Timothy Fox v GIO Australia Limited

APPLICANT: Mr G Hatcher of senior counsel SOLICITOR: Mr P Hayward Haywards Solicitors LEGAL REPRESENTATIVES: RESPONDENT: Mr J Phillips of counsel SOLICITOR: Mr D Sloan Ebsworth & Ebsworth

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

19 December 2002 Matter No. IRC 5966 of 1999

Application under Section 106 of the Industrial Relations Act 1996 re unfair contract.

1 This matter concerns a Notice of Motion which derives from proceedings in which Mr Timothy Fox ("the applicant") applied for relief in relation to a purported unfair arrangement pursuant to s106 of the Industrial Relations Act 1996 ("the Act"). The applicant, in addition to orders for consequential relief, sought orders in those proceedings that the arrangement under which he performed work for the respondent: (a) be declared unfair, harsh or unconscionable and contrary to the public interest; (b) be declared void in whole or in part; and (c) be varied to require the respondent to pay the applicant money that he might reasonably have anticipated upon the arrangement coming to an end. 2 It is necessary to recount the course of the proceedings in some detail before considering the applicant's Notice of Motion filed on 10 August 2001, which is the present matter for determination. As to that factual background I note that the Notice of Motion was supported by an affidavit of the applicant's solicitor, Ms Suzanne Barnes, which was filed on the same date. GIO Australia Limited ("the respondent"), together with the applicant, invited the Court to accept this affidavit as a recitation of the facts and I will do so. Background

3 The applicant filed a Summons for Relief on 29 October 1999 and, in accordance with s109 of the Act, the matter was allocated to Hungerford J for conciliation. A conciliation conference was convened on 26 July 2000 and each party attended, accompanied by a solicitor and counsel. During the conciliation conference the respondent contended that s200B of the Corporations Act 2001 ("the Corporations Act") prohibited it from making a payment to the applicant. Conciliation was consequently unsuccessful and Hungerford J issued a certificate to that effect.

4 The matter was reallocated to Glynn J on 29 July 2000 for hearing and determination. After two mentions, the matter was reallocated to Marks J due to difficulties obtaining a convenient hearing date. Following a directions hearing on 12 December 2000, his Honour adjourned the matter with liberty to apply on the basis that suitable hearing dates were available during May to July 2001. The parties were to confirm a date with his Honour's Associate by mid-February.

5 On 22 January 2001 Ms Barnes spoke to Mr Oakes, a partner of Minter Ellison, solicitors for the respondent, in relation to Mr Oakes's suggestion that the parties attend a second conciliation conference. Mr Oakes had assumed conduct of the matter for another partner of Minter Ellison, Mr Heddle. The conversation is reproduced from paragraph 11 of Ms Barnes' affidavit: 11. I telephoned Mr Oakes on 22 January 2001 and said to him words to the following effect: " We are willing to consider a second conciliation conference but we need to have some parameters around the discussions. The first conciliation conference was a total waste of time and I need to be able to assure my client that if there is a second conference it would not simply be a repeat of the first." He said to me words to the effect of:

"It is not an attempt to delay the matter. It is a bona fide attempt to reach agreement."

"We don't want to make an offer for strict legal reasons. We want an order of the Court because of the Corporations Law.

I think we can reach an agreement. Because the Corporations Law is strict we don't want anything that could suggest a pre-agreement or anything that indicates the arrangement is disingenuous. If ASIC ever investigated, we need to have done the right thing. I'm a new partner looking at the lowest risk route. We have accepted we have to go back to conciliation."

6 The respondent's solicitors then approached the Court, with the consent of the applicant's solicitors, seeking (and obtaining) a reallocation of the matter to Hungerford J. On 15 June 2001, the second conciliation conference was convened before his Honour. The applicant, in absentia in London, was represented by Mr B Cross of counsel and Ms Barnes, and the respondent was represented by Mr A Bell of counsel, Ms Kelleher, solicitor, and Ms Pearsall, an officer of the respondent.

7 Again, I will extract the paragraph from Ms Barnes' affidavit which refers to this stage of the proceedings: 16. At the commencement of the conference, Mr Bell said words to the effect of:

"On the last occasion GIO had a concern with Corporations Law issues. However, payments made pursuant to an order of the Court will fall within an exemption to the Corporations Law prohibition." 8 Offers and counter-offers were made until the parties agreed on a figure of "$265,000, to be treated as tax-effectively as possible". Paragraph 23 of Ms Barnes' affidavit described the conclusion of the conciliation conference as follows: 23. The Honourable Mr Justice Hungerford then said words to the effect of:

"I don't think consent orders under section 174 can be made for the payment of money unless orders are also made as to the avoidance or variation of the contract.

I suggest that the orders by consent be as follows: 1. the contract between the parties is declared void with effect from x date (being the commencement of employment or some other date) provided that all benefits thereunder already paid to the Applicant shall not be affected including payments made under the previous deed of release; 2. the Respondent to pay the Applicant $265,000."

Mr Bell of counsel interjected by saying words to the effect:

"Do the consent orders have to specify the amount or can they simply say it will be paid in accordance with a deed of release?"

The Honourable Mr Justice Hungerford responded with words to the effect of:

2. The Respondent to pay the Applicant an amount in accordance with the method of payment set out in the deed of release annexed hereto. 3. No order as to costs. 9 The parties then discussed the fact that the respondent would draft the deed of release and consent orders (having volunteered that it had already commenced drafting the deed of release) and Hungerford J noted the Court file to this effect: "Matter settled. Deed of Release. Listed 9:30am Friday 29 June 2001 for hearing to make consent orders."

10 On 29 June 2001 at approximately 9am Ms Kelleher telephoned Ms Barnes to advise that, at a board meeting of the respondent the previous night, the board passed a resolution rejecting the settlement agreement. No explanation was given to Ms Barnes for this resolution. Mr Bell and Ms Kelleher appeared before the Court on behalf of the respondent at 9:30am to advise the Court of their instructions, viz, the respondent would not enter into a deed of release and would not consent to any orders. Ms Barnes appeared on behalf of the applicant. Mr Bell suggested a reallocation of the matter to Marks J, which was resisted by Ms Barnes, and, following discussions in chambers between the parties and his Honour, the matter was adjourned to 18 July 2001.

11 Ms Barnes' affidavit refers to the content of those discussions in chambers as follows: 31. The Honourable Mr Justice Hungerford then adjourned the matter to his chambers. Mr Bell said words to the following effect:

" I have instructions not to enter into a deed and not to consent to orders of the Court. There is a residual Corporations Law issue."

The Honourable Mr Justice Hungerford then said words to the effect of:

"Wasn't there a settlement reached on the last occasion?"

Mr Bell reiterated his instructions were not to consent to any orders of the Court. I then said words to the effect of:

"But we agreed the form of the words of the consent orders at the conciliation conference. Documenting them was a mere formality. How can you say now you don't consent?"

"I am concerned there was a settlement on the last occasion based upon the fact that the Respondent had attended to the Corporations Law issue to its own degree of satisfaction. On that basis an offer was made and accepted, to be given effect under s174 by way of the wording that I gave to you. All that is missing from the orders is the deed to give effect to the orders."

" It is my understanding that the Court can only make orders under s174 with the consent of the parties. The Respondent has not consented and if it has consented, that consent has now been withdrawn."

12 On 13 July 2001 Ms Barnes and a partner of her firm, Mr Fisher, attended a meeting to discuss a Statement of Facts with Mr Oakes, Ms Kelleher and Mr Heddle at the offices of Minter Ellison. According to paragraphs 35 and 36 of Ms Barnes' affidavit, during this meeting Mr Oakes made the following comments: "On one view of it, a lot of material in your Affidavit is just baggage and doesn't go to proving that an agreement exists. The reality of it is that our instructions changed and that's just a fact of life." And:

"The Board has decided not to go ahead with the settlement and is not entering the deed for a range of reasons."

13 At the resumed hearing on 18 July 2001 argument between the parties centred on whether there was a binding settlement agreement and whether, in the light of that dispute, it was appropriate for the Court to issue a certificate of successful conciliation. Hungerford J delivered an ex tempore judgment that he was satisfied that, at the conciliation conference on 15 June 2001, the matter had been the subject of an agreement between the parties on terms noted by them. The fact that the respondent subsequently declined to execute a deed of release or consent to orders was irrelevant, and any certificate of unsuccessful conciliation would be contrary to the fact.

14 His Honour then issued a certificate of "result of conciliation conference" dated 18 July 2001 in the following terms:

1. Consent orders to be made, without admission of liability, pursuant to s106 and s174 of the Industrial Relations Act 1996 to give effect to the agreed terms of settlement.

2. The parties to execute a deed of release consequent upon the settlement reached to specify the terms of settlement and their implementation.

3. The agreed terms of settlement to be confidential as between the parties. Notice of Motion

15 The applicant filed a Notice of Motion on 10 August 2001 seeking the following orders: 1. A declaration that the proceedings herein were settled in conciliation proceedings before his Honour Justice Hungerford conducted pursuant to s109 of the Industrial Relations Act 1996, on 15 June 2001, in the terms of the consent orders proposed by his Honour Justice Hungerford which are set out in paragraph 23 of the Affidavit of Suzanne Melinda Barnes sworn on 9 August 2001 ("the Consent Orders").

2. An order that the Applicant and the Respondent comply with the terms of the Consent Orders.

3. The Respondent pay the Applicant's costs of and incidental to this Notice of Motion on an indemnity basis.

4. Such further or other orders as the Commission in Court Session considers appropriate.

16 The Notice of Motion was listed for hearing on 11 February 2002 and adjourned on the basis that it would proceed by way of written submissions. Mr G Hatcher of counsel (now senior counsel) appeared on behalf of the applicant and Mr J Phillips of counsel appeared on behalf of the respondent. On that date, as I have mentioned, counsel for both parties invited the Court to accept Ms Barnes' affidavit as a recitation of the facts. Mr Phillips further conceded that the respondent did not oppose the first order sought by the applicant in the Notice of Motion. Subsequent written submissions filed by the respondent raised the nature and extent of its concession of 11 February 2002. In the result, the matter was listed for (and proceeded to) a brief hearing on 5 March 2002. Mr Phillips confirmed that the respondent's concession as to the first order in the Notice of Motion should operate in the manner described below.

17 The "Consent Orders" in the first order were defined by reference to paragraph 23 of Ms Barnes' affidavit, but in that paragraph Hungerford J proposed four orders, the third of which amends the second. After some discussion on 5 March 2002, both parties agreed that the "Consent Orders" properly referred to the first, second (as amended by the third), and fourth orders referred to in paragraph 23. In effect, the second order would provide that the terms which had been agreed (payment by the respondent to the applicant of $265,000) would be reflected in a deed of release, as opposed to the actual form of the order itself.

18 Finally, in response to a question from the Court, the applicant, with leave, filed an Amended Notice of Motion on 9 April 2002 seeking the following additional order: 2A. An Order that the Respondent pay the Applicant $265,000 in accordance with the method of payment set out in the Deed of Release filed herein.

19 Leave was granted to proceed on the basis of the amended Notice of Motion.

20 The applicant's primary submission - that there was a binding settlement agreement, the respondent should comply with it, and the Court should make corresponding orders - is straightforward and it is really the respondent's submissions concerning two sections of the Corporations Act which give shape to the matters which require determination.

21 The relevant sections of the Corporations Act are sections 200B and 200H:

200B. Retirement benefits generally need membership approval

(1) Benefits in connection with retirement from board or managerial office

The following must not give a person a benefit in connection with that person's, or someone else's, retirement from a board or managerial office in a company, or a related body corporate, without member approval under section 200E:

(a) the company; (b) an associate of the company (other than a body corporate that is related to the company and is itself a company); (c) a prescribed superannuation fund in relation to the company.

Note 1: Sections 200F, 200G and 200H provide for exceptions to this rule. Note 2: Section 9 defines board or managerial office .

(1A) For an offence based on subsection (1), strict liability applies to the circumstance, that the benefit is in connection with the person's, or someone else's, retirement.

Note: For strict liability , see section 6.1 of the Criminal Code.

200H. Benefits required by law Subsection 200B(1) does not apply to a benefit given by a person if failure to give the benefit would constitute a contravention of a law in force in Australia or elsewhere (otherwise than because of breach of contract or breach of trust). It should be noted that section 200B must be read in the context of s200A(1): 200A. When benefit given in connection with retirement from office (1) For the purposes of this Division: (a) a benefit is given in connection with a person's retirement from an office if the benefit is given: (i) by way of compensation for, or otherwise in connection with, the loss by the person of the office; or (ii) in connection with the person's retirement from the office; and (b) giving a benefit includes: (i) if the benefit is a payment---making the payment; and (ii) if the benefit is an interest in property---transferring the interest; and (c) a person gives a benefit even if the person is obliged to give the benefit under a contract; and (d) a pension or lump sum is paid or payable in connection with the person's retirement from an office if the pension or lump sum is paid or payable: (i) by way of compensation for, or otherwise in connection with, the loss by the person of the office; or (ii) in connection with the person's retirement from the office; and (e) retirement from an office includes: (i) loss of the office; and (ii) resignation from the office; and (iii) death of a person at a time when they hold the office.

22 The following definition in s9 is also relevant: "law" of a State or Territory means a law of, or in force in, the State or Territory.

Note: This definition does not affect the meaning of law when used otherwise than in a phrase such as "law of a State or Territory". Examples of such a use is in the phrase "any provision of any law" in section 100A and the phrase "law of the Commonwealth" in section 156.

23 The application of the Corporations Act is clearly a determinative issue, and it is instructive to review firstly the submissions which relate to each relevant section. Additional submissions by both parties assumed that the respondent was correct in its interpretation of the Corporations Act, and may not be necessary to decide.

24 Mr Phillips submitted that s200B clearly applied to the respondent, being a company, and, as a director of the respondent, the applicant fell within the definition in s9 of "board or managerial office". This was not contested by the applicant.

25 The respondent further submitted that the applicant's departure from the respondent was a "retirement", as s200A defines that word to include "loss of the office". Again, this was not contested by the applicant.

26 It is when one examines the other requirements of the section that the matter becomes clouded: the respondent must not give the applicant a benefit in connection with his loss of office without member approval.

27 The respondent submitted that payment of money by it to the applicant in settlement of his proceedings under s106 of the Act would breach this prohibition. This was because the proceedings under s106 were, in essence, a claim for benefits incidental to the applicant's employment which he was not paid upon termination.

28 The respondent further relied upon the definition in s200A(1)(a) that a benefit is given in connection with a person's retirement from an office if the benefit is given: (i) by way of compensation for, or otherwise in connection with the loss by the person of the office; or (ii) in connection with the person's retirement from the office.

29 According to the respondent, a payment made in settlement of the applicant's proceedings under s106 would be a payment by way of compensation for the termination of his employment. The respondent cited the Macquarie Dictionary definition of compensation: "something given …as an equivalent for loss".

30 Alternatively, the respondent submitted that such a payment would be "in connection with" the applicant's loss of office or retirement. In addition to the Macquarie Dictionary definition of "connection" ("association, relationship") the respondent cited the decision of Wilcox J in Cummings v Claremont Petroleum NL (1992) 9 ACSR 583, which was subsequently affirmed by the Full Court, to the effect that the best approximation of the meaning of "in connection with" was "having to do with".

31 In relation to s200B, the applicant submitted that any payment made pursuant to the consent orders sought would be a payment in settlement of proceedings brought pursuant to s106 of the Act, which, following Beahan v Bush Boake Allen Australia Limited (1999) 47 NSWLR 648, could not be proceedings brought in relation to the dismissal of the applicant. Accordingly, such a payment would not be a payment "in connection with the applicant's loss of office". 32 The applicant further submitted that s200B did not enact an express prohibition, rather a prohibition against acting without member approval. There was no evidence that the respondent had made any attempt to meet this requirement, which it would be bound to do if s200B did in fact apply. The respondent did not make any reply to the submission that the allowance for member approval qualified the prohibition, nor offer any explanation as to why it entered into a settlement agreement without ensuring (on its own argument) that requisite steps of that kind had been taken.

33 Section 200A(1)(b)(i) provides that, in the case of a payment, "giving a benefit includes … making the payment". Neither party directly referred to this definition, or to interpretational issues which may arise from its temporal implications. In oral submissions and further written submissions, the respondent asserted (in the context of its insistence that s200B enacted an express prohibition) that s200B impliedly prohibits an agreement to pay, which, in turn, meant that the settlement agreement was void.

34 Although the applicant did not make any submissions in relation to s200H, the issue was raised squarely (and, in my view, correctly) by the respondent. Without any clear explanation or justification, the respondent asserted that s200H did not apply in this case. Written submissions offer no insight, and in fact anticipate that a Court order may satisfy the exception: at paragraph 22 of submissions filed on 18 February 2002, the respondent stated in relation to s200H: This exception is not open to the Respondent as a failure by the Respondent to pay the Applicant is not contrary to the law. There is as at the date of the hearing of this motion neither a Court order nor a statutory requirement for the Respondent to make the payment sought.

35 The only basis for the respondent's rejection of s200H which can be gleaned from oral submissions is the following argument: s200B enacts an express prohibition; it therefore impliedly prohibits the agreement to pay. It was contended that the settlement agreement was therefore void and accordingly the Court had no power under s174 of the Act to make consent orders (such a power requiring a valid settlement). In the result, it was argued, there could be no orders to satisfy s200H, the exception to s200B. It is perhaps a fine point, but an important one to make: the preceding argument relies upon the assertion that s200H cannot apply because no order will come into existence (because the Court is precluded from making it as an issue of power under s174), rather than relying upon any limitation in the operation of s200H per se (such that an order under s106 would not enliven the operation of that section).

36 This point is well illustrated by the following oral submission of the respondent: ... Paragraph 24 of our submissions identifies the penalty provisions in relation to both the applicant and respondent but of course there is the other provision there which is section 200H we have referred to and that is (read). Now we do not get to that because you cannot make the order in relation to getting under section 200H because you do not get there because of section 174 because 174 is only triggered by the settlement on conciliation and one goes back to the question of settlement and we are forbidden to make the settlement and we are forbidden to pay the money. And the following concession: ... but one would clearly see that if an order was made after a concluded hearing that would not be in breach of 200B, it is a question of whether we have the right to agree to it. If we are ordered to pay it is a different matter.

Subsidiary submissions - s200G, illegality, s174 of the Act and unconscionability

37 The parties also referred to an additional exception to s200B, namely s200G, but no evidence was adduced to support or refute its application and I do not intend to consider it further in that light, having come to the view that sections 200B and 200H are determinative. In fact, I have reservations as to whether s200G, which relates to payments for past services, would apply in the present circumstances which arise from the termination of an arrangement which is alleged to have been unfair within the meaning of s106 of the Act.

38 The submissions in this matter generally raise issues of statutory interpretation, the nature of a claim brought under s106 of the Act, illegal contracts and the power conferred by s174 of the Act, not all of which must be decided to determine this matter. In addition, the applicant contended that the respondent's reliance upon the Corporations Act to resile from the settlement agreement was unconscionable in view of its repeated assurance to both the Court and the applicant that the Corporations Act would not present a problem.

39 Neither party made any submissions in relation to implied authority although the Corporations Act contains the following sections: 126. Agent exercising a company's power to make contracts

(1) A company's power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company's express or implied authority and on behalf of the company. The power may be exercised without using a common seal.

(1) A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.

129. Assumptions that can be made under section 128

(3) Officer or agent A person may assume that anyone who is held out by the company to be an officer or agent of the company: (a) has been duly appointed; and (b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company. …

40 Without determining the matter in the absence of submissions, I simply note that there would appear to be persuasive arguments for the application of all three sections in this matter. In particular, I anticipate that it would be reasonable to assume that a barrister and solicitor, accompanied by an officer of a company, who appeared on behalf of that company at a conciliation conference before a judicial member, and who proceeded to conclude a settlement agreement, were acting in accordance with the company's authority.

41 Counsel for neither party referred the Court to a judicial decision involving the interpretation of s200H, nor have I found such authority. Its meaning, then, falls to me to determine on the ordinary principles of statutory interpretation as discussed below.

42 The principles of statutory interpretation were discussed in Capral Aluminium Limited v WorkCover Authority of New South Wales (2000) 49 NSWLR 610 at [42] and [43]: 42 … A useful starting point in terms of recent authorities is the judgment of the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 - 382, where McHugh, Gummow, Kirby and Hayne JJ said:

69. The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute (See Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 213, per Barwick CJ). The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole" ( Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320, per Mason and Wilson JJ. See also South West Water Authority v Rumble's [1985] AC 609 at 617, per Lord Scarman , "in the context of the legislation read as a whole"). In Commissioner for Railways (NSW) v Agalianos ((1955) 92 CLR 390 at 397), Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed ( Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590 at 597; Minister for Lands (NSW) v Jeremias (1917) 23 CLR 322 at 332; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312, per Gibbs CJ; at 315, per Mason J; at 321 per Deane J). 70. A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals ( Ross v The Queen (1979) 141 CLR 432 at 440, per Gibbs J). Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions (See Australian Alliance Assurance Co Ltd v Attorney-General (Q) [1916] St R Qd 135 at 161 per Cooper CJ; Minister for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565 at 574, per Gummow J; 116 ALR 54 at 63). Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other" ( Institute of Patent Agents v Lockwood [1894] AC 347 at 360 per Lord Herschell LC). Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. 71. Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision ( The Commonwealth v Baume (1905) 2 CLR 405 at 414, per Griffith CJ; at 419, per O'Connor J; Chu Kheng Lim v Minister for Immigration Local Government & Ethnic Affairs (1992) 176 CLR 1 at 12 - 13, per Mason CJ). In The Commonwealth v Baume (1905) 2 CLR 405 at 414 Griffith CJ cited R v Berchet (1688) 1 Show KB 106 [89 ER 480] to support the proposition that it was "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent".

43 See also the discussion in the recent Full Bench judgment in Drake Personnel Limited t/a Drake Industrial v WorkCover Authority of New South Wales (Inspector Ch'ng) (1999) 90 IR 432 at 445 - 446, where it was said: ... the primary task of the court is to ascertain the intention of parliament by examining the language of the legislation itself. If the terms of the legislation are clear, so is the duty of the court. If, however, the legislation is ambiguous or uncertain the court must decide between contending interpretations. In doing so, the court should prefer the construction which best accords with the evident purpose of parliament in enacting the legislation. Relevant considerations include the need to avoid a construction the consequences of which are manifestly inconvenient, absurd, irrational or capricious or which would result in serious injustice: see, for example, Clarke v Bailey (1993) 30 NSWLR 556 at 566. For example, in their judgment, in Cooper Brookes (Wollongong) Pty. Limited v. Commissioner of Taxation (Cth) (1981) 147 CLR 297, Mason J (as he then was) and Wilson J observed (at 321):

"Quite obviously questions of degree arise. If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended."

Gibbs CJ, in the same case (at 304-305), observed that the object in interpreting a statute was "to see what is the intention expressed by the words used", and held:

"However, if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust. To say this is not to insist on too literal an interpretation, or to deny that the court should seek the real intention of the legislature. The danger that lies in departing from the ordinary meaning of unambiguous provisions is that " it may degrade into mere judicial criticism of the propriety of the acts of the Legislature", as Lord Moulton said in Vacher & Sons Ltd. v London Society of Compositors ([1913] A.C. 107, at p.130); it may lead judges to put their own ideas of justice or social policy in place of the words of the statute. On the other hand, if two constructions are open, the court will obviously prefer that which will avoid what it considers to be inconvenience or injustice. Since language, read in its context, very often proves to be ambiguous, this last mentioned rule is one that not infrequently falls to be applied."

43 It should be noted that s5C(1) of the Corporations Act provides that the Acts Interpretation Act 1901 (Cth) (as in force on 1 November 2000) applies to the Corporations Act. For the purposes of this determination, the relevant section of the Acts Interpretation Act 1901 (Cth) is s15AA: 15AA. Regard to be had to purpose or object of Act (1) In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.

44 The decision of this Court in Beahan v Bush Boake Allen Australia Limited is useful in this context. The Court held (at 687): We were helpfully assisted by counsel as to the proper approach to statutory construction and to the method which now prevails, particularly by reference to the purposive and non-literal approach: see e.g. Kingston v. Keprose Pty. Ltd. (1987) 11 N.S.W.L.R. 404 per McHugh at 421-424. Also, we were referred to the judgment of Spigelman C.J. in the Court of Criminal Appeal in R. v. Young [1999] N.S.W.C.C.A. 166 which represented the most recent exposition in the State of the approach to statutory construction by reference to the acknowledged authorities. In addition, we have had in mind s.34 of the Interpretation Act 1987 as to the use of extrinsic material in the interpretation of a statute and, in particular, the provisions of sub-s.(2)(e), (f) and (h), respectively as to any explanatory note or memorandum relating to the Bill for the Act, the speech made to a House of the Parliament by the Minister moving that the Bill be read a second time and the official record of debate on that occasion. However, for present purposes we think it sufficient to attempt to summarise the position by reference to what the learned editors said in Halsbury's Laws of Australia (Vol. 24 at par.[385-145]), as follows : Intention of legislature. The function of the court is to construe, by the application of accepted canons of construction, the intention of the legislature through the words used in a statute. This literal approach has been described as the fundamental rule of interpretation to which all others are subordinate. With the adoption of such an approach to interpretation, the rejection of the grammatical sense is only permitted if the results lead to an absurdity or inconsistency. While the literal interpretation of the words has at times been expressed in the past more absolutely than in recent times, the more recent approach has been for the courts to ascertain the intention of the legislature through the object or purpose underlying the legislation and to ascertain the meaning of the words in light of that object or purpose. Such an approach consequently allows the court far more latitude in departing from the literal or grammatical meaning and extends to any situation where the literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy that may be discerned from those provisions. Such an approach has also been supported by legislative provisions in most Australian jurisdictions.

However, within these general parameters, a court must not refuse a construction: (1) merely because it results in an inconvenient result or produces anomalies; (2) because the court disapproves of the provision; (3) by disregarding and treating it as a dead letter; or (4) by disregarding it because of unreasonableness.

45 The interpretation of the Victorian equivalent of s15AA of the Acts Interpretation Act (Cth), s35(a) of the Interpretation of Legislation Act 1984 (Vic), was discussed by Dawson J in Mills v Meeking (1990) 169 CLR 214 at [19]: [T]he literal rule of construction, whatever the qualifications with which it is expressed, must give way to a statutory injunction to prefer a construction which would promote the purpose of an Act to one which would not, especially where that purpose is set out in the Act. Section 35 of the Interpretation of Legislation Act must, I think, mean that the purposes stated in Pt 5 of the Road Safety Act are to be taken into account in construing the provisions of that Part, not only where those provisions on their face offer more than one construction, but also in determining whether more than one construction is open. The requirement that a court look to the purpose or object of the Act is thus more than an instruction to adopt the traditional mischief or purpose rule in preference to the literal rule of construction. The mischief or purpose rule required an ambiguity or inconsistency before a court could have regard to purpose: Miller v. The Commonwealth (1904) 1 CLR 668 at p 674; Wacal Developments Pty. Ltd. v. Realty Developments Pty. Ltd. (1978) 140 CLR 503 at p 513. The approach required by s.35 needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction. Reference to the purposes may reveal that the draftsman has inadvertently overlooked something which he would have dealt with had his attention been drawn to it and if it is possible as a matter of construction to repair the defect, then this must be done. However, if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 requires a court to construe an Act, not to rewrite it, in the light of its purposes.

46 The modern approach to statutory interpretation insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by reference to legitimate extrinsic material such as explanatory memoranda and law reform reports, one may discern the statute was intended to remedy: CIC Insurance Ltd v Bankstown Football Club (1997) 187 CLR 384 at 408.

47 In Langan v Ceramiclab Pty Limited (2000) 97 IR 80 the Full Bench of this Court referred to the need to interpret provisions in context at [13]: ...However, the submissions of the applicant earlier referred to are subject to another important consideration arising from the need to interpret the subject provisions in context. That is, the need, in appropriate cases, to interpret a word or phrase on the basis that its meaning is to be defined from its context. See, for example, Pearce and Geddes Statutory Interpretation in Australia , 4th edition, 1996, at page 99: [4.14] Although usually stated separately, the noscitur a sociis rule reflects the same philosophy as the general approach of reading an Act as a whole. When writing, a person assumes that a reader will not read the document word by word but will look at whole phrases or sections. Stamp J in Bourne v J Norwich Crematorium Ltd [1967] 1 WLR 691 at 696 put it thus:

Sentences are not mere collections of words to be taken out of the sentence, defined separately by reference to the dictionary or decided cases, and then put back again into the sentence with the meaning which one has assigned to them as separate words, so as to give the sentence or phrase a meaning which as a sentence or phrase it cannot bear without distortion of the English language.

See also Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 376... 48 Further, I note that the principles of construction embodied in the Latin expressions ejusdem generis and noscitur a sociis favour the construction of general words by reference to more particular matters dealt with in the same provision.

49 Turning to the construction of s200H of the Corporations Act, the obvious initial question to be answered is whether an order made pursuant to s174 of the Act (leaving aside the respondent's submissions as to the Court's capacity to make such an order) would be "a law in force in Australia". It may then be necessary to consider the respondent's submissions in relation to s174.

50 The phrase is not defined in the Corporations Act. As I have already noted, "law" is defined as "law of, or in force in, the State or Territory" but only when used in the phrase "law of a State or Territory", which does not assist the interpretation of s200H.

51 The first thing to observe is the wide ambit of the phrase and to note that its common usage is not restricted to acts of Parliament but includes the common law - see for example Lander and Anor v Whitbread and Ors [1982] 2 NSWLR 530 at 532 and Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155 at 165. Indeed, subject to the specific qualification for breaches of contract or trust, the whole scope of the section is very wide: not only conceptually ("law in force") but geographically ("in Australia or elsewhere").

52 It is worth noting the decision of Gibbs CJ, Mason, Brennan and Deane JJ in Kirmani v Captain Cook Cruises Pty Ltd [No 1] (1985) 159 CLR 351 that the phrase "law of the Commonwealth" in s103 of the Navigation Amendment Act 1979 meant the law in force in the Commonwealth and not laws within the competence of the Commonwealth Parliament. At 363, Gibbs CJ observed: The expression "law of the Commonwealth" in s. 103 is aptly used to refer to the law of the Australian nation, or to the law in force within Australian territory, but it would be straining language to give it the meaning of the law which deals with matters within the scope of the Commonwealth's legislative power.

53 Similarly, in the case of s200H, it would be straining language to give it a meaning which excluded court orders, particularly when one has regard to the general breadth of the section and to the particular qualification at the end of the section: "(otherwise than because of breach of contract or breach of trust) ". This approach is consistent with the need to consider the statute in context (see CIC Insurance Ltd v Bankstown Football Club).

54 If the legislature considered it necessary to exclude contravention of law by virtue of breach of contract or breach of trust, it must follow that the phrase "a law in force in Australia" encompasses a broader body of laws, rules and principles governing the affairs of the Australian community than those found in statutes or the common law. Court orders form a natural subset of such a broader body of laws.

55 If one looks to the purpose behind the section of the Corporations Act regulating termination payments, it is clear that s200B seeks to counter the obvious potential for abuse by those who control a company in relation to what are colloquially known as "golden handshakes". The section is virtually unchanged from its predecessor, s200B of the Corporations Act 1989, and the Explanatory Memorandum to the earlier Act which provides a discussion of the section (at para 858): In order that shareholders' rights are not prejudiced by the giving of the benefit, particulars of the proposal must be disclosed to the members and be approved by the company in general meeting.

56 There is no commentary on the precursor to s200H.

57 The mechanism for controlling the potential for abuse is adroit - since it is the shareholders who are exposed to the most direct loss, what is required to authorise such a payment is their informed consent. Classes of payment which have to be made (by law: s200H), which would be reasonable to make (proportionate termination payments: s200G), or which should be made (damages for breach of contract etc: 200F) do not require shareholder consent because they do not exhibit the same potential for abuse. Clearly, a balance has been struck between regulating questionable payments and allowing acceptable transactions and mandatory payments to proceed unhindered. It would be incongruous indeed were parliament to provide by s200F(a)(ii) an exception to s200B for genuine payments by way of damages for breach of contract (presumably made without the impetus of Court compulsion) but not for payments made pursuant to Court orders.

58 In summary, there is no reason, either as a matter of literal interpretation, or in order to further the purpose of the Corporations Act, to restrict the unfettered language of s200H to exclude court orders, and even less reason to exclude a subset of court orders, namely consent orders. Indeed, the respondent assumed that court orders (albeit after a contested hearing) would, in fact, come within the scope of s200H. The respondent did infer, on occasion, that consent orders, as distinct from orders made after a contested hearing, were in some way questionable. Although it is not strictly relevant to my decision in relation to the interpretation of s200H, I consider that any such suggestion is erroneous and will explain why.

59 No reason was advanced by the respondent for its inference, but a possible basis for the distinction would be the potential for directors and like office holders to collude with the board to receive an unmeritorious payment by commencing sham proceedings to achieve the desired consent orders. To impute such a convoluted intention to parliament without anything to substantiate it, in order to justify an interpretation which constrained the broad, plain words of a statute, would be wrong.

60 This is particularly so when one considers two factors. Firstly, the making of any such consent orders would be within the discretion of the relevant court. Secondly, such an interpretation would undermine the many legislative schemes designed to encourage conciliation and the settlement of disputes. An interpretation which demanded the expense, inconvenience, delay and public resource of a contested hearing, notwithstanding a genuine desire and agreement between the parties to settle the dispute, and therefore should not be adopted in the absence of clear language requiring such an approach, particularly when, as I have mentioned, parliament has already made an exception for "genuine payments for breach of contract".

61 In conclusion, I consider that, if the Court made an order in accordance with s174 of the Act that the respondent should pay the applicant a sum of money, failure by the respondent to comply with that order would constitute a contravention of a law in force in Australia so that s200H would operate. Thus, it is to s174 of the Act that I must turn to evaluate the respondent's submissions.

62 Section 174 of the Act is in the following terms: 174. Powers when application settled by conciliation

If a matter that is the subject of an application to the Commission under this Act is settled by conciliation, the Commission may: (a) dismiss the application, or (b) make an order on the agreed terms for settlement.

63 There was no dispute as to the agreed terms for settlement, as I have noted earlier, and indeed the respondent does not oppose the first order sought by the applicant, namely a declaration that the proceedings were settled in the conciliation before Hungerford J in terms of the consent orders proposed by his Honour. This would appear to trigger s174, and, in particular, empower the Court, in the exercise of its discretion, to make an order on the agreed terms for settlement.

64 The respondent argued that it does not. In a finely drawn argument, hinging upon the meaning of the word "settlement", the respondent has submitted that s174 requires a "settlement in its purest form" and will not operate if the settlement is for some reason "invalid". The respondent submitted that the settlement under consideration was "invalid" or "void". On 5 March 2002 Mr Phillips expressed the respondent's submissions thus: Your powers really go to section 174 of this Act, the subject of the powers being crystallised by the settlement at conciliation and you are asked, in effect, to make an order in accordance with s200B, make an order on the agreed terms of settlement. That then goes to the question is there settlement, and we say that there cannot be a settlement, notwithstanding what we agreed to at the time, because we had no power to make the agreement so that your powers are contingent upon there being a settlement in its purest form.

65 I will proceed on the basis of the final submissions for the respondent, outlined above, although they conflict with the following earlier written submissions, filed 18 February 2002 (at paragraph 8): Harvey v Phillips (1956) 95 CLR 235 can be distinguished as a case to do with whether a signed consent order can be impeached on the basis of the invalidation of the underlying agreement. In the instant case, there are no consent orders. The relevant issue is whether the Commission should exercise its discretion not to enter consent orders when the effect of doing so would be to put the Respondent into breach of s.200B. It does not matter whether the underlying agreement is ultimately held to be "valid" in the sense contended for by the Applicant (which is not admitted).

66 I note at the outset of this analysis that the respondent's submissions questioned the power of the Court in relation to s174, but raised no issue as to jurisdiction.

67 There is no definition in the Act to assist the interpretation of s174, nor has there been any judicial consideration of the section in this light. In a similar vein to the forgoing interpretation of s200H of the Corporations Act the starting point should be s33 of the Interpretation Act 1987 (NSW): 33. Regard to be had to purposes or objects of Acts and statutory rules In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object. Which directly leads to s3(g) of the Act: 3. Objects The objects of this Act are as follows: (a) to provide a framework for the conduct of industrial relations that is fair and just, …. (g) to provide for the resolution of industrial disputes by conciliation and, if necessary, by arbitration in a prompt and fair manner and with a minimum of legal technicality, …

68 Judicial consideration of settlements within the scheme of the Act does not benefit the respondent: as a general proposition, consonant with the objects of the Act quoted above, this Court has been most reluctant to allow a party to resile from a settlement willingly entered into. Dr Payne v The University of Sydney and Anor [2000] NSWIRComm 102 and Smarzak v Grimes Management Services Pty Ltd [2000] NSWIRComm73 are two such recent cases. In Dr Payne v The University of Sydney, Schmidt J stated at [94]: 94 The Court cannot overlook the important public interest in parties adhering to the bargains which they make in settlement of proceedings which they have brought, thereby bringing litigation to an end. This must especially be the case when one side of the bargain has acted in accordance with the agreement reached and the other has benefited as a result. That was plainly the case here, where Dr Payne himself sought payment of long service leave in advance in accordance with that agreement, before he sought to repudiate it. Here, it cannot be overlooked that the bargain was made during a second attempt at conciliation before the Court, in circumstances where the matter was otherwise listed for hearing, where the all parties were legally represented and where the Court was informed of the settlement reached and then also acted in accordance with that advice.

69 Here, as in Dr Payne v The University of Sydney, the bargain was made during a second attempt at conciliation before the Court (which was agreed to in lieu of a hearing date), where both parties were legally represented and where the Court was informed of the settlement. Further, (albeit for different reasons) the public interest is again especially concerned, the matter involving more than the simple adherence to a settlement (important in itself, as noted by Schmidt J): the respondent specifically declared to the applicant and to the Court, immediately before the settlement, that it was satisfied as to the very point upon which it now seeks to rely to invalidate the settlement.

70 The importance of adherence to undertakings given as between parties and to the Commission was referred to by the Full Bench of this Court in Broken Hill Chamber of Commerce and Ors and Construction Forestry Mining and Energy Union (New South Wales Branch) [2002] NSWIRComm 244 in the context of an award. The Full Bench noted at paragraph [20] that such an agreement should not be departed from lightly, and further expressed the reluctance of the Court to facilitate such a departure, particularly where such a departure would be apposite to the Commission's mandate as provided in s3 of the Act.

71 Nor is the respondent assisted by recent authority on the interpretation of statutes conferring powers and jurisdiction upon courts. In Crown Employees' (Teachers in Schools and TAFE and Related Employees) Salaries and Conditions Award (2000) 102 IR 202 at [52] the Full Bench of this Court referred to the decision of the High Court in Australasian Memory Pty Ltd v Brien [2000] HCA 30: … As was stated recently by the High Court of Australia in Australasian Memory Pty Ltd v Brien [2000] HCA 30 at 17 (applying Shin Cobe Maru Empire Shipping Co Inc (1994) 181 CLR 404 at 421) it is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words. …

72 In my view, it would do some violence to the terms of the section to accept the respondent's interpretation. There is nothing in the section to qualify the condition which gives rise to the Court's power: all that is required is that a matter is settled by conciliation. In interpreting the section, particular regard should also be had to the statutory context of the section, and to the stated objects of the Act extracted above and discussed in the context of recent decisions concerning settlements and undertakings. Section 174 is part of a statutory scheme which emphasises conciliation and settlement, both generally (for example, ss86, 133, 146(2)(a) and 3(g)) and in particular: s 109.

73 Further, it must be noted that s174 provides a discretion, and this potential flexibility, rather than an interpretation which is not suggested on the face of the provision, and which runs contrary to the stated objects of the Act, provides the appropriate mechanism to consider and determine issues such as the validity or "illegality" of any settlement agreement.

74 Finally, I discuss the unconscionability of the respondent's conduct below in the context of the exercise of discretion under s174. Such conduct also militates against the interpretation of s174 urged by the respondent: see, by analogy, the decision of Lloyd J in The Firm (Australia) Pty Ltd v South Sydney Council [1999] NSWLEC 5 at paragraph [7]: 7. Mr Hawkes also submits that any unlawful use must be ignored. He cites a number of authorities, including Pearce and Geddes: Statutory Interpretation in Australia (1996) 4th Edition, Butterworths, at 43 for the proposition that the courts will resist strongly an interpretation of an Act that will permit a person to take advantage of his or her own wrong. He refers to a number of cases involving existing use provisions in which the lawfulness of the existing use was held to be a necessary element in order to enable the continuance of that use (in particular Bourne v Marrickville Municipal Council (1953) 19 LGR (NSW) 218, Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1 at 26, 26 LGRA 437 at 456). As with Mr Hawkes' first submission, these are settled propositions which I also accept as applying in this case.

75 In conclusion, for the reasons of interpretation and authority outlined above, I reject the respondent's submission that pursuant to s174 the Court does not have the power to make consent orders in relation to a matter settled by conciliation in the absence of a settlement "in its purest form". It is not necessary for me to consider the circumstances in which a court may, as a matter of discretion, decline to make consent orders for reasons of "illegality" because, in my view, (as I will discuss below) the respondent has failed to establish that s200B of the Corporations Act applies.

76 As to the exercise of discretion under s174, the applicant submitted that the respondent's reliance upon the Corporations Act to resile from the settlement agreement was unconscionable in view of its repeated assurance to both the Court and the Applicant that the Corporations Act would not present a problem. As foreshadowed, in my view, the submission has merit, and would be relevant to the exercise of any discretion. In addition, the Court should have regard to the failure by the respondent to offer any evidence or explanation in relation to its apparent failure to take any steps to seek member approval, despite the fact that this would cure the "illegality" which so agitated it. Instead, to its benefit and to the detriment of the applicant, it has sought to rely upon its own failure to attempt to comply with corporate regulation to resile from a settlement willingly entered into with the benefit of legal advice. In view of the respondent's conduct, its submission that the Court, in its discretion, should refrain from entering consent orders on the basis that to do so would be to render the respondent in breach of s200B, is insupportable. All factors point in favour of the exercise of discretion to give effect to the settlement agreement to prevent an unreasonable and unconscionable result. Section 200B

77 The critical flaw in the respondent's submissions concerning s200B relates to the precise conduct which is restricted. As extracted earlier, s200B provides that a company must not "give a person a benefit ..." without member approval, and s200A(1)(b)(i) contains the following applicable definition: (b) giving a benefit includes: (i) if the benefit is a payment---making the payment; and (ii) if the benefit is an interest in property---transferring the interest; (c) …

78 Despite questions from the Court as to how a contravention of s200B could arise before payment was made, neither party referred to this definition or addressed the interpretational issues thereby raised.

79 I have already commented on the manner in which s200B requires at least an agreement in principle or proposal to present to the members for approval. The definition of "giving a benefit" strengthens my view that it is not until a company actually makes a payment (or otherwise gives a benefit) that any transgression occurs. Otherwise, it could always be asserted that the company intended to seek member approval. It is only once the benefit has been given that it is clear that the company did so without approval.

80 Both limbs of the definition of "giving a benefit" refer to acts which occur in the present, not to acts which are to occur in the future, and, unsurprisingly, this accords with the present tense of the verb "to give" used in s200B itself. The Australian Concise Oxford Dictionary (1992) 2ed defines "give" as (inter alia) "transfer the possession of freely; hand over as a present". Reinforced by the use of the unambiguous words "making" and "transferring" (which denote an actual transaction or its completion) in the two-limbed definition in s200A(1)(b), this dictionary definition of "give" clearly requires more than a mere agreement to give; each definition (statutory and dictionary) refers to a concrete act, as distinct from a promise to do something. Clearly, it is the transaction itself which is intended to be caught.

81 Section 200A(1)(b) describes subsections (i) and (ii) as being "included" in the definition of "giving a benefit". The Full Bench of this Court considered the meaning of "includes" as a general matter of statutory construction in Campbells Cash and Carry Pty Ltd v National Union of Workers, New South Wales Branch (No.2) (2001) 53 NSWLR 393 citing at paragraph [14] with approval the following passage from the first instance decision of Wright J, President, in Storeworkers - Campbells Cash and Carry Pty Limited (NSW), NUW (NSW Branch) Award 2000 (No 2) [2001] NSWIRComm 53 at [19]: The usual construction of the word "includes" or the word "including" is that it is intended to be read as a word of extension (compare R v Holmes; Ex parte Public Service Association of New South Wales (1977) 140 CLR 63 at 72 - 73) but that does not necessarily mean that all of the areas or concepts following the use of the word "includes" must involve an extension in meaning. Some of the relevant words may be mere examples. However, the usual approach adopted when the word " includes", or one of its variants, is used, is that amongst the words following it are words which extend the meaning of the term or terms defined.

82 In s200A(1)(b) "includes" extends the preceding word "benefit": both examples given after the word "includes" are examples of "benefits". As Wright J noted above, succeeding words may be examples, not concepts subject to extension in meaning. It would not be appropriate in the context of the use of the present tense in both s200B and s200A(1)(b) to construe "includes" to extend the words "making the payment" in s200A(1)(b)(i) to include "or agreeing to make the payment". Although the base meaning of "giving a benefit" can be expanded by adding examples of benefits, to introduce the new concept of "agreeing to make a payment" changes the meaning of the definition completely.

83 Even if, contrary to my interpretation, s200A(1)(b)(i) were construed to include "or agreeing to make the payment", I do not consider that s200B would apply to the present case. The settlement agreement was an agreement to request the Court, in its discretion, to make orders which had been agreed upon. It would be stretching the interpretation of s200A(1)(b)(i) to an unreasonable extent to apply to a promise to make a payment, subject to the act of a third party which is completely outside the control of the two parties to the agreement: in this case, the exercise of a court's discretion.

84 It follows from the application of s200B as interpreted to the present circumstances that, no payment having yet been made, in the event that the applicant is successful on his Notice of Motion, there will be no transgression of the Corporations Act. Orders would be made in accordance with the settlement agreement, there being no reason to exercise the Court's discretion otherwise, and payment would then be made pursuant to orders under the protection of s200H.

85 This aspect of s200B, both by the operation of the section per se and in conjunction with s200H, determines the matter in favour of the applicant. However, as another matter relating to s200B was also raised in argument, I will touch on it briefly: whether any payment would be "in connection with" the applicant's loss of office. It is not a matter which requires resolution in view of my conclusion above that s200B does not apply in the absence of a payment, but for the reasons I will now discuss it casts further doubt on the respondent's position.

86 Neither "connection" nor "in connection with" are defined in the Corporations Act although the respondent cited the decision of Wilcox J in Cummings v Claremont Petroleum, which was subsequently affirmed by the Full Court of the Federal Court, to the effect that the best approximation of the meaning of "in connection with" was "having to do with".

87 Although it is undeniably a broad expression, the subject of considerable judicial consideration in many contexts, the expression "in connection with" does have a limit. Some things will not be "in connection with" others. Thus, in R v Isaac & Ors; ex parte Transport Workers' Union (1985) 159 CLR 323, Gibbs CJ observed at 333: The words "in connexion with" in an eligibility rule connote a relationship between the work of the employee and the industry or calling in question. It is not enough that the products of the worker are used in the industry or that the products of the industry are used by the worker. Thus is has been held that workers employed to produce coke from coal, in a business of iron and steel manufacturers, were not employed in or in connexion with the coal and shale industry: R v Hibble; Ex parte Broken Hill Proprietary Co. Ltd (1921) 29 CLR 290, esp at pp 297, 302. Similarly, workers who produced the coal in those circumstances could not have been said to be employed in or in connexion with the iron or steel industry: cf. Reg. v. Watson; Ex parte Australian Workers' Union (1972) 128 CLR 77 at p 95.

88 The crux of the argument is whether a payment made in settlement of proceedings, particularly proceedings brought under s106 of the Act, could properly be described as being a payment "in connection with" the termination of the applicant's employment. The applicant submitted that any payment made pursuant to the consent orders sought would be a payment in settlement of proceedings brought pursuant to s106 of the Act, which, following Beahan v Bush Boake Allen Australia Limited, could not be proceedings brought in relation to the dismissal of the applicant. Accordingly, such a payment would not be a payment "in connection with the applicant's loss of office".

89 This submission is supported by the decision of the Full Bench of this Court in Metrocall Inc v Electronic Tracking Systems Pty Ltd (2000) 101 IR 66, where the Court was required to examine the nature of proceedings brought under s106 of the Act. At paragraph [53] the Court stated: ... In proceedings under s106 of the IR Act, the question to be determined is whether the contract whereby work is performed is unfair having regard to the factors or considerations referred to in the Act. Regardless of the basis of the claims made, the issue for determination is whether the contract is an unfair contract because it is unfair, harsh or unconscionable, against the public interest, provides for remuneration less than a person performing work as an employee, or is designed to avoid the provisions of an industrial instrument. 54 In this case, the dispute concerns the fairness of the licensing agreement having regard to the termination of the agreement at the end of the initial term and to certain representations alleged to have been made on behalf of the appellant. Although the thrust of the allegations contained in the summons for relief concern certain representations and also the termination of the agreement, the subject matter of the controversy raises nevertheless the fairness of the agreement. It is whether this "matter" is capable of settlement by arbitration which must be determined in this case. We do not consider that this situation is altered merely because it may have been open for the respondent to bring its claim in another jurisdiction in which the ultimate question for determination would have been different.

90 The determination of the Full Bench in Metrocall, although in the context of the International Arbitration Act (1974) (Cth), has clear implications in this matter. Although it may have been open to the applicant to commence different proceedings in relation to an unfair dismissal, settlement of which could truly be said to be "in connection with" his loss of office, this does not alter the nature of the present proceedings, nor the nature of the issues which have thereby been settled.

91 The real question is therefore whether payment in settlement of proceedings alleging that an employment arrangement was unfair, harsh and unconscionable, and against the public interest, can properly be described as a payment "by way of compensation for, or otherwise in connection with, the loss ... of office" (s200A(1)(a)). As I have said, it is not necessary for me to decide this issue, but I note that the combined effect of the decisions in Metrocall and Beahan v Bush Boake raise real doubts as to the application of s200B on this basis.

92 Finally, I come to the doctrine of illegality, which was relied upon by both parties to varying degrees. For the reasons outlined above, it is not strictly necessary for me to evaluate these submissions: I have concluded that s200B does not apply to the settlement agreement, and it is therefore unnecessary to consider whether parliament intended the doctrine of illegality to apply to any such transgression, and, if so, to what extent.

93 I will, however, comment briefly on some of the issues raised. Independently of my analysis above, I do not accept the respondent's proposition that because a payment is "prohibited", the agreement to pay is also prohibited and therefore "illegal" and/or "void" and/or "unenforceable". As discussed earlier, s200B seeks to regulate "golden handshakes" by requiring shareholder approval - no more, no less. (For this reason I also reject the submission that such a payment or, for the sake of argument, agreement to pay, is "expressly prohibited" per se: the prohibition only operates if the act is done without member approval.) This regulatory mechanism requires at the very least an agreement in principle to present to the shareholders, such an agreement presumably being subject to approval. It must follow that, to achieve its aim, s200B anticipates and authorises the steps preceding the actual giving of the benefit. This conclusion is reinforced by the legislature's definition of "giving a benefit" in s200A(1)(b)(i). (Also see my discussion in the context of s200B above).

94 As a more general comment, even assuming (contrary to my determination above) that I accepted the respondent's submissions as to the prohibition of an agreement to pay the settled sum referred to in the declaration sought, the consequences of any such prohibition in terms of enforceability or avoidance of the contract, particularly where the illegality may be said to arise from the acts or omissions of one party to the contract, present complicated contractual issues before one even considers the implications upon a discretion to exercise a power. These issues were raised by the applicant in submissions on Abdurahman v Field (1987) 8 NSWLR 158, in which Hope JA observed at 164: In my opinion it would be quite inequitable if the Defendant were able to rely upon the illegality of which he was the author as an answer to the Plaintiff's claim.

95 On this vexed issue the respondent, in written submissions, disingenuously stated that it was not the "author" of any illegality: in this case, any illegality "comes about by the operation of the Corporations Law (regardless of any conduct or intent of the Respondent)". Quite apart from the fact that illegality will always require both a law and someone to contravene it, such a submission cannot be supported when (assuming, in favour of the respondent, the application of s200B to the settlement agreement) the existence of illegality is determined by the failure of the respondent to submit the agreement to its shareholders for consideration.

96 The respondent cited the decision of the Court of Appeal in Hurst and Ors v Vestcorp Ltd (1988) 12 NSWLR 394 in support of its submission that the settlement agreement, by virtue of its implied prohibition (as the respondent contended), was illegal and hence void. In particular, the respondent cited the following passage in the judgment of Mahoney JA at 427: The law has long accepted the principle that where a transaction is effected by illegality the transaction will be void or at least the court will not intervene to give effect to it.

97 It is worthwhile extracting the subsequent text of his Honour's judgment, not only to place the above quotation in context, but also to illustrate the issues relevant to illegality which were not addressed by the respondent: (It is not necessary for present purposes to determine which of these views the law presently adopts: see First Chicago Australia Ltd v Yango Pastoral Co Pty Ltd [No 3] [1977] 2 NSWLR 583 at 596-597; affirmed (1978) 139 CLR 410). But the fact that there is involved a breach of the law and in particular statutory law, does not always result in the law of illegality applying to the transaction. The matter is to be determined having regard to, as it is described, the legislative intention: see generally the judgment of Mason J in the First Chicago case (1977) 139 CLR 410 at 424 et seq. In the present case Mr Palmer QC submitted that the law of illegality did not apply to transactions in contravention of s 83(1) for, in the main, three reasons: because the legislative intention was such; because of the provisions of s 86(2); and because the illegality did not attach to what was here in question. I shall consider each of these three matters separately. In First Chicago Australia Ltd v Yango Pastoral Co Pty Ltd [No 3] there was, in my opinion, a significant development, or at least restatement, of the law of illegality as it applies to transactions. Both in the judgments in the High Court and in this Court emphasis was placed upon the necessity, when an issue of illegality is raised, to determine precisely what is the subject of the statutory proscription. The reason for this is at least twofold: to enable the court more clearly to consider the question whether that which is proscribed by the statute was intended to be, for the purposes of the law of transactions, illegal, as distinct from merely penalised; and, secondly, to enable the courts to apply with a greater degree of precision and flexibility the consequences of the decision that, in the particular case, the law of illegality was intended to apply. Each of these is, as Mr Palmer has submitted, relevant in the present case.

But if the law of illegality be applicable, it does not follow that all aspects of a transaction are void or unenforceable. The illegality law has often been seen to have unintended effects: in the First Chicago case I applied the description "a crude instrument of social policy apt to produce hardship" (at 595). One of the purposes of the decision in that case was to point out that, if illegality applies to what is proscribed, it does not necessarily affect transactions, or aspects of transactions, outside the proscription. Thus, as had been pointed out in Re Mahmoud and Ispahani [1921] 2 KB 716 at 725; First Chicago case (at 594); where what is proscribed is the sale of goods, a contract for the sale of goods is not within the precise terms of the proscription and may not therefore necessarily be within the law of illegality. A decision as to whether anything beyond that which is precisely proscribed is to be visited with the effects of illegality may then be determined according to the policy of the matter and the consequences of a particular decision are able to be weighed. This was pointed out by Mason J in the Yango Pastoral Co Pty Ltd v First Chicago case (at 427-430); where his Honour indicated that such a question is to be determined according to considerations of policy embodied in the "ex turpi" principle. With respect, his Honour's judgment indicates that the justice and good sense of the matter may be taken into account in the making of such a decision.

98 The quotation above from Re Mahmoud and Ispahani [1921] 2 KB 716 at 725 distinguishing the sale of goods from a contract for the sale of goods in order to alleviate the hardship of the doctrine of illegality presents real difficulties for the respondent's twofold submission that (a) s200B should be interpreted to impliedly prohibit an agreement to pay and (b) the doctrine of illegality should be visited upon this implied prohibition and transactions which are thereby caught.

99 The respondent also referred to the judgment of Kirby P in Hurst v Vestcorp, but an inspection of that judgment reveals, again, the complicated issues which attach to the doctrine of statutory illegality which were not addressed in submissions. I extract his Honour's summary of the relevant principles at 411: The principles of law applicable to the resolution of this question are found in First Chicago Australia Ltd v Yango Pastoral Co Pty Ltd [No 3] [1977] 2 NSWLR 583; affirmed sub nom Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410. I take the relevant principles to include: 1. The fact that a transaction is made which results from or involves a breach of the requirement of statute may result in a conclusion that the transaction itself is illegal such that, to give effect to the statute, a court will decline to enforce the transaction or will treat it as void; 2. Such a result will not, however, always follow. Because statutes rarely provide, in terms, for the effect of the breach of their provisions upon such transactions, it is for the court, in applying the potentially crude instrument of the doctrine of illegality, to determine the imputed legislative intention. It must do so from the language, history and apparent policy of the statute: the court necessarily filling the gaps left by the legislature; 3. In reaching its conclusion, the court will consider the extent to which the statute itself already provides adequately for securing the attainment of its apparent objects and for punishing breaches of and non-compliance with its terms. It will also have regard to the possible consequences upon innocent third parties of a rigorous application of the principles as to illegality; and 4. Because of the sometimes drastic consequences of the application of the doctrine of illegality upon transactions, the proscription may not be extended beyond those transactions which are clearly in breach of the statute, lest, by casting the net more widely, serious injustice may be done to third parties beyond that necessary to give effect to the presumed legislative intention. Inherent in these principles, and in their application to particular cases, is an inescapable element of imprecision and judgment.

100 The above judgments clearly describe the manner in which courts, when faced with the doctrine of illegality, will carefully interpret statutes to confine proscription in order to avoid unintended and harsh effects of the doctrine. Even if there was scope to argue the application of the doctrine in this matter, it is difficult to see how such argument could benefit the respondent in view of the fact that the Corporations Act already provides consequences for breach (which do not include the avoidance of underlying agreements), thereby suggesting that the transactions were intended to be penalised rather than illegal, and the harsh consequences of illegality upon the applicant as an innocent third party.

101 It is common ground that these proceedings have been "settled by conciliation", thus bringing the matter within the powers of the Commission defined by s174 of the Act.

102 Considerations of justice favour the conclusion that, subject to any absolute or clear legal bar to the contrary, the Commission should act pursuant to s174 of the Act to give effect to the compromise or bargain entered into by the parties, who had the benefit of professional advice and adequate information.

103 Further, as I noted in the context of s174 of the Act, the circumstances of this case create a compelling basis for the exercise of discretion to make orders giving effect to the settlement agreement, which would be both consonant with the statutory scheme in promoting a conciliated outcome to proceedings and desirable to prevent an unreasonable and unconscionable result.

104 In all of the circumstances, and particularly in light of the settlement reached between the parties during conciliation proceedings, it would be appropriate to make "an order on the agreed terms for settlement" pursuant to s174(b) of the Act.

105 It is possible that the agreement between the parties designed to resolve this litigation is enforceable, as a matter of law, without such an order of the Commission, although it is unnecessary to decide this point. However, the making of a formal order constitutes a more definitive and clear-cut result of the agreement between the parties.

106 In my opinion, there is no real legal distinction between a 'settlement', which the parties accept has occurred, and a settlement "in its purest form" which the respondent contends has not occurred (even if there was such a distinction properly available). To give effect to that submission would result in manifest injustice and a trifling with the conciliation process of this Commission, where every consideration should favour practicalities rather than technicalities thought of ex post facto.

107 In my view, the making of the order which I have proposed would mean that a benefit was required to be given by the respondent in accordance with an order, with statutory force, made by a superior court of record, and that a failure to give that benefit would constitute a contravention of a law in force in the State of New South Wales. Thus, the making of the proposed order would result in a benefit required by law and would constitute an exception prescribed by s200H of the Corporations Act to the more general provisions of s200B of that Act. Further, s200B of the Corporations Act, as earlier discussed, does not prevent the Court in any event from making orders under s174 of the Act.

Costs and Interest 108 The applicant has sought costs of the Notice of Motion on an indemnity basis, and interest upon the settlement sum from 15 June 2001, relying upon the unconscionability of the respondent in support of its application. The respondent, by written submission, opposed the application for costs (and interest - see below) on the basis that its conduct, "motivated by a concern to comply with the law, should not cause it prejudice". Although I sympathise with the applicant's position, and agree that the respondent should pay the applicant's costs on a party/party basis (no real basis having been put by the respondent as to why costs should not follow the event), I do not consider that indemnity costs would be appropriate in relation to a Notice of Motion which raised such complicated and unchartered issues. As I noted in Van Huisstede v the Commissioner of Police (No 2) (2001) 106 IR 56 the granting of indemnity costs is a matter for the discretion of the Court, and does not involve considerations of a punitive nature.

109 The applicant sought interest payable on the consent order from 15 June 2001 (being the date of settlement) and the respondent opposed this application as noted above. In accordance with the decision in Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 (at [44] - [48]), I note that the awarding of interest is a matter of discretion to be exercised by considering the requirements of justice in each case. It is just in this matter to grant the applicant's request for interest when (a) the agreement was reached based on the known state of the law, (b) it was repudiated without reasonable cause, (c) the applicant was then put to the expense to meet a further case and (d) the respondent has consented to the declaration sought in the first paragraph of the applicant's notice of motion. I have determined to make an order for interest from the date of the respondent's repudiation of the settlement agreement, that is, 29 June 2001, to the date of this judgment at the Supreme Court scale.

110 In accordance with my findings in favour of the applicant, the respondent's concession to the declaration sought by the applicant and in the absence of any argument or discussion as to the date of avoidance of the employment arrangement (the date of commencement having been suggested by Hungerford J at the settlement) or as to the form of the Deed of Release referred to in the declaration, I make the following orders: 1. I declare that on 15 June 2001 these proceedings were settled before Hungerford J in conciliation proceedings under s109 of the Act on the following terms set out in paragraph 23 of the Affidavit of Suzanne Melinda Barnes sworn on 9 August 2001, as clarified by the parties in discussion before the Court on 5 March 2002: (i) the contract between the parties is declared void with effect from x date (being the date of commencement of employment) provided that all the benefits thereunder already paid to the applicant shall not be affected including payments made under the previous deed of release; (ii) the respondent pay the applicant an amount in accordance with the method of payment set out in the Deed of Release referred to in order 2 below; and (iii) no order as to costs. 2. I order the parties to execute the Deed of Release filed on 9 April 2002 with the applicant's Amended Notice of Motion within 14 days;

3. I order the respondent to pay the applicant $265,000 plus interest calculated from 29 June 2001 to the date of this judgment at the Supreme Court scale in accordance with the method of payment set out in the Deed of Release; and 4. I order the respondent to pay the applicant's costs of and incidental to this Notice of Motion as agreed or in default as assessed within 28 days.

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