions relating to the performance of work. At first instance Hill J held in Barry v. Incitec Ltd [1991] 45 IR 143 at 146 that: Unfairness under the section may arise either from the terms of the contract itself, the surrounding circumstances and/or from the manner of performance or operation of the contract 30. Hill J's interpretation of Section 88F was approved and upheld by the Full Bench in Incitec Ltd and anor v Barry & ors and by the Court of Appeal in Incitec Ltd v Industrial Court of New South Wales [1992] 45 IR 155 at 157 (per Gleeson CJ, Kirby P, and Priestley JA) 31. What constitutes an arrangement was considered by a Full Court (Hill, Maidment and Peterson JJ) of the former Industrial Court in Legal & General Assurance Society Limited v Stock [1993] 49 IR 464. The case was a decision under section 275 and their Honours observed at pp 480-481 that: The authorities make clear that the term "arrangement" where used in the section is a wide one and encompasses transactions or plans which are not legally enforceable agreements. The following principles may be drawn from decided cases in the matter in relation to the ambit and reach of the term "arrangement" where used in the section (Unconscionable Contracts and Economic Duress - Peter M Hall, at 55-56). (1) The word 'arrangement' in its ordinary meaning and particular statutory context is a word of much wider import than the word 'contract'. (2) An 'arrangement' will be found to exist where there is a bilateral or multilateral plan or concerted action to bring about a particular result. (3) An 'arrangement' may envisage a transaction in the nature of a bargain which may not be legally binding or enforceable, something in the nature of an understanding between two or more persons. (4) The section speaks of an arrangement of a particular kind, namely, an arrangement whereby a person performs work in an industry, that is, a transaction which directly leads to the performance of work in an industry. (5) The term 'arrangement' possessing a broad and extensive meaning may be found disclosed in a document comprising or specifying its terms, or there may be no document specifying the arrangement in which event resort will be had to oral evidence of discussions whilst in other cases an arrangement may be implied or inferred from the circumstances or the conduct of the parties. An arrangement may be discovered in a combination of documentary or verbal communications and the conduct of the parties. The relationship between the parties may itself manifest an arrangement. (6) There may exist two separate contracts each forming part of a specific arrangement and together constituting the means by which it is effectuated so as to produce particular results and whereby a person performs work in an industry. (7) The section accordingly comprehends not only the initial plans but all transactions by which the arrangement is carried into effect. It applies to any dealing the purpose or the effect of which is to achieve a situation as a consequence of which or wholly or partly in fulfilment of which a person performs work in an industry. (8) The term 'arrangement' embraces a situation where there exists two or more separate contracts which, notwithstanding their separateness, are, in a particular factual context, so sufficiently associated with each other in a practical sense as together to constitute an arrangement of which each contract is a constituent part. (9) The arrangement, including the relationship leading to the performance of work and another contract, need not necessarily have sprung into existence at the same time."" 32. In Legal & General Assurance Society Limited v Stock [1993] 49 IR 464 the appellant, Legal & General was not Stock's employer but was the administrator and manager of the superannuation fund where Stock's employer had arranged for Stock to become a member and into which contributions were to be paid on behalf of Stock. At page 474 their Honours stated that: … there was a collateral arrangement between the employer (the first respondent), the appellant and Mr Stock that the appellant would take such steps as were necessary to give effect to the contract between the first respondent and Mr Stock that Mr Stock would become a member of the Staff Executive Superannuation Fund with annual contributions of $3,000 by the first respondent for the benefit of Mr Stock which would provide for Mr Stock a retirement benefit at age 65 of approximately $200,000. 33. Their Honours found that the collateral arrangements were unfair in relation to the fund as was the lack of monitoring and safeguards, Their Honours said at p 479: We have no doubt that the contract of employment as varied in 1979 and 1986 and the collateral arrangements so far as they comprehended the membership by Mr Stock of the superannuation fund were unfair in terms in that adequate safeguarding or monitoring provisions were not included. Their Honours continued at pp 481-482- We therefore find that the arrangements between the first respondent, the appellant and the trustees of the superannuation fund and Mr Stock in relation to his admission to the fund on the terms promised and represented were arrangements collateral to the contract of employment as varied in 1979; the variation of 1979 and the collateral arrangements were unfair in that they failed to make any or any proper and adequate provision for ensuring that Mr Stock was admitted as a member of the "Adtype Pty Limited Superannuation Plan" in accordance with the contract and the collateral arrangements; and that regular and appropriate advice in relation to the state of the fund, the benefits to the credit of Mr Stock, and the contribution made thereto by the employer were promptly provided to the trustees, the employer and Mr Stock, and further that appropriate advice by the appellant was given annually as to the amount of the annual contribution necessary to ensure that Mr Stock received a retirement benefit at age 65 of approximately $200,000. We reject the submission by the appellant that the action under the section was nothing more than one for breach or enforcement of contract. There is no doubt that a breach of contract was involved. But that does not end the matter. In this case there is also involved a contract forming part of an overall arrangement or transaction which in our view is manifestly unfair both in its terms (or more accurately lack of them) and in its operation in practice. The contract and arrangement contained simply no provision or mechanism which would have enabled the beneficiary, Mr Stock, to detect objectively any omissions or errors of performance. … We reject the submission by Mr Hale that the appellant had no real or close connection with the making or performance of any relevant contract or arrangement, the unfairness thereof, and/or any loss sustained by Mr Stock. The real and close connection of the appellant with the 1979 variation to the contract of employment and the collateral arrangements relating to superannuation, within the meaning of the principles laid down in Brown v Rezitis, is made abundantly clear in our opinion by its management and administration of the fund and its pecuniary interest therein; it was an active participant or actor in relation to the performance of the contract as varied and the overall transaction involving Mr Stock." 34. The case of David Jones Ltd v Cukeric (1997) 78 I.R. 430 at 457-458 dealt with a release given by a worker which affected his superannuation rights. The case was decided under the former section 275. The Full Bench (Hill, Hungerford and Schmidt JJ) found that the Superannuation trust deed was collateral to the Applicant's employment and that the clauses of the deed that was challenged was unfair. Their Honours applied the decision of the Full Court of the former Industrial Court in Legal & General Assurance Society Limited v Stock [1993] 49 IR 464 and said at p 452: … the then Full Industrial Court discussed the meaning of the word "arrangement". We are satisfied the term is sufficiently wide to embrace a contract of employment, superannuation arrangements made by an employer in respect of that employment … At p 453 their Honours said: The superannuation scheme can be said to be also an arrangement collateral to the contract of employment. Their Honours found that the contract of employment and the superannuation scheme together comprised an arrangement under which work was performed within the jurisdiction under Section 275. The Full Bench also confirmed the significance of conduct of parties in determining whether a contract or arrangement is unfair. At pp 457-458 their Honours said: There is also, however, a public interest in parties honouring the obligations which they have under contracts including employment contracts and any promises and/or representations made in relation to such contracts. In this regard, the Company was remarkably deficient to the point, in our view, of engaging in conduct which was both reprehensible and unconscionable. It was conduct which makes irresistible the conclusion that the release it extracted from Mr Cukeric was harsh, unfair and unconscionable and contrary to the public interest within the scope of s.275. While we do not condone the action of Mr Cukeric in giving the release, the wrong there involved is submerged by the unconscionable conduct of the company in misrepresenting Mr Cukeric's superannuation entitlements and demanding the release as a condition of paying him his correct and lawful ones. We are satisfied it would be unjust in the circumstances for Mr Cukeric to be held to the release. It is well settled that the conduct of the parties is a matter to which regard may properly be had in determining whether a contract or arrangement under s 275 is harsh, unfair or unconscionable. Their Honour's found that the Company's construction of the deed: patently involves injustice and unfairness as it allows the Company to deem a position as one of fact which is clearly in this case contrary to fact to the detriment of the employee/beneficiary. It is in the nature of a fraud on the beneficiary. Company had misrepresented Applicant's rights under the superannuation deed. The provision of the Deed that was challenged in this case was never drawn to the Applicant's attention until raised as a defence and Applicant had never seen the trust deed. The provision was deleted by the Full Bench. A monetary sum was awarded to the Applicant which reflected all salary, and non-salary components of the package such as motor vehicle, superannuation contributions, and other benefits. 35. Section 106 has been comprehensively reviewed by the Full Bench of the Court in Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1 and again in Reich v Client Server Professionals Of Australia Pty Ltd (Administrator Appointed) (2000) 99 IR 69.

[19]

In Beahan v Bush Boake the Full bench at p.13 considered that: The former s.88F, and hence the present s.106, has been, properly in our view, described as remedial in nature in enabling a person (including an employee) aggrieved by a contract within the scope of the section to obtain relief: see Manni v. Scully [1967] A.R. (N.S.W.) 606 at 615. As Isaacs J. observed in Bull v. Attorney-General for New South Wales (1913) 17 C.L.R.370 at 384, such legislation "should be construed beneficially ... so as to give the fullest relief which the fair meaning of its language will allow". 37. The Full Bench reviewed the earlier authorities on Section 88F, Section 275 and Section 106 and stated at p 33 that: A series of more recent unfair contracts cases under s 275 of the 1991 Act and s.106 of the present Act have been decided by single judges and on appeal by Full Benches of the Court in situations where after an employee was dismissed relief was allowed by avoiding or varying contracts of employment found to be unfair in respect of various matters, including notice periods, severance pay, redundancy payments, superannuation, share option schemes and deeds of release; orders were made for the payment of money in connection with the contracts so avoided or varied as to the subject matters concerned. Those cases may be identified from the authorities which we have set out earlier in these reasons and we do not repeat them. Their Honours further stated at p 35 that : What emerges from the above authorities, we think, is the now settled view that s 106 (as with the previous Section 88F of the 1940 Act and Section 275 of the 1991 Act) is directed to an impugned contract of employment, whether existing or terminated, as to the fairness of its express or implied terms. Such unfairness will depend upon the facts of each particular case by focusing attention on the contractual relationship between a particular employer and employee and where the unfairness might arise from the terms of the contract itself, the surrounding circumstances and/or the manner of performance or operation of the contract. The Section, we emphasise, is not concerned with re-establishing an employment relationship which has ended nor with compensating an employee for the loss of his employment contract. In other words, the Section is properly concerned with the fairness of the terms of a contract of employment in its various respects, and if relevantly found to be unfair, to provide remedial relief by avoiding or varying the terms of that contract and to order the payment of money in connection with any contract so avoided or varied as is considered just in the circumstances of the case. 38. In Reich v Client Server Professionals Of Australia Pty Ltd (Administrator Appointed) (2000) 99 IR 69 the nature and scope of Section 106 was again comprehensively reviewed by a Full Bench (Wright P, Walton V-P, Glynn, Hungerford and Schmidt JJ.). The decision of the Full Bench in Beahan v Bush Boake was applied by the Full Bench in this case. 39. The case raised two question to be determined which were: (i) whether an action is properly within s 106 and as attracting relief thereunder where a respondent employer breached a contract of employment by repudiating a term or condition thereof so as to enable an action to be brought at common law for damages for breach of contract, and (ii) whether unfair conduct of itself by the respondent employer could establish a relevant ground of unfairness that the contract of employment was unfair under s 106 so as to attract relief thereunder. 40. On appeal both questions were answered by the Full Bench in the affirmative. 41. Wright P, Walton V-P and Hungerford J reviewed the definition of "contract" meant in Section 105 and stated at p 75 that: A "contract" is relevantly defined in s 105 of the statute as meaning "any contract or arrangement, or any related condition or collateral arrangement ... "; and an "unfair contract" is defined as one "that is unfair, harsh or unconscionable, or that is against the public interest". It will be immediately apparent that the type of transaction caught by the section is not limited to a "contract" (or agreement) in the strict common law sense of being legally enforceable where a contractual relationship has been established; it extends to cover an "arrangement" and further extends to cover "any related condition or collateral arrangement". The resultant scope of the section as to transactions comprehended within it was referred to by Sheldon J in Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 at 373, since referred to with approval in very many cases and which needs no elaboration here. 42. Their Honours then looked at the extension of the section to cover an "arrangement". They noted that the consequent effect on transactions within its scope have been referred to on many occasions and cited the passage referred to above of the Full Court (Hill, Maidment and Peterson JJ) in Legal & General Assurance Society Limited v Stock [1993] 49 IR 464 at pp 480-481. They held at p 77 that: We are well satisfied that the word "arrangement", including if necessary the extended words in the definition as covering "any related condition or collateral arrangement", is sufficiently wide to encompass aspects of the employment relationship which are said to offend the concept of fairness, including as alleged here the conduct of the respondent in repudiating the contract of employment. 43. Their Honours also referred to and approved Hungerford J's statements in Day v Lumley Life Ltd (1999) 90 IR 70 at p 71 and p 72 . 44. Wright P, Walton V-P and Hungerford J agreed that conduct by an employer which is unfair and which breaches the employment contract, even though not permitted by the terms of that contract would nevertheless render such contract unfair and amenable to relief. 45. Their Honours stated at p 83 that: Such approach is entirely consistent with the language of s106. We would only add the comment that to us it seems an utterly arid exercise in semantics to find conduct as part of the operation of a contract to be unfair but not thereby to find also the contract to be unfair because such unfair conduct was not permitted by the otherwise fair contract - we think it should be stated as plainly as it may be, and as we think the authorities and s106 (2) do, that a contract may be found to be unfair because of any conduct of the parties. 46. In Reich their Honours referred to and approved McNaught v Micador Australia Pty Ltd (1996) 83 IR 111. They agreed with the way in which Hungerford J reviewed the cases in McNaught v Micador and with the conclusions reached by his Honour. 47. Hungerford J in reviewing the authorities on the nature and scope of Section 275, including his decision in Walker v Hussman Australia Pty Ltd (1991) NSWLR 451 determined inter alia that: (1) The mere fact that an action may also lie in the ordinary courts in respect of the actions which constitute or give rise to the unfairness does not in itself provide an answer to the question of whether or not an action lies under the section although it may go to the exercise of discretion: Hussmann (per Hill, Maidment and Peterson JJ. contra). (2) The fact that the terms of a particular contract or arrangement permit an unfair, harsh and/or unconscionable dealing by one party with the other party thereto can lead to the conclusion that the contract or arrangement is unfair, harsh and/or unconscionable within the section: Hussmann (31 NSWLR at p 203; 48 IR at p 408) (per Hill J, Maidment and Peterson JJ contra). (3) Although a contract was not unfair, harsh or unconscionable or against the public interest at the time of its making, subsequent events have made it so: Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543 at 560; [1987] 22 IR 59 at 76 (per McHugh JA). (4) Unfairness under the section may arise either from the terms of the contract itself, the surrounding circumstances and/or from the manner of performance or operation of the contract: Barry v. Incitec Ltd [1991] 45 IR 143 at 146 (per Hill J); Incitec Ltd v Industrial Court of New South Wales [1992] 45 IR 155 at 157 (Gleeson CJ, Kirby P, and Priestley JA). (5) In determining whether "unfairness" in the contract or arrangement has been established, regard may be had not merely to the terms of the contract or arrangement, as originally negotiated, but also to the manner in which the contract or arrangement has ultimately worked out and operates as between the parties to it: Walker v Industrial Court of New South Wales [1994] 53 IR 121 at 133-134, 140, 149 (per Kirby P, semble, Meagher and Sheller JJ A). (6) The existence of other remedies (such as statutory claims for redundancy payments, statutory claims for reinstatement for wrongful dismissal, or a common law claim for unjust dismissal) do not control or limit the very large language of the section: Walker v Industrial Court (53 IR at pp 134-135) (per Kirby P). (7) In considering "fairness", the determination is according to the common sense approach of a juryman by applying standards which appear to provide a proper balance or division of advantage and disadvantage between the parties who have made the contract or arrangement; in doing so, the conduct of the parties, their capability to appreciate the bargain they had made and their comparative bargaining positions when entering into the contract or arrangement will always have to be borne in mind: Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 at 373-374 (per Sheldon J); and A & M Thompson Pty Ltd v Total Australia Ltd [1980] 2 NSWLR 1 at 13 (Perrignon and Dey JJ, Cahill J dissenting). (8) How a contract may operate in practice necessarily means looking at the conduct of the parties to enable a conclusion that a contract which could so operate was unfair: Baker v. National Distribution Services Ltd [1993] 50 IR 254 at 270, 272 (Fisher CJ and Hungerford J, Hill J dissenting but not on this point); and Rothmans Distribution Services Ltd v Full Court of the Industrial Court of New South Wales [1994] 53 IR 157 at 160 (Kirby P, Priestley and Meagher JJ A). (9) The necessary jurisdictional requirement to hear and determine a matter under the section exists once it be established that there is a contract or arrangement or any related condition or collateral arrangement under which a person performs work in any industry: Stevenson v Barham (per Mason and Jacobs JJ., Barwick C.J. agreeing); Caltex Oil (Australia) Pty Ltd v Feenan (Privy Council - per Lord Diplock); Minister for Youth and Community Services] (per McHugh JA); Visalli v Southwell (per Kirby P.); Production Spray Painting & Panel Beating Pty Ltd v Newnham (Mahoney, Priestley and Handley JJA); Majik Markets Pty Ltd v. Brake & Service Centre Drummoyne Pty Ltd (Kirby P., Mahoney and Handley JJA); and Port Macquarie Golf Club Ltd v Stead (Fisher C.J., Hungerford and Cullen JJ). 46.(sic) The other members of the Bench in Reich, Glynn and Schimdt JJ, stated at p 114 that: In the light of these authorities it can no longer be open to doubt that a contract containing a term implied by law cannot thereby be precluded from review under s106 of the Act. Conduct which is in breach of an implied term may, or may not, in the particular circumstances of a case demonstrate the unfairness of the contract in question. The parties must be heard as to such claims. 47. Recently in Westfield Holdings Ltd v Adam [2001] NSWIRComm 293 (21 December 2001) Full Bench stated at Paragraph 53 that: 53. The law relating to unfair contracts in New South Wales has developed into a substantial and important area of jurisprudence within the jurisdiction of the Commission. Within this jurisdiction there have been an increasing number of cases in recent years involving claims by senior corporate executives or highly paid employees seeking relief under s 106 (or its predecessor). The case law has developed to address particular features associated with the employment contracts or arrangements for this class of employee or, in some cases, independent contractor. These features have included loss of value of share options, bonuses or superannuation on termination; the fate of loans from the employer on termination; post employment restraints of trade; the fairness of notice periods and redundancy; mitigation of loss; and the capacity of this class of skilled and experienced employee or contractor to bargain on equal terms with the employer or principal regarding the terms of their contract. 48. At paragraph 134, their Honours stated that: 134. The discretion conferred by s 106(5) of the Act to order the payment of money "in connection with" any contract declared wholly or partly void, or varied, as the Commission considers "just in the circumstances of the case" is wider than the power to award damages in the case of tort or breach of contract at common law. As has been discussed, the discretion conferred by s 106(5) of the Act is not restricted to awarding payment so as to compensate the applicant for actual loss suffered. 49. More recently in Thornthwaite v Australian National Credit Union Ltd [2002] NSWIRComm 240 (17 September 2002) Haylen J again reviewed the cases on Section 106 of the IR Act and its predecessors. His Honour referred to and approved the statement of Hill J in Barry v Incitec Ltd (1991) 45 IR 146 on the nature of Section 88F. His Honour relied on the decisions of Beahan v Bush Boake and Reich v Client Server Professionals Of Australia Pty Ltd. His Honour reviewed the cases and stated that: 1 It is appropriate to consider the observations made by the Full Bench in Westfield Holdings v Adams (2001) NSWIRComm 293, in dealing with the general nature of s 106 of the Act and the nature of the orders which may be made following a finding of unfairness. It was accepted that s 106 (5) provided a wide power to grant compensation which was not limited by common law concepts of assessment of damages. 2. The breadth of the provision, when it was 88F, was described by Barwick CJ in Stevenson v Barham (1977) 136 CLR 190 at 192, in the following terms: ... the language of Section 88F of the Act is intractable and must be given effect according to its width and generality. His Honour also made reference to the famous judgment of Sheldon J in Davies v General Transport Development Pty Ltd [1967] AR NSW 371 at 374, in which his Honour said of Section 88F(2): By adding sub-(2), it gave the Commission power, when avoiding or altering a transaction to 'make such orders as to the payment of money ... as may appear to the Commission to be just in the circumstances of the case. Not only can no wider discretion by conceived, but the whole subject of right and remedy under this section was thus committed exclusively to the Industrial Tribunal. In relation to the width of the power available, his Honour referred to a Full Bench of the Industrial Court in Barclays Australia Investments Services Ltd v Nordby (1995) 99 IR 258 at 279 where they said: The task of assessing a 'just' monetary amount is one which, not infrequently, involves the exercise of a broad judgment without the assistance of defined and identifiable parameters or heads of loss or damage. His Honour also cited the Full Industrial Court in State of New South Wales v Health and Research Employees Association of New South Wales (unreported, Fisher CJ, Bauer and Hill JJ, 31 March 1993) where they stated that: It is clear that an instruction for the payment of a sum ' just in the circumstances' in Section 88F(2) has a wider base than that generally available under the principles of common law damages. Indeed, the existence of Section 88F indicates that the legislature found that common law remedies are not necessarily appropriate and it seems to follows, insofar as argument by analogy might be useful, that though persuasive, reliance solely upon common law rules as to 'damages' may well be inappropriate. Further, Kirby P in Walker v The Industrial Court of New South Wales (1994) 53 IR 121 at 135 said: The High Court of Australia, and this Court, have repeatedly stressed the very wide discretion conferred by Section 88F upon the former Industrial Commission (and now the Court). Once Section 88F(1) attaches, the remedies that are then at the disposal of the Commission (now the Court) are also extremely wide. There is no warrant for confining this very large power, or for narrowing the circumstances of its exercise, except as statute provides ... . His Honour then identified principles which the Full Bench dealt with which were appropriate to be applied under s 106 (5) of the Act. The Full Bench raised the following matters: 161 ... (4) any order shall be what the Commission considers just in the circumstances of the case. While such orders should not be limited by drawing some analogy with contractual, tort or equitable remedies it is proper to have regard to the common law or equitable principles, but recognising that in particulars cases those principles may be inappropriate ... (8) ... ultimately, the relevant guiding principles for the Commission in Court Session under s 106 (5) is not confined to a question of what loss or damage an aggrieved party has suffered but rather a wider test, namely, what is just in the circumstances of the case. (9) In assessing whether unfairness has occurred and in making money orders under s 106 (5) it would be appropriate to have regard to the following principles regarding the relevance of general industrial standards. In doing so, however, the individual contract or arrangement concerned remains the primary consideration: a) whether or not a contract or arrangement is unfair within the meaning of Section 105 and 106 is a matter to be decided upon examination of the facts of each particular case; Section 106 deals largely with private rights inter partes; the focus of attention is the contractual relationship between a particular employer and employee . (b) subject to the primary focus being the particular circumstances of the individual contract or arrangement concerned, in assessing whether unfairness has occurred, general standards or levels of what is considered to be fair, including general standards of redundancy pay applying to employees covered by industrial awards or legislation, will be factors to be considered. (c) despite that a general and relevant industrial prescription governing benefits payable to employees in termination of employment situations may exist, unfairness in relation to a particular contract of employment may nevertheless arise in the situation of redundancy or termination of employment for reasons unrelated to or not relevant to the basis of award prescription of an objective and fair benefit ... Haylen J held at paragraph 80 that: 80………Contrary to what might have been the understanding of industrial lawyers for many years, it is now clearly established that the contract of employment operates separately from an award or certified agreement and is not automatically subsumed into the contract of employment. Orders made under s 106, especially for the payment of money, are not in the nature of an award or the provision of an agreement. As the discussion in Westfield v Adams discloses, while concepts from the general law and general industrial standards may be relevant in reaching a determination on what money amount is just in the circumstances of the case, the result is not to order damages, nor does it simply amount to restitution or, for that matter, can it be considered the equivalent of making an "award" for the payment of more money. This will be so even if there is an award in existence and the Court has taken into consideration general award and industrial standards in arriving at the amount of money to be paid as being just in the circumstances of the case. All of those surrounding circumstances will not, ultimately, alter the true nature of the order made. As pointed out in Westfield v Adams, it is a mistake to treat the considerations which inform the determination of a money order which is "just in the circumstances of the case" as resulting in the Court ordering, in some strict legal sense, for example, damages in lieu of reasonable notice. Tests and approaches from various areas of the law may be utilised in the task of determining a money order. However, it masks the true nature of the exercise to simply equate those matters with an order "for notice" or "due to redundancy" or "for severance pay". The focus will always remain on the unfairness demonstrated to be associated with the contract impugned. … 56. There have also been a number of decisions dealing more specifically with superannuation arrangements under Section 106 and its predecessors where relief has been granted under those sections 57. In Gray, Ian Lynton And Rentokil Pty Ltd [1993] NSWIRC 21 (7 April 1993) an essential question was which set of superannuation rules was applicable to the relationship between the applicant and the employer. The superannuation scheme which the applicant entered as a collateral arrangement to his contract of employment was the scheme contained in the "Deed for the Rentokil Retirement Plan dated 1 January, 1975". The rules which were annexed to that deed (exhibit 19) would necessarily apply to the applicant unless an amendment were made, in accordance with the rules of that scheme. An amendment to the Deed was made which adversely affected the benefits and potential benefits of the Applicant. The question was whether the Industrial Court should intervene pursuant to s 275(1). Bauer J held that: Had the issue been confined to the question of whether the collateral arrangement to the contract of employment, the superannuation scheme, was itself a fair and proper one then the evidence may not have allowed a decision to be made favourable to the applicant in this case. Indeed, the safeguard contained within the original scheme that no changes should be made which would be to the detriment of the existing members of the scheme together with the various discretions which were retained in the hands of the Directors including that in relation to instructing the Trustees to pay some intermediate benefit indicated at least to the extent of the working of the scheme appropriate mechanisms were therein contained. In this particular instance, however, those safeguards failed and in the working out of the arrangement there was, in my view, an unfairness which ought to have been more carefully guarded against in the collateral arrangement. The question then arises whether the discretion of the Court should be exercised to make an order with respect to the contract so found to be unfair. In my view, such a discretion should be exercised in favour of the applicant. 58. The case of Janette Maureen Keyworth v Carol Forster, Michael Edgar Forster v Lorac Australia Pty Limited [1997] NSWIRComm 168 (2 December 1997) simply involved the pursuit, by a former member of a superannuation fund, of the employer's contributions to that fund. Peterson J held as follows: I conclude that the superannuation arrangements formed part of the contract of employment of Mrs Keyworth which was unfair in that it permitted conduct by the employer to put in train a course of events which had the effect of unfairly depriving the employee of her benefits in the Fund which were accrued in circumstances which anticipated not that they would be forfeited but in fact received in part in substitution for salary increases over a period of time. I accept the fund was created essentially, and after 1985 continued, for the purpose described in the recitals, to provide certain employee benefits on retirement. Alternatively I would take the view that the superannuation scheme formed part of an arrangement or was a related condition or a collateral arrangement under which work was performed within the meaning of s.106 of the Act. His Honour made an order declaring void ab initio clauses 15.1 and 15.2 of a Trust Deed and an order that the first and second respondents pay to the applicant the amount of the superannuation benefit of the applicant in the superannuation fund. 59. In Ivan Paul Ruefli v Allam Bros Australia Pty Ltd [1999] NSWIRComm 471 (26 October 1999) Glynn J considered a claim under Section 106 which included a claim for occupational superannuation contributions to be at the percentage rates set by the Superannuation Guarantee Administration Act 1992. The Respondent was ordered to pay superannuation contributions at the applicable rates set by the legislation. On the question of the meaning of remuneration, her Honour applied the decision of the Full Bench of the Commission in Sheed v Summit Western Pty Ltd t/a Blacktown Mitsubishi (1998) 81 IR 347) and found that non-salary benefits received by an employee do form part of an employee's remuneration. 60. In UPM-Kymmene Pty Limited v Christopher Drake [1999] NSWIRComm 77 (9 March 1999) Kavanagh J considered a claim under Section 106 which included a claim for superannuation contributions. Her Honour held, on the authority of David Jones Ltd v Cukeric that the applicant was entitled to payments of his full employment package during notice. She held that it was a term of the applicant's employment that he would receive, in addition to his salary, not less than 15% of the amount of his salary payable to Mercantile Mutual Insurance Scheme equating to an annual figure of $23,850. This was his superannuation scheme. Her Honour ordered the Respondent to pay 6 Months superannuation contributions 61. In Mark Cotton v Harpoon Investments [2001] NSWIRComm 198 (12 September 2001) Boland J considered a claim under S.106 which included a claim for unpaid superannuation contributions of $3000.00 per annum. It was found that the promised superannuation contributions were part of employment and that the applicant did not receive superannuation contributions in accordance with the contract of employment. His Honour made money orders under Section 106 in relation to the applicant's superannuation ordering that he be paid $3000.00 per annum for the period of employment plus interest. His Honour at paragraph 58 cited and applied Brown v Retzitis as authority for the following: (1) The power of the Commission in Court Session to make an order under s 106 (5) is not limited to the making of an order for the payment of money by one of the parties to the contract, arrangement, related condition or collateral arrangement that has been varied or declared void under s 106 (1) but extends to such orders as can reasonably be thought to have a real connection with the making, variation or avoidance of the contract, arrangement, related condition or collateral arrangement. (2) sum by way of compensation for wages unpaid can properly be included in an order under s 106 (5) for the payment of money. (3) Where a manager or shareholder is culpably associated with the "making or operation" of a contract etc., there is no reason why such a person could not be the subject of an order under s 106 (5). (4) An order for the payment of a sum of money by a manager or person culpably associated with the "making or execution" of the contract etc. should be limited to an amount that represents their association with the making or operation of the contract etc. 62 In Paul Stephen Cummings v Crossocean Forwarding Services Pty Ltd [2001] NSWIRComm 303 (30 November 2001) was a claim under Section 106 0f the IR Act where the Respondent took over the Applicant's employer and continued to employ the Applicant. The Respondent agreed to pay employees including the Applicant Superannuation guarantee levy payments to a maximum amount of $20,000.00 Glynn J found that the employment Contract became unfair in terms of s 106 (2) subsequently to its being entered into because of the inequality of bargaining power between the applicant and the respondent and because of the conduct of the respondent in relation to a subsequent variation of the contract and varied it. The orders that her Honour made included an order for Superannuation to be paid at the statutory rate. 63. Accordingly, even without any Award provisions to ground jurisdiction to hear superannuation matters, the Commission in Court Session has jurisdiction generally to hear superannuation claims under Section 106 of the IR Act.

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15 Recently the President, Wright J, gave consideration to the relevant principles applicable on an application for indemnity costs in Tuholi Pty Ltd v Caltex Australia Petroleum Pty Ltd (2001) 103 IR 329. His Honour referred to the judgment of Badgery-Parker J in Rouse v Shepherd (No 2) (1994) 35 NSWLR 227 where his Honour said: The tendency of the Court has been to avoid unduly widening the cases in which indemnity costs will be awarded. In Colgate-Palmolive v Cossins (1993) 46 FCR 225 at 233-234; 118 ALR 248 at 256, Sheppard J reviewed the relevant common law principles: 4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all Judges dealing with applications for payment of costs on the indemnity or some other basis whether here on in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (1887) 39 Ch D 133 at 141 said that the Court had a general and discretionary power to award costs as between solicitors and client 'as and when the justice of the case might so require'.. Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston [1981] 3 WLR 619 at 637) namely there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, or warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, 'the categories in which the discretion may be exercised are not closed'. Davies J expressed (at 6) similar views in Ragata. … In Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 the Court of Appeal considered the objects of the Rules of Court as to indemnity costs and described them (at 724-725) as follows:

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