Taudevin v Egis Consulting Australia Pty Limited and The Commonwealth

SECOND RESPONDENT: The Commonwealth of Australia FILE NUMBER: IRC 7025 of 1999 CORAM: Wright J President CATCHWORDS : Unfair contract - Applications to strike out proceedings - Related reference proceedings before Full Bench - Whether appropriate to determine preliminary issues initially or to await trial - Principles as to determination of jurisdictional matters on interlocutory basis - Whether mandatory for conciliation under s 109 to occur before jurisdictional issues determined - Territorial basis of Court's jurisdiction under s 106 - Degree and nature of connection required with New South Wales - Whether, as a matter of construction, s 106 applies to Commonwealth and to work carried out by applicant - Construction of s 106 - "Whereby a person performs work in an industry" - Notices of motion dismissed. Industrial Arbitration Act 1940 s 5 s 88F LEGISLATION CITED : Industrial Relations Act 1996 s 7 Pt 9 ch 2 s 105 s 106 s 109 s 193 s 404 Workers Compensation Act 1926 Workers Compensation Act 1987 Alsford v Castech Pty Ltd [2001] NSWIRComm 259 Bartolacci v Permanent Custodians Ltd (1992) 44 IR 388 Beahan v Bush Boake Allen Australia Ltd (1999) 93 IR 1 Bell v Macquarie Bank Ltd (No 2) (1999) 87 IR 126 Bell v Macquarie Bank Ltd (No 4) (1999) 93 IR 191 BNY Australia Limited v James (1992) 26 NSWLR 57 Booth v Kritikos Developments Pty Ltd (1995) 59 IR 298 Bropho v Western Australia (1990) 171 CLR 1 Brown v Green (1996) 66 IR 220 Burgess v Mount Thorley Operations Pty Ltd (unreported, Marks J, 9 March 1999) Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169 Clarkson v Dent (1998) 84 IR 250 Commonwealth v Rhind (1966) 119 CLR 584 Commonwealth v Western Australia (1999) 196 CLR 392 Davis v Amalgamated Television Services Pty Ltd (1998) 81 IR 364 Englebrecht v Cordukes Ltd [2000] NSWIRComm 52 Federated Municipal and Shire Council Employees' Union v Energy Australia (1999) 90 IR 311 Fox Evergreen Pty Ltd v May (unreported, Cahill V-P, 16 July 1998) Frost v The Speaker of the Legislative Assembly of New South Wales [2000] NSWIRComm 70 Gosper v Sawyer (1985) 160 CLR 548 Hall v Strathfield Group Ltd [2001] NSWIRComm 266 Harris v Hammon (No 2) (1995) 59 IR 232 CASES CITED : Heath Group Australasia Pty Ltd v Pengly [2001] NSWIRComm 241 Hogan v Employment National (Administration) Pty Limited [2000] NSWIRComm 47 Howitt v Retec Ltd (1992) 45 IR 245 Jacobsen v Rogers (1995) 182 CLR 572 Killinger v Minproc (unreported, Kavanagh J, 12 May 1999) McGowan v Australian Broadcasting Corporation [2001] NSWIRComm 49 Majik Markets v Brake and Service Centre (1991) 39 IR 169 Nagle (T/as W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8 Packer v The Greater Murray Area Health Service [2000] NSWIRComm 149 Perrott v Xcellnet Australia Ltd (1998) 84 IR 255 Production Spray Painting & Panel Beating Pty Ltd v Newham (1991) 27 NSWLR 644 Registrar of the Accident Compensation Tribunal v Federal Commisioner of Taxation (1993) 178 CLR 145 Richardson, ex parte, Re Hildred [1972] 2 NSWLR 423 Russo v World Services and Constructions Pty Ltd [1979] 1 NSWLR 330 Shop, Distributive and Allied Employees' Association, New South Wales v Librus Pty Ltd, t/as Dymocks Parramatta (2001) 103 IR 394 Stevenson v Barham (1970) 136 CLR 190 Stonham v The Speaker of the Legislative Assembly of New South Wales [2000] NSWIRComm 69 Taudevin v Egis Consulting Australia Pty Ltd and the Commonwealth of Australia (No 1) [2001] NSWIRComm 340 Telstra Corporation Limited v Worthing (1999) 197 CLR 61 Townsville Hospital Board v Council of City of Townsville (1982) 149 CLR 282 Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 Younan-Sedrak v State of New South Wales (unreported, Hungerford J, 19 August 1999) HEARING DATES: 07/06/2000; 07/14/2000; 08/17/2000 DATE OF JUDGMENT: 01/30/2002

APPLICANT: Messrs R J Buchanan QC and S B Benson of counsel Solicitors: Gilbert & Tobin (Ms D M Banks)

FIRST RESPONDENT: LEGAL REPRESENTATIVES: Mr P J Newall of counsel Solicitors: Corrs Chambers Westgarth (Mr P Wilkins)

SECOND RESPONDENT: Mr D H Godwin of counsel Solicitors: Australian Government Solicitor (Mr J Heard)

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

CORAM: WRIGHT J, President Wednesday 30 January 2002

LANSELL RONALD TAUDEVIN v EGIS CONSULTING AUSTRALIA PTY LIMITED AND THE COMMONWEALTH OF AUSTRALIA. Application under s 106 of the Industrial Relations Act 1996. JUDGMENT

[2002] NSWIRComm 6 1 This judgment deals with certain issues raised by the respondents in respect of a summons for relief filed by the applicant, Lansell Ronald Taudevin, pursuant to s 106 of the Industrial Relations Act 1996. The applicant's amended summons, as did the initial summons, seeks relief against the first respondent, Egis Consulting Australia Pty Limited (Egis), and the second respondent, the Commonwealth of Australia (the Commonwealth). The issues dealt with are, as subsequently discussed, complementary to those the subject of the Full Bench judgment delivered last month: see Taudevin v Egis Consulting Australia Pty Ltd and the Commonwealth of Australia (No 1) [2001] NSWIRComm 340. 2 Mr P J Newall of counsel appeared for Egis to argue these issues. Mr D H Godwin of counsel appeared for the Commonwealth and Messrs R J Buchanan QC and S B Benson of counsel appeared for the applicant. Factual Background 3 It is useful to outline initially the factual background to the proceedings generally, as extracted from the amended summons for relief filed by the applicant and other material tendered or relied upon for the purpose of the proceedings, and subsequently to refer to matters relevant to the present issues. The applicant was employed by Egis (then known as CMPS&F Pty Limited) from about May 1996 as a team leader. His duties involved the management of a water sanitation and community development project in East Timor. Egis was a contractor for the Commonwealth aid agency, AusAid, and the operator of a joint project of the Indonesian and Australian governments. The applicant travelled to Dili in East Timor in June 1996 and remained in East Timor working on the aid project until 28 February 1999. 4 The applicant claimed that in late May 1996, prior to taking up the position in East Timor, he travelled to Australia and met with senior officials from AusAid, the Department of Foreign Affairs and Egis in Canberra. He was asked to provide intelligence reports concerning the military and political situation in East Timor. During his stay in East Timor, the applicant forwarded both project and political reports to the AusAid desk in Jakarta and to Egis in Australia. In late 1998 the applicant was informed that his reports were being cross-checked with Indonesian officials in Jakarta who became aware of his identity. He was interrogated about his reports by Indonesian military intelligence in Dili. After receiving a number of threats, he left East Timor in February 1999.

5 Upon returning to Australia, the applicant continued to be employed by Egis and took a period of paid leave. He was contacted by members of the press and interviewed about his time in East Timor and commenced writing a book about his experiences. He was subsequently warned by Mr Ponsonby, General Manager International for Egis, not to speak to the media. At the time Egis also became aware that the applicant was working on the manuscript for a book. In May 1999 Mr Ponsonby contacted the applicant and offered him a position as project team leader for a project in Kiribati subject to constraints on him talking to the media. The applicant then moved to Sydney to begin work on the Kiribati project and later signed a contract of employment dated 16 June 1999. The contract contained various restrictions on communication with the media about East Timor and made the publication of any written material on East Timor subject to the approval of Egis.

6 On 14 October 1999, the applicant forwarded to Egis a copy of the proposed manuscript for a book later entitled East Timor: Too Little, Too Late . The book was published on 23 November 1999 and on that day an interview with the applicant appeared in the Sydney Morning Herald . On 7 December 1999, Mr Ponsonby telephoned the applicant and stated that the publication of the book was a breach of contract. On 13 December 1999, Egis wrote to the applicant stating that the article in the Sydney Morning Herald and the publication of the book constituted separate breaches of the contract and gave the applicant two weeks notice of termination.

7 The applicant commenced proceedings on 23 December 1999. The amended summons for relief filed on 10 March 2000 seeks orders varying the arrangement which was said to exist between the applicant and Egis and the Commonwealth whereby the applicant provided information and intelligence reports to AusAid and Egis during his employment in East Timor. The amended summons also seeks orders varying the contract of employment dated 16 June 1999 between the applicant and Egis. Further details of the applicant's claims against the respondents, the allegations made as to the nature of his contract or arrangements with them, the work performed pursuant thereto and the procedural background to the issues considered are found in the Full Bench judgment earlier referred to: Taudevin v Egis Consulting Australia Pty Ltd and the Commonwealth of Australia (No 1) [2001] NSWIRComm 340 at [9] and following.

8 Egis seeks, pursuant to Rule 82 of the Industrial Relations Commission Rules, an order that the summons be set aside as against Egis, a declaration that the Commission had no jurisdiction over Egis in respect of the subject matter of the proceedings and an order dismissing the summons. Orders were sought, in the alternative, that the summons be set aside to the extent of Part A of the summons, which dealt with the arrangement to provide information which was said to exist whilst the applicant was working in East Timor. The grounds relied on were as follows: 1. The Industrial Relations Commission of New South Wales in Court Session lacks jurisdiction to exercise powers pursuant to Part 9 of Chapter 2 of the Industrial Relations Act 1996 with respect to the matters agitated in the Summons for one or both of the following reasons: a) The contracts (as defined in section 105 of the Act) alleged in the Summons to exist or to have existed are not contracts which have any or any sufficient connection with New South Wales so as to ground jurisdiction; b) The Summons as it is framed, in seeking relief against the First and Second Respondents, seeks to invoke the jurisdiction of the Commission over a party over which the Commission has no relevant jurisdiction, to wit the Commonwealth of Australia, rendering the Summons bad.

2. Alternatively, as to the orders and declarations sought is A.2 above, the Industrial Relations Commission of New South Wales in Court Session lacks jurisdiction to exercise powers pursuant to Part 9 of Chapter 2 of the Industrial Relations Act 1996 with respect to the matters agitated in Part A of the Summons for one or more of the following reasons: a) The contract or contracts (as defined in section 105 of the Act) alleged to have existed in part A of the Summons are not contract which have any or any sufficient connection with New South Wales so as to ground jurisdiction; b) The First Respondent was not a party to the contract or contracts alleged to have existed in Part A of the Summons, nor was the First Respondent party to a contract or contracts of the nature of the contract or contracts which are alleged to have existed in Part A of the Summons; and c) The propositions in 2(a) and 2(b) above are apparent on the face of the material filed herein by the Applicant. In those circumstances, the orders and declarations sought should be made so as to prevent unnecessary costs to the parties and the public, and unnecessary use of the Commission's resources, by eliminating irrelevant matters from any proceedings.

9 The Commonwealth sought, pursuant to Rule 82, an order that the summons for relief filed be set aside as against the Commonwealth, a declaration that the Commission had no jurisdiction over the Commonwealth in respect of the subject matter of the proceedings and an order dismissing the summons. The following grounds were relied on: The Industrial Relations Commission of NSW lacks jurisdiction under s.106 of the Industrial Relations Act 1996 (NSW) ("the NSW Act") or otherwise, to entertain Mr Taudevin's application, or to grant the relief sought by him, as against the Commonwealth, for one or more of the following reasons: a) The NSW Act does not bind or apply to the Commonwealth either: (i) as a matter of construction; or (ii) because the Commonwealth is immune from any exercise of the power in the NSW Act to declare void or to vary any arrangement entered into by the Commonwealth. b) Alternatively, to the extent that the applicant seeks a declaration that an alleged arrangement between him and the Commonwealth or some collateral arrangement involving the Commonwealth should be the subject of a declaration under s.106 of the Act, the exercise of such a power in relation to the Commonwealth would be contrary to Chapter III of the Constitution as not involving the exercise of judicial power.

10 The Commonwealth subsequently applied for reference of the following questions pursuant to s 193 of the Industrial Relations Act for decision by the Full Bench: a) Whether as a matter of construction, the arrangement alleged between the second respondent and the applicant set out in the applicant's amended summons filed 10 March 2000 as supplemented by particulars given on 30 March 2000, is capable of attracting the jurisdiction of the Commission pursuant to s 106 of the Act.

b) Whether the second respondent is immune from any exercise of the power in s 106 of the Act in the circumstances set out in the applicant's amended summons filed 10 March 2000 as supplemented by the particulars given on 30 March 2000 on the basis that in respect of those circumstances, so far as they involve the second respondent, the New South Wales parliament is not constitutionally capable of affecting the Commonwealth in the manner otherwise permitted by the section.

c) Whether the second respondent is immune from any exercise of the power in s 106 of the Act in these proceedings on the basis that the New South Wales parliament is not constitutionally capable of conferring on the Commission power to grant the relief sought by the applicant against the second respondent as this would involve the conferral of non-judicial power on a court exercising federal jurisdiction, contrary to Chapter III of the Constitution.

However, the Commonwealth eventually pressed for the referral of only the second and third questions and the reference was limited accordingly.

11 This judgment therefore deals with the remaining questions. That is, those raised by the Egis notice of motion and, in addition, the third question which the Commonwealth initially sought to be referred to the Full Bench: whether s 106 of the Act applied to the Commonwealth as a matter of construction. The statutory scheme relevant to s 106 12 The Commission has jurisdiction to make orders in relation to unfair contracts under Part 9 of Chapter 2 of the Industrial Relations Act . The relevant provisions are ss 105 and 106 which provide:

105. Definitions In this Part:

"contract" means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument.

"unfair contract" means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. Note: The jurisdiction of the Commission under this Part is exercisable only by the Commission in Court Session.

106. Power of the Commission to declare contracts void or varied (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) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time.

(4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force.

(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.

Factual matters relevant to present part of proceedings 13 Senior Counsel for the applicant went in detail to the material before the Court to show some of the factual matters disclosed and also to demonstrate that in some relevant areas the material presently available was not complete. He also stressed that the applicant's case had not been closed. 14 Apart from the points raised by Egis as to the nature or quality of the applicant's evidence, to which reference will later be made, there was no issue as to the accuracy of the evidence relied on by the applicant. This was of course inevitable because of the nature of the proceedings. 15 A convenient way of approaching this material is to refer to what appears to be the more significant aspects and to the inferences which Senior Counsel submits should be drawn from it. To the extent necessary for present purposes, I make findings of fact in accordance with what follows. That is, findings as to each of the matters stated, including as to each of the inferences relied upon. 16 Evidence relied on by the respondents showed that the work of the applicant in East Timor occurred in connection with an aid project the subject of a series of contracts between the Commonwealth and Egis (in the latter case, novated from another apparently associated company, and in conjunction with a third company). The goal of the project was to improve the welfare of people in a part of East Timor (Kabupaten Dili and Kabupaten Covalina) through sustainable improvements to water supply and sanitation facilities and their effective use. East Timor was then part of Indonesia. The original contract in 1996 between Egis and the applicant as Team Leader for the project had little apparent connection with New South Wales, other than Egis being a New South Wales company. 17 The material particularly referred to by Senior Counsel for the applicant included an extract from a company search which showed that Egis was registered in New South Wales in 1971 and its registered office was in the Sydney suburb of Chatswood. This was also the location of its Head Office and principal place of business. The registered office had been there since 1989 and the principal place of business since December 1992. It was a New South Wales company with New South Wales offices. 18 The applicant was employed by the company in about May 1996 in the role earlier noted. He commenced duties in about June of that year and continued to work in East Timor until February 1999. At least from July 1998 he was paid from its Sydney office. 19 Attachment A to the applicant's affidavit was a contract of 16 June 1999. This was the second contract between the applicant and Egis. It comprised a number of documents: a letter of appointment headed "Melbourne Office International" inviting acceptance of the offer contained in it by signature and return of a copy, and a number of Annexures referred to in the letter. The letter was for appointment "as a Project Team Leader/Specialist in the Sydney office [employed] under the supervision of Mr Colin Mellor." The letter's final paragraph provided: Whilst you have previously worked for us in a project capacity, we look forward to you joining us in this new role. Whilst it is usual to provide some induction training, in your case this might be best done after return from your initial input in Kiribati. 20 Annexure D to the letter of appointment/contract of employment was a confidentiality deed, which specified that it was a deed with Egis, "formerly CMPS&F Pty Limited, a company duly incorporated in the State of New South Wales … and having its registered office at 67 Albert Avenue, Chatswood, New South Wales". Paragraph 10 of the deed specified that it "shall be subject to the laws of New South Wales … and the parties hereto submit to the jurisdiction of the courts of New South Wales." 21 Annexure C included the special conditions to the contract. These were submitted to be for the benefit of Egis Consulting Australia, a New South Wales company, and provided, inter alia , "[y]ou will not communicate with the media in relation to East Timor (either in writing or verbally) … You will not publish (either in writing or otherwise) any material related to your previous assignment or the AusAid East Timor Water Supply & Sanitation Project without Egis' prior written consent, which consent will not be unreasonably withheld". Although certain quite significant safeguards were included, breach of the special conditions would provide grounds for summary dismissal. 22 A document entitled "Agreement for International Assignment" was also relied on. Senior Counsel submitted that it should be treated as a collateral arrangement for a particular project as it specified that it applied to the assignment of an Egis Consulting employee overseas. It pre-supposed employment and provided arrangements for an assignment as part of the employment. The definition of employee was predicated upon existing employment as were other conditions of employment; for example the salary and taxation arrangements were expressed as indicative of an assignment during the course of current employment. Schedule 1, entitled "Project and Assignment Details" was attached to this document. It specified the employee's home base as Sydney and the duration of the assignment, as distinct from that of the employment which was not limited, as "18 person-months". 23 On the basis of this material, I accept the applicant's submission that it was reasonably arguable, on the evidence presently available, that the reality of the situation was one of continuing employment; and that whatever status the particular contracts may have had from time to time, there was arguably a situation of continuing employment encompassing both the East Timor and the Kiribati projects, linked by the period in Sydney during which the formal contract of 16 June 1999 was signed. It was also arguable that a jurisdictional connection with East Timor arose from the special conditions in the contract of June 1999 referred to in paragraph [21] above. This would then lead, as the applicant submitted, to the situation where, in order to deal with the issue of the special conditions and the question of their fairness, it would be necessary in any event to review the factual position in East Timor. A factual inquiry into the circumstances in East Timor might be necessary because of the allegations as to Egis' conduct in seeking to prevent the applicant from publishing, in writing or otherwise, information as to his work and making these restrictions part of the formal contract which was executed in Sydney. Determination of the Egis motion as a preliminary matter 24 The first issue to be considered is whether it is appropriate to determine the matters raised in the notices of motion as a preliminary matter, or whether they should more appropriately be determined at trial. Egis argued that it is possible for the Commission to hear and determine a challenge to jurisdiction at a threshold stage: Nagle (T/as W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8; Majik Markets v Brake and Service Centre (1991) 39 IR 169; Stevenson v Barham (1970) 136 CLR 190 at 202 and Virtue v New South Wales Department of Education and Training (1999) 92 IR 428. This power extended to staying or dismissing part of a summons: see Brown v Green (1996) 66 IR 220.

25 It was submitted that, as a general rule, it was desirable that an objection to jurisdiction be determined as early as circumstances would conveniently admit: see Virtue at 447. Egis argued that the cost and inconvenience saved if the notice of motion was successful were very substantial and it was desirable that the threshold question be determined discretely. It was conceded, however, that there was only utility in having the matters raised in the notice of motion heard discretely if there were some prospect of their being determined at that stage.

26 The applicant submitted that normally the Commission would not entertain a preliminary challenge to jurisdiction of the kind advanced in the Egis notice of motion and, furthermore, preliminary issues of this kind should not be addressed prior to conciliation: see Younan-Sedrak v State of New South Wales (unreported, Hungerford J, 19 August 1999). The practice of the Commission was said to clearly provide that the issues raised in the notice of motion should not be heard at this stage of proceedings.

27 The principles to be applied in determining whether a challenge to jurisdiction should be determined as a preliminary matter have been considered in detail in previous decisions of the Court. Full Benches have emphasised that, although it is desirable to determine questions of jurisdiction at a preliminary stage, such a determination may be made only where the absence of jurisdiction is clear. In Nagle (T/as W D and J L Nagle & Sons) v Tilburg, for example, the Full Court held at 10 - 11: The principle to apply by a court entertaining a challenge to jurisdiction in a preliminary or threshold way was considered by the Supreme Court of New South Wales, Court of Appeal in Majik Markets Pty Limited v. Brake and Service Centre Drummoyne Pty Limited (1991) 28 NSWLR 443; 39 IR 169. Kirby P. observed (at 446; 170) : "Such a course if often a sensible one where a party has a substantial threshold argument which, if it succeeds, will knock out the claim and save the costs and inconvenience that attend a protracted hearing of proceedings on the merits. But, as with any threshold relief of this kind, it must be conserved to a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation. Necessarily, refusal of relief at the threshold will not finally determine that jurisdiction exists for any order which the Commission might make between the parties. This is because, to secure relief, the claimants must demonstrate that no order could be made which would be within jurisdiction. This burden, which is a heavy one, was accepted by the claimants."

And subsequently observed, at 11 - 12: We would draw from those authorities the proposition that whilst it is desirable for a case to be determined at an early stage it is only open to do so at the appropriate stage of the proceedings, that is, where the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, it seems to us, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such a determination to be made. 28 This approach has been followed and adopted in numerous cases in both the Court and the Commission: see, for example, Davis v Amalgamated Television Services Pty Ltd (1998) 81 IR 364 at 396 - 397; Clarkson v Dent (1998) 84 IR 250 at 252; Federated Municipal and Shire Council Employees Union v Energy Australia (1999) 90 IR 311 at 317 - 319; Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 at 447 - 448; Beahan v Bush Boake Allen Australia Ltd (1999) 93 IR 1 at 2 - 3; Packer v The Greater Murray Area Health Service [2000] NSWIRComm 149; Hogan v Employment National (Administration) Pty Limited [2000] NSWIRComm 47 at [10]; Stonham v The Speaker of the Legislative Assembly of New South Wales [2000] NSWIRComm 69 at [4]; Frost v The Speaker of the Legislative Assembly of New South Wales [2000] NSWIRComm 70 at [4]; as has the analysis or summary of the relevant approach in Virtue which is cited in paragraph [29]: Heath Group Australasia Pty Ltd v Pengly [2001] NSWIRComm 241; Hall v Strathfield Group Ltd [2001] NSWIRComm 266; Alsford v Castech Pty Ltd [2001] NSWIRComm 259.

29 In my judgment in Virtue, at 447 - 448, the applicable principles were set out in this way: (1) The discretion of a court to determine a case at an early stage, when appropriate, has been repeatedly accepted.

(2) As a general rule it is desirable that an objection to jurisdiction be determined as early as circumstances will conveniently admit so that the tribunal does not embark on a hearing which it lacks authority to conduct. The course of a court entertaining a challenge to jurisdiction in a preliminary or threshold way is often a sensible one where a party has a substantial threshold argument which, if it succeeds, will knock out the claim and save the costs and inconvenience that attend a protracted hearing of proceedings on the merits.

(3) However, a further general proposition is that all issues arising should be dealt with in the substantive proceedings unless the basis for a challenge, either on jurisdictional grounds, or for lack of a reasonable cause of action, be clearly demonstrated.

(4) Threshold relief of the kind sought here must be conserved to a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation.

(5) Necessarily, refusal of relief at the threshold will not finally determine that jurisdiction exists for any order which the Court might make between the parties. This is because, to secure relief, the claimants must demonstrate that no order could be made which would be within jurisdiction. The resulting burden is a heavy one.

(6) Accordingly, whilst it is desirable for a case to be determined at an early stage it is only open to do so at the appropriate stage of the proceedings. That is, where the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such a determination to be made.

(7) Similarly, the jurisdiction to terminate an action summarily for want of a cause of action is to be sparingly employed and ought not to be used save where the lack of the cause of action was clearly demonstrated. 30 In order to succeed in a motion to dismiss on a preliminary basis a summons for want of jurisdiction, a respondent must demonstrate that there is no power in the Commission to grant any relief sought in the application: see, for example, Virtue at 448. In the present circumstances, the Court must be satisfied that the contracts or arrangements between the applicant and the respondents are plainly not contracts or arrangements in respect of which the Commission may exercise jurisdiction.

31 A further question in this case concerns whether it is appropriate to hear a preliminary challenge to jurisdiction prior to the matter being referred to conciliation pursuant to s 109 of the Industrial Relations Act . That provision is in the following terms: 109. Conciliation of applications to be attempted first. (1) The Commission must endeavour, by all means it considers proper and necessary, to settle a matter under this Division by conciliation.

(2) When, in the opinion of the Commission, all reasonable attempts to settle the matter by conciliation have been made but have been unsuccessful, the Commission is to determine the matter in accordance with this Act.

(3) Nothing in this section prevents further conciliation from being attempted at any time before the Commission makes such an order.

(4) Any member of the Commission (whether or not a judicial member) may undertake the conciliation of a matter under this Division. 32 In Younan-Sedrak v State of New South Wales , Hungerford J concluded that it was not appropriate in that case for a jurisdictional question to be determined before conciliation had been attempted. His Honour observed: Section 109 of the Industrial Relations Act makes provision for the conciliation of applications to be attempted first; I emphasise the use in the section of the word "first". Sub-section (1) provides that the Court must endeavour, by all means it considers proper and necessary, to settle a matter by conciliation and sub-s.(2) provides that where, in the opinion of the Court, all reasonable attempts to so settle the matter have been made but have been unsuccessful, the Court is to determine the matter. Having in mind those sub-sections, and as the heading of the section makes clear, it is my view that before a matter is determined the process of conciliation must first be attempted to the point where it may reasonably be said it has been unsuccessful. If it were otherwise, then, it seems to me to be clear, the whole statutory purpose and intent of s 109 would be lost.

The point may be illustrated in this way: if the present Motion were argued successfully then the claims to which it was directed would be determined by being effectively dismissed, and that would occur without there first being attention to conciliation as required by the section. I emphasize, in expressing this view, that at this point of time the claims are properly before the Court and there has been no determination one way or the other as to whether they are within or outside jurisdiction. As such, being before a superior court of record, they properly stand for consideration with no assumption they are beyond power so as to remove them, but as the respondent suggested was the case, from the scope of the requirement for conciliation before determination.

Against conciliation being attempted prior to the Notice of Motion being heard, a large part of the opposition was based upon the proposition that conciliation would require additional expense being incurred by the parties in preparing for it, expense which otherwise may not be necessary. I disagree. The whole purpose of conciliation, in my view, is an alternative cost effective and efficient way in which parties may have their dispute dealt with; indeed, so much is clear from the terms of s.109 which require conciliation to be attempted first . It is not necessary, in my view, in preparing for an effective conciliation for there to be the preparation of affidavits and other material as if the matter were to proceed to a substantive hearing. Appropriate steps may be adopted to enable conciliation to proceed in a cost effective way. Even if all of the issues not be settled, a large part of them might be so that that in itself will mean the conciliation process has resulted in at least a containment of the claims thus representing a saving in costs.

For the reasons given, I am of the view that it is appropriate, indeed it is a requirement of s 109, for the whole of this matter to proceed to conciliation first in order to see if it may be resolved. It follows that the Notice of Motion filed by the respondent should be stood over to a date to be fixed. I make orders accordingly. Whether the Motion should be heard as a preliminary matter rather than as part of the whole proceedings, if the conciliation be unsuccessful, will be determined later.

33 Egis contended that the position adopted in Younan-Sedrak did not reflect the jurisprudence of the Commission in other matters under s 106 in which there has been a preparedness to deal with threshold issues before conciliation. There were clearly cases in which the Commission had heard preliminary challenges to jurisdiction prior to conciliation being attempted: for example, Burgess v Mount Thorley Operations Pty Ltd (unreported, Marks J, 9 March 1999); Killinger v Minproc (unreported, Kavanagh J, 12 May 1999); Virtue v New South Wales Department of Education and Training (1999) 92 IR 428; Bell v Macquarie Bank Ltd (No 4) (1999) 93 IR 191. On the other hand, there were some cases in which jurisdictional points have been heard after conciliation: for example, Fox Evergreen Pty Ltd v May (unreported, Cahill V-P, 16 July 1998). 34 Egis also submitted that the jurisdiction of the Commission to conduct a conciliation depended on the matter being properly before the Commission. There was no warrant, it was said, for the Commission to proceed to conciliate a matter which may be without jurisdiction. Indeed, it was submitted, a firmly held view by one party that a matter is outside jurisdiction may be a substantial obstacle to any conciliation and a conciliation then would run counter to the "general rule" that jurisdictional questions be determined as early as circumstances conveniently admit: see Stevenson v Barham . 35 The initial consideration as to this aspect of the present issues is the significance and the strength of the observations of Hungerford J in Younan-Sedrak noting, however, that a different approach was taken on this issue by Peterson J in McGowan v Australian Broadcasting Corporation [2001] NSWIRComm 49 at [15] where his Honour held: I conclude that s 109 does not compel conciliation of a matter which is contended to be beyond the Commission's jurisdiction. This means that whether a matter goes to conciliation or not first will be a matter for the Court at first instance to determine in the exercise of its judicial discretion, on the facts of the particular case. 36 The differing approaches raise an important issue as to a fundamental aspect of the Court's jurisdiction and practice. The importance of the obligation on the Commission under s 109 to conciliate should not be underestimated: the requirement did not exist in the counterparts to s 106 in the 1940 and 1991 statutes, and the 1996 legislative intention to encourage and facilitate settlement of s 106 proceedings appears to have been vindicated by the very great proportion of applications resolved by the operation of s 109. See also the consideration, albeit in a different context, by a Full Bench of the Commission in Shop, Distributive and Allied Employees' Association, New South Wales v Librus Pty Ltd, t/as Dymocks Parramatta (2001) 103 IR 394 at 395 - 398 of the interrelationship between the conciliation and determination of proceedings and the significance of conciliation in the functioning of this jurisdiction even where it is alleged that there was an absence of power to determine the proceedings. 37 However, because of the firm conclusion I have reached on the respondents' strike-out applications, it is not necessary for this difference to be resolved in these proceedings as they may be satisfactorily finalised otherwise. In other words, as I have concluded that the motions are to be dismissed, the apparent mandate in s 109 as to conciliation prior to determination will be observed. Nevertheless, it may be observed that the considerations referred to in the judgment in Younan-Sedrak serve to emphasise the stringency with which the approach in the line of cases represented by the judgment in Nagle v Tilburg is to be applied in these proceedings. The Substance of the Notice of Motion 38 It is necessary now to turn to the principles which may be relevant in determining whether Egis can demonstrate that the Commission has no jurisdiction in this matter. Egis submitted that the jurisdiction of the Commission depended on the existence of a contract "in and of" New South Wales, citing Bell v Macquarie Bank Ltd (No 2) (1999) 87 IR 126, Englebrecht v Cordukes Ltd [2000] NSWIRComm 52 and Perrott v Xcellnet Australia Ltd (1998) 84 IR 255. It was argued that the words "in" and "of" are conjunctive so that the contract must be both "in" New South Wales and "of" New South Wales. The contract must be one which is carried out, if only in part, in New South Wales to be "in" New South Wales. The relevant industry must be conducted from New South Wales with a view to undertaking work in New South Wales. 39 Egis contended that the applicant appeared to assert that he relied on the respondents' evidence to make out the connection required to establish jurisdiction. Reference was made to the affidavit of the applicant's solicitor, Ms Dianne Margaret Banks. Egis argued that it was entirely appropriate to determine the question raised in the notice of motion based solely on the evidence of the applicant taken at its highest. It was not required to call any witnesses or bring any evidence. It also contended that the evidence of Ms Banks was unsatisfactory in that it was mere information and belief and should be given negligible weight. 40 Egis also submitted that the evidence of the applicant as to the first contract was that he was recruited in Indonesia and that all work was performed outside Australia with the applicant's wages being paid into an overseas bank account. Egis contended that it was of no relevance, for example, the applicant claimed to have communicated with the company while in East Timor. Further, the first contract did not gain the character of a contract "in and of" New South Wales by virtue of being collateral to the second contract. The second contract was also said not to be a contract "in and of" New South Wales and the contracts are discrete. 41 It is appropriate to pause here to observe that the way in which Egis argued its motion raises immediate difficulties for its success, as the arguments themselves, on their face, raise real doubt as to whether the relevant criteria are met and the proceedings are at "the appropriate stage": see, for example, the principles numbered 5, 6 and 7 in Virtue. 42 The applicant argued that it was, in any event, manifestly unfair to deny him the opportunity to rely on the evidence as a whole to demonstrate that the contracts have sufficient connection to New South Wales, including documents which may come to light through the process of discovery, notices to produce etc. It was submitted that it was not possible for Egis to show that the applicant could not succeed in obtaining relief in these proceedings. One possible view of the factual position was that all the contracts and arrangements formed part of a single and continuing arrangement under which the applicant performed work for Egis in its business - a business (and work) having sufficient connection to New South Wales (cf Howitt v Retec Ltd (1992) 45 IR 245 at 258 - 259). 43 The principles relating to the degree of connection with New South Wales required to bring a contract or arrangement within the scope of s 106 of the Act have been considered in a range of cases. Referring to relevant authorities, the Full Bench in Bell v Macquarie Bank Ltd (No 4) at 202 - 203 stated: A further consideration which has some significance in the present stage of the case is that jurisdiction under s 106 depends upon the existence of a relevant contract or arrangement, rather than upon the performance of work itself. So much is made clear in the judgment of the Court of Appeal in Ex parte Richardson; Re Hildred [1972] 2 NSWLR 423. In that case, an application was made under s 88F of the Industrial Arbitration Act 1940 by two performers who were contracted in New South Wales to produce a variety show to be performed outside the State, primarily in Vietnam and Hong Kong. The appeal concerned whether the Commission had jurisdiction to determine the application. Asprey JA commented (at 433 - 434): What attracts the jurisdiction of the court to award, and what confers upon an applicant the right to receive, compensation under the various workmen's compensation statutes is the injury received in the course of the employment. What attracts the jurisdiction of the Commission to grant, and confers upon an applicant a right to obtain, relief under s88F of the Act is a contract or arrangement whereby a person performs work in the theatrical industry in or of New South Wales.

His Honour continued (at 434): It is a matter of common knowledge that artists are booked by theatrical managers or theatrical agents in New South Wales for performances not only in New South Wales but in the other State of the Commonwealth as well as outside the territorial limits of the Commonwealth, e.g. New Zealand. It is not the performances of the artists but the agency contract or arrangement or the contract or arrangement under which they perform which is struck at by the section on the ground that it, not the performances, falls within one or other of the pars. (a) to (e) of sub-s. (1).

A similar approach was adopted by Watson J in Cosgrove v International Opal Pty Limited [1977] AR (NSW) 751 at 762 as well as by the Full Bench in Chrysler Jeep v Canberra Star Motors (at 459) and Perrott v Xcellnet Australia Limited (at 266).

Nonetheless, to enliven the jurisdiction of the Court under s 106 of the Act, the contract or arrangement involved must have the requisite connection with the State of New South Wales. In Perrott , it was said (at 266): What must be determined, it seems plain to us, is whether, on the evidence, it has been demonstrated that the contract in question has the necessary connection with the State of New South Wales. That involves, in our view, a consideration of whether the contract, " any contract " (emphasis added) to use the words in s 106(1) of the Act, was one whereby a person performs work in any industry "in and of New South Wales". Such an approach accords with that of both Asprey J.A. and Manning J.A. in Hildred - Asprey J.A. there spoke (at 434) of "a contract or arrangement whereby a person performs work in the theatrical industry in or of New South Wales" as conferring a right to obtain relief under the section; and Manning J.A. posed (at 437) the "vital question for determination" to attract jurisdiction as being "because there was an industry in New South Wales, and because the persons who performed work in the industry did so wholly or substantially in New South Wales," although, as Asprey J.A. added (at 434), "the theatrical industry in or of New South Wales is not limited to the performance of entertainment in New South Wales by the artists engaged in that industry."

In our view, subject to the clarification expressed in Chrysler Jeep (at 459) as to the formulation by Asprey JA, this passage correctly states the jurisdictional nexus which must be demonstrated to the standard of a "good arguable case" in order to attract the discretion to grant leave to proceed against a respondent served outside Australia under rule 112(4). We would emphasise, however, that what needs to be shown at the relevant standard is a "contract or arrangement, or any related condition or collateral arrangement", involving the applicant and the foreign respondent, under which work is performed in an industry "in and of" New South Wales.

The authorities cited indicate that a range of factors may be relevant when seeking to determine whether there is a contract or arrangement under which work is performed in an industry "in and of" New South Wales. It is evident that the proper law of the contract, whilst a relevant factor, will not in itself determine whether the contract possesses the necessary connection with the State. Perrott (at 267) demonstrates that a contract governed by New South Wales law may nonetheless lack the requisite connection, whilst a contract not governed by New South Wales law may be amenable to relief under s 106 because it is one under which work is performed in an industry "in and of" the State. Maloney v Hoffman [1980] AR (NSW) 318 is an example of the former circumstance, while Perrott itself and Savage v Digital Equipment Corporation (Australia) Pty Limited (unreported, Glynn , Hungerford and Schmidt JJ, IRC98/195, 17 May 1999) are examples of the latter.

Relevantly, for present purposes, the place where work is performed under the contract or arrangement is also one factor, albeit not a decisive factor, which must be considered. As was said in Perrott (at 267): "the place work is performed … is but one factor in assessing the relevant connection of the contract with New South Wales and in that assessment the nature, quality and extent of the performance in the context of all the relevant circumstances of the contract will be material considerations." We are satisfied, however, that work may be performed in an industry "in and of" New South Wales notwithstanding that the majority of the work is not physically performed in the State. This may be the case so long as there are other factors present which establish, or assist in establishing, a relevant connection with New South Wales. Factors which may indicate such a connection include that the contract or arrangement was negotiated or made in the State by New South Wales residents or that the contract or arrangement involves the performance of work overseas in furtherance of a New South Wales industry.

44 Further, the Full Bench observed that a contract or arrangement will ordinarily be within jurisdiction so long as it is collateral to another contract or arrangement which satisfies the jurisdictional nexus: see Gosper v Sawyer (1985) 160 CLR 548 at 560 and Bartolacci v Permanent Custodians Ltd (1992) 44 IR 388 at 397. The Full Bench held (at 205): [W]e consider that to establish the existence of a relevant jurisdictional connection or nexus, it may ordinarily be sufficient if the applicant demonstrates the existence of an arrangement which is collateral to another contract or arrangement whereby work is performed in an industry "in and of" New South Wales. We emphasise that what must be established by an applicant for leave to proceed in this context is that the contract or arrangement to which the respondent is "a party" has a territorial connection with New South Wales.

45 In Englebrecht v Cordukes Ltd [2000] NSWIRComm 52 at [55], Marks J summarised the principles which may be derived from the decision in Bell v Macquarie Bank Ltd (No 4) , in a manner which I consider of assistance in the present matter. His Honour observed: Without hopefully detracting from the analysis of decided cases and the principles distilled therefrom undertaken by their Honours I shall attempt to summarise the relevant principles as follows:

1. Jurisdiction under s 106 depends upon the existence of a "contract, arrangement, related condition or collateral arrangement" answering the relevant statutory description.

2. The proper law of any relevant contract will be relevant but not determinative as to whether jurisdiction exists.

3. The place where work is performed under the contract or arrangement is one factor but not a decisive factor which must be considered. "…work may be performed in an industry "in and of" New South Wales notwithstanding that the majority of the work is not physically performed in this State. This may be the case so long as there are other factors present which establish, or assist in establishing, a relevant connection with New South Wales. Factors which may indicate such a connection include that the contract or arrangement was negotiated or made in the State of New South Wales or that the contract or arrangement involves the performance of work overseas in furtherance of a New South Wales industry."

4. Consistent with the line of authority confirmed by the judgment of Hungerford J in Bartolacci v Permanent Custodians Ltd (1992) 44 IR 388 as subsequently approved on many occasions, " …It may ordinarily be sufficient if the applicant demonstrates the existence of an arrangement which is collateral to another contract or arrangement whereby work is performed in an industry 'in and of' New South Wales." That is, once there is a primary contract or arrangement under which work is performed as contemplated by the application of the definitions in s 105 of the Act to s 106, and such primary contract or arrangement is one possessing the necessary nexus and otherwise fulfilling the statutory requirements to vest jurisdiction, any related arrangement which is collateral to the primary contract or arrangement under which work may be performed does not of itself need to possess any territorial nexus with New South Wales.

46 A number of considerations arise from the authorities cited above in relation to the submissions advanced by Egis. First, the authorities make clear that it is not the contract which must be "in and of" New South Wales, but rather the industry whereby work is performed under the contract: see Ex parte Richardson; Re Hildred [1972] 2 NSWLR 423 and Bell v Macquarie Bank Ltd (No 4) . The contract may have little connection to New South Wales so long as work is performed under the contract in an industry "in and of" New South Wales. Where the contract was negotiated and the law of the contract may be relevant factors, but are not decisive. 47 Second, the work involved is not restricted to work performed by one party to the contract, but may include the actions of other parties to the contract. In Hildred , the Supreme Court considered that the performance of work included the formation of the contract, maintenance of the arrangement and negotiations for its renewal: see Bell v Macquarie Bank Ltd (No 4) at 205. Thus, liaison between the applicant in East Timor and representatives of Egis in Sydney might be of more importance for relevant purposes than Egis' submissions seemed to countenance. 48 Finally, it is doubtful that the proposition raised by Egis is correct; that is, that the industry must be one which was conducted from New South Wales with a view to undertaking work in New South Wales. A range of factors may be relevant in determining whether the contract or arrangement is one whereby work is performed in an industry "in and of" New South Wales: see Bell v Macquarie Bank Ltd (No 4) at 203. The place where work is to be performed is but one factor in assessing the relevant connection to New South Wales: see Perrott at 267; Bell v Macquarie Bank Ltd (No 4) at 204. 49 I do not consider that Egis has made out a case on any of the grounds it has put forward. As already mentioned, the very basis on which Egis put its case demonstrates that it is premature to conclude the proceedings against the applicant. Further and also as already noted, the applicant has shown that, at this stage, he has an arguable case as to jurisdiction. On one view, that is all he needs to demonstrate; on another view, it is more than required. I also consider that the considerations referred to by the applicant (see paragraph [23]) show that the argument ab inconvenienti which Egis relied on should not be accepted. The Commonwealth's motion

50 One question remains to be determined from the Commonwealth's motion. The question not referred to the Full Bench was: Whether as a matter of construction, the arrangement alleged between the second respondent and the applicant set out in the applicant's amended summons filed 10 March 2000 as supplemented by particulars given on 30 March 2000, is capable of attracting the jurisdiction of the Commission pursuant to s 106 of the Act. Submissions for the Commonwealth 51 When counsel for the Commonwealth commenced his oral submissions, he said that the two points originally raised by the Commonwealth and dealt with in its outline of submissions were not being pressed as it was accepted that they had already been decided by Full Benches in Bell v Macquarie Bank Ltd (No. 4) and in the judgments cited therein. 52 Counsel then raised a further argument which had not been foreshadowed earlier. The contention was that, as a matter of construction, the applicant's case that the work performed by him and conducted on behalf of the Commonwealth did not fall within the ambit of s 106 of the Industrial Relations Act. The submission was raised in the following way, albeit over the strenuous objection of Senior Counsel for the applicant, as the submissions were being made in the absence of appropriate notice and contrary to the requirements met by the other parties as to the service of their outline submissions etc: This is dealing with two questions as far as the second respondent is concerned this morning. The first is whether your Honour should be dealing with the question as to whether or not as a matter of construction the arrangement which the applicant seeks to have varied against the second respondent is within the jurisdiction of the Commission. The first question is whether that should be dealt with as a preliminary issue. The second question is, if it is dealt with as a preliminary issue, what the answer to that question is.

The Commonwealth has filed some submissions in support of this question. Regrettably very recently the Commonwealth realised that this Commission's decision in Bell v Macquarie Bank (No. 4) 93 IR 191 particularly pages 204 and 205 had dealt precisely with the first of the questions or the ways in which the Commonwealth had put its case. That being the words in the definition of contract in section 105. In Bell v Macquarie Bank the Full Commission held that they did not, and that they did not in particular qualify the words "collateral arrangement". So that was a knock out point against the applicant in these proceedings, the Commonwealth's point, or your Honour is bound to follow what was said in the Full Bench ( sic ). 53 Two issues arose from the Commonwealth's approach and resulting altered position. First, whether the Court should accept the Commonwealth's concession, and second, whether it should be permitted to put the new arguments. As to the first of these matters, I consider that the concession was correctly made and should be accepted. I shall refer nevertheless to some of the applicable authorities. 54 As to the second aspect, the applicant's objections were considered capable of being addressed by, if necessary, appropriate costs orders. Leave was granted, therefore, for the Commonwealth to put the additional arguments, and for the applicant to file supplementary submissions. Pursuant to that leave, the applicant filed submissions in reply to the Commonwealth's further contentions. 55 In his oral submissions, counsel for the Commonwealth then dealt with the further question concerning the "construction" of s 106. He drew attention to observations of Hill J (with which Maidment J generally agreed) in BNY Australia Limited v James (1992) 26 NSWLR 57 at 73 in these terms (omitting references): It may be that on a proper construction of the section, having regard to its terms and purposes in the context of the Act, as a whole, it does not apply to particular contracts or arrangements or particular classes or categories of contracts or arrangements, notwithstanding that they may be contracts or arrangements whereby work is performed in an industry and unfair, etc. within the meaning of the subsection…

He also referred to Gosper v Sawyer (1985) 160 CLR 548 at 560 - 561 and, in particular, the following passage at 561: However, there is nothing in the words of section 88F that suggests it was intended to give the Commission power to affect trusts governed by laws other than that of New South Wales

On the basis of those extracts from the judgments, counsel made the following submission: The point I take out of [this] is, although there was some question in the minds … of the High Court, … as to [the] constitutional reach of section 88F, which in an analogous way is the question we have put in the minds of the Full Bench of this case, their Honours decided the case on the question of construction. Commencing with the contention that there are limits to the character of contracts or arrangements which may be dealt with under s 106 the Commonwealth submitted that any arrangement with the applicant fell into a class of arrangement which was beyond the reach of s 106; i.e. the arrangement that the applicant sought to have reviewed involved the exercise by government of its governmental, rather than commercial, capacity. 56 As it was not in a position to provide them at the time, leave was granted to the Commonwealth to provide any authorities which might support its characterisation of the arrangement as falling outside the limits it appeared to assert were to be found as to s 106. Pursuant to the leave the Commonwealth provided reference to the following cases: Townsville Hospital Board v Council of City of Townsville (1982) 149 CLR 282 at 288 - 289; Bropho v Western Australia (1990) 171 CLR 1 at 19, 23 - 24; Jacobsen v Rogers (1995) 182 CLR 572 at 591, 593 - 594; Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation (1993) 178 CLR 145 at 171 - 172. 57 The Commonwealth had originally submitted that s 106 did not apply to it as a matter of construction. The Commonwealth conceded, however, that s 404 of the Industrial Relations Act which provided that the statute "binds the Crown in right of New South Wales and, so far as the legislative power of Parliament permits, the Crown in all its other capacities" appeared to displace the presumption that a statute which regulated the conduct and rights of individuals did not apply to executive government: see Commonwealth v Western Australia (1999) 196 CLR 392 at 409 - 412. It was submitted, nevertheless, that it was still necessary to show that the relevant provisions were capable of applying to the Commonwealth as a matter of construction. 58 It was argued that "industry" in s 106 should not be construed as extending to activities engaged in or in relation to the operation of the Commonwealth government. In support of that submission, it was observed that the term "employer" in State worker's compensation legislation has been construed as not including the Commonwealth (relying on Russo v World Services and Constructions Pty Ltd [1979] 1 NSWLR 330). It was also argued that, in any event, the arrangement did not possess the requisite industrial character because it did not lead to the performance of work in an industry. Rather it was discrete and supplementary to the performance of work: Stevenson v Barham . 59 The applicant observed that the jurisdiction of the Commission under s 106 was enlivened not only in relation to contracts leading directly to the performance of work, but also arrangements collateral thereto. The applicant also challenged the fundamental contention that something which is done by the Commonwealth is not properly described as being in an "industry". The Commonwealth's submissions emphasised, rather than removed, the need for an examination of the factual position and led to the conclusion that there was no basis on which the proceedings against the Commonwealth could be dismissed at this stage. "Whereby a person performs work in an industry" 60 A question to be considered in relation to the construction of s 106 is whether any contract or arrangement between the applicant and the Commonwealth was a contract "whereby a person performs work in any industry". This issue may be seen as having two aspects. First, whether the activities of the Commonwealth were carried on in an "industry" and, secondly, whether the arrangement in this case was one "whereby" work was performed in an industry. 61 "Industry" is defined is s 7 of the Act in the following terms: 7. Definition of industry

In this Act, "industry" includes: (a) any trade, manufacture, business, project or occupation in which persons work, or (b) a part of an industry or a number of industries.

62 The term "industry" in s 106 and its predecessors has been construed widely in line with the definitions contained in the 1940, 1991 and 1996 Acts. For example, in Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169, the Privy Council considered whether a licence agreement for the operation of a service station came within s 88F of the Industrial Arbitration Act 1940. The Privy Council referred to the breadth of the definition contained in s 5 of the 1940 Act (at 173): Their Lordships accordingly turn to what is the only real question of construction in this appeal. Was the Solus Contract a "contract whereby a person performs work in any industry", within the meaning of that phrase in section 88F? "Industry" is defined in s 5 to mean "craft, occupation, or calling in which persons of either sex are employed for hire or reward". It covers, therefore, the occupation of supplying petroleum products and other services to motorists at a service station. Performing work in industry, in their Lordships' view, covers doing anything which a person employed in the same occupational for hire or reward might be expected to be required to do under a contract of employment. So the Feenans when running the service station by their own labours were performing work in industry. The remaining question of construction is whether the Solus Contract was a contract "whereby" they did so. In their Lordships' view this provision in the context of contract or arrangement bears its ordinary meaning of "in consequence of which" or "in fulfilment of which". Either meaning is sufficient to bring the Solus Contract within the description of contracts to which s 88F applies. The Feenans were required to carry on the task of supplying petroleum products to motorists throughout all lawful working hours. In doing so, they were fulfilling their contractual obligations to Caltex. (emphasis added)

63 The construction of the term "industry" has generally been confined only by the terms of the definition contained in the Act from time to time. As a result, it may be relevant whether the arrangement between the Commonwealth and the applicant, or to which the applicant and the Commonwealth were "party", related to work in "any trade, manufacture, business, project or occupation in which persons perform work." On the basis of relevant authority it does not seem available or appropriate, at this stage, to answer that question in the negative.

Russo v World Services and Constructions Pty Ltd 64 The Commonwealth relied by analogy on the decision in Russo v World Services and Constructions Pty Ltd . In that case, the Court of Appeal determined that the term "employer" should not be read as applying to the Crown in right of the Commonwealth for the purposes of the Workers Compensation Act 1926. However, that case is distinguishable from the present case as the legislation under consideration is materially different. There were two major bases upon which the Court of Appeal determined in Russo that the Commonwealth was not an "employer" within the meaning of the Act. The Court applied the principle that the Crown was not included in the operation of a statute except by express words or necessary implication applying Commonwealth v Rhind (1966) 119 CLR 584 at 598 - 599. The Workers Compensation Act expressly bound the Crown in right of New South Wales, but not the Crown in right of the Commonwealth. The Court considered there was no basis to hold the Crown in right of the Commonwealth bound by necessary implication and concluded that the general reference to an "employer" did not include the Commonwealth. 65 In the present case, the Commonwealth conceded that there appeared to be a legislative intention to bind the Crown in right of the Commonwealth by virtue of s 404 of the Industrial Relations Act . This itself was a relevant and important difference from the legislation considered in Russo . 66 It may also be observed that the High Court, in Telstra Corporation Limited v Worthing (1999) 197 CLR 61 at 74, distinguished Russo v World Services and Constructions Pty Ltd and held that, as a matter of construction, the 1926 and 1987 State Workers Compensation Acts applied in terms to the Commonwealth statutory corporation sued in those proceedings, as there was nothing in the relevant statutory definitions which derogated "from simply applying the normal understanding of the expression 'employer' as referring to a person or body which employs people". The High Court also considered it relevant that the 1987 statute contained a provision in materially similar terms to s 404 of the Industrial Relations Act. Although, in the result, Telstra was held not to be bound by the State legislation the determinative factor was a specific provision of the federal statute which established Telstra, and for which there is no parallel in this case.

"Whereby work is performed" 67 Although the term "industry" has been given a broad meaning, it is still necessary to show that the contract or arrangement in question is one which leads directly to the performance of work. The Commonwealth also argued that the arrangement with the applicant does not have a requisite industrial character because it does not lead to the performance of work in an industry. In Stevenson v Barham, at 201 - 202, Mason and Jacobs JJ held in respect of s 88F of the 1940 Act: It follows, then, that 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 pursuant to s 14, be challenged, appealed against, reviewed, quashed, or called in question by any court on any account whatsoever (s. 84). The plaintiff must, as a condition of making out a case for relief, show the existence of one of the five grounds set out in the sub-section. When such a ground has been established it is for the Commission in the exercise of its discretion to determine whether relief will be granted. Thus in exercising its discretion the Commission may decide, as it appears to have done in a number of cases, that relief will only be granted if the agreement appears to be one which is subversive of industrial regulation. By so deciding the Commission might or might not be acting upon a correct legal principle governing the exercise of the discretion given to it. Since s 88F(1) includes pars (a), (b) and (c) as well as (d) and (e) it may well be that the Commission would not be acting on a correct principle if it were so to decide. But it must be recognized that the principle so adopted is one which relates, not to jurisdiction, but to the exercise of the discretion conferred by the sub-section. The various facts and circumstances relied upon by Kelleher J. as reasons for holding that he had no jurisdiction may lead him to conclude that no order ought to be made but that is a matter for the Industrial Commission. (at p202). We would therefore reject the appellant's submission that the contract is not one of the kind contemplated in the opening words of s 88F(1). The share-farming agreement provided directly for the employment of the first respondent in the dairy farming or dairying industry and, in accordance with the provisions of the agreement, he performed work in that industry. This, so it seems to us, is the end of the appellant's case in this Court. It was not suggested, nor could it be suggested, that if the agreement be held to fall within the opening words of the sub-section, there was an excess of jurisdiction on the part of the Commission in proceeding to hear and determine the respondent's claim for relief.

68 In Production Spray Painting & Panel Beating Pty Ltd v Newham (1991) 27 NSWLR 644, the Court of Appeal considered whether an agreement for the sale of a business was one "whereby a person performs work in an industry" for the purposes of s 88F of the 1940 Act. Priestley and Handley JJA observed at 657: In our opinion consideration of the section in light of these other provisions demonstrates that this Court was correct in Ex parte VG Haulage Services Pty Ltd in holding that a contract is only within the section if it has "an industrial colour or flavour" (at 87). It is not sufficient to establish jurisdiction that a contract "involves the provision of goods and services, with a consequent performance of work in an industry": Ex parte VG Haulage Services Pty Ltd (at 88) (our emphasis). The impugned contract, etc, therefore must directly, that is under or pursuant to its terms, provide for the performance of work in an industry. Accordingly the contrast drawn by this Court in Ex parte VG Haulage Services Pty Ltd and approved by the High Court in Stevenson v Barham is between a contract which leads directly to the performance of work in an industry on the one hand, and on the other a contract which does so only indirectly or in a remote or consequential manner. (further emphasis added)

69 The Court of Appeal concluded that the contract for the sale of the business was not within s 88F. Although the purchaser intended to work in the business, the work was not done "in accordance with the provisions of the agreement", was not "required" by the agreement, and did not "fulfil" the purchasers' contractual obligations to the vendor (at 657): see also Harris v Hammon (No 2) (1995) 59 IR 232 at 237 (where the Full Bench ( Hungerford and Hill JJ, Cullen J dissenting) found that an agreement for the sale of a business was not one whereby work was performed) and Booth v Kritikos Developments Pty Ltd (1995) 59 IR 298 at 303 (where Schmidt J found that an agreement which included the lease of a hotel was an agreement whereby work was performed). Whilst the contract or arrangement must lead directly to the performance of work in an industry that, of itself, means it has the requisite industrial character: see Stevenson v Barham (at 201). 70 It is now also settled that the words "whereby work is performed in an industry" in s 106 qualify the words "contract or arrangement" although not the phrase "any related condition or collateral arrangement". In Howitt v Retec Ltd , for example, Hungerford J considered an application to avoid a share agreement which was said to be collateral to a service agreement under which work was performed. His Honour stated at 255 that it was not essential that work was performed under the share agreement, so long as that agreement was collateral to the service agreement under which work was performed. Thus, so long as an arrangement is collateral to a contract or arrangement whereby work is performed in an industry it is within the jurisdiction of the Commission: see also Bell v Macquarie Bank Ltd (No 4) at 205 - 207. 71 In view of the conclusion reached as to Egis' motion and the above authorities it is arguable that the work the applicant alleged he performed for the Commonwealth was work in an industry; or was either collateral to a contract or arrangement with Egis whereby such work was performed or was part of an arrangement involving the three parties whereby such work was performed. 72 The applicant submitted, in response to the Commonwealth's additional assertions as to the construction of s 106 and that the arrangement it had with the applicant fell outside its confines, that they amounted to a contention that the arrangement between the Commonwealth and the applicant was undertaken in a governmental rather than a commercial capacity. However, none of the authorities relied upon by the Commonwealth supported this contention: see, for example Townsville Hospital Board v Council of the City of Townsville per Gibbs CJ at 288 - 289 and Bropho v Western Australia at 19, 22 - 23. Jacobsen v Rogers and Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation were to similar effect and supported the applicant's situation rather than detracted from it. It was also emphasised that, on the best view of the matter for the Commonwealth, it was too early to conclusively characterise the arrangement in the way in which the Commonwealth contended. 73 The applicant also made the following further submissions as to the authorities the Commonwealth referred to. In respect of Townsville Hospital Board v Council of City of Townsville , the question was whether the Board of Townsville Hospital enjoyed the privileges and immunities of the Crown when erecting a building with borrowed money. The question was answered in the negative. Gibbs CJ said (at 288 - 289): However, many functions formerly regarded as matters of private concern are now carried out by instrumentalities of government and the question whether the functions in question are traditionally or peculiarly governmental is likely to be increasingly unhelpful in deciding whether the body formed to carry out those functions enjoys the privileges and immunities of the Crown. However, if it matters, the provision of hospital services is not a traditional function of government, and is still regarded as a matter in which private enterprise as well as governments will play a part. 74 Further, that in the present case it was already clear that there was a commercial arrangement between the Commonwealth and Egis, that the applicant was engaged by Egis as its employee to work in furtherance of that commercial arrangement and that the directions given to the applicant by officers of the Commonwealth were given to him in his capacity as such an employee. It was also submitted that there was nothing in that context which would support any assertion that, as a matter of "construction", the applicant's employment contract or the arrangements collateral to it fell outside the reach of s 106. 75 As to the decisions in Bropho v Western Australia and Jacobsen v Rogers, it was argued that they did not support the Commonwealth's contention. For example, the passage in Bropho at 19 in referring to the historically different situation in Australia "where the activities of the executive government reach into almost all aspects of commercial, industrial and developmental endeavour" as rendering largely inapplicable the presumption that statutes did not bind the Crown, was against a ready acceptance of an exclusionary rule of the kind posited or proposed by the Commonwealth. Properly understood, these authorities were generally adverse to the Commonwealth's position. 76 Reliance was placed on the concession made by the Commonwealth that there was no authority located by it which gave direct support for the position it argued in the proceedings. It was submitted that the authorities relied upon, in any event, confirmed the concession. 77 In the circumstances, it is not necessary to deal with the Commonwealth's additional or further submissions beyond observing that the authorities relied on do not support the submission made. The applicant's submissions in response were essentially correct; for example, in noting that the authorities largely contradict rather than support the Commonwealth's approach. Similarly, the reliance on certain dicta from BNY Australia Limited v James and Gosper v Sawyer was also misplaced; the passages referred to do not, properly understood, stand for the proposition contended for. One matter is however plain. There is an issue between the applicant and the Commonwealth as to whether there was a commercial element to the relations between Egis and the Commonwealth. If it is, or becomes, a relevant consideration between the Commonwealth and the applicant, it might also become one between the Commonwealth and Egis, or vice versa. Whatever be the actual situation as to that matter, assuming possible relevance, it is certainly premature to deal with it because there is plainly insufficient material for that purpose. This observation serves to show that the Commonwealth's argument in this respect is significantly premature. On the various bases considered above, the Commonwealth's arguments must be rejected. 78 In summary, neither respondent has succeeded in making out a case for the orders it sought. Orders

79 Orders should therefore be made giving effect to the conclusions reached by formally dismissing the respondents' motions with costs to follow the event. It seems appropriate also to grant leave in two respects: to ensure provision is available to resolve any difficulty as to the respondents' respective share of the costs, and also to deal with any particular application arising from the leave granted to the Commonwealth. 80 The Court accordingly makes the following orders: 1. The first and second respondents' notices of motion are dismissed. 2. The first and second respondents shall pay the applicant's costs of and incidental to the notices of motion. 3. Leave granted to the first and second respondents in the event that the parties are unable to agree as to the respondents' liability inter se in respect of order 2. 4. Leave granted to the applicant to make such further application as to the costs of the second respondent's notice of motion as may be appropriate. 5. The application will be listed for further directions on a date to be fixed. __________________

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