(d) The claimant's claim that s 179 is inconsistent with Chapter III of the Commonwealth Constitution.
162 Section 106, so far as relevant, provides:
"(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract.
(2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract, or any other reason.
(3) The contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time.
(4) ...
(5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case".
163 Section 105 defines contract as meaning: "Any contract or arrangement, or any related condition or collateral arrangement"; and an unfair contract as meaning, so far as relevant, one that is "unfair, harsh or unconscionable".
164 The contract found to be within s 106 was the lease as incorporated in the deed of consent. The Starkeys as assignees covenanted in the deed that they would "hereinafter duly perform and observe all terms, conditions and covenants expressed or implied in the lease and on the part of the assignee to be performed in the same manner as if the assignee had been a party to the lease". This covenant may have been unnecessary because s 51 of the Real Property Act provides that upon registration of a transfer of lease the transferee becomes liable under the lease as if he had been the original lessee. The point was not argued but there is no reason to think that statutory privity of contract would deprive the Commission of jurisdiction under s 106.
165 Mr Grieve QC, who appeared for the claimant, submitted that the contract was not within s 106 because of its commercial character, and because it created an interest in land. The original parties had bargained at arm's length on equal terms, without any misrepresentation or unfairness in the negotiations. The original lessee thought the lease was worth a premium of $400,000.
166 The Starkeys did not claim that there had been any misrepresentation or other unfairness in the negotiations leading to the assignment and the landlord's consent. They thought the lease was worth the premium of $650,000 they paid the assignor.
167 The decision in Production Spray Painting & Panel Beating Pty Limited v Newnham (1991) 27 NSWLR 644 (Newnham), which the High Court declined to review, establishes that the contract of sale to the Starkeys was not one whereby work was performed in an industry.
168 Mr Grieve submitted that the original lease and the assignment, including the deed of consent, constituted a contract under which the Starkeys, with a view to profit, obtained long term benefits and accepted long term risks and that it could not be unfair for the purposes of this section.
169 However whether or not a contract is unfair for the purposes of s 106 is the very question committed to the decision of the Commission. This is made clear by sub s (1) which empowers the Commission to make orders in respect of a relevant contract "if [it] finds that the contract is an unfair contract". The Commission has been given jurisdiction to determine whether a contract is "unfair".
170 In Stevenson v Barham (1977) 136 CLR 190 Mason and Jacobs JJ, with the concurrence of Barwick CJ (192), said (201):
"... if the contract is one which leads directly to a person working in any industry it has the requisite industrial character - it is a contract 'whereby a person performs work in any industry'. This is the relevant jurisdictional fact which needs to be established. An error of law whereby the Commission assumes or declines jurisdiction may be corrected by the Supreme Court; but once the jurisdiction is established the Industrial Commission is the final arbiter both on matters of law and on matters of fact. Its decision cannot, except by way of appeal to the Commission in court session ... be challenged". (Emphasis supplied).
171 In Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169 Lord Diplock said (171):
"Mr Justice Macken found the Solus Contract to be harsh, unfair and unconscionable and [that it] provided a total remuneration to the Feenans that was less than persons who performed the work ... would have been paid ... as employees. These findings are open neither to appeal nor to review by the Supreme Court or by their Lordships. The only question open to review is whether the Industrial Commission had jurisdiction under the section to entertain an application to declare the Solus Contract void upon these grounds; and this turns upon whether it was a 'contract ... whereby a person performs work in any industry'."
172 Thus as Sheller JA said in Walker v Industrial Court of NSW (1994) 53 IR 121, 155:
"There could be no doubt that the Full Industrial Court had authority to decide whether or not the contract of employment was unfair, harsh or unconscionable".
173 Stevenson v Barham also makes it clear that the commercial character of this lease, and its lengthy term with an option for renewal, did not prevent it being a contract whereby work was performed in an industry. Barwick CJ said (192) that contracts are within the section although they may be "agreements for business ventures", and the result of "bargains freely made by a person who was under no constraint or inequality ... whose labour was not being oppressively exploited".
174 The Commission therefore had jurisdiction to determine whether the contract was unfair, and the relief, if any, to be granted. Any error, assuming one were made, would be within jurisdiction. Error within jurisdiction "is a wrong exercise of a jurisdiction [the Court] has, and not a usurpation of a jurisdiction which [it] has not" (per Lord Sumner in R v Nat Bell Liquors Ltd [1922] 2 AC 128, 151-2). The same point was made in Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369, 374 by Latham CJ who said:
"When jurisdiction is given to decide a question, there is power to decide it, rightly or wrongly, and not only power to decide it rightly".
175 Mr Grieve submitted that this lease was either not relevantly a contract, or not merely a contract, because it created an estate in land. There is substantial authority in the Commission and its predecessors that a lease may be a contract whereby work is performed in an industry but there is, as yet, no authority in the higher courts on this question. A share farming agreement, which creates a licence, and not a lease (Dudgeon v Chie (1955) 92 CLR 342) was held to be within the section in Stevenson v Barham and a licence to operate a service station was held to be within the section in Caltex Oil (Australia) Pty Ltd v Feenan.
176 Any doubts which once may have existed as to whether a lease was a contract have been resolved by the decision in National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 that a lease may be frustrated, and by the decision in Progressive Mailing House Pty Limited v Tabali Pty Limited (1985) 157 CLR 17 that it may be repudiated so as to entitle the innocent party to rescind for breach. As Mason J said in the latter case (29):
"... as the law of landlord and tenant has outgrown its origins in feudal tenure, it was more appropriate in the light of the essential elements of the bargain, the modern money economy and the modern development of contract law that leases should be regulated by the principles of the law of contract".
177 There is no discernible reason why a lease of land should not be a contract for the purposes of s 106.
178 The jurisdictional fact for the purposes of s 106 is the existence of a "contract whereby a person performs work in any industry". It will be necessary to consider this requirement in more detail later in these reasons, but for the moment it will be sufficient to note that the established test is whether the contract leads directly to a person working in any industry [par 19]. There was no dispute that work in a hotel is work in an industry for this purpose. The issue in the Commission, and now in this Court, is whether this was a contract "whereby" such work was performed.
179 This lease did not impose an express contractual obligation on the lessee to keep the hotel open for business, or to carry on the business. There is no obligation on a licensee under the Liquor Act or the standard hotel licence to carry on the hotel business and keep it open for trading during licensed hours.
180 There is no authority in the higher courts that a contract will only be one whereby work is performed in an industry if the work is performed pursuant to an express or implied term. The section covers arrangements, related conditions, and collateral arrangements as well as contracts, and as Barwick CJ said in Brown v Rezitis (1970) 127 CLR 157, 164: "One of the purposes of the section is to deal with subterfuges". It is clearly concerned with issues of substance and not of form. Any requirement that the work be performed pursuant to an express or implied term would be formalistic and would allow the section to be avoided by subterfuges.
181 Hungerford J held that the lease contained an implied term that the lessee would carry on the hotel business and keep it open for trading. However such an implication in a 17 page lease with a multiplicity of express terms cannot be supported. It was not "necessary" to give business efficacy to the lease which was quite effective without it, it was not so obvious that it went without saying, and it was not capable of clear expression. What opening and closing times were implied and for what days of the week? What sections of the Hotel had to be kept open? What types of meals had to be served, in what parts of the Hotel and during what hours? The implied term found by Hungerford J did not satisfy the tests in BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266, 282-283.
182 It is not clear that the Full Bench upheld the implied term found by Hungerford J. They may have based themselves solely on the express obligations of the tenant with respect to repairs and maintenance. In para 34 they upheld the Judge's finding that the lease "constituted an ongoing relationship with the clear purpose, on the facts, that the applicants would conduct the business of an hotel … and that necessarily contemplated the performance of work, including as to the maintenance of the premises in good order and repair" (emphasis supplied). Then in para 35 they held "that the performance of work under the deed, incorporating as it did, the terms of the original lease, was a direct result of an obligation imposed by the deed" (emphasis supplied).
183 If the Full Bench intended to endorse the implied term found by the Judge, then, as I have already held, they fell into error that would have gone to jurisdiction had no other jurisdictional basis been shown. However Hungerford J also found that the lease fell within s 106 because (par 74, 77) "it contained "various obligations … to perform a significant amount of physical work so as to ensure the premises were kept in a fit state" and that "the express work obligations imposed by the lease could not be characterised as being only incidental or peripheral".
184 The Full Bench appear to endorse the Judge's finding (par 77) that the tenants' obligations for the maintenance and repair of the premises brought the lease within the section. They also appear to have found (par 35) that the performance of such work was a direct result of an obligation imposed by the deed, and not an accidental consequence.
185 With respect a decision that work done in performance of repairing obligations under a contract brings that contract within s 106 cannot be supported. Obligations to repair and maintain are commonly, if not invariably, found in real estate mortgages, long term residential leases, equipment leases, leases hire purchase agreements and chattel mortgages over motor vehicles farm equipment and other chattels, and long term commercial leases including head leases of office buildings, shopping centres and industrial buildings. Leases of Crown land in rural areas commonly contain covenants by the tenant to carry out improvements and to work the land. It cannot be supposed that Parliament intended that all these contracts would be within the jurisdiction of the Commission under s 106.
186 There is a further difficulty. In the present case the tenants were bound to repair and maintain the hotel in accordance with the covenants in the lease, but were not bound to do the necessary work personally, and there was no finding that they ever did so. Indeed it would have been surprising if the tenants had done the work themselves because in the ordinary course such work would be done by skilled tradesmen engaged as independent contractors. Since the tenants were neither required nor expected to do the work themselves, the lease, in this respect, did not lead directly to the performance of work in an industry.
187 It is established by Barham [par 19] which is binding on the Commission and this Court, that a contract which only leads indirectly to the performance of work in an industry is not within the jurisdiction of the Commission. Practically every contract leads indirectly to the performance of work in an industry. Thus a contract of insurance will result in clerical work being performed in the office of the insurance company, there will be work in banks as the cheque for the premium is collected and credited, and work in the post office as the cheque and the policy are sent and received. The same can be said of a sale of securities on the stock exchange, or a contract of loan including all contracts between banker and customer.
188 I would therefore reject two of the bases for jurisdiction accepted by Hungerford J and the Full Bench, but there was a further ground accepted by the Full Bench (34) which was based on the following finding of Hungerford J (77):
"…the relationship between the applicants and the respondent here under the lease constituted an ongoing relationship with a clear purpose on the facts, that the applicants would conduct the business of an hotel … for the duration of the lease term and that necessarily contemplated the performance of work".
189 If the arrangements considered in Barham and Caltex Oil (Aust) Pty Limited v Feenan [par 20] had been entered into by way of lease instead of licence, they would still, in my judgment, have been contracts whereby work was performed in an industry because they would have led directly to the performance of such work. For the same reasons the ordinary brewery lease would also be such a contract. Accordingly it is impossible to maintain as a general proposition that a lease of business premises to a working tenant cannot be a contract whereby work is performed in an industry. On the other hand the converse is also true, because in my judgment it cannot be said that every lease of that kind is such a contract. Unfortunately there appears to be no bright line which distinguishes the leases which are, and those which are not, contracts whereby work is performed in an industry.
190 In this case the landlord had the hotel constructed as a purpose built building (Hungerford J para 4). He then had the option, assuming he did not wish to conduct the business himself, of employing a manager to run the business on his behalf, or leasing the property to a tenant who would conduct his own business on the premises. The tenants of this hotel did not sell goods which their landlord had produced, and they could not be said, for that reason, to be working for their landlord like a tenant from a brewery or an oil company. However this landlord still had quite an interest in the goods sold at the hotel because clause 3.3 of the lease contained a covenant by the tenant to pay an additional rent of 4% of the value of the liquor purchased by the tenants under the liquor licence.
191 There are several factors which, in combination, made this a contract whereby work was performed in an industry, if not from the outset then certainly at a later stage. The Starkeys always intended to be working proprietors, and that is what they were throughout. When they took over the lease the rent was not unreasonable, and the lease was in fact a valuable asset for which they, as experienced hoteliers, were prepared to pay $650,000. At that stage the rent was simply a normal overhead and the Starkeys could earn a reasonable living from the business. At that stage one could fairly say that the Starkeys were working for themselves.
192 However as time went on and the rent escalated remorselessly, the Starkeys were not able to pay the rent in full, and the arrears mounted. The rent became a rack rent and ceased to be a normal overhead. When the arrears are taken into account, the tenants must have been operating the business at a substantial continuing loss. By this stage they were, in a real sense, working for the landlord. The lease was unsaleable, they were locked in, and they had been reduced to the role of managers because the landlord was taking all the profits of the business and leaving them with a loss. They continued to live off the business but in economic terms they were working for nothing because their losses must have substantially exceeded their drawings.
193 By this time, if not before, the lease had become a contract whereby work was being performed in an industry, because it led directly to the performance of such work in circumstances where the Starkeys were at best working for themselves and the landlord, but in reality they were working for the landlord. In my judgment a contract which, at its inception, was not one whereby work was performed in an industry can become such during its performance so as to fall within the Commission's jurisdiction under s 106, and this case is a good example of how this can occur.
194 In the words of Jacobs JA in Ex Parte VG Haulage Services Pty Limited; Re The Industrial Commission of NSW [1972] 2 NSWLR 81, 88, which were quoted by Priestley JA and myself in Production Spray Painting and Panel Beating v Newnham (1991) 27 NSWLR 644, 656, this lease "itself directly envisages the employment of a person or persons in industry and has a recognisable impact upon the conditions of that employment". Once the rent of this hotel reached the point where the Starkeys were falling into arrears and making losses the lease had a recognisable impact upon the conditions of their continued employment at the hotel, and as such it was within the section.
195 Since the Commission in truth had jurisdiction it does not matter that it upheld its jurisdiction on legal grounds which cannot be supported: R v Moore ex parte Graham (1977) 138 CLR 164.
196 In these circumstances it might have been thought that the appropriate relief to be granted under a section in industrial arbitration legislation was to treat the Starkeys from that time onwards as managers employed at a salary and to write off the arrears of rent, rather than to adjust the contract so as to restore to them the chance of profits and a capital gain with the risk of further losses as Hungerford J did. It might have been thought that relief of that kind was more appropriately granted, if at all, under the Contracts Review Act rather than the Industrial Arbitration Act. However it was not suggested by the claimant that this was enough in itself to demonstrate an absence or excess of jurisdiction.
197 The Commission therefore had jurisdiction and the principal challenges to the validity of the orders made by Hungerford J and confirmed by the Full Bench must fail.
198 However orders 11 and 12, as follows, raise different questions:
"11. That the Respondent, within 28 days, prepare and submit to the Applicants, a new lease for a term of 10 years commencing 10 July 1999 on terms consistent with the orders above.
12. That the Respondent procure the stamping and registration of the new lease within 2 months of receipt of the executed leases from the Applicants and the Applicants' cheque in payment of stamp duty".
199 There is no express statutory power which authorised the Commission to make these orders. They were not foreshadowed by Hungerford J in his reserved judgment and were presumably sought by counsel for the Starkeys when he brought in draft formal orders. It does not appear that they were the subject of any argument before Hungerford J, and they were not the subject of any independent challenge in the Full Bench.
200 Those orders are not within the sections which confer power on the Commission to grant injunctions in limited circumstances (ss 107, 277, 359). They are therefore beyond power unless the Commission has some implied or inherent power or jurisdiction to make orders of this nature.
201 The orders, if valid, would be enforceable by resort to the Commission's powers under s 180 to punish for contempt but this cannot confer the power to make them. The Commission does not have the power, which the Supreme Court has under s 100 of the Supreme Court Act, and had previously, where a person has failed to comply with an order directing him to execute a document, to authorise someone else to execute it on his behalf. Although the Real Property Act authorises the registration of statutory titles, orders made by the Registrar-General, and some orders made by courts (ss 46C, 62(3), 81K(2), 86, 91, 105, 135K, 138), there is no provision which would authorise the registration of an order of the Commission.
202 The Commission is a superior court of record (s 152(1)), but as a statutory court it only has the powers conferred on it, expressly or impliedly, by statute. In R v Forbes ex parte Bevan (1972) 127 CLR 1 the High Court held that the Commonwealth Industrial Court had no implied or inherent power to grant an ex parte injunction to prevent a de facto amalgamation of registered organisations and their funds. This is persuasive authority that the Commission had no implied or inherent power to make orders 11 and 12, whether they are characterised as orders for specific performance, injunctions, or simply as mandatory orders. Accordingly, subject to the privative clause in s 179, certiorari should go, but only to quash those orders, which are clearly severable. R v Arundel JJ ex parte Jackson [1959] 2 QB 89.
203 Section 179 provides so far as relevant:
"(1) Subject to the exercise of a right of appeal to a Full Bench of the Commission conferred by this Act ... a decision or purported decision of the Commission ...
(a) is final, and
(b) may not be appealed against, reviewed, quashed or called in question by any court or tribunal (whether on an issue of fact, law, jurisdiction or otherwise).
(2) A judgment or order that, but for this section, might be given or made in order to grant a relief or remedy (whether by order in the nature of prohibition, certiorari or mandamus, by injunction or declaration or otherwise) may not be given or made in relation to a decision or purported decision of the Commission, however constituted.
(3) To avoid doubt, this section extends to any decision or purported decision of the Commission, including an award or order of the Commission".
204 This is the widest privative clause I have seen, but in Woolworths Ltd v Hawke (1998) 45 NSWLR 13, 18 this Court doubted whether it could protect orders "made beyond any power to make them". Both Mr Jackson QC for the Starkeys and the Solicitor-General accepted that s 179 was subject to the principles stated by Dixon J in R v Hickman ex parte Fox & Clinton (1945) 70 CLR 598. No doubt they were deterred from submitting otherwise by hypothetical examples such as those referred to by Griffith CJ in Baxter v NSW Clickers Association (1909) 10 CLR 114, 131. In the context of an earlier privative clause, in this State's industrial legislation, the Chief Justice instanced trials for indictable offences, the grant of probate, and administration of the trusts of a deed or will, as cases where there would be no "decision" for the purposes of that privative clause.
205 Section 179 attempts to close this gap by references in each sub section to "a decision or purported decision" and the reference to jurisdiction in sub s (1)(b). However the Hickman principle does not depend on the verbal niceties of the privative clause but on the need to reconcile conflicting provisions in the same statute. R v Coldham ex parte AWU (1983) 153 CLR 415, 418 cited in Plaintiff S 157/2002 v The Commonwealth (2003) 77 ALJR 454 (Plaintiff S 157), 467 [par 61] per Gaudron, McHugh, Gummow, Kirby, and Hayne JJ (the joint judgment).
206 Speaking in Hickman of a privative clause in National Security Regulations governing the coal industry, Dixon J said at 614-5, 616:
"The particular regulation is expressed in a manner that has grown familiar. ... in jurisdictions where there is a unitary constitution, the interpretation of provisions of the general nature of reg 17 is well established. They are not interpreted as meaning to set at large the courts or other judicial bodies to whose decision[s] they relate. Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body ... where the legislature confers authority subject to limitations, and at the same time enacts such a clause ... it becomes a question of interpretation of the whole legislative instrument whether transgression of the limits, so long as done bona fide and bearing on its face every appearance of an attempt to pursue the power , necessarily spells invalidity ... In considering the interpretation of a legislative instrument containing provisions which would contradict one another if to each were attached the full meaning and implications which considered alone it would have, an attempt should be made to reconcile them". (emphasis supplied)
207 The operation of a widely drawn privative clause in a State statute was considered in Darling Casino Ltd v NSW Casino Control Authority (1997) 191 CLR 602 by Gaudron and Gummow JJ, and their joint judgment was cited with approval in the joint judgment in Plaintiff S 157 (above) at pars 60, 64, 69, 70, 72 and 76. Gaudron and Gummow JJ said at 630-1, 633-4:
"So far as concerned impugned exercises of power the Hickman principle allows the privative clause to operate in the fashion identified by Brennan J in Deputy Commissioner of Taxation v Richard Walter Pty Ltd:
'The privative clause treats an impugned act as if it were valid. In so far as the privative clause withdraws jurisdiction to challenge a purported exercise of power by the repository, the validity of acts done by the repository is expanded'.
... the privative clause operates, in effect, to recast the legislative provision which confer the power in question and which condition its exercise.
It is to be remembered that the Hickman principle is a rule of construction ... Accordingly the question ... is not one of the meaning and effect of the Hickman principle which seeks to reconcile 'the prima facie inconsistency between one statutory provision which seems to limit the powers of the [decision maker] and another provision, the privative clause, which seems to contemplate that the [decision] shall operate free from any restriction'. Rather it is one of the meaning and effect of the statutory provisions in question. If there is an inconsistency the Hickman principle requires that it be 'resolved by reading the ... provisions together and giving effect to each' ...
The operation of a State privative clause is purely a matter of its proper meaning ascertained in its legislative context ... Provided the intention is clear a privative clause in a valid State enactment may preclude review for errors of any kind. And if it does the decision in question is entirely beyond review so long as it satisfies the Hickman principle" . (emphasis supplied)
208 The three conditions of the Hickman test, as they apply in this case, are that Hungerford J and the Full Bench made bona fide attempts to exercise the powers of the Commission, that their orders relate to the subject matter of the legislation, and that they are reasonably capable of reference to the powers given to the Commission.
209 The bona fides of Hungerford J and the Full Bench could not be in question, and the orders related to the subject matter of the legislation because they related to a contract whereby work was performed in an industry. The difficulty arises in relation to the third condition that the decision "is reasonably capable of reference to the power[s]" given to the Commission [par 41].
210 The third requirement directs attention to a source of power to which the order may be referred. In Hickman at 617 Dixon J said that the decisions "should not be considered invalid if they do not upon their face exceed the Board's authority" (emphasis supplied). As Gleeson CJ said in Plaintiff S 157 at par 12 this requirement can be traced to the statement in the advice of the Privy Council in Colonial Bank of Australia v Willan (1874) LR 5 PC 417, 442 that where there is a wide privative clause the Court will not quash "except upon the ground ... of a manifest defect of jurisdiction". In R v Metal Trades Employers Association ex parte Amalgamated Engineering Union (1951) 82 CLR 208, 249 Dixon J said that the third requirement was satisfied in that case because:
"... it appears that the order or award is reasonably capable of reference to a power belonging to the Court ...".
211 He said earlier in that case (248):
"Now it cannot be denied that the order impugned was made by the Arbitration Court in purported pursuance of s 29(b), that it is an attempt to exercise that power and that upon its face the order appears to be an exercise of the power. It is only when you look behind it at the terms of the award that any ground is disclosed for denying that the order falls within s 29(b)". (emphasis supplied)
212 In R v Commonwealth Conciliation and Arbitration Commission ex parte Amalgamated Engineering Union (1967) 118 CLR 219, 253 Kitto J referred to the previous case and Hickman, and expressed the third requirement thus:
"... and it is reasonably capable of being referred to the power (i.e. does not on its face go beyond the power)".