Informax International Pty Ltd v Clarius Group Limited

JUDGE: PERRAM J DATE OF ORDER: 18 AUGUST 2011 WHERE MADE: SYDNEY

1. The applicants' amended notice of motion dated 10 June 2011 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 594 of 2009

JUDGE: PERRAM J DATE: 18 August 2011 PLACE: SYDNEY

I. Introduction 1 In Informax International Pty Ltd v Clarius Group Limited (2011) 192 FCR 210 I held that two contracts between the first applicant ('Informax') and the respondent ('Candle') were unfair within the meaning of s 12(1)(a) of the Independent Contractors Act 2006 (Cth) ('the Act'). Subsequently, I ordered the insertion into both contracts of two terms intended to redress that unfairness. The relevant order was as follows: 1. The contracts between the Applicants and the Respondent of 31 May 2008 and 4 June 2008 be varied by the addition of the following terms: "14. Candle will not take any step to enforce any provision in any contract between Candle and the Client, the purpose or likely effect of which would be (in whole or in part) to fetter, restrain or otherwise impede the Contractor or the Principal Person from being directly or indirectly engaged by the Client during the period of 17 September 2008 to 1 October 2008 (being a period after the expiry of this agreement) including any restraint provision that exists before the formation of this agreement. 15. Candle will not procure or encourage the taking of any step by the Client to enforce a provision of the kind referred to in clause 14." 2 I also found that between 17 September 2008 and 1 October 2008 Candle successfully sought to persuade its client, Woolworths Ltd, to dispense with the services of the applicants. The applicants now wish to amend their pleadings to allege that by so doing Candle breached the two terms of the contracts inserted by the Court on 29 March 2011. Candle submits that this should not be permitted because as at 17 September 2008 - 1 October 2008 the contract contained no such terms (which were not inserted until the orders of 29 March 2011 were made) and it cannot, therefore, have been in breach of them. 3 The applicants, on the other hand, say that the orders of 29 March 2011 should be interpreted to be retrospective in effect so that the two terms set out above operate as though they were contained in the contract at the relevant time in 2008. In the alternative, they say that if the orders were not retrospective in that way, it is plain from the reasons for judgment that they were intended to be and, to the extent necessary, the orders should be amended pursuant to the slip rule (formerly O 35 r 7 of the Federal Court Rules 1979) to make that clear. Section 16(4) of the Act says that an order made under the Act takes effect as at the date of its making or at some specified later date. Candle says that s 16(4) means that an order may not be made under the Act which is retrospective in operation because such an order would be one neither taking effect on the date of its making nor at some later date. It says that the orders of 29 March 2011 are not retrospective as a matter of form and that no power exists, by reason of s 16(4), to accede to the applicants' slip rule application. In any event, it denies that the reasons for judgment do require the conclusion that the orders were intended to be retrospective. 4 The above debates are each engendered by the applicants' notice of motion dated 21 April 2011. On the eve of the hearing of that motion the applicants amended their motion to seek to add to their application the following prayer for relief: 3A Further or in the alternative, an order varying the contracts between the Applicants and the Respondent of 31 May 2008 and 4 June 2008 by the addition of the following term: "If Candle acts in a manner inconsistently with clause 14 or clause 15 Candle will pay, on 1 July 2011, the Contractor the sum of $450,000 (being the loss suffered by the Contractor from being engaged during the period from 17 September 2008 to 1 October 2008 and the loss of opportunity for the Contractor being engaged during the period from 2 October 2008 to 30 June 2010." 5 This Candle resisted on the basis that the question of what terms should be inserted into the two contracts was resolved in the first judgment and that no jurisdiction now remained in the Court to permit the applicants to seek a different term to the one upon which they had already succeeded. To this the applicants rejoined that the orders of 29 March 2011 were interlocutory and could be varied under O 35 r 7. More generally, Candle relied upon case management principles to contend that the making of such an application after judgment was too late and that such a fundamental recasting should not be permitted at the eleventh hour. In addition, it was said that the Act, by s 12(3), did not permit an examination of anything after the date of the contract's formation so that the Court could not feasibly undertake an assessment of compensation arising from events post-dating the contract (in this case Candle's post-contract persuasion of Woolworths to end its relationship with the applicants). Further, the clause proposed would, in any event, amount to a penalty. 6 It is useful then to turn to the first amendment application.

II. The first amendment application seeking add a claim for damages for breach of contract

(a) Were the orders of 29 March 2011 retrospective? 7 Although I explain this in greater detail below, it is useful to begin by observing that there was no issue before me during the first hearing as to whether I could make an order which was retrospective in nature. There was an issue as to whether I could make an order in respect of a contract which had been terminated and this I determined favourably to the applicants: Informax at 251 [150]. 8 At trial, the applicants sought to have me grant them leave to amend their pleadings to raise the damages claim if I came to the view that the contract should be varied. This was resisted by Candle on the basis that the Court had no jurisdiction to award damages for a retrospective breach of a retrospectively varied contract. I declined, however, to deal with the amendment application in the judgment requiring instead the applicants to pursue the matter by motion so that full and proper argument could be had on the issue (at 252 [162]). The present application represents the fruits of that order. The question, therefore, of when an order was to take effect was not the subject of substantive debate in the first hearing. 9 That view of things, which favours Candle's contention that retrospectivity was not in play at all at the first hearing, has to be seen, however, against a backdrop which includes s 16(2) of the Act: 'An order may only be made for the purpose of placing the parties to the services contract as nearly as practicable on such a footing that the ground on which the opinion is based no longer applies.' The reference to the 'opinion' is a reference to the conclusion drawn by the Court that the contract is unfair under s 15(3). I made such a finding in Informax at 237 [97] and 250 [144]. Consequently, the orders made must have been directed to the end of placing the parties in the position they would have been but for the unfairness identified. If that was the statutorily mandated purpose of the orders which were made, it is permissible to ask how that purpose was served by the insertion of the two clauses in question into the contracts. Their mere inclusion had no capacity to extinguish the unfairness I had identified unless they also imposed some meaningful obligation on Candle not to seek to persuade Woolworths to dispense with the applicants' services. Since the contracts between the parties had ended by October 2008 the insertion of the two clauses in such a way that they had effect only from the date of the orders (29 March 2011) could be of no utility. It seems to me inevitable, therefore, that the reasons for judgment were implicitly based on an assumption that the orders made would be retrospective in operation. Any other view means that the orders could not have been directed to redressing - as s 16(2) explicitly requires that they should - the unfairness which had been determined. 10 The order by which the two clauses were inserted was in these terms: 'The contracts between the Applicants and the Respondent of 31 May 2008 and 4 June 2008 be varied by the addition of the following terms…'. I do not think this order can be read as if it included the words 'which variations are to take effect from the date of the formation of the contracts'. Accordingly, I cannot accept the applicants' submission that the orders of 29 March 2011 purported to vary the contracts with retrospective effect from September 2008.

(b) Does the Court have jurisdiction to vary the orders pronounced? 11 On the other hand, I do accept, as the applicants submitted, that such a retrospective effect was what the reasons for judgment, objectively viewed, assumed. As such, I am satisfied - subject to one important matter to which I come next - that there is jurisdiction to vary the orders of 29 March 2011 to make plain what the reasons for judgment assumed, viz the necessity for the variations' retrospective effect. This is because the orders have not been entered - contrary to the submissions made on Candle's behalf - and the Court therefore retains jurisdiction to vary them under r 39.04 of the Federal Court Rules 2011 (formerly O 35 r 7). In that regard, it is to be noted that electronic recording of the Court's orders is not the same as their entry: Davis v Insolvency and Trustee Service Australia (No 2) (2011) 190 FCR 437 at 439 [5]; John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at 53 [152]. Even if the orders had been entered, r 39.05(e) would have authorised an alteration to them because they did not 'reflect the intention of the Court'. I do not need to consider whether, as the applicants submitted, I also retained jurisdiction over them because they were interlocutory in nature.

(c) Should the jurisdiction to vary the orders be exercised? 12 Granted that the Court, therefore, has jurisdiction to amend the orders to give effect to the intention embodied in the reasons, I do not think that that jurisdiction should be exercised to make orders which are otherwise beyond the jurisdiction of the Court. In this case, for reasons which I set out below, I do not think that s 16(4) of the Act permits this Court to make an order which brings about a variation to a contract at a time prior to the making of the order. 13 If that issue had been the subject of debate at trial and if it had been determined adversely to Candle's interest, I would not now have permitted the same issue to be ventilated once more under the guise of a defence to the applicants' slip rule application. The principal of finality of litigation counsels strongly against allowing the same point to be argued more than once. 14 As discussed briefly above, I do not think, however, that this issue was argued at the trial. The applicants did seek in their application and in their written submissions to amend their pleadings in the event that the Court was minded to permit a variation. This was opposed by Candle on the basis that this would involve the pursuit of a 'claim for damages for retrospective breach of a retrospectively varied contract' and this was would give rise to 'complex issues'. I resolved that debate by declining the amendment application and directing that any amendment application be pursued by motion so that '[t]he question of whether leave should be granted can then properly be ventilated' (at 252 [162]). It is tolerably clear from that statement that I did not regard myself as resolving the questions surrounding the retroactivity of the orders (even though it is obvious that I assumed that they would be retrospective in effect). 15 The only reference to s 16(4) of the Act which took place during the trial occurred on the first day during Mr Kimber SC's opening. MR KIMBER …Then, your Honour, 16(4) indicates that the order takes effect on the date of the order or a later date specified in the order. Then, 16(5) - - - HIS HONOUR: That means I can't make an order which has effect from the outset? MR KIMBER: Look, on its [face] it says the order takes effect on the date that the order is made. The fact that it refers to later dates one would think that it does seem to rule out an order having an effect earlier than the date upon which it is made. That would appear to be the way it is construed. But, nevertheless, we say it doesn't interfere with what we have asserted and I note that it has been put in issue about whether or not a new cause of action for breach of contract can arise as a consequence of any variation order that your Honour makes. Here you have - your Honour will no doubt be aware that under this Act the regulations require that proceedings under this Act have to be started within 12 months of the termination of any contract. So, obviously, as long as you commence within 12 months following the termination of the contract, you have still got five years in which to sue for breach of contract and the statutory regime contemplates that the court has the power to vary that contract and so, then, it can be sued upon. Then the residual question that then becomes - or one of the questions that then arises is to whether or not an applicant, assuming variation orders were made, then has to go off to another court, to a common law court interstate, to seek damages for breach of that term that's been introduced by the statute. And, of course, we say the better view is that that is not so and that has been the subject of that recent decision in Keldote [Pty Ltd v Riteway Transport Pty Ltd (2009) 185 IR 155] … where Cameron FM [went] through quite a detailed reference to the authorities about federal matters and the underpinning idea that all matters in controversy are to be dealt with in one place. So unless it was to be said that the court was somehow completely functus if your Honour made a variation order, then the authorities, to the extent that they have been developed, [suggest] that there can be a further amendment to then press for damages for breach of the new term that your Honour has put in place… 16 This was not a topic which was subsequently returned to. The issue of whether s 16(4) of the Act could operate in a retrospective fashion was not touched on by either party in later oral or written submissions (beyond Candle's submission referred to above). It is perhaps too late to surmise the reasons for what occurred but it is to be noted that the orders sought by the applicants at trial did not include any order which would have made the order take effect prior to their pronouncement. The applicants did seek, inter alia, an order in this form: 1 An order varying the Candle Contract, the First Extension Agreement, the Second Extension Agreement and the Third Extension Agreement by insertion of the following additional term into each: (a) "Candle will not at any time following the commencement of this contract (and after its termination for any reason whatsoever) take any step to enforce clause 4.4 (or any part thereof) in any way against the Contractor or the Principal Person." The important feature of this order is the fact of its taking effect on its pronouncement. The obligation inserted into the contract - 'Candle will not at any time following the commencement of this contract' - is prospective in form and necessarily future in operation. The insertion of such an obligation into the contract on 29 March 2011 could not have operated as a warranty that Candle had not behaved that way prior to 29 March 2011, for the word 'will' is inapt for such a past operation. What the applicants shied away from by seeking such an order was a debate about s 16(4). 17 That being so, it is perhaps unsurprising that Candle made no submissions directed to the effect of s 16(4). Nor is it surprising - since the applicants did not seek a retrospective order - that a retrospective order was not made. 18 There was, on the other hand, a debate about the power of the Court to make the orders which were sought by the applicants. That debate concerned whether it was possible for the Court to make an order in respect of a contract which had been terminated prior to the commencement of the proceedings. This I determined adversely to Candle, concluding (at 251 [149]-[150]) that I should follow the Full Court of the Industrial Relations Court's decision in Gerrard v Mayne Nickless Ltd (1996) 135 ALR 494 at 505-507, it not being apparent that it was plainly wrong in the requisite sense. Gerrard upheld the jurisdiction of the then Industrial Relations Commission to make orders in respect of contracts which had been terminated prior to the commencement of proceedings. 19 For the reasons I have given, there was no debate before me as to whether the Court could make an order which effected a variation of a contract at a time prior to the making of the order. And, just as importantly, there was no consideration of any such issue in the reasons. It therefore appears to be the case that the reasons assumed - without either argument or actual decision - that the order would be retrospective in operation. I do not think, in those circumstances, it would be appropriate to exercise the discretion conferred by r 39.04 ('[t]he Court may vary or set aside a judgment or order before it has been entered') against Candle simply on the basis that the issue had already been dealt with for, in my opinion, it had not. 20 For the reasons shortly to be given, I do not accept that s 16(4) of the Act permits this Court to vary a contract with retrospective effect. Consequently, I should not - and will not - accede to the applicants' slip rule application.

(d) May an order made under s 16 of the Act be given a retrospective operation? 21 Does the Act permit the making of variation to a contract which pre-dates its own making? Section 16(4) certainly suggests that the answer to that question might be in the negative: 'An order takes effect on the date of the order or a later date specified in the order.' With one exception, the course of decisions about s 16 (and its predecessors) provides no basis for reading it any differently to what appears to me to be its plain meaning. 22 The Act came into force on 1 March 2007. A similar jurisdiction had been conferred on and after 23 July 1992 on the former Industrial Relations Commission by ss 127A-127C of the Industrial Relations Act 1988 (Cth). In 1993 the reference to the Commission in those provisions was replaced with a reference to 'the Court' which was defined to be the now defunct Industrial Relations Court of Australia (see Industrial Relations Reform Act 1993 (Cth) ss 71 and 72). In 1996, on the passage of the Workplace Relations and Other Legislation Amendment Act 1996 (Cth), the jurisdiction of the Industrial Relations Court was transferred to this Court. After that time, and until the coming into of effect of the present Act in March 2007, ss 127A-127C conferred jurisdiction on this Court. On the introduction of the Work Choices legislation on 27 March 2006 (by the passage of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth)) ss 127A-127C were renumbered as ss 832-834. Subsequently, they were excised altogether by the Workplace Relations Legislation Amendment (Independent Contractors) Act 2006 (Cth) and re-enacted in the present Act. 23 As events transpire, the original insertion of ss 127A-127C turns out to have been an event of considerable constitutional significance for this country. The Parliament had sought to ground its ability to regulate unfair contracts on a number of bases including that the contract was one 'relating to the business of a constitutional corporation' (s 127C(1)(b)). Compared to the broad sweep of the Workplace Relations Act 1996 (Cth) (then known, as at 1992, as the Industrial Relations Act) the topic of independent contractors might be seen as a relatively modest one but until the insertion of ss 127A-127C the jurisdiction of the Commission had rested on the conciliation and arbitration power in s 51(xxxv) of the Constitution and with it the concomitant need for there to be, as a condition precedent to the Commission's jurisdiction, an industrial dispute extending beyond the limits of any one state. Sections 127A-127C, for the first time, sought to base the Commission's jurisdiction on Parliament's power to make laws with respect to trading or financial corporations contained in s 51(xx) of the Constitution (the 'corporations power'). Until the passage of ss 127A-127C, jurisdiction in relation to unfair contracts in an industrial setting had largely been the domain of State industrial tribunals (see, e.g., the former s 88F of the Industrial Arbitration Act 1940 (NSW)). 24 The provisions almost immediately generated litigation in the former Commission. Some of this was generated by the reduction in the size of the logging industry in Tasmania. The Dingjans were carters of pulp logs and saw logs and transported felled trees from the place where they were harvested to various pulp mills which were operated or controlled by a constitutional corporation. This they did at the instance of the suppliers of the trees, Mr and Mrs Wagner. There was dissatisfaction on the Dingjans' part with the quantity of work they were being allocated. Proceedings were commenced in the Commission and 3 days later their engagement was terminated. The Dingjans contended that the contracts between themselves and the Wagners were unfair under ss 127A-127C. Before the Commission, the Wagners deployed a number of arguments including: first, that ss 127A-127C were not laws authorised under the corporations power because, in short, they did not seek to regulate the affairs of the corporation in question (here the company operating the pulp mills); secondly, there was insufficient nexus between the company and the contracts (an argument more substantially debated later in the High Court); thirdly, and pertinently for present purposes, that ss 127A-127C could not be used in respect of contracts which had already been terminated (although note that the contract had not been terminated prior to the commencement of the proceedings in the Commission but merely prior to the hearing of the proceedings). 25 The proceedings were heard before the Commission by Munro J who concluded that the contracts were unfair in a number of ways including the manner in which they might be terminated: see Re Transport Workers Union (1993) 50 IR 171. In relation to the Dingjan's contract he inserted provisions which prevented the contract being terminated on other than reasonable notice and he inserted a term which on 30 July 1993 required the Wagners to pay the Dingjans $25,000 as a set off against any potential liability which the Wagners might have had to the Dingjans for unpaid entitlements. The orders were made on 30 June 1993 (that is, one month before the payment was required) and the last order was especially significant: That these terms shall be effective from the date of operation in the order in which they are set out and shall take effect from the date notwithstanding any repudiation, or breach or purported termination of the original contract occurring prior to 30 June 1993. 26 The effect of this order was to overcome the fact that the contract between the Dingjans and the Wagners had been terminated. The insertion of the term which required the payment of $25,000 one month after the orders were made might well appear remedial in nature but one thing which was plain was that Munro J was not awarding damages for breach of contract (which was constitutionally forbidden to him in any event). 27 The Wagners sought prerogative relief in the High Court and succeeded (see Re Dingjan; Ex parte Wagner (1995) 183 CLR 323). The Court concluded by majority that the corporations power did not support ss 127A and 127B when their application was prescribed, as in that case, by s 127C(1)(b). However, no invalidity was found in ss 127C(1)(a) or (b), also supported by the corporations power. There was thereby achieved a dramatic increase in the scope of Commonwealth legislative authority, an outcome eventually, if inevitably, confirmed in New South Wales v Commonwealth (2006) 229 CLR 1. As the Industrial Relations Reform Act had already commenced amending ss 127A-127C in certain respects (such as by conferring the jurisdiction to hear matters under those provisions on this Court) the decision in Re Dingjan on the pre-reform legislation did not prompt further immediate parliamentary response and s 127C(1)(b), although invalid, remained. 28 The Wagners argued that the provisions conferred judicial power on the Commission, contrary to Ch III of the Constitution. The Court rejected that argument on the basis that what was created by the orders made by Munro J were new rights rather than a determination of pre-existing rights. Most importantly for present purposes, Gaudron J concluded that ss 127A-127C were 'not, in my view, confined to contracts which are current when the particular power of review or variation comes to be exercised' (at 363). Her Honour noted, however, that the case gave rise to no question 'as to whether the Commission's jurisdiction is confined to contracts that are current when application is made to it under ss 127A and 127B' (at 362). Consequently, the Commission was not denied jurisdiction merely because after the proceedings had been commenced the contract the subject of those proceedings was terminated; left undecided was whether it would be denied jurisdiction if the contract was terminated before the proceedings were commenced. Three other Justices expressed their agreement with Gaudron J on this issue: Toohey J explicitly on this point at 356; Mason CJ and Deane J more generally. 29 Dingjan was argued before the High Court on 1-2 February 1994 and decided on 16 March 1995. Before Dingjan was argued a fresh case was commenced before the Commission in 1993 (coincidentally before Munro J). It concerned allegations that a contract between a transport company, Finemores, and some of its contracted drivers was unfair. The contracts were terminated by Finemores on 2 July 1993 and it was after that date, on dates between 6 July and 25 August 1993, that the drivers commenced proceedings before the Commission in relation to their contention that the contracts were unfair. The hearing before the Commission finished (after 15 days) on 25 November 1993. The case directly raised the issue of whether the Commission had jurisdiction in relation to a contract which had been terminated prior to the commencement of the proceedings. On 31 August 1994 Munro J made orders varying the contracts on the basis that they were unfair (see Print L4930) (the 'Finemores case'). He noted his own conclusions in Re Transport Workers Union (at [2]), the fact that that decision 'still awaits the outcome of judicial review by the High Court' and that he proposed to apply his analysis in that decision. He dealt specifically with the argument that relief could not be granted in respect of contracts which had been terminated prior to the commencement of proceedings (at [3.2]) and concluded that this was covered by his earlier decision and could not be accepted. As he had done in that case, his Honour again embraced a form of order which was prospective in form from its date (see Print M0182 and Print M0183). For example, the order in one of the contracts was: 1. So much of the contract for services between each of the applicants listed in Schedule 1, trading as described and the respondent company in operation as at 20 June 1993 be set aside and varied to the extent necessary to permit the contract to be varied to insert and make it a term of the contract that: In the event of a decision by the Principal Contractor to close the Express Operation, or to transfer or redistribute the activity of the Express Operation, in substitution for any period of notice of termination of contract elsewhere specified, a period of 10 weeks' notice of termination shall be given by the Principal Contractor to each of the subcontractors identified in Schedule 1 to this order, as the case may be for each relevant contract. In default of such notice being given in a manner permitting the full period of notice to be worked prior to termination of work under the contract, the Principal Contractor will, not later than 21 days after the coming into operation of this term, make payment in lieu of notice for the unexpired portion of such notice. Such payment for the unexpired notice period shall be calculated by applying the hourly rate set by reference to the 1993/94 Subcontract Drivers Agreement Addendum 1 for the subcontractor's vehicle as at the date notice was given, (which shall be deemed to be 21 June 1993), applied to the guaranteed minimum ordinary hours of 45 per week of not less than 9 hours per day Monday to Friday inclusive. Any payment already made by the Principal Contractor for work undertaken during a period covered by the notice required by this term, shall be treated as payment in settlement of the payment due under this term in respect of the part of the period to which that payment relates, and no payment shall be due under this term in respect of a day on which the Principal Contractor required worked to be performed under this contract and the subcontractor refused or was not available to perform such work. 30 Finemores appealed to the Full Bench of the Commission but the Full Bench stated a case in respect of a number of questions of law to the former Industrial Relations Court of Australia (which then had jurisdiction) (see Finemores v Papa (1995) 61 IR 88). One of these questions was: whether the powers formerly conferred on the Commission pursuant to ss 127A-127C of the Act were exercisable in respect of: (i) a contract which had been terminated before the application was made to the Commission calling for the exercise of those powers; 31 Beyond this question, no part of the stated case concerned the appropriateness or otherwise of the form of Munro J's orders. Further, none of the orders made by Munro J purported to be anything but prospective - at least in form - in their operation. 32 That stated case then came before the Full Bench of the Industrial Relations Court of Australia together with a number of other cases in Gerrard. The actual decision in the Mayne Nickless litigation did not concern the question of whether jurisdiction could be exercised over contracts terminated prior to the commencement of proceedings but the Finemores case did. The report of it commences at 135 ALR 500. The Court examined Dingjan and concluded that jurisdiction existed even if a contract had been terminated prior to commencement (at 506): It would be strange if the legislation permitted the Commission to intervene only if the independent contractor had been well-informed and efficient enough to file an application before the other party could terminate the contract. The legislation being protective in character, it is unlikely that parliament intended it to operate in such a way as to disadvantage those less able to look after themselves. 33 The Court had no occasion to consider - and did not consider - whether an order could be made which was retrospective in operation. The orders which Munro J had made were prospective only and attempted no alteration to the past legal relations between the parties. The Full Court did not consider this issue because no such issue was alive in the proceedings. 34 It is useful to pause and consider what has been established to this point. The High Court's decision in Dingjan establishes that ss 127A-127C authorised amendments to a contract which has been terminated after the commencement of proceedings. The particular amendment in question in Dingjan was prospective, not retrospective, just as s 127B(4) apparently required ('[a]n order takes effect from the date of the order or a later date specified in the order'). Gerrard then extended this conclusion to contracts which were terminated prior to the commencement of the proceedings. Again, the order in suit in that proceeding was prospective in form and not retrospective. 35 It was submitted on behalf of the applicants in this case that the fact that one could vary a contract which had already been terminated demonstrated that the powers in s 16 could be used retrospectively and that Dingjan and Gerrard showed this to be so. Although I was initially inclined to agree, ultimately I cannot accept this submission. It is apparent when one examines those cases that the order which was made on each occasion did not operate retrospectively. In that circumstance, neither Dingjan nor Gerrard provides support for the view that s 16 may be used retrospectively to vary a contract. 36 Authority to the contrary is available. In Keldote Pty Ltd v Riteway Transport Pty Ltd (2009) 185 IR 155 a claim was made in the Federal Magistrates Court that contracts made between a transport firm and sub-contractors were unfair pursuant to the Act. The contracts had been on foot at the commencement of the proceedings (when interim relief was sought) but were terminated prior to the substantive hearing. After the primary hearing in which the contract was found to be unfair (Keldote Pty Ltd v Riteway Transport Pty Ltd (2008) 176 IR 316) the learned Federal Magistrate, following some dispute over the initial order made (see Keldote Pty Ltd v Riteway Transport Pty Ltd (No 2) (2008) 178 IR 290), was invited to make an order which varied the contract 'as from the time the contract was made' by the insertion of a particular term (see Keldote Pty Ltd v Riteway Transport Pty Ltd (2009) 185 IR 155). His Honour considered Dingjan and Gerrard and, from the latter, a particular passage (at 505-506) in these terms: Technically, it is incorrect to say that an order made by the Commission in respect of a terminated contract has retrospective operation; s 127B(4) provides that an order takes effect from its date or a later date specified in the order. However, in a practical sense, an order will always involve an element of retrospectivity. The rights and obligations of parties to a contract crystallise on termination. If an order varying the contract is subsequently made, it must affect those rights and obligations. 37 His Honour reasoned (at 161 [33]) that this was authority for the proposition that the Court can make an order 'which has a retrospective quality'. With great respect to the learned Federal Magistrate, I cannot agree with this conclusion. The Full Court in Gerrard was not saying that s 127B(4) permitted the making of an order which took effect prior to its making. It was merely saying that sometimes prospective orders can have an effect on legal relations which have arisen in the past. The orders made by Munro J well-make the point. There was nothing retrospective in form about those orders and there was no interference with any legal relations which antedated the order. Nevertheless, the rights and liabilities which had accrued before the order were adjusted prospectively by its making. In that particular regard it is worth noting that the reasoning in the High Court in Dingjan which defended ss 127A-127C from a challenge that it involved the exercise of judicial power was explicitly based on the idea that the Commission was involved in the generation of new rights for the future. As Gaudron J remarked (at 361) in concluding that the judicial power argument failed: The power of variation which ss 127A and 127B contemplate is, in essence, a power to create new rights and obligations, even though they are attached to a pre-existing contract for services. In that respect, the power is precisely analogous with the Commission's power to make industrial awards, at least when the award-making power is exercised, as is generally the case, to create new rights and obligations attaching to pre-existing employment relationships. 38 That emphasises that the word 'technically' in the passage just quoted from Gerrard may belie a certain tension in the High Court's own reasoning in Dingjan: a desire, on the one hand, to extend jurisdiction into the past and in respect of contracts which have ended; an insistence, on the other, that the Commission's arbitral function operated to generate new rights into the future so avoid the appearance of judicial power. The attempt to operate on the past by speaking only to the future may, I think, be the source of some of the present obscurities. 39 But one does not need to reach a settled view on those issues. Whatever else the Full Court was saying in Gerrard it was not addressing itself to whether the words in s 127B(4) (now s 16(4) of the Act) prevented the making of an order operating in the past and I do not read it as saying that s 127B(4) does not mean what it says. The Full Court's expostulations on the question of retrospectivity arose in relation to the contention put by the contractors that to permit variation of contracts already terminated would be to give the legislation a retrospective operation not contemplated. The Court was not concerned with the much narrower question of whether an explicitly retrospective order was itself authorised (no doubt because the orders made by Munro J were explicitly prospective). I do not, therefore, read the reasons of the Full Court in the same way that the learned Federal Magistrate did. If, however, the Full Court was saying in Gerrard that s 127B(4) could be used retrospectively then in my opinion it was, for reasons shortly to be given, wrong. Since there was no issue before the Court about s 127B(4), however, the statement is at best an obiter dictum and does not bind me. In either case, I do not accept that Gerrard requires the conclusion that s 127B(4) and s 16(4) are not prohibitions on the making of a retrospective order. 40 What then is the effect of s 16(4)? The words of s 16(4) are clear: the order may take effect on its making or some later date. To permit it to be read so as to authorise an order taking effect prior to its making would render those words - apparently of limitation - quite otiose. '[A] court construing a statutory provision must strive to give meaning to every word of the provision': Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [71] per McHugh, Gummow, Kirby and Hayne JJ. If the applicants be right an order may be made taking effect at any time, which means that the words 'on the date of the order or a later date specified in the order' are unnecessary. Such an approach to the provision is contrary to established principles of statutory interpretation. It is also not what the provision says. 41 For those reasons, I do not accept that the Act authorises an order that the contracts be varied with effect from a date prior to 29 March 2011. Apart from Keldote Pty Ltd v Riteway Transport Pty Ltd (2010) 195 IR 423 there is, so far as I can see, no other decision in which a retrospective amendment to the contract has been sought attached to a breach of contract suit. The usual way in which the problem has been addressed has been by means of the kind of order made by Munro J; that is, a prospective order. That was the course taken in Dingjan and the Finemores case. I have surveyed the use of ss 127A-127C in the Industrial Relations Court and this Court and, so far as my research reveals, in only two cases has this issue (being the form of orders to be formulated by the Court on such an application arising out of a terminated contract) arisen. In Harding v EIG Ansvar Ltd (2000) 95 IR 349 Spender J made an order pursuant to s 127A in respect of a contract which had been terminated after the commencement of proceedings by varying it so that 'upon termination of the contract, the insurer pay to the agent the sum of $5,000' (at 361 [60]). There is no discussion of the issues arising from s 127B(4). That said, however, it is not an order which purports to be retrospective. A similar situation arose in Buchmueller v Allied Express Transport Pty Ltd (1999) 88 IR 465. There, Dowsett J made an order varying the contract by requiring payment of a sum of money on termination in discharge of all of the parties' rights otherwise arising under the contract. Again, that term did not purport to be retrospective. In neither case did the Court historically re-engineer the contract to permit a breach of contract suit to be brought.

(e) Conclusions on first amendment application 42 The orders made on 29 March 2011 are not retrospective in their operation. The issue of whether an amendment to the contracts could be ordered retrospectively was not addressed at the trial. In ordering the variations to the contracts that I did, however, I assumed that the orders would be retrospective in their operation. Whilst the Court has a jurisdiction to vary its orders to correct them where they do not reflect its intention, that power should not be exercised where the Court has no power to make the order sought. Section 16(4) of the Act expressly prohibits the making of a retrospective order. Accordingly, the power to amend the orders should not be exercised notwithstanding that the orders do not reflect the purpose for which they were made.

III. The second amendment application seeking at add prayer 3A 43 By an amended notice of motion dated 10 June 2011 (that is, the day of the hearing of the present application) the applicants sought the insertion into their application of prayer 3A set out in paragraph [4] above. 44 One thing which may be observed about prayer 3A is that it assumes that Candle will have acted in breach of cll 14 and 15 (the clauses which were inserted by the orders of 29 March 2011). However, because the orders of 29 March 2011 did not insert those clauses with retrospective effect, and because I have declined to amend them so that they do, it seems to me somewhat difficult to understand how the term in prayer 3A could ever be activated for Candle's conduct in September 2008 cannot have been inconsistent with cll 14 or 15 since they did not then exist. This aspect of the matter was not the subject of argument and I pursue it no further. I should also record that it was accepted at the hearing that the figure of $450,000 would need to be altered to reflect whatever the correct compensation sum was ultimately determined to be. 45 It is apparent that proposed prayer 3A is prospective in form and hence does not run into difficulties with s 16(4). In that regard (apart from the matter referred to in the preceding paragraph) it is similar to the orders made in Harding, Buchmueller and also with those made by Munro J in Re Transport Workers Union and the Finemores case. 46 Candle submits that an amendment in the form of proposed prayer 3A should not be permitted for four reasons: (a) the unfairness with which the Act is concerned is with matters subsisting at its inception (s 12(3)). The events said to give rise to the right to compensation arose after both contracts' formation and may not, therefore, be examined by the Court; (b) the proposed variation would, as a matter of contract law, be an unenforceable penalty and the Court would not insert into a contract a term which was invalid; (c) the application to amend had been delayed and no explanation had been proffered for that delay; and (d) the orders of 29 March 2011 have been entered. 47 As to the first argument, s 12(3) provides: In reviewing a services contract, the Court must only have regard to: (a) the terms of the contract when it was made; and (b) to the extent that this Part allows the Court to consider other matters--other matters as existing at the time when the contract was made. 48 Mr Moses SC, who appeared, with Mr Shariff of counsel, for the respondent, submits that in formulating the compensation figure in the proposed term I would need to have regard to matters which had occurred after the formation of the two contracts. I think this must be right. I would, for example, need to determine that Candle had acted in a certain way in September 2008; in particular, that it had contacted Woolworths and encouraged it to dispense with the applicants' services. Indeed, in Informax, I have already determined that to be the fact. I would also need to determine the applicants' submissions made at trial that Woolworths would have renewed Informax's contract but for that conduct not only in October 2008, but also at later periods of time. None of these matters is susceptible to being described as a matter 'existing at the time when the contract was made'. I do not see, therefore, how I could embark upon an assessment of the figure contemplated by prayer 3A conformably with s 12(3). 49 I have considered whether this conclusion might be averted in various ways. Section 12(3) is a prohibition placed on the Court whilst it is 'reviewing' a contract. Might it be possible to say that the formulation of relief is not part of the 'review'? I do not think so. The structure of the provisions is as follows. Section 12(1) permits an application to be made on the grounds that a contract is 'harsh' or 'unfair'; that application is an application to the Court 'to review'; in conducting the review, the Court is limited to the terms of the contract and matters existing at the time the contract was formed (s 12(3)); if the Court forms the 'opinion' that the contract in question is 'unfair' or 'harsh' it must record that opinion (s 15(3)); the opinion is significant for the relief the Court can give is delimited by it - the Court may make an order setting aside the contract or varying it (s 16(1)) but whatever order is made this injunction applies: 'An order may only be made for the purpose of placing the parties to the services contract as nearly as practicable on such a footing that the ground on which the opinion is based no longer applies' (s 16(2)). What is to be remediated by any order made is, therefore, the unfairness or harshness identified in the opinion and, by reason of s 12(3), this can be based only on matters subsisting at the time of the contract's inception. In this case, s 12(3) has this effect: I concluded that the contracts as formed were unfair because they left it open to Candle to seek to bring the applicants' engagement by Woolworths to an end when it had no legal rights as against Woolworths or the applicants to do any such thing. That was an unfairness existing at the time the contracts were formed. The remedy available must be one which is at once both prospective (s 16(4)) and designed to address that, and no other, unfairness (s 16(2)). 50 In this case, the unfairness which existed ab initio was an unfettered ability on Candle's part to behave in a particular way. The fact that that ability was contractually unfettered was the unfairness in the contract. When, in fact, Candle acted in that way this may have been a practical example of why it was true that the contract had been unfair from its inception; it was not itself an example, however, of the kind of 'unfairness' with which the Act was concerned because it was not an unfairness which existed at the time of the contract's inception as required by s 12(3). What is required then is a distinction between the unfairness in the contract (here Candle's unconstrained contractual freedom) and later instances of that unfairness being played out (here Candle's post-contractual suggestion to Woolworths that it should dispense with the applicants' services). The Act only permits the opinion about unfairness to be formed in relation to the former and not the latter. This is significant because it means, unavoidably I fear, that the remediating order made - by reason of s 16(2) - is similarly limited; that is, it is available to cure the contract but not the historical conduct which the contract should have prevented. 51 This suggests, and I conclude, that this Act is concerned with the prospective remediation of unfair or harsh contracts (e.g. s 16(4)) and that unfairness or harshness is to be judged by reference to the circumstances existing at the time of the contract's formation (e.g. s 12(3)). There is no room in its provisions for attempts to obtain compensation for the fact of a contract having been unfair in its operation in the past. Any attempt to formulate the compensation for that past operation takes one directly into the forbidden area lying between the moment of the contract's inception and the making of the Court's orders. The effect of ss 12(3) and 16(4) is to operate as a bar on the consideration of events falling in the range delimited by them. 52 I have also considered whether authority might be against this view. The only orders of this kind of which I am aware are those made first, by Munro J in the Commission in Re Transport Workers Union and the Finemores case and, secondly, by Spender and Dowsett JJ. I do not regard any of these as being to the contrary. The provisions under consideration in those cases did not include an equivalent limitation to that in s 12(3) - that is, ss 127A-127C did not ever limit the circumstances which could be examined during a review to those existing at the time of the inception of the contract. They, therefore, have nothing to say about the effect of s 12(3) which was not present until the current Act came into force in 2007. In Keldote Pty Ltd v Riteway Transport Pty Ltd (2009) 185 IR 155 the learned Federal Magistrate adverted (at 161 [31]) to s 12(3) but not in relation to the proposition that it operated to prevent him from examining the circumstances which would permit the compensation to calculated. 53 In those circumstances, I conclude that Candle's submission should be accepted. The combined operation of ss 12(3), 16(2) and 16(4) is to prevent an examination of the matters which would need to be examined in order to undertake an assessment of the appropriate compensation. Perhaps the easiest way to express this conclusion is to say that those sections disclose a scheme whose end is the reform of unfair contracts and not the remediation of unfair behaviours which have not been contractually forbidden. The Federal Magistrate in Keldote Pty Ltd v Riteway Transport Pty Ltd (2010) 195 IR 423 expressed the view that 'it would be pointless to empower the Court to vary contracts but make it impossible to enforce the rights created by such variations' (at 443 [69]) but from this view of things I must dissent for two reasons. First, the Court does not lack power to enforce the variations it orders - a suit for breach of them is almost certainly in federal jurisdiction since the applicant's entitlement to damages will arise under the federal law which had authorised the insertion of the term. As Latham CJ explained in R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 'a matter may properly be said to arise under a Federal law if the right or duty in question in the matter owes its existence to Federal law or depends upon Federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law' (cited with approval by six Justices in LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581). Here the term in question owes its existence to a federal law: s 16(1)(b) of the Act. Consequently, any suit for breach of that provision is necessarily in federal jurisdiction. 54 Secondly, the real point being made is that the jurisdiction conferred by the Act is pointless unless it is retrospective so that the Court is able to give a remedy for those who have been harshly or unfairly treated. But an alternate view may be that that is not what this legislation is about. There is nothing especially pointless about a statute which authorises prospective amendments to contracts which are harsh or unfair, thereby reforming the bargain between the parties into the future. Sections 12(3), 16(2) and 16(4) show, in my opinion, that this is indeed the kind of law which is under consideration. Thirdly, the learned Federal Magistrate's conclusions sit at variance with the history of the provisions which shows, to the contrary, an anxiety when the same powers were vested in the Commission to ensure that they could be seen as creating new rights for the future so as to avoid their characterisation as involving the exercise of judicial power. 55 That makes it unnecessary to deal with Mr Moses SC's arguments about the proposed contractual provision being a penalty and the discretionary reasons for declining leave. Out of deference to the arguments put I would say this. The particular term sought in prayer 3A requires an act which is in contravention of cll 14 and 15. The compensation awarded is likely, therefore, to be a reasonable estimate of the liability arising from the breach and hence not a penalty. This result emerges because - unlike the clauses inserted in Harding, Buchmueller, Re Transport Workers Union and the Finemores case- the clause in prayer 3A is made contingent on the breach of another provision. That quality probably gives rise to the difficulty already noted above that cll 14 and 15 cannot have been contravened because they cannot have been (and were not) inserted with retrospective effect. The clauses considered in the cases just mentioned were not conditioned on breach and there may be something to be said for the view that such a clause might be a penalty. 56 In relation to the discretionary issues I do not think, had they arisen, that any real prejudice would have been suffered by Candle. The issues are in substance purely legal ones. Further, the appropriate form of prayer 3A was raised in the applicants' submissions in reply at the primary hearing in these terms: Furthermore, while section 16 does not contain an express power to award compensation, quite apart from the Applicants' contention that the pleadings in this case could be further amended following the Court's decision as to variations (so as to press a further claim for damages for breach of contract in the accrued jurisdiction of the Court), it would also undoubtedly be open to the Court to vary the services contract in such a manner as it thought fit and appropriate to correct for the unfairness found, by the insertion of a term in each agreement that said (in effect) that: "notwithstanding anything else in this agreement, the Respondent shall pay the Applicants within 7 days the sum of $500,000 in the event that the Applicants lose an opportunity to provide ongoing services to a Candle client as a consequence of Candle's reliance at any time on a restraint of trade provision that was undisclosed at or before the time that the Service Contract was entered into, provided only that such compensation will not be payable unless and until formally demanded by the Applicants in writing". 57 That issue (and others) was postponed to the hearing of the application. It is true that it appears the applicants omitted to put the point until the second amendment application but that does not appear to have engendered any real difficulty. I infer that the explanation for the matter not being raised until the submissions in reply is because no-one had thought of the point. There being no real prejudice I would otherwise have permitted the amendment (but for the legal difficulties identified). I would not have accepted the argument based on the entry of the orders as, so far as I can see, the orders have not, in fact, been entered.

IV. Conclusions 58 The amended notice of motion should be dismissed with costs. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.