THE SUBMISSIONS
For the appellant
92 The case advanced on appeal for the appellant by Mr Murphy in extensive written and oral submissions, was that Maidment J had fallen into error in the approach which he had adopted to the decision in Dun which required correction on appeal.
93 The issue at first instance was said to be - 'was the conduct of the respondent towards the appellant in unilaterally reducing the latter's remuneration and which was, and was found by his Honour to be, a breach of the employment contract, a repudiation of the employment contract and unfair, such as to entitle the appellant to relief pursuant to s106?'
94 Mr Murphy approached the appeal by an analysis of case law, commencing with Australian Entre Business Centres v Smith (1989) 29 IR 172, where it was observed at p183:
'In a case which in truth and substance is nothing more or less than an action for damages for breach of contract it may be that there is no jurisdiction under s88F, or alternatively that, as a matter of discretion the Commission should not exercise its jurisdiction.'
95 This observation related to a predecessor to s106, s88F of the Industrial Arbitration Act 1940 and was submitted to be obiter. Similar approaches were adopted by Sweeney J in Long v Momentum Computing Pty Ltd (unreported, 11 December 1989), by Maidment J in Beard v WBW Insurance Brokers (unreported, 10 April 1990); by Sweeney J in Woods v Bank of New York Australia Ltd (unreported, 27 April 1990) and James v BNY Australia Limited (unreported, 25 March 1991); by Maidment J in Bass and Colaco and Cullen J in Chowdhury . In some of these cases the view was taken that the claim advanced was in truth nothing but an action for breach of contract and therefore not amenable to relief under s88F.
96 Reference was made to the approach of Hungerford J in Walker v Hussman (1991) 38 IR 180, that all that was necessary to attract jurisdiction under s88F was to demonstrate that the contract was one whereby a person performs work in an industry. A similar approach was said to have been adopted by Hill J in BNY Australia v James (1992) 40 IR 1 who, at p22, expressly reserved the question of whether a claim was within jurisdiction under s88F of the 1940 Act, if the 'only ground of unfairness established' is a failure to honour the contract, that is its breach.'
97 Counsel then turned to the conclusion of Hungerford J in Walker v Hussman (No2) (1992) 44 IR 404, the appeal from that decision in Hussman v Walker (1993) 48 IR 396 and the decision of the Court of Appeal in Walker .
98 Reference was also made to the judgment of Cahill DCJ in Baker v National Distribution Services Ltd (unreported, 15 March 1993) and the judgment on appeal therefrom in Baker v National Distribution Services Ltd (1993) 50 IR 254. The Court of Appeal's judgment in Rothmans was also analysed, as was the judgment in Kellett.
99 It was submitted that s106 of the Act had departed significantly from its predecessors, s88F of the 1940 Act and s275 of the Industrial Relations Act 1991, the section now making clear that 'the Commission can only exercise jurisdiction if it finds that the contract is unfair', in the context of the definition of 'unfair contract' in s105. It was also submitted however, that s106(2) put beyond issue that unfair conduct by a party to an employment contract can, per se, render the contract in the sense of the employment relationship, unfair
100 In so approaching the construction of s106, the Court was invited to adopt a definition of 'contract' in the case of employment contracts, as comprehending the entirety of an employment relationship, including conduct. It was submitted that beneficial legislation such as s106 should be so approached and that this was consistent with the approach of Hungerford J in Day v Lumley Life Limited (1999) 90 IR 70 at p71, which had been approved in Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1 at pp14-15.
101 Counsel then turned to deal with some recent authorities in which the provisions of s106 of the Act had been considered, including Dun and Bush Boake .
102 It was submitted that Maidment J's analysis of the decision in Dun and the conclusion that he would abide by the approach of Kirby P and Sheller JA in Walker , that a prerequisite to relief was a finding that the contract was unfair and that mere unfair conduct was insufficient for a grant of relief, were both errors which required correction on appeal.
103 The Court was invited to conclude that conduct constituting a breach of a term of a contract of employment may, in the circumstances of a particular case, of itself be amenable to relief and that the conduct of the respondent in this case fell into such a category.
104 It was also submitted that Maidment J had erred in his approach to the work of s106, the effect of which was to fail to approach the section beneficially and further, to shrink the work it was designed to do, so as to defeat the legislature's intention, which was to entitle persons such as the appellant who had suffered unfairly from the conduct of their employer, to approach the Court for relief. His Honour's approach had had the result, so it was submitted, that while there was no difficulty in finding that the respondent had acted unfairly, because of his Honour's technical approach to the need to find that the contract was unfair, the appellant was denied relief. It was further submitted that on one view of that approach, relief would only be available under the section, if the contract was on its face unfair.
105 It was submitted that the ratio of Maidment J's decision was 'that there was no unfairness in the contract, the subject of the proceedings before the unfair conduct of the employer in unilaterally reducing the remuneration of the employee did not render the contract unfair but rather constituted a repudiation and/or breach of it.'
106 In so finding it was submitted that his Honour had jurisdiction 'to determine whether there is jurisdiction and that is a necessary step. So he had to consider whether the contract was one amenable to the rules of the section and he found that it was not.' While his Honour had before him a contract 'whereby a person performed work in an industry', the second element of s106(1), was in his view not present, his Honour's final conclusion turning entirely on whether or not the contract was an unfair one.
107 As to the work of s106(2) of the Act, it was submitted that it ought to be read so as to include conduct which involved a purported variation to a contract, which was not agreed. This, it was submitted, illustrated the error into which his Honour had fallen. A unilateral variation to a part of the employment relationship which did not form part of the contract, such as a policy, could be found unfair on his Honour' approach and amenable to relief under s106, but a unilateral variation to a contractual term could not. This would flow from the fact that the employer was entitled to unilaterally vary the policy, but not the contract. Such an odd result would be inconsistent with the section.
108 It was also submitted that his Honour's review of the decision in Walker was not a full and fair one and that his Honour's approach was now even more wrong than when rejected by the Court of Appeal in that case. Further, his Honour was bound by the judgment of the Full bench in Dun , even though in reality he declined to follow it. This position was particularly relevant to the question of leave, which it was submitted would be granted, because the result of his Honour's approach had been to cast doubt upon what was thought to be a settled approach in the Court to the jurisdiction under s106 of the Act.
109 It followed, so it was submitted, that the appeal would be upheld and the question of the merit of the claim would be determined by the appeal bench, which would make the orders earlier set out, quantified at the sum of $250,000. However, after the joinder motion was dismissed, this submission was withdrawn. No final orders on the application were sought on appeal.
For the respondent
110 It was submitted by Mr Fernon , that in reality this appeal raised but one issue, namely whether unfair conduct was of itself sufficient to warrant the making of orders against a respondent under s106 of the Act.
111 In this case Maidment J found that the contract was not unfair. No error of law emerged from that finding and no challenge was made on appeal to the findings of fact which underpinned it. It followed, so it was submitted, that leave to appeal and the appeal would both be refused.
112 Reference was made to Abboud v State of New South Wales 92 IR 32 at 42, where it was observed that what had to be demonstrated was:
'The principles to be applied by the Full Bench reviewing findings of fact made by a trial judge below are clear. An appeal brought under Part 7 of Chapter 4 of the Act will generally attract the normal principles which apply to appeals stricto sensu on questions of fact and/or law: see Re Solicitors (State) Award (No 3) (1996) 72 IR 225 at 234 and Stone Microsystems (Aust) Pty Ltd v Kwong & Datamax Pty Ltd (1997) 42 NSWLR 160 at 163; 85 IR 237 at 238. In the case of an appeal from a judge in the strict sense, the appellate court will substitute its own judgments only if the trial judge has fallen into error of law or has made a finding of fact which is clearly wrong or are not reasonably open on the evidence: Camilleri's Stock Feeds Pty Ltd v Environmental Protection Authority (1993) 32 NSWLR 683 at 688. Otherwise, the appellate court should not intervene.'
113 Here, the appellant had not demonstrated that any such finding of fact made by Maidment J was either wrong or clearly wrong. Indeed, the factual findings were not challenged, either as to the terms of the contract or its repudiation; they were embraced by the appellant.
114 It followed that the approach of the appellant was misconceived. The appeal was advanced on the basis that while reliance was placed on his Honour's findings, particularly as to unfair conduct, it was argued that a finding that the respondent's conduct had been unfair was all that was required for relief under s106 to be granted. This, it was submitted, had never had been the approach adopted to s106 and its predecessors, either by this Court and its predecessors, or by the Court of Appeal and did not reflect the law.
115 It had never been accepted, so it was submitted, that if a contract was fair, but conduct of a party to the contract was inconsistent, indeed repugnant to its terms, that relief would be granted under s106. More was required, but had not been advanced by the appellant in this case.
116 Mr Fernon emphasised that even if on the facts in this case the appellant's claim could have been approached in a different way, so as to properly identify unfair aspects of the contract, the case had not been argued on that basis, either at first instance or on appeal. The Court now had to attend to the case as advanced by the appellant.
117 It was also submitted that in any case brought under s106 the unfairness alleged had to be identified, established on the evidence and then, in case of alleged unfair conduct, the contract examined in order to identify whether it was unfair, having regard both to what the contract provided and what it failed to prevent. If such unfair conduct did not demonstrate an unfair contract, the claim could not succeed. In the case of conduct which was in breach of contract, as here, a finding that the contract had been breached would not alone provide an answer to the question of whether the contract was unfair.
118 In this case, the finding was that the conduct of unilaterally varying the contract was unfair and was also was repugnant to the contract. That finding was reasonably open on the evidence and not challenged on appeal. His Honour concluded that the contract, which did not permit the unfair conduct of unilaterally varying the contract, was not unfair. Even if the Full Bench would have reached a different conclusion as a matter of discretion had it heard the case, it had to attend to the complaint advanced by the appellant on appeal, namely that the finding of unfair conduct of itself should have led to relief under s106.
119 It was submitted that the same case had been advanced at first instance, where the complaint identified from the outset was the respondent's conduct in seeking unilaterally to alter the commission structure. The question which then arose was whether the contract was also unfair. Maidment J found that the contract did not in fact permit the commission structure to be so altered and that the contract, on that basis, was not unfair. The appeal did not attack the finding that the contract was not unfair, but rather his Honour's refusal to grant relief upon the finding of unfair conduct alone.
120 As to the submission that the contract in question in proceedings such as this should be regarded as the 'employment relationship', it was submitted that in order to succeed under s106, the contract or arrangement in question must be identified so that its fairness could be examined. The contract could not be something 'amorphous and physically changing, forever varying'. Here the contract identified at the outset was the employment contract, which it was alleged permitted the variation of the commission arrangement. His Honour rejected that construction, finding the respondent's conduct was inimical to the contract, a finding not challenged on appeal.
121 As to his Honour's approach to the decision in Dun , it was submitted that it was proper for his Honour to consider the status of the cases in Bass, Colaco and Chowdhury, because those cases had concerned circumstances involving breach of contract and in Dun , the Full Bench had stated in effect that they were not good law. Maidment J concluded that none of these cases had a bearing on the question before him and followed the approach of Kirby P and Sheller JA in Walker .
122 It was submitted that his Honour could not be criticised for this approach, given the nature of the case brought in these proceedings. Rather, he would have been criticised if he had not given a full explanation of his approach. His Honour's conclusion, after analysis, to follow the approach of the court of Appeal in Walker , was correct.
123 It was also submitted that the comments of the Full Bench in Dun regarding Bass, Colaco and Chowdhury were obiter dicta, because the decision not to grant leave to appeal was made because no relevant error had been demonstrated in the reasoning of the trial judge, who had not referred to those cases. Maidment J had been correct in observing that the Full Bench did not explain what reliance counsel had placed in submissions upon those cases and why they could not stand with Walker and other, later decided cases. The comments made by the Full Bench however were in rejection of those submissions. It followed that they were not necessary for the decision in Dun and were thus obiter.
124 In any event it was submitted that the propositions for which Bass, Colaco and Chowdhury stood were not plain. To the extent that they stood for the proposition that unfairness of a contract cannot arise where the only real ground of unfairness was a breach of contract, the cases may be overstated. What had to be considered was whether a contract allows or provides for or does not prevent unfair conduct or in other words, whether the unfair conduct was consistent with the contract.
125 It followed also, so it was submitted, that to the extent that in these three cases these were determined issues at a preliminary hearing, that approach might not have been appropriate. (Cf Nagle v Tilburg (1993) 51 IR 8).
126 It was further submitted that other cases such as Walker, Rothmans, Harcourt Brace and Stone Microsystems , made clear that unfairness may exist in a contract where there is a breach. Whether that is so in a particular case will depend upon the ground of unfairness alleged and the evidence led to establish the allegation. Breach of contract does not preclude unfairness, but these cases all demonstrated that it was something other than the breach of contract itself, which demonstrated the unfairness found.
127 It was also submitted that in the event the appeal was upheld, the matter should be referred back to Maidment J for further hearing, so as also to enable his Honour to deal with the surrounding circumstances of the termination, which had been relied upon by the respondents below, but had not been dealt with by his Honour, because of the way he had dealt with the application of the appellant.