5
[Extract from Queensland Government Industrial Gazette,
dated 22 April, 2005, Vol. 178, No.17, pages 404-407]
INDUSTRIAL COURT OF QUEENSLAND
Industrial Relations Act 1999 – s. 341(1) – appeal against decision of industrial commission
Newmont Pajingo Pty Ltd AND Tomac Enterprises Pty Ltd (No. C1 of 2005)
PRESIDENT HALL 11 April 2005
DECISION
On 23 December 2004 the Queensland Industrial Relations Commission released a decision, now reported at 178 QGIG 35, on an application by Tomac Enterprises Pty Ltd seeking relief under s. 276 of the Industrial Relations Act 1999 (the Act) against Newmont Pajingo Pty Ltd. Tomac Enterprises Pty Ltd was successful. The order of the Commission was:
“1. The Commission declares that the contract (as that term is defined in s. 276(7) of the Act) between Newmont Pajingo Pty Ltd (ACN 009 112 065) and Tomac Enterprises Pty Ltd (ACN 092 141 798) was an unfair contract (as that term is also defined in s. 276(7) of the Act) in that it became an unfair contract after it was entered into because of the conduct of Newmont Pajingo Pty Ltd.
2. The Commission orders that the contract be amended by the inclusion of terms to the effect that Newmont Pajingo Pty Ltd is to provide Tomac Enterprises Pty Ltd with 120,000 metres of drilling work for the Atlas Copco 104/157 drill (less any work undertaken by the Atlas Copco 126 drill), or, in the alternative, 2 years’ of drilling work, commencing from 1 July 2002, whichever event occurs first.
3. The Commissions orders that the contract be amended by the inclusion of terms to the effect that Newmont Pajingo Pty Ltd is to reimburse Tomac Enterprises Pty Ltd for any lease payments it may incur on the Atlas Copco 104/157 drill in the event that drill becomes idle because the 120,000 metres of drilling is completed before the expiry of the 2 year period described in point 2.
4. The Commission orders that Newmont Pajingo Pty Ltd is to make payment of $414,250.87 to Tomac Enterprises Pty Ltd within 22 days of the date of release of this decision.”.
Newmont Pajingo Pty Ltd now appeals.
To understand how it came about, that a labour tribunal is authorised to exercise an arbitral power to reform business dealings and to grant financial relief in respect of neo-contractual commercial transactions, which the civil courts will neither recognize nor enforce, it is necessary to know something of the history of s. 276 of the Act.
It is commonly accepted that s. 276 had its origin in a New South Wales initiative which precedes s. 276 by forty years. Section 88F of the Industrial Arbitration Act 1940 (NSW) was introduced into the Principal Act by the Industrial Arbitration (Amendment) Act 1959. It authorised the Industrial Commission (and the then Conciliation Committees) to “declare void in whole or in part or [vary] in whole or in part … any contract or arrangement or any condition or collateral arrangement relating thereto whereby a person performs work in any industry”, on a variety of grounds including achievement of fairness and defence of the public interest.
The observations of then Minister, Mr Landa, Second Reading Speech, Hansard, 18 November 1959, p. 2130 indicate that the section was thought to have limited reach and to be directed at systems of contract labour (involving bread-carters, milkmen and participants in the building and construction industries), which had the potential to undermine award rates and conditions and (potentially) the industrial arbitration system itself. And it was read conservatively by the Industrial Commission. In Davies and Anor v General Transport Development Pty Ltd and Ors [1967] AR (NSW) 371 at 373 Sheldon J said:
“As this section has received some salutary publicity recently, it seems opportune to sound a cautionary note. It is, of course, obvious that s. 88F is not a revolutionary measure in general law reform imposing, in (a), (b), and (c), a form of palm-tree control over the principles developed in the courts of common law and equity and the traditional statutes relating to contracts. If it were, it would be odd to find it hidden in the middle of an Act which is familiar only to a relatively few specialized lawyers. Nor would this Commission (and until recently, even more incongruously, conciliation committees) be appropriate as the sole repository of such sweeping powers. In fact, there is no general charter in s. 88F to rescind or vary contracts because they are thought to be oppressive. Its place is in this Act because its basic purpose is industrial. The crucial, and restrictive, words are ‘whereby a person performs work in any industry’. So read, the section is put into focus and is seen to be but one of several in the Act designed to protect the arbitration system against those who enter its allotted field unprepared to pay the standard price of admission – the regulation of wages and conditions of employment by award or industrial agreement. This includes not only those who directly avoid such regulation by chicanery but also some of those who get their work done for them in a way which gives them a business advantage over competitors so bound. Thus, the section invades only one bastion in the citadel of private contract and does so, primarily, not because certain contracts are unjust to individuals but because they are subversive of the orderly control of industry. In fact, in some cases within (c), (d) and (e), the parties may, be truly in pari delicto. Although this particular instrument, in making effective the purposes of the Act, operates by conferring rights on individuals, they are really blown in by a side wind. But they are none the less real for that.”.
There was additionally a very practical restraint. Prior to the Industrial Arbitration (Further Amendment) Act 1966, there was no power to order the payment of money (or costs), though doubtless, there would have been cases in which an order of the Commission might have been followed by proceedings for restitution (or in the case of a true contract, enforcement) in the civil courts.
The decision of the High Court in Stevenson v Barham (1977) 136 CLR 190 ushered in a wider view. The core of the judgment of Barwick CJ is brief and, because it amply identifies the new approach, may usefully be reproduced.
“The parties entered into a share-farming agreement as a business venture from which each, but particularly the appellant (Stevenson), expected to derive profit, as distinct from wages. In the facts of the case there is no room for any contention that Stevenson entered into the arrangement as a means thereby of securing the benefit of Barham’s labour rather than as a means of employing him. As the venture was proving less profitable for Stevenson than he had hoped, he exercised his rights under Agricultural Holdings Act, 1941(NSW). Barham then sought to have the share-farming agreement declared void under s. 88F.
…
Notwithstanding the wide language of s. 88F, I have found difficulty in becoming convinced that it was within the contemplation of the legislature that agreements for business ventures, of which the present may be a specimen, freely entered into by parties in equal bargaining positions, should be so far placed within the discretion of the Industrial Commission as to be liable to be declared void. However, I have come to the conclusion that the language of s. 88F of the Act is intractable and must be given effect according to its width and generality. The legislature has apparently left it to the good sense of the Industrial Commission not to use its extensive discretion to interfere with bargains freely made by a person who was under no constraint or inequality, or whose labour was not being oppressively exploited.”.
Of course, in New South Wales the restriction “…whereby [in later formulations ‘under which’] a person performs work in any industry”, operated to require some element of “industrial colour or flavour”; compare Production Spray Painting and Panel Beating v Newnham (1991) 27 NSW AR 644. Section 276 omits that restriction, though as counsel for the Respondent submits the presence or absence of industrial taint may be relevant to the granting or denial of admittedly discretionary relief. Put aside employments which are not subject to an industrial instrument, the Queensland jurisdictional pre-requisite to the exercise of jurisdiction is a characterisation of the “contract” as a “contract for service”, and this Court has held that “contracts” between large, well advised corporations with deep pockets, may be so characterised; see Couriers Please Pty Ltd v Braunack (2001) 166 QGIG 141.
The language of the section defies more limited construction: notwithstanding that the power is vested in a tribunal which is (basically) bound neither by rules of evidence nor procedural constraints and which required to genuflect to “..equity, good conscience and the substantial merits of the case”; see s. 320(2) and (3).
Critical to the appeal at hand is the definition of “contract” at s. 276(7) which provides that for s. 276:
“ ‘contract’ includes –
(a) an arrangement or understanding; and
(b) a collateral contract relating to a contract.”.
It follows from that definition that whilst s. 276 applies to “true” contracts for service, the section also applies to dealings which are not contracts under the general law. Section 276(7) is not a provision directed to enabling the Commission to have regard to associated arrangements or understandings, or to related collateral contracts in assessing the “fairness” of a true contract. The purpose of s. 276(7) is to make the remedies at s. 276(1) and (5) available where what is impugned is not a “true” contract but an arrangement or understanding or a related collateral contract.
The extended definition of “contract” is critical because of the way in which the appellant frames its primary argument. The argument focuses on the original “true” contract between the parties, i.e. the contract which so far as it was reduced to writing, is to be found in Order No. 3000196346 and which related to the performance of 30,000 metres of drilling by the Respondent (together with associated works) at $17.50 per metre (later $20 per metre).
At one level, it is argued that the Commission did not find that contract to be unfair and, indeed, could not have done so because no findings were made about the terms of the contract. At another level, it is argued that s. 276(4)(b) is aimed at the case in which conduct of the parties in exercise of contractual rights so alters the effect of its terms, as to make it unfair, and that no such exercise of rights by the appellant was identified in the decision of the Commission. Associated with the primary argument is a submission that the “true” contract came to an end because the agreed metres had been won, and the failure of the negotiations for a further contract did not (retrospectively) make the contract unfair.
The submission that the Commission did not make findings about the terms of the “true” original contract, nor about the implementation of its terms is well founded. But the Commission did not make such findings because the Commission did not seek to evaluate the fairness of the “true” contract. The Commission’s decision is directed at the fairness of the “arrangement” between the parties. There was good reason for the Commission’s approach, viz. the terms of the Respondent’s “Further Amended Application”. By the “Further Amended Application” the decision sought by the Respondent was:
“(a) That there was an arrangement or understanding subsisting between Tomac and Newmont for drilling work to be carried out at the Newmont Pajingo mine site near Charters Towers (hereafter “the mine”) between beginning on 8 June 2002 and the 31 July 2003 whereby Tomac would be given three years longer term work if it went to the expense of obtaining from Sweden a new narrow vein ore body Atlas Copco 104/157 Simba drill (hereafter ‘the new drill’).
(b) That in the alternative to (a) there was a collateral contract to the contract between Tomac and Newmont, which latter contract was formed by the issue of Newmont purchase order 3000196346 of 13 May 2002. That collateral contract consisted of an agreement that Tomac would be given longer term work three years work if Tomac went to the expense of obtaining the new drill from Sweden.
(c) The arrangement or understanding or contract and collateral contract between Tomac and Newmont was unfair within the meaning of s. 276(7) of the Act in that they were harsh, unjust and/or against the public interest or unconscionable.”.
In the event the Commission held that the Respondent was entitled to the decision described at (a), see 178 QGIG 35 at 51 the Commission announced:
“After considering the whole of the evidence and the whole of the submissions (the major elements of which are set out in detail above) I have concluded that Tomac’s argument that the contract between itself and Newmont was an unfair contract within the meaning of s. 276 of the Act and the authorities, is overwhelming.”.
And the very first of the reasons given was:
“Firstly, the evidence clearly establishes that Newmont’s senior representatives led Mr Tomkins and Mr Welburn to believe they were entering into a long term relationship with Newmont and would be at the Mine for a long time. In this respect I accept Mr Tomkins’ and Mr Welburn’s evidence that Mr Russell told them he was looking for a long term relationship with a small contractor. I also accept their evidence that Mr Kusabs informed them they would be given 30,000 metres to allow Newmont to check their performance and if it was satisfactory they would be drilling at the Mine for ‘a long time’. I also accept their evidence that Mr Kusabs told them ‘not to worry’ and that they would be ‘alright’ when they expressed a reservation that 30,000 metres was not enough to justify the purchase of a new drill. I further accept that Mr Price informed them, in response to a similar reservation expressed to him, that they would ‘be right’, ‘there was a shit load of drilling to do’ and that they would be ‘here for years’.”.