Taouk and anor v Fairline Corporation Pty Limited and ors

FIRST RESPONDENT / APPLICANT ON MOTION PARTIES: Fairline Corporation Pty Limited

SECOND RESPONDENT Afrall Pty Ltd (t/a Retail Nationwide Developments)

THIRD RESPONDENT Retail Estate Pty Ltd T(as agent for Guardian Trust Australia Limited)

Unfair contract - Interlocutory proceedings - Motion to strike out summons for relief - Lease - Whether contract is one whereby work is performed in any industry - Consideration of Mitchforce (No 2) - Whether claim for relief amounted to claim for breach of contract - Held no jurisdiction to entertain claim - Leave granted to amend claim

Industrial Relations Act 1996 LEGISLATION CITED: Industrial Relations Commission Rules 1996

Booth v Kritikos Developments (1995) 59 IR 298 Euphoric Pty Ltd v Ryledar Pty Ltd and another (2002) 117 IR 1 Jennings v Auto Plaza Ltd (1993) 46 IR 413 Mitchforce v Industrial Relations Commission (2003) 57 NSWLR 212 Mitchforce v Starkey (No 2) (2003) 130 IR 378 CASES CITED: Production Spray Painting & Panel Beating Pty Ltd & Others v Newham & Others (1991) 27 NSWLR 644 Solution 6 Holdings Limited & Ors v Industrial Relations Commission of NSW & Ors (2004) 60 NSWLR 558 Starkey v Mitchforce (2000) 101 IR 177 Stevenson v Barham (1977) 136 CLR 190 Sydney Water Corporation v Industrial Relations Commission of NSW [2004] NSWCA 436

APPLICANTS / RESPONDENTS ON MOTION Mr R Moore of counsel Solicitor: Mr P Ives Maxwell Berghouse & Ives LEGAL REPRESENTATIVES:

FIRST RESPONDENT / APPLICANT ON MOTION Mr S Prince of counsel Solicitor: Mr S Ingui Colin Biggers & Paisley

• 22 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

Application under s 106 of the Industrial Relations Act 1996

1 In November 1998 Jeanette Taouk ("the first applicant") entered into an agreement with Afrall Pty Ltd, trading as Retail Nationwide Developments ("second respondent") on a leasing proposal in relation to premises in the Wentworthville Mall Shopping Centre in order that the first applicant and her mother, Mona Taouk ("second applicant"), might conduct the business of a take away food shop. The second respondent was the agent for Fairline Corporation Pty Limited ("first respondent"), the owner of the shopping centre at the time.

2 In April 1999 the first applicant entered into a lease agreement with the first respondent. In about May 1999, the first respondent sold the shopping centre to Guardian Trust Australia Limited whose agent was Real Estate Pty Ltd ("third respondent"). The lease was assigned to Guardian. 3 In September 1999 the applicants' business failed and they abandoned the leased premises. In November 2001 the applicants filed for relief under s 106 of the Industrial Relations Act 1996 claiming the lease was an unfair contract. 4 The relief sought was an order that the lease be avoided ab initio save as to monies received by the applicants whilst operating the shop or, in the alternative, varied so as to remove any liability of the first applicant to pay rent under the lease and orders for compensation, interest and costs. The applicants sought to recover monies lost as a consequence of the first applicant's entry into the lease.

5 Conciliation of the applicants' claim was unsuccessful and in February 2005 the first respondent moved the Commission for orders that: 1 The summons for relief filed by the applicants be struck out. 2 The first and second applicants pay the first respondent's costs associated with the motion. 3 An order for expedition of the hearing of the motion.

This interlocutory judgment deals with the strike out motion by the first respondent. 6 The first respondent sought to strike out the claim for relief on two bases: 1 The application relates wholly to a putative contract, which is in reality a commercial lease and not a contract whereby work is performed in an industry; 2 That the claims advanced by the applicants in the summons for relief are in reality a claim for breach of contract and are outside the jurisdiction of the Commission in Court Session. 7 The first basis relied on the majority judgment of the Full Bench in Mitchforce v Starkey (No 2) (2003) 130 IR 378. The second basis relied on the judgment of the Court of Appeal in Sydney Water Corporation v Industrial Relations Commission of NSW [2004] NSWCA 436. 8 The issues are relatively narrow, the first being whether the lease in this case is a contract whereby a person performs work in an industry and the second being whether the claims advanced by the applicants in the summons for relief are in reality a claim for breach of contract. If the first question is answered in the affirmative there is no jurisdiction in the Commission in Court Session to entertain the claim and the second question becomes redundant. I propose, therefore, to deal firstly with the question of whether lease is a contract whereby a person performs work in an industry. 9 The first respondent submitted the Court should take the applicant's factual assertions as contained in the summons for relief at the highest in the applicants' favour and that is the approach that has been taken given that the only impugned contract is the lease, the terms of which are annexed to the affidavit of Mr Brian Carl Weinert, a director of the first respondent. Given the narrow compass of the issues and the fact that it is only the terms of the lease that needs to be examined, I consider that I have sufficient material at this interlocutory stage to determine the jurisdictional issue.

Whether lease is a contract whereby work is performed

10 A useful starting point in any consideration of whether the lease in this case is a contract whereby a person performs work in an industry is the decision of the Full Bench in Mitchforce (No 2). It is that decision that is binding on me and not the decision of the Court of Appeal in Mitchforce v Industrial Relations Commission (2002) 57 NSWLR 212. 11 After an exhaustive consideration of the authorities, in particular, High Court authorities, the majority (Wright J, President and Walton J Vice President) concluded at [102] that: The relevant jurisdictional fact that must be established in order to come within jurisdiction is "whereby a person performs work in any industry". 12 The majority held "It is not an element in an action under s 106 that the impugned contract or arrangement has an "industrial colour and flavour"" and at [112]: We would again reiterate "so long as the transaction leads directly to work in any industry it has the necessary "industrial colour or flavour". 13 Importantly, at[120]-[121] the majority held that: [I]f it can be shown that the contract or arrangement leads directly to the performance of work, either by one of the legal entities to the arrangement or by somebody else, then that conclusion will provide the relevant jurisdictional nexus. In a case involving a contract in its more readily identifiable or usual legal sense, it will no doubt be accurate to refer to work being performed under or pursuant to the terms of the relevant contract as was the case in the reasoning of the majority in Production Spray Painting . 121 We should note, having made these observations, our agreement with Handley JA (at [177]) that "there is no discernible reason why a lease of land should not be a contract for the purposes of s 106". 14 The majority also held at [124] that: It could not be said, in our opinion, that the majority in Stevenson v Barham adopted as a requirement for jurisdictional purposes that the contract must have a "recognisable impact upon the conditions of that employment". 15 In relation to the lease that was the subject of the proceedings the majority said at [24]-[25] and [126] and [145]: 24 We wish to emphasise that we agree with the conclusion reached by the majority that the deed of consent to assignment of lease made on 1 May 1990, as incorporating therein the terms and conditions of the original lease made on 10 July 1989 was not, pursuant to its terms (leaving aside for the present the question of whether it formed part of a broader arrangement), a contract whereby work was performed in the hotel industry. We agree that the lease, in terms and considered on its own, having regard to the relevant law as espoused by the High Court in Stevenson v Barham (1977) 136 CLR 190 (to which we will refer shortly) and the authorities of the Commission in Court Session, as recently considered in Euphoric Pty Limited v Ryledar Pty Limited (2002) 117 IR 1 , could not establish a proper basis for jurisdiction.

25 Moreover, to the extent that Hungerford J expressed the conclusion (at [79]) that "on the terms of [the] lease " it was "a contract whereby work was performed in the hotel industry, and, hence, within the jurisdictional scope of s 106", we agree that his Honour was in error. The lease in and of itself was not a contract which directly or pursuant to its terms led to the performance of work in an industry.

… 126 It is worthwhile repeating that the terms of the lease itself could not sustain jurisdiction as they do not for the reasons given by the Chief Justice at [48] - [49]) lead directly to the performance of work in an industry.

145 As the appellant has submitted, the appellant entered into the lease for the purpose of receiving a return on a capital asset. The respondent entered into the lease to obtain a capital asset from which it could then conduct a business. The performance of work in which both parties had an interest, was not the purpose for entering into the lease. We agree, in this respect, with the conclusion of the Chief Justice (at [58]). 16 The passages referred to by the majority in the judgment of Spigelman CJ in Mitchforce v IRC were as follows: 48 The lease in this case stands on its own as a lease of property. It is not part of a broader arrangement involving the supply of goods as may arise in the case of a hotel owned by a brewery. A case of that character may prove to be more closely analogous to the arrangements considered in Caltex Oil v Feenan and Majik Markets. In those cases, like Stevenson v Barham , the ongoing relationship between the parties was multi-dimensional covering a number of different aspects of the conduct of a business. Here the relationship is one dimensional. 49 There can be no doubt that his Honour was correct to say that the lease "contemplated" the performance of work by or on behalf of the lessee. This was, as I have said, a purpose built structure the value of which depended on the maintenance of a licence attached to the premises. However, mere "contemplation" that work will be done is not enough. The additional element is the finding that the conduct of the business was a " purpose" of the agreement. I am unable to agree that there was such a "purpose", nor that the agreement led "directly" to the performance of work in an industry.

58 There is not, in my opinion, anything which provides an "industrial flavour of colour" to the arrangement presently under consideration. Nor is there anything which has a "recognisable impact on the conditions of … work", to use the formulation of Jacobs JA in VG Haulage . Nor is the "purpose" of the transaction that work be performed, to use Mahoney JA's formulation in Production Spray Painting. The sole purpose of the agreement is the occupation of premises. It does not lead directly to the performance of work in an industry. 17 Elsewhere in his judgment the Chief Justice made the following observations: 50 The relevant "purpose" of the agreement was to provide one part of the means for conducting a business by the Lessee. However, that business was to be conducted on the Lessee's own account. I do not see how it could be said that the Lessee was in any sense working for, or even with, the Lessor. Accordingly, when the Second Opponents paid a capital sum to the original Lessee for the sale of the business, the Lessor received no part of the sum. That the conduct of the business was, subject to the Lessee's other sources of income, the means by which the rent could be paid does not, in my opinion, establish such a connection. … 53 In this case, unlike other lease cases determined by the Commission, there is no express term obliging the lessee to conduct the business, save insofar as the obligation to have a licensee be on the premises "at all necessary times" can be so regarded. I do not see any proper basis on which a term to that effect could be implied. Even if such a term did exist I would not see it as determinative. 54 Such a provision is often inserted to protect a Lessor's legitimate interests as the owner of property, whether of the demised premises or of associated property. Such provisions do no more than restrain the lessee departing from the common assumption upon which the lease was based. They do not necessarily mean that work is "performed" under the agreement itself. In particular it cannot be said that a contract containing such a provision leads "directly" to the performance of work. The word "directly", in the case law, is to be regarded as an essential part of the process of determining that the contract can be said to have the requisite "industrial colour or flavour". 55 Nor, in my opinion, do the obligations to repair and maintain the premises, as variously provided for, establish any such ' direct' link. Whether, and if so, to what degree, any of those covenants require physical activity is contingent on future events, e.g. whether some deterioration beyond "fair wear and tear" occurs or whether there was breakage or obstruction or other deficiency. The contract requires the restoration of a state of affairs of a physical character. The linkage between the contract and the physical activity in the nature of works is, in my opinion, indirect. 56 That a contract envisages that physical activity may need to occur is insufficient to draw the conclusion that the contract is one "whereby" work is to be performed, in the sense that it leads "directly" to that work. There is probably no commercial lease in New South Wales which does not have a covenant for repair. Nothing in the scope, purpose or subject matter of the legislative scheme suggests that the concept of " work in an industry" could extend to any activity under a commercial lease which involves physical work. Such work is not performed "in" the hotel " industry". It is performed under the lease to maintain the value of the asset to the owner, as a lessor of property. 18 In a dissenting judgment in Mitchforce (No 2) I held that the evidence revealed that the Starkeys were "obliged" to operate licensed premises. After referring to the relevant evidence I stated at [241]-[244]: 241 When regard is had to all of the evidence in the proceedings, it is apparent that the relationship between the parties was not limited to a formal contractual agreement represented by the bare terms of the lease but rather there was a wider arrangement that led directly to the performance of work in the hotel industry. Mitchforce constructed "purpose built" tavern premises in Empire Bay; it applied for a liquor licence on the basis that the Empire Bay area needed a liquor outlet and the appellant submitted that it actively intended to have the licence utilised at the tavern.

242 The appellant and the Starkeys entered into a lease agreement. It is evident from the terms of the lease that the intention of the parties was that the Starkeys were to operate a licensed tavern business from the purpose built premises owned by Mitchforce in Empire Bay. The appellant's evidence was that when the Starkeys took over the lease by assignment, they were obliged to operate those licensed premises. 243 The lease provided that respondents were to pay the appellant rent. The rent was to be calculated on the turnover of the tavern business. Mitchforce transferred its liquor licence to the Starkeys for the purpose of operating the tavern business; without the licence the tavern could not operate. The Starkeys did in fact operate the tavern business from the outset and did in fact seek to meet their rent obligations under the lease from the turnover of the tavern business. Apart from the interest the appellant had in receiving rent derived from the turnover of the business operated by the Starkeys, the appellant had a clear 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 per cent of the value of the liquor purchased by the tenants under the liquor licence. 244 Once it be accepted as a matter of fact that the Starkeys were obliged to carry on a hotel business from the Tavern, as his Honour did, then it is, in my view, unarguable that the work performed in the hotel industry was a "direct result" of an arrangement between the parties and not an "accidental consequence" (see Production Spray Painting & Panel Beating v Newnham at 649 per Mahoney JA) or an "indirect, remote or consequential" result of the deed (see Kostakis v New World Oil & Developments Limited at 10). 19 It is difficult to escape the conclusion that in Mitchforce v IRC the Chief Justice took the view that an important, perhaps even fundamental, consideration was that unless a contract had as its purpose the performance of work, then it was not to be regarded as a contract whereby work is performed in an industry because it did not lead directly to the performance of work. It is difficult to reconcile that approach to the meaning of s 106(1) with the relevant High Court authority. There is no doubt that if a contract has, as a purpose, the performance of work the contract may be said to lead directly to the performance of work. However, it seems to me a contract may lead directly to the performance of work but not have as its purpose the performance of work.

20 It is also evident in the judgment of the Chief Justice in Mitchforce v IRC and in Solution 6 Holdings Limited & Ors v Industrial Relations Commission of NSW & Ors (2004) 60 NSWLR 558 at [30]-[34] that his Honour regarded as significant the scope and purpose of the legislative scheme in which s 106 is to be found in providing assistance in determining when a contract may be said to lead "directly" to the performance of work. There can be no doubt, with respect, that his Honour was correct in this regard. But I would observe it is not a simple matter of demarking the boundaries of the operation and application of the Industrial Relations Act by contending that a contract is commercial in nature or that its purpose is commercial rather than industrial. Part 9 of Chapter 2 of the Act is there to provide relief from unfair contracts or arrangements. Because the provisions relating to unfair contracts appear in an "industrial" statute does not appear to me to be a basis for reading the provisions down by applying, with respect to those that consider otherwise, some artificial and vague notion of "industrial colour or flavour". There is nothing in the statute to suggest the contract must have about it an "industrial colour or flavour": Mitchforce (No 2); the provisions of Part 9 of Chapter 2 of the Act are not limited to employment contracts or contracts of that nature and it is to be noted that the definition of "industry" in s 7 of the Act is expressed in the widest possible terms. A lease or a contract for the sale of goods that leads directly to the performance of work may be just as "unfair" as an employment contract. 21 In other words, regardless of the characterisation of the contract or whether or not it has as its purpose the performance of work, the contract will be within jurisdiction if it leads directly to the performance of work. 22 Whether a contract leads directly to the performance of work will be a question of fact. However, as the Chief Justice observed in Solution 6 at [31], there is sometimes difficulty in determining this question. This is especially so if a contract does not contain specific provisions requiring the performance of work, or if the contract does not have as a purpose the performance of work, yet it is apparent that the contract would be meaningless without the performance of work. A difficulty also arises, on the view taken by the Court of Appeal in Mitchforce v IRC and Solution 6, even if the contract does require the performance of work. That is, even though a lease, for example, by its terms may require work to be done it may still not attract the Commission's unfair contract jurisdiction.

23 Whilst there was agreement with the Chief Justice in the majority's judgment in Mitchforce (No 2) that the lease did not lead directly to the performance of work, the majority did not endorse the idea of a purpose test. Nor did the majority consider that in order to establish jurisdiction the lease must, by its implied or express terms, lead directly to the performance of work. It is apparent from a reading of the majority's judgment as a whole and, in particular, [126] that it considered the appropriate test for establishing the jurisdictional fact was whether the contract or arrangement led directly to the performance of work in an industry.

24 It is not immediately apparent from the majority's judgment in Mitchforce (No 2) why they came to the conclusion that the lease did not lead directly to the performance of work in an industry. Given that the majority did not agree with the Chief Justice that there was any need for an "industrial colour or flavour" (a phrase that the Chief Justice made clear in Solution 6 at [30] that he did not use for the purpose of qualifying the test in Stevenson v Barham (1977) 136 CLR 190 (at 201) or that the contract had to have a "recognisable impact on the conditions of … work", or that the transaction had to have a "purpose" that work be performed, it is evident that the majority's agreement with the Chief Justice did not involve embracing these elements in agreeing with the Chief Justice.

25 The majority did, however, refer specifically to the Full Bench judgment in Euphoric Pty Ltd v Ryledar Pty Ltd & another (2002) 117 IR 1 at [24]. In that case it was held a contract for the sale of petroleum products, which included express provisions as to the delivery of the products, was not a contract that led directly to the performance of work. Relying to a significant degree on the judgment of Mahoney J in Production Spray Painting & Panel Beating Pty Ltd & Others v Newham & Others (1991) 27 NSWLR 644, Schmidt J, with whom the other members of the Full Bench (Wright J, President and Walton J Vice President) agreed, held that the contract did not require the performance of work by the respondents. At [38]-[48] Schmidt J held: 38 In my view, that a contract for the sale of a product imposes an obligation upon the seller to deliver the product to the purchaser, at a particular place or places, is of itself not a sufficient basis to ground jurisdiction under s106, irrespective of how much or little work is required, as a practical matter, in order to effect such delivery. Once the contract seeks to deal with the work required to effect delivery, a different conclusion might result. This, however, was not such a case. 39 The purpose of this contract was to provide for the sale of petroleum by the appellant to the respondents, at regular intervals over the life of the agreement. In order that this purpose would be achieved, the contract stipulated that delivery of the petroleum to the respondents was to be effected at the various sites where the products were to be retailed, by the respondents and third parties. That obligation ensured that the purpose of the contract was achieved, namely that the petroleum which the respondents had purchased be delivered to it, in accordance with its express instructions as to the place of delivery. The transfer of the goods sold was thereby achieved, as contemplated by the Sale of Goods Act 1923 . 40 The transportation of the petroleum to the specified sites in order to affect the required delivery, was a consequential result of the sale contract. The respondents had no interest in how this was done, on what terms, or by whom. They could only complain if they did not receive delivery of the petroleum purchased, at the sites specified. It follows that this contract was simply not one which enlivened the Court's jurisdiction as the result of the delivery obligation. 41 Were a contrary view to be taken, it is difficult to see how the section could not be regarded as generally granting the Court jurisdiction in respect of all contracts for the sale of goods. An obligation to deliver goods sold attaches to every such contract, whether expressly dealt with or not. Meeting that obligation will always require the performance of work of one kind or another. What that work involves will depend upon the nature and amount of goods purchased, amongst other things. 42 While there may well be contracts for the sale of goods which make provision for the performance of work, so as to enliven the Court's jurisdiction under the section, a bare obligation to deliver to a particular place or places, without more, cannot do so. In my view that obligation is directed to ensuring that the purpose of the contract - the sale of the goods in question - is effected. The purpose of the obligation to deliver is not the performance of work, although that will be a result of the obligation being met.

43 I turn then to the respondents' contentions. The view that Marks J was correct in concluding that the contract did not impose any obligations upon the respondents for the performance of work, cannot be avoided. Obviously enough, work was required to be performed by the respondents as a result of the contract. For example, the respondents' orders had to be placed with the appellant, the appellant's invoices considered and payment of them later made. Such consequences are, however, not sufficient to enliven the Court's jurisdiction under the section. 44 Clause 7 of the contract, relied upon by the respondents as evidencing the contractual requirements that involved the performance of work, in my view cannot be so characterised and even if it could, cannot be viewed, as Mahoney J put it in Production Spray Painting as a 'purpose of' the transaction, rather than 'that which the parties have stipulated shall be done in order that that purpose be achieved.' 45 The right granted the appellant in clause 7.1, to give 'reasonable and lawful instructions' was particularly relied upon by the respondents. That was, however, not a right concerned with the performance of any work, but rather, with instructions as to 'procedures to be followed ' to ensure the safety of persons or property; the preservation of the quality of the petroleum products sold and the protection of the environment. Such procedures, when followed, might of course require the performance of work. Nevertheless, the right to give instructions about such procedures imposed no requirement for the performance of any work, nor could that right itself be viewed as one of the purposes of the parties' contract. 46 Similar conclusions flow in relation to clause 7.2, which was concerned with the hazards associated with petroleum products and the steps which the respondents were obliged to take in relation to the consequences of such hazards. These were undoubtedly important obligations under the contract, having in mind the statutory obligations resting upon both the appellant and the respondents in relation to safety risks and environmental matters. This was a contract with a life of 2 years, during which such products were to be supplied by the appellant. That such provision might be made in such an ongoing sale contract is not surprising, but it does not evidence the necessary jurisdictional fact - the performance of any work under the contract. 47 Analogies were sought to be drawn with other decided cases, for example Booth v Kritikos Developments Pty Limited (1995) 59 IR 228 and Kostakis & Anor v New World Oil & Developments (1997) NSWIRComm 84 (25 July 1997). Those comparisons did not avail the respondents' arguments here. Those contracts imposed express and ongoing obligations for the performance of work. In Kritikos , for example, an obligation to renovate a hotel and to operate the business of a hotel, during the period of a lease and in Kostakis, to operate a particular type of business at the shop in question, during the period of the lease. No such obligations were imposed in this contract. 48 I thus agree with the conclusion reached by Marks J as to the allegation made by the respondents in the initiating summons, that the contract did not require the performance of work by the respondents. There were no such contractual obligations and no jurisdictional fact flowed from the performance of any work, by or for the respondents, in connection with this contract. 26 The judgment in Euphoric comes close, with respect, to adopting a "purpose" test for determining whether a contract leads directly to the performance of work. But I consider that the ratio of the judgment is that in the absence of specific provision in the contract requiring the performance of work, the work necessarily required in the delivery of the petroleum products was merely consequential and given also that the purpose of the contract was the sale of goods, it could not be said the contract led directly to the performance of work, especially when the respondents had no interest in how the delivery was effected, on what terms, or by whom. The reasoning in Euphoric would appear to be modelled on that in Production Spray Painting because of the similarity of the nature of the respective contracts. 27 What, I consider, flows from the majority's judgment in Mitchforce (No 2) in respect of contracts such as a lease is that unless the terms of the lease, expressly or by implication, require the performance of work in an industry or it could be said that a purpose of the lease was the performance of work, the bare terms of the lease will not establish the necessary jurisdictional fact because it could not be said the lease leads directly to the performance of work. Even if it could be said the terms of the lease "contemplate" the performance of work it will not be sufficient to attract jurisdiction: see Mitchforce v IRC at [49]. 28 Further, even though the lease may require what the Chief Justice referred to in Mitchforce v IRC at [45] as "physical activity on the premises", this again will not be enough to attract jurisdiction. Such provisions in the lease in that case included: - The covenant to repair and maintain, fair wear and tear excepted, extended beyond the hotel premises to encompass plant, equipment and fixtures as well as "stock-in-trade" (cl 5.1). - The obligation to make good any "breakage, defect or damage" occasioned by want of care extended to the "premises or any facility or appurtenance" (cl 5.10). - The obligation to repair and replace broken glass and damaged or broken heating, lighting, electrical equipment and plumbing installed on the premises (cl 5.11). - The obligation to maintain the premises extended to an express obligation to keep gutters, drains and pipes free from obstruction and in good working condition and also to keep yards, gardens, shrubs and lawns in good, clean and tidy condition (cl 5.2). - The obligation to maintain also encompasses an obligation to paint the premises when required by the lessor or by the licensing or other authority (cl 5.3). - To make alterations and repairs other than structural repairs which are required under any statute or bylaw (cl 5.4). - On transfer of the lease the lessee was obliged to carry out repairs, renovations, painting and papering as considered necessary in a report of an architect appointed by the lessor (cl 5.18). 29 Spigelman CJ did not consider these "activities" could be regarded as the performance of work for the purpose of establishing the relevant jurisdictional fact. At [56] his Honour considered "Such work is not performed "in" the hotel "industry". It is performed under the lease to maintain the value of the asset to the owner, as a lessor of property." 30 The majority in Mitchforce (No 2) in agreeing with the Chief Justice that the lease, "in terms and considered on its own" could not establish a proper basis for jurisdiction, must be taken as agreeing with the Chief Justice that the "activities" referred to by his Honour and required under the lease did not bring the lease within jurisdiction. It follows that standard covenants in leases going to repair, renovation, reparation and maintenance do not attract jurisdiction. Nor will it be sufficient to attract jurisdiction if the lease requires the lessee to be on the premises at all necessary times: see Mitchforce v IRC at [41]. 31 It must also follow from the majority's decision in Mitchforce (No 2) that as Hungerford J in Starkey v Mitchforce (2000) 101 IR 177 relied specifically on Jennings v Auto Plaza Ltd [1993] 46 IR 413 and Booth v Kritikos Developments (1995) 59 IR 298, to the extent his Honour did so those two cases can no longer be considered authority for the proposition that leases of the kind there considered are contracts whereby work is performed in any industry. 32 Hungerford J in Starkey v Mitchforce considered the terms of the lease relied upon by Cahill DCJ in Jennings were directly comparable with the terms of the lease in the case before him. The passage quoted by his Honour from Jennings was from 421-422 of the Report: In the present case, however, the contract is a lease between the parties of part of large shopping centre premises obviously at least intended by both parties to be used by the lessees for the conduct of a restaurant business. The lease prescribes a term of years (with provision for the exercise of an option of renewal), during which the provisions of the lease are to govern and bind the relationship of the parties: it thus postulates and requires an ongoing relationship. It imposes a restriction on the lessees as to the use of the premises. Except with consent the premises are not to be used otherwise than as a licensed restaurant and takeaway food outlet (cl II(15)). That restrictive provision is expressed in the negative and, of itself, does not require that the lessees shall use the premises for the carrying on of a business so described. To that negative provision is added another, in the first part of cl IV(ff), to the effect that the lessees "shall not occupy or permit the premises to be occupied or used outside the hours as are from time to time stipulated by law". The second part of that subclause, however, is expressed in positive terms. It requires the lessees to "keep the demised premises (Unit 11 of the Autoplaza Centre) open for business during normal trading hours for such business". Reference is also made to cl XI, which has already been set out in full, under which the lessees "shall be responsible for and shall attend to" the full fitout of the demised premises as a restaurant.

In my view, the terms of the lease, and particularly those to which reference has been made, require the lessees to establish the demised premises in restaurant mode and to carry on therein a restaurant business during lawful trading hours.

I also consider that the carrying on of such a business in accordance with that obligation necessarily requires and results in the performance of work in the restaurant industry by the lessees themselves and/or by other persons whom the lessees engage to work in the business. Furthermore, that work provides any necessary "industrial colour or flavour" which might be needed in order that s 275 should apply. 33 Similarly, Hungerford J relied on the passage from Booth v Kritikos at 59 IR 303-304: Unlike the situation in Production Spray Painting , the applicant here could not simply close the business up, that being a matter of no interest to the respondents. The continued operation of the hotel as a business was assured by the contractual obligations imposed on the applicant to ensure the performance of work in the business during the term of the lease. This was of real interest to the respondents, as was the performance of the renovation work which reflected the agreed reduction in the purchase price of the business. This arrangement involved not merely the sale of a business by an outgoing proprietor, but an ongoing relationship. Properly analysed, one of the purposes of the arrangement between the parties, namely what was sought to be achieved, was to ensure the performance of certain work in the business during the continuation of the parties' relationship under the lease. Another purpose was to ensure that the specified renovation work was carried out to the premises the subject of the lease. 34 After referring to the foregoing passage, his Honour stated: In my view, the relationship between the applicants and the respondent here under the lease constituted an ongoing relationship with the clear purpose, on the facts, that the applicants would conduct the business of an hotel from the Tavern for the duration of the lease term and that necessarily contemplated the performance of work, including as to the maintenance of the premises in good order and repair. 35 I turn to the lease in the present proceeding. It is important to keep squarely in mind that the contract alleged to be unfair is the lease. No other contract or arrangement was pleaded and so the question of whether the contract alleged to be unfair in this case, is to be determined by an examination of the terms of the lease alone. The lease contained the following relevant terms: Clause 7.1 PERMISSIBLE USE: The Lessee shall not use the demised premises or any part thereof for any purpose other than as set out in Item 3 of Annexure A hereto without the prior consent in writing of the Lessor.

Clause 7.5 OPERATION OF BUSINESS: The Lessee will take all necessary steps to ensure that any business carried on upon the demised premises is carried on at all times in a reputable manner and that the Lessee will not commit or knowingly suffer or permit any illegal or unlawful act to be committed or performed or done on the demised premises. The Lessee will at all times during the term of the Lease but subject to any restrictions imposed by law keep the demised premises open for trade during the regular and customary hours of business for substantially all business conducted by the Lessee in the Centre, and shall use to the best advantage all space available in the demised premises for the display and adequate merchandising of the Lessee's goods, wares and stock-in-trade and will keep display windows, signs and other appropriate parts of the demised premises adequately lighted with electric illumination during such periods of time as may from time to time be reasonably required by the Lessor in respect of all retail businesses in the Centre.

CLAUSE 18 NO RELATIONSHIP OF PARTNERSHIP …

The covenants provisions, terms and agreements contained herein expressly or by statutory implication, comprise the whole of the agreement between the parties, and the parties expressly agreed and declare that no further or other covenants, agreements, provisions or terms whether in respect of the demised premises or otherwise shall be deemed to be implied herein or to arise between the parties by way of collateral or other agreement by reasons of any promise, representation, warranty or undertaking given or made by either party to the other upon or prior to the execution hereof, and the existence of any such implication or collateral or other agreement is hereby negatived.

CLAUSE 32 - MENU The Lessee acknowledges that the Lessor has a material and substantial interest in ensuring that there is no conflict between the menu offered by the Lessor for consumption by the public with foods offered by other retailers within the Centre. The Lessee shall submit to the Lessor the menu for food to be served from the Demised Premises and shall submit to variation, alternation or addition to such menu from time to time during the lease term to the lessor for the Lessor's approval. The Lessor shall promptly consider such menu and shall act reasonably in consideration of the menu (as varied, added to or amended from time to time by the Lessee) and shall be entitled to reject all or any items on any menu of the Lessee in relation to the food to be served from the Demised Premises where, in the Lessor's reasonable opinion, the food would conflict with or be identical to foods served by other food retailers within the Centre.

ITEM 3 ANNEXURE A - PERMITTED USE: Clause 7.1 Such take away foods as are consented to by the Lessor from time to time in its absolute discretion and the menu of the Lessee must be approved by the Lessor at the commencement of this Lease and on each occasion when any item on the menu changes. The Lessee's permitted uses shall not extend to any food or beverage over which any other tenant has an exclusive use. 36 The applicants submitted: The lease in the present Matter contains express provision as to permissible use (Clause 7.1 and Item 3) and required within the permissible use so defined that a menu be submitted for the approval of the lessor (Clause 32). Further, performance of the lease necessitated a requirement for an appropriate fit-out in accordance with this permitted use. Finally, the lease required operation by the Applicants of the business established at the Mall to be as provided in Clause 7.5 of the lease. 37 The only term of the lease in the present case that may be relevantly distinguished from those that were the subject of proceedings in Starkey v Mitchforce, Jennings and Booth v Kritikos is the provision relating to "Menu". In this respect, I agree with the submissions of counsel for the first respondent, namely: [T]he purpose of appending the menu is to allow the lessor to make decisions as to the composition of the food types sold in the food court in administering its asset. That clause is no more than a clause preventing the Tavern in Mitchforce from being used for any purpose other than maintaining licensed premises. It is no different to requiring that the Starkeys ensured that a proper liquor licence continued to attach to the Tavern. Further, it is no different to requirements that a shop stay open for a particular period of time or that it be maintained in a particular state of repair. Clause 32 of the Lease does nothing to tell the lessee how they should go about satisfying the menu, what ingredients they should use, where they should obtain the ingredients, the quantities in which the menu items should be produced or whether indeed any of the items on the menu would need to be available to the public. Clause 32 is a negative covenant to the extent that it seeks to prevent certain food from being produced by the lessee if it is not within the scope of the agreement for the purpose of the shop and the lease. 38 I find that the Commission in Court Session has no jurisdiction to entertain the applicants' claim for relief on the ground that the lease was not a contract whereby work is performed in an industry. Whether claim is for breach of contract 39 I turn next to the first respondent's second objection, namely, that the claims advanced by the applicants in the summons for relief are in reality a claim for breach of contract and are outside the jurisdiction of the Commission in Court Session: See Sydney Water Corporation. This objection seems to be taken on the basis that the applicants claimed the lease (clause 32 in particular) granted them exclusivity within the shopping centre over the items contained in their menu and that exclusivity was not provided in accordance with the terms of the lease thereby resulting in a breach of contract in respect of which the applicants were, in reality, seeking damages by way of restitution. 40 The first respondent made no concession that the impugned lease did contain an express term granting exclusivity. As counsel for the applicant submitted, in the absence of this concession it is open for the Court to find whether the lease contained such a term. Should the lease contain such a term, a question of the power of the Commission to grant relief might arise should no requisite "unfairness" be found. Further, it was submitted, to the extent the lease did not contain such term, the applicants seek incorporation of such a term and say that the contract or arrangement that led to their performance of work would be unfair without it. Leave to file amended summons 41 A determination by the Court in respect of the first respondent's second objection is somewhat academic given the Court's finding regarding the first objection on jurisdictional grounds. However, the applicants have sought leave to file an amended summons for relief in the event the Court were to find in the first respondent's favour on the motion. Section 170(1) of the Act provides that the Commission may, in any proceedings before it, make any amendments to the proceedings that the Commission considers to be necessary in the interests of justice and any such amendment may be made at any stage of the proceedings. Rule 148 of the Industrial Relations Commission Rules 1996 provides: 148. General

(1) A tribunal may, at any stage of any proceedings, on application by any party or of its own motion, order that any document in the proceedings be amended, or that any party have leave to amend any document in the proceedings, in either case in such manner as the tribunal considers to be necessary in the interests of justice. (2) Unless the tribunal otherwise orders or permits, an application to amend shall be made by notice of motion.

42 The first respondent opposed such leave being granted, contending that the applicants had been aware of the first respondent's position on jurisdiction for a long time and had not taken any steps to amend. However, in the interests of justice I propose to grant to the applicants leave to amend the summons. If I were not to grant leave it is likely that any claim for relief would be, in every practical sense, extinguished. If the first respondent's second objection based on Sydney Water is still a live issue in the event a motion is filed to amend then I will deal with it at that stage. Orders and Directions

43 The Court makes the following orders and directions: 1 The applicants have liberty to file and serve an amended summons for relief within 14 days of the date of this Interlocutory Judgment. In the event this is not done the Court orders that the summons for relief be struck out and the applicants shall pay the first respondent's costs of the motion. Otherwise, costs are reserved.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.