MAYNE NICKLESS LIMITED v INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES & 3 ORS

Court of Appeal (NSW)|2004-09-21|Before: Mason P, Hodgson JA, McColl JA, Coll JA

BACKGROUND The claimant, Mayne Nickless, sought an order in the nature of prohibition restraining the Industrial Relations Commission from proceeding to exercise power under s106 of the Industrial Relations Act 1996 in pending proceedings brought by the second, third and fourth opponents.

Portpath (the second opponent) is a company carrying on business in the provision of pathology services. Dr John Hammett and Dr Michelle Hammett (the third and fourth opponents respectively) are the sole shareholders and directors of Portpath. The claimant conducts a healthcare services business which operates Port Macquarie Base Hospital.

In November 1994 the opponents entered into an agreement with the claimant to provide pathology services at the hospital and executed a "Pathology Services Deed" and a "Pathology Licence". The Deed provided for Portpath to be paid an annual fee of $686,800 in respect of services provided to public patients. A mechanism was provided in the Deed for the annual fee to be reviewed based on specified criteria. The claimant took the view that the review mechanism was a mere agreement to agree and did not oblige it to agree to any fee increase. Consequently, reviews requested by Portpath were either rejected by the claimant or met in small part only.

In the Commission, the opponents pleaded that as a result of changed circumstances from the time when the agreement was being negotiated, the Deed operates harshly and under-remunerates them. Such changed circumstances included the number of patients and the nature of the patient mix. The opponents sought orders varying clauses of the Deed and requiring the claimant to pay Portpath in excess of $5,800,000 plus interest and costs.

In the Court of Appeal, the claimant sought prohibition preventing the Commission from hearing the proceedings for want of jurisdiction. The jurisdictional issues raised by the claimant were that:

(1) The Commission did not have jurisdiction because neither of the contracts were a contract "whereby a person performs work in any industry"; (2) The IRC Summons was beyond jurisdiction to the extent that it sought relief with respect to parts of the contracts which did not closely relate to the performance of work in an industry; and

(3) The IRC Summons was beyond jurisdiction to the extent that it sought relief on the basis that the claimant acted in breach of contract.

HELD per Mason P (Hodgson and McColl JJA agreeing):

(1) It has not been established that there is no contract whereby a person performs work in an industry · Portpath is the corporate vehicle through which the third and fourth opponents conduct a pathology practice. [42] · It is not essential that there be identity between the person working and the contracting party. [45] Ex parte VG Haulage Services Pty Ltd: Re Industrial Commission of New South Wales [1972] 2 NSWLR 81; Stevenson v Barham (1977) 136 CLR 190. · The directness test (required by Stevenson v Barham) is open to be satisfied as the Deed directly recognises, contemplates and provides for the work that is to be done by the fourth opponent in the provision of pathology services. [44]-[49] Stevenson v Barham ; Solution 6 Holdings Ltd and Ors v Industrial Relations Commission of New South Wales and Ors [2004] NSWCA 200, 208 ALR 328.

(2) Relief relating to the performance of work is capable of being granted · Standing to claim relief under s106 is not confined to the person that will perform work in an industry (see s108). However, the applicant must establish a nexus between the jurisdictional fact and the relief claimed in the Commission. [53] Solution 6 Holdings v IRC & Ors · The claimant's submission that the IRC Summons as presently framed does not address the entitlements of the relevant "workers" (ie the two doctors) raises matters which may require further attention in the Commission. [58] · However, prohibition should not be issued. The claimant is unable to establish a probable excess of jurisdiction as regards the remedial aspect of the IRC Summons. The facts established are capable of generating an arguable basis for relief based on unfairness as regards the two doctors. [59]

(3) Unnecessary to consider the scope and correctness of Reich v Client Server Professionals of Australia Pty Ltd (Administrator Appointed) [65]-[72] · The claimant has failed to establish that the claim of unfairness made by the opponents is based upon a breach of contract. · The only claim based upon unfairness arising from a breach of contract concerns a sum of $135. Prohibition is a discretionary remedy and the maxim de minimis non curat lex should be applied in all of the circumstances.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40654/04

MASON P HODGSON JA McCOLL JA

Friday 1 October 2004 MAYNE NICKLESS LTD v INDUSTRIAL RELATIONS COMMISSION OF NSW & Ors JUDGMENT

1 MASON P: The claimant (Mayne Nickless) seeks an order in the nature of prohibition restraining the Industrial Relations Commission from proceeding to exercise power under s106 of the Industrial Relations Act 1996 (the Act) in pending proceedings brought by the second, third and fourth opponents. The Commission has adopted a submitting role. 2 The claimant accepts, for present purposes, the facts alleged in the Summons filed by the opponents in the Commission. Some affidavit evidence has been filed, but it is mainly confined to explaining the state of proceedings in the Commission. 3 The second opponent (Portpath) conducts a pathology services business. The third and fourth opponents, each of them doctors, are the sole directors and shareholders of Portpath. Together the three shall be referred to as the opponents (as regards the proceedings in this Court) or the IRC applicants (as regards proceedings in the Commission). 4 The claimant conducts a healthcare services business under the name Health Care of Australia (HCOA). In December 1992 it entered into a Services Agreement with the Health Administration Corporation to operate the Port Macquarie Base Hospital. 5 From about 2 November 1994 the IRC applicants agreed to perform and discharge, on behalf of the claimant, the claimant's obligations under the Services Agreement to provide pathology services to public and other patients at the Hospital. On about 1 March 1996 the claimant entered into a deed (the Pathology Services Deed) with the IRC applicants and a licence (the Pathology Licence) with Portpath to regulate the provision of pathology services at the Hospital. The Deed and Licence are interlocking in various ways. 6 Evidence filed in this Court, doubtlessly indicating the way in which the IRC applicants are advancing their case in the Commission, demonstrates that the third and fourth opponents have channelled all of their working resources into Portpath, the company of which they are equal shareholders. A company structure was adopted primarily for accounting and taxation reasons. The shareholders' finances, both personal and work-related, are managed through the Portpath bank account. Portpath provides the services of the other two opponents and has a number of employees. It receives payment for pathology services from patients, the Department of Veterans' Affairs, Medicare and the claimant (see Red 866). The pathology business is the major source of Portpath's income. 7 Other family assets, including a farm, are operated through Portpath. Nothing however, turns on this as regards the jurisdictional issues involved in these proceedings, because the IRC applicants seek relief in the Commission only in relation to the provision of pathology services to the claimant. The provision of such services by doctors and staff is undoubtedly work in an industry within the scope of s106(1) of the Act.

Proceedings in the Commission 8 In June 2001 the IRC applicants commenced proceedings in the Commission. Their Summons was further amended on 31 October 2003. The Further Amended Summons (hereafter "the IRC Summons") seeks relief with respect to what is said to be a contract, arrangement or understanding between the IRC applicants and Mayne Nickless as formalised by the Pathology Services Deed and the Pathology Licence (as extended by further agreement on 24 March 2000). (Together these three agreements are referred to as "the Contracts".) The existing contractual arrangements expire on 1 November 2004. 9 Paragraph 6 of the IRC Summons alleges that all three of the IRC claimants were (from 2 November 1994 onwards) parties to a contract, arrangement or understanding whereby the applicants performed work, namely the provision of pathology services, in the healthcare industry. Paragraph 7 alleges that the Deed and Licence "formalised" the earlier contract, arrangement or understanding between Portpath, Dr Hammett, Dr Fulton and HCOA. (The third and fourth opponents are married to each other. The maiden name of the fourth opponent, Dr Michelle Hammett, is Fulton.) 10 Very considerable steps have been taken to bring the proceedings to readiness for trial in the Commission. There was a conciliation conference under s109 of the Act conducted before Marks J on 6 March 2002. Two further informal conciliations have been held without resolving the dispute. The IRC applicants filed the Further Amended Summons on 31 October 2003, to which Mayne Nickless filed an Amended Reply on 3 December 2003, to which the IRC applicants filed a Response to Amended Reply on 19 February 2004. Directions have been given as to interlocutory matters including discovery, the filing of evidence and the production of documents by third parties. The parties have filed extensive affidavit evidence in the Commission. 11 The Commission proceedings have been set down for hearing to commence on 2 November 2004. Hearing dates previously set to commence on 28 September 2004 were vacated when an early hearing date was fixed for the Summons in this Court. The Commission's courtesy in doing this is appreciated, but should not be seen by litigants as establishing a practice. Claimants who file applications for prohibition in the Court of Appeal (especially late ones) should not presume that their proceedings in this Court will be expedited, nor should they view the pendency of proceedings in this Court as any dispensation from obligations under Rules or directions of the Commission as regards preparation for a hearing in the Commission. 12 Portpath also commenced proceedings against Mayne Nickless in the Supreme Court in August 2000. In these proceedings it seeks damages at general law and under s82 of the Trade Practices Act 1974 and orders pursuant to s87 of that Act varying cl 4.2 of the Pathology Services Deed. The Supreme Court proceedings have not progressed and have been stood over pending resolution of the Commission proceedings.

Overview of jurisdictional issues raised by claimant 13 On 21 July 2004 this Court handed down its judgment in Solution 6 Holdings Ltd and Ors v Industrial Relations Commission of NSW and Ors [2004] NSWCA 200, 208 ALR 328. 14 These proceedings were commenced on 10 August 2004 when Mayne Nickless filed a Summons whose principal claim for relief is for: An order in the nature of prohibition restraining the First Opponent from proceeding to exercise or purporting to exercise, its power under section 106 of the Industrial Relations Act 1996 in the Industrial Relations Commission proceedings No 3908 of 2001 with respect to the Pathology Services Deed and the Pathology Licence entered into between the Claimant and the Second, Third and Fourth Opponents on or about 1 March 1996 as described in the Further Amended Summons filed in the Industrial Relations Commission proceedings on 31 October 2003. 15 The claimant pleaded want of jurisdiction in 2 August 2001 when it first filed a Reply to the Summons in the Commission. However, the proceedings in this Court are the first time that any challenge to the Commission's jurisdiction was pressed for hearing. 16 The jurisdictional dispute focuses upon whether the IRC applicants are seeking orders to avoid or vary a contract or arrangement "whereby a person performs work in any industry". It is common ground that "person" in this context means a natural person. But it does not follow that individuals who enter into a relevant contract or arrangement involving a corporation, such as a family company, take themselves out of the reach of s106. It is also clear that a corporation that is a party to the relevant contract or arrangement has standing to seek relief or join with individuals seeking relief in the Commission (see s108(a) and Metrocall Inc v Electronic Tracking Systems Pty Ltd (No 2) (2000) 102 IR 309). 17 The claimant's principal contention is that the IRC Summons is no more than an allegation by Portpath that its Contracts were or have become unfair. It does not allege facts showing that the Contracts required the two doctors to work nor does it claim that their remuneration is affected by the unfairness complained about. 18 The opponents submit that the IRC Summons falls squarely within the Commission's jurisdiction in that it seeks the avoidance or variation of a contract or arrangement to which the two doctors are parties in the relevant sense. Alternatively, they submit that it is sufficient that the Contracts lead directly to the performance of work by Portpath's employees generally. 19

The jurisdictional issues raised by the claimant are that: (a) the Contracts are wholly beyond the jurisdiction of the NSW Commission because none is "a contract whereby a person performs work in any industry" for the purposes of s106 of the Act;

(b) the IRC Summons is beyond jurisdiction to the extent to which it seeks relief with respect to those parts of the Contracts which do not closely relate to the performance of work in an industry; and (c) the IRC Summons is beyond the jurisdiction of the NSW Commission to the extent to which it seeks relief on the basis that the claimant has acted in breach of the Contracts. 20 Issue (c) raises the correctness of Reich v Client Server Professionals of Australia Pty Ltd (Administrator Appointed) (2000) 49 NSWLR 551 and its application to the IRC Summons. Senior counsel for the claimant Mr Douglas QC said little about this issue. This is understandable, because it is highly unlikely to arise having regard to the bases upon which relief is claimed in the IRC Summons. Most of the complaints raised by the IRC claimants relate to the unfairness of the Contracts because of what they do not provide, having regard to pre-contractual representations and practices and the way that the Deed has worked itself out in its performance. I shall say a little more about issue (c) later in these reasons. 21 The IRC Summons offers the following summary of the claims made by the IRC applicants: Outline of Claims 9. During 1994 HCOA was in the process of developing and planning a new Hospital at Port Macquarie.

From early 1994 Portpath and HCOA entered into negotiations pursuant to which Portpath was to provide pathology services to patients at the Hospital.

Whilst the arrangement commenced from about 2 November 1994 the Deed regulating the rights and obligations of the parties was not entered into until 1 March 1996.

During the course of the negotiations leading up to the provision of the pathology services and the entry into the Deed, HCOA made various representations detailed hereunder which induced the Applicants to enter into the Deed and provide the pathology services.

The agreement provided for Portpath to provide pathology services in accordance with the Deed and for HCOA to pay Portpath an annual fixed fee of $686,800 in respect of pathology services provided to public patients at the Hospital.

The Deed provided a mechanism for the annual fee payable to be reviewed based upon various criteria including inter alia patient numbers and case mix.

HCOA has informed Portpath that it has legal advice that the review mechanism is a mere agreement to agree and does no oblige it to agree to any increases. HCOA claims that there is no ultimate obligation on it to agree to any review of fees.

Such reviews as have been requested by Portpath have been either rejected by HCOA or met in small part only.

The Deed operates harshly and under-remunerates Portpath as a result of changed circumstances from the time when the agreement was being negotiated.

Those circumstances have required Portpath to provide the pathology services to a far greater number of patients and a different patient mix to that which was contemplated at the time the agreement was entered into without receiving appropriate remuneration for doing so.

Portpath's fee was arrived at based upon projections as to the patient episodes requiring pathology services. It was represented to the Applicants that to the extent that any material changes occurred in the agreed patient volumes, patient case mix and other services required, HCOA would review and agree with Portpath its fee. 20. HCOA has not agreed to appropriate reviews of the fee having regard to patient volumes, case mix, CPI increases, and other changes in the services which have been required to have been provided under the Deed.

Further, due to inefficiencies with HCOA's operations at the Hospital which, despite complaint remain unremedied, Portpath has suffered considerable additional expense in providing pathology services of an appropriate standard.

Parts of the Deed regulating the provision of pathology service are unfair, harsh and unconscionable.

Further, the Deed has become unfair, harsh and unconscionable in its operation as a result of changed circumstances from the time when the agreement was being negotiated.

Further, parts of the Deed and its practical effect is contrary to the public interest.

22 The IRC applicants seek orders varying nominated clauses of the Pathology Services Deed and that Mayne Nickless pay Portpath in excess of $5,800,000 plus interest and costs. 23 In its Outline of Submissions in this Court, the claimant summarises Portpath's allegations in the IRC proceedings in the following terms (s11): a. Mayne has rejected its requests for review of the annual fee; b. The Deed operates harshly, and under-remunerates Portpath, because the annual fee was based on projections of patients requiring pathology services and it has been obliged to provide pathology services of a different mix and to a greater number of patients than originally contemplated; c. Mayne represented that it would review and agree the annual fee with Portpath if there was a material change in agree[d] volumes or services mix, but has not done so; d. Inefficiencies at the Hospital have caused additional expenses in providing pathology services; and e. By reason of those matters, the Deed has become unfair, harsh or unconscionable in its operation and is contrary to the public interest.

24 This appears to be a fair summary as far as it goes and it shows why there is no serious Reich issue in this case. 25 But the summary is inadequate as a description of the impact of the Deed on the two doctors, the fourth opponent in particular. In order to address issues (a) and (b) there needs to be a closer examination of the Deed before returning to the complaints about it voiced by the IRC applicants in the IRC Summons and the remedies sought by them.

The Pathology Services Deed 26 I shall concentrate on the portions of the Deed said by the parties to assist or harm the jurisdictional issues. 27 The parties to the Deed are Mayne Nickless, Portpath, Dr Michelle Fulton (the fourth opponent) and Dr John Hammett (the third opponent). 28 Portpath is described as "the Pathologist". The primary obligations to provide "Pathology Services" (as defined) are imposed upon Portpath, and it is Portpath that is entitled to payment from Mayne Nickless under the Deed (see esp cls 2.2, 2.3, 3.3, 3.6, 4 and 8.1. See also Recitals A, C and D). 29 The Deed is dated 1 March 1996 but said to have effect from 2 November 1994. That date is explained in Recital D, which states: On and from 2 November 1994 the Pathologist agreed to perform and discharge, on behalf of the Operator, the Operator's obligations under the Services Agreement to provide the Pathology Services to Public Patients and, in addition, to provide the Pathology Services to other patients at the Hospital. 30 The third and fourth opponents are referred to in the Deed as "Hammett" and "Fulton" respectively or as the "Guarantors". Their position as directors of and beneficial owners of the Pathologist is acknowledged in Recital E, which also acknowledges that it was they who requested Mayne Nickless to enter into the agreement referred to in Recital D. 31 The third and fourth opponents guarantee and indemnify Mayne Nickless with respect to Portpath's obligations under the Deed (cl 7, esp 7.7(a)). But the Deed goes much further in recognising and stipulating the activities (ie "work") that they are to perform. 32 The opponents submit that there is ample material, even within the four corners of the Deed, to be capable of satisfying the jurisdictional requirement of demonstrating that the Deed is a contract whereby a person performs work in an industry. 33 The opponents point in particular to provisions that contemplate the performance of work by Dr Michelle Hammett (nee Fulton) herself. She is and appears always to have been the pathologist in charge and the laboratory manager of Portpath. She is a member of the Royal College of Pathologists of Australasia. It was her pathology practice that adopted the family company Portpath as its corporate vehicle. (Dr John Hammett is a qualified specialist physician. He no longer practices medicine but is primarily responsible for the administration of the pathology practice.) 34 As indicated, it is accepted for the purpose of the present application that the three IRC applicants were parties to a contract arrangement or understanding operating on and from 2 November 1994 whereby the applicants performed work in the health care industry by providing pathology services. The history of the negotiations leading up to the Deed demonstrates beyond doubt that the claimant and Portpath entered into the Deed upon the understanding that Dr Michelle Hammett was and would remain the "approved pathology practitioner" supervising the pathology work provided by Portpath and its employees (see Red 868-9). This was the basis of the pre-contractual representations on the opponents' part (see Red 1184ff). As indicated below, these assumptions are written into the Deed. 35 Portpath's appointment under the Deed is non-delegable (cl 2.4). 36 The Health Insurance Act 1973 (Cth) requires the proper supervision of the rendering of pathology services, including ensuring that a properly qualified person supervises the rendering of the service and has personal responsibility for the proper rendering of the service (see s3AA). Medicare benefits in relation to pathology services are (with a presently irrelevant exception) not payable unless the service is rendered by or on behalf of an approved pathology practitioner (s16A(2)(a). See also s23DB). 37 The Deed contains warranties from all three opponents that Portpath will provide pathology services in accordance with the statutory regime (see cl 2.6(g)-(k), 3.3(c)). Indeed, it goes further. There are warranties to the effect that the third opponent is an approved pathology practitioner under the Health Insurance Act, with standing as such (cl 2.6(m)-(q)). These are continuing warranties, deemed to have been repeated each day during the term of the Deed (see cl 2.7. See also cl 8.1(k)). These and the other warranties in the Deed are the subject of the guarantee and indemnity provided by the two doctors. 38 Clause 3.6(b) requires Portpath to ensure that a duly qualified pathologist is at all times available at the licensed premises or the Hospital to provide the pathology services. 39 Clause 3.6(g) contains Portpath's agreement that "all its employees including the Guarantors" shall comply with all reasonable directions given by the Chief Executive Officer of the Hospital. 40 Clause 3.13 requires at least one of the "Guarantors" to be an approved pathology practitioner under the Health Insurance Act for the entire term of the Pathology Licence (see also cl 8.1(n)-(t)). Clause 8.1(q) puts Portpath in default if Dr Fulton dies or becomes permanently disabled or otherwise incapable of performing work which she is trained as a pathologist to perform.

Issue (a): Is this a contract or arrangement whereby a person performs work in an industry? 41 My brief survey of the Deed demonstrates why, even if the Deed stood alone, the claimant would fail to establish want of jurisdiction on issue (a). The Commission will need to satisfy itself that it has jurisdiction. The claimant has not established that the facts alleged in the IRC Summons are incapable of showing the critical jurisdictional fact. 42 Portpath may be a significant enterprise, but everything points to it being at all times the corporate vehicle through which the third and fourth opponents conducted a pathology practice substantially dedicated to the claimant. 43 The claimant does not suggest that the interposition of the corporation necessarily precludes satisfaction of the jurisdictional question. It submits that the Deed is a contract to provide a product in the form of "Pathology Services". So be it, but it does not follow that it necessarily ceases to be the means whereby persons perform work in an industry. 44 The claimant submits that the Deed at its highest leads only indirectly to the performance of work. It merely contemplates that work will be done, and this is not enough (Mitchforce Pty Ltd v Industrial Relations Commission of NSW & Ors (2003) 57 NSWLR 212 at 226[49]). 45 The critical jurisdictional fact is the identification of a contract (as defined in s105) "whereby a person performs work in any industry". Stevenson v Barham (1977) 136 CLR 190 explains how this criterion is satisfied. The critical passage in the joint judgment of Mason and Jacobs JJ at 201 (with which Barwick CJ agreed: see at 192) refers to the relevant jurisdictional fact being whether the contract is one which leads directly to a person working in any industry (see generally Solution 6 at [26]-[34] per Spigelman CJ). Since "contract" includes an "arrangement", it follows that it is not necessary in an "arrangement" case to prove that the work was performed pursuant to a legal obligation to do it (QSR Ltd v Industrial Relations Commission of NSW & Ors [2004] NSWCA 199 at [47], [57], [58]). 46 Nor is it essential that there be throughout an identity between the person working and the contracting party (Ex parte VG Haulage Services Pty Ltd: Re Industrial Commission of New South Wales [1972] 2 NSWLR 81 at 87-88, Stevenson at 200). It is commonplace for modern contracts of employment involving senior executives, professional persons and leading sportsmen and women to use a service company. 47 In Solution 6 (at [35]), Spigelman CJ referred to two paraphrases of the word "directly" that have received judicial acceptance. In Production Spray Painting and Panel Beating Pty Limited v Newnham (1991) 27 NSWLR 644, Mahoney JA (at 649-50) posed the question in terms of "whether the purpose of the transaction was that relevant work be performed". Priestley and Handley JJA (at 657) posed the question in terms of whether the impugned contract "must directly, that is under or pursuant to its terms, provide for the performance of work in an industry". Another statement found in the cases is whether or not the work was "required" by the contract (Production Spray Painting at 657, Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Limited (1992) 28 NSWLR 443 at 465, Solution 6 at [35]). 48 In Solution 6, Spigelman CJ (at 217[12]-[14]) cited the judgment of Jacobs JA in V G Haulage at 88 as supporting the proposition that a contract may be found to lead "directly" to the performance of work in an industry if it: (i) itself "directly envisages" performance of work; and (ii) has a "recognisable impact on the conditions of that employment" and "work" .

Identification of these elements was not intended to propound some kind of alternative test to that stated by the High Court in Stevenson (see Old UGC Inc & Ors v Industrial Relations Commission of NSW & Anor [2004] NSWCA 197 at [49]). 49 All of these tests or indicia are well capable of being satisfied in the present case. It is sufficient to demonstrate why that is so as regards the fourth opponent, although many of the provisions apply to each of the third and fourth opponents. This Summons was not argued on the basis of any distinction being drawn between the two doctors. 50 The Contracts directly envisage that the fourth opponent will continue her hands-on role as a pivotal worker in the pathology business. Without that involvement the statutory requirements under the Health Insurance Act will not be satisfied. The Deed ensures that it will be satisfied, by procuring the continuing warranties about Dr Fulton's role as an approved pathology practitioner (cl 2.6(m) to (q)), being warranties that the two "Guarantors" back by their indemnity in cl 7. It is also procured even more directly by cl 3.13 (see par 40 above). 51 The claimant's suggested analogy between this case and a large lump sum building contract is unconvincing. Here, the level of Portpath's (and consequently the doctors') remuneration is directly affected by the alleged deficiencies and unfairnesses of the Deed. Furthermore, this Deed directly recognises, contemplates and provides for the work that is to be done by the fourth opponent in the provision of pathology services for the claimant. 52 In these circumstances, it becomes unnecessary to consider the alternative jurisdictional argument advanced by the opponents which focuses upon Portpath employees other than the opponents.

Issue (b): Does the relief address those parts of the Contracts that closely relate to the performance of work in an industry? 53 This is related to issue (a), but nevertheless distinct from it. 54 Standing to claim relief under s106 is not confined to the person that the contract or arrangement envisages will perform work in an industry (see s108). But Solution 6 emphasised the need for the applicant to demonstrate a nexus between the relevant jurisdictional fact and the relief claimed in the Commission. 55 Spigelman CJ said that the power to declare void or vary a contract or arrangement once jurisdiction is established extends only to those parts of the contract or arrangement that are closely related to the performance of work in an industry (see at [73], [80], [83], [93]-[95]). The Chief Justice added that in the usual case all aspects of a remuneration package will be within the scope of the contract or arrangement whereby work is performed in an industry (at [73]). 56 The claimant argues that Handley JA took a wider position in Solution 6 at [175]-[177]. However, I do not agree that the difference in language expresses any difference in principle. In the paragraphs cited, Handley JA is addressing the slightly different matter of the Commission's power in "appropriate cases" to exercise its jurisdiction in respect of "composite transactions". In Solution 6, I agreed with both the Chief Justice and Handley JA on these matters (see at [160]). 57 For present purposes, I am content to examine the issue through the lens of the Chief Justice's formulation. 58 The IRC applicants seek the reformulation of the Deed by adding more effective and fairer fee review mechanisms and other variations (see generally claims 1, 3, 4, 5, 6, 7, 8, 9 in the IRC Summons), with consequential orders for payment of additional moneys, including interest and costs. 59 The nub of the claimant's argument on issue (b) is that the beneficiary of such relief is Portpath, whereas Portpath is not the person performing work in an industry for the purposes of s106(1). The claimant points out that there is no allegation that any employee of Portpath is receiving inadequate remuneration under or pursuant to the Deed and its regime. There is not even an allegation to that effect in relation to the two working shareholders of Portpath. Section 106 does not exist to remedy unfairness to Portpath. 60 There is, in my view, force in these submissions and they raise matters requiring further attention in the Commission. However, I am not prepared to issue prohibition on this account. The claimant is unable to establish a probable excess of jurisdiction as regards this remedial aspect of the IRC Summons. That is because the facts established (for present purposes) are capable of generating an arguable basis for relief based on unfairness as regards the two doctors. 61 The Court of Appeal will not prohibit proceedings in the Commission where jurisdiction can be established by an amendment asserting that undisputed facts have a particular legal effect (see Solution 6 at [36], Old UGC at [51]). 62 The relief claimed in the IRC Summons may require closer attention or amendment. Alternatively, the Commission may not ultimately be satisfied that any unfairness established has a sufficiently direct impact upon the remuneration of the two doctors. But it is sufficiently clear that the IRC applicants intend to press a claim that has such a nexus. It is also clear that the facts are capable of supporting the relief claimed in the IRC Summons, or some alternative remedy having similar effect as regards two doctors. 63 Portpath is the corporate vehicle through which the two doctors provide their services to the claimant and through which they earn income from personal services in relation to their pathology work at Port Macquarie. The doctors are the directors and shareholders of Portpath, but the provisions in the Deed that I have highlighted are capable of showing that they have been working for the claimant as well as for themselves (cf Production Spray Painting at 655, 657, noting that the present case is easily distinguishable from the example of a sale of a business by a working proprietor there discussed). Portpath is run by the doctors on the basis that all profits from the pathology business will pass to them at their direction either as salary, dividend or other drawings; and everything points to Mayne Nickless being aware of this. 64 The affidavit of the fourth opponent demonstrates that the money claims in the IRC Summons are primarily based upon the Contracts having been unfair during their performance (cf s106(2)), because the doctors have had to work longer hours for the claimant than originally contemplated by all parties, while being effectively precluded from earning fair or adequate remuneration through the fees payable to Portpath. Their remuneration has fallen significantly below what would have been earned had they been employed directly in the work they are committed to perform through Portpath by the Deed (see Red 876-881). 65 On these facts it is open to the Commission to be satisfied both as to the jurisdictional fact of the contract or arrangement being one whereby the two doctors work in an industry and the secondary remedial requirement of showing that (if unfairness is found) relief can be moulded that closely relates to their performance of work, such relief being in effect the provision of greater remuneration for their services provided through Portpath.

Issue (c): The threatened application of Reich 66 The third arm of the claimant's case contends that Reich was wrongly decided and that the Commission would commit a jurisdictional error if it were to find that conduct in breach of a contract is capable in itself of establishing that the contract is unfair in the sense defined in s105 of the Act. The point was not part of the claimant's written submissions, but emerged opaquely in the submissions of Mr Douglas QC. 67 The scope and correctness of Reich will be addressed by this Court (as presently constituted) in Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Ors (CA 40666/04). Judgment in that matter was reserved on 22 September 2004. This summons can be dealt with by assuming in the claimant's favour that it is not open to the Commission to hold that a contract has become unfair merely because of a party's conduct in breach (cf Solution 6 at [162]-[164] per Handley JA). 68 On this assumption, the claimant must still establish that the claim of unfairness made by the IRC applicants is based upon conduct in breach of the Contracts. This the claimant has substantially failed to do, for the reasons that follow. 69 The Reich point was not advanced in the claimant's written submissions and it was at most a subsidiary alternative in the oral submission of Mr Douglas QC. The nub of this submission was that some of the monetary claims in the IRC Summons were based on allegations of contravention of the Contracts by Mayne Nickless. The submission was advanced globally, directed at the entire IRC Summons, whereas close examination of that document indicates that the submission only engages claim 10 in that Summons. All other claims are based in terms upon specific allegations of unfairness in what the Contracts do not provide for. 70 Most of the allegations in the Commission are to the effect that the contractual arrangements are unfair in what they do not provide. The unfairness is said to be based in part on representations preceding entry into the Contracts, in part upon additional costs to Portpath stemming from changes in patient numbers and other matters occurring after the Contracts commenced. Issues of these types fall squarely within the Commission's jurisdiction under s106. it is no answer to suggest, as the claimant does in par 30 of its written submissions, that these claims would also lie in the Commercial Division or the Federal Court if framed by reference to the general law of misrepresentation or the Trade Practices Act 1974. 71 The major claim in the IRC Summons, monetarily speaking, concerns the unfair operation of the contractual mechanism for the review of the fees payable to Portpath. This is Claim No 1 and more than $3 million is at issue, excluding interest. 72 Claims 2, 3, 4, 5, 6, 7, 8, 10 and 12 in the IRC Summons are similar in form and substance to Claim 1. Claims 11 (Inconvenience, distress and vexation), 12 (loss of sale of business), 13 (professional costs) and 14 (interest) are not framed as claims for variation of the Contracts, but are obviously advanced as monetary claims consequential upon the other claims. They are capable of being addressed under s106(5) and do not necessarily involve the Reich issue. Indeed they appear highly unlikely to do so. 73 Only one of the claims in the IRC Summons appears to be based upon unfairness arising from conduct said to be in breach of the Contracts. Claim 9 alleges that nine patients have received tests that have not been billed by Portpath under the terms of the Deed. Since the sum claimed is $135, prohibition is a discretionary remedy, there has been considerable delay and since none of the submissions of either party squarely addressed the Reich issue in this context, this is a classical case for the application of the maxim de minimis non curat lex. 74 I have had the benefit of reading Hodgson JA's reasons. I agree with them. 75 The Summons should be dismissed with costs. 76 HODGSON JA: I agree with the orders proposed by Mason P, and subject to what I say below, substantially with his reasons. 77 In my opinion, the claimant has not shown entitlement to relief on the basis that there is no relevant contract or arrangement whereby a person performs work in an industry. The deed and associated contract and arrangements are capable of amounting to such a contract or arrangement, and whether or not they do may depend on the detailed facts ultimately found by the Commission. In approaching the matter, in my opinion the Commission will need to have regard to the principle referred to by Priestley and Handley JJA in Production Spray Painting & Panel Beating Pty. Ltd. v. Newnham (1991) 27 NSWLR 644 at 657, to the effect that it is not sufficient to establish jurisdiction that a contract involves the provision of goods and services, with a consequent performance of work in an industry. In cases such as the present, where it appears that the applicants do work for entities other than the claimant, this may be a real question. Although plainly a contract or arrangement whereby a person performs work part-time in an industry may be within the provision, the circumstance that the person performs work for other people or companies in the same industry pursuant to other contracts and arrangements will be a factor in determining whether the contract or arrangement in question is in truth one whereby the person performs work in an industry, or rather whereby the person provides goods and/or services with consequent performance of work in an industry. 78 McCOLL JA: I agree with Mason P.

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(D) Health Insurance Act 1973(Cth)

CITATION : MAYNE NICKLESS LIMITED v INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES & 3 ORS [2004] NSWCA 359 HEARING DATE(S) : 21 September 2004 JUDGMENT DATE : 1 October 2004

CATCHWORDS : Prerogative relief - prohibition - Industrial Relations Act 1996, s106 - unfair contract - whether Commission has jurisdiction - whether a contract whereby a person performs work in any industry - whether relief sought related to performance of work in an industry - de minimis non curat lex. (D) Health Insurance Act 1973 (Cth) LEGISLATION CITED : Industrial Relations Act 1996 Trade Practices Act 1974 Ex parte VG Haulage Services Pty Ltd: Re Industrial Commission of New South Wales [1972] 2 NSWLR 81 Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Limited (1992) 28 NSWLR 443 Metrocall Inc v Electronic Tracking Systems Pty Ltd (No 2) (2000) 102 IR 309 Mitchforce Pty Ltd v Industrial Relations Commission of NSW & Ors (2003) 57 NSWLR 212 CASES CITED : Old UGC Inc & Ors v Industrial Relations Commission of NSW & Anor [2004] NSWCA 197 Production Spray Painting and Panel Beating Pty Limited v Newnham (1991) 27 NSWLR 644 QSR Ltd v Industrial Relations Commission of NSW & Ors [2004] NSWCA 199 Reich v Client Server Professionals of Australia Pty Ltd (Administrator Appointed) (2000) 49 NSWLR 551 Solution 6 Holdings Ltd and Ors v Industrial Relations Commission of NSW and Ors [2004] NSWCA 200, 208 ALR 328. Stevenson v Barham (1977) 136 CLR 190 MAYNE NICKLESS LIMITED v INDUSTRIAL RELATIONS COMMISSION OF NSW PARTIES : PORTPATH PTY LIMITED John Frederick HAMMETT Michele Mary HAMMETT FILE NUMBER(S) : CA 40654/2004 Claimant: F M Douglas QC/ B J Shields COUNSEL : 1st Opponent (Commission) : Submitting 2nd-4th Opponents: S J Burchett/ P Castley Claimant: Freehills SOLICITORS : 1st Opponent (Commission): Crown Solicitor, IV Knight 2nd-4th Opponents: Clayton Utz

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