(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.