Stevenson v Barham [1977] HCA 4; (1977) 136 CLR 190 (1 February 1977)

HIGH COURT OF AUSTRALIA

STEVENSON v. BARHAM [1977] HCA 4; (1977) 136 CLR 190

Industrial Law (N.S.W.)

High Court of Australia
Barwick C.J.(1), Stephen(2), Mason(3), Jacobs(3) and Aickin(4) JJ.

CATCHWORDS

Industrial Law (N.S.W.) - Industrial Commission - Power to declare certain onerous contracts void - Contract or arrangement whereby a person performs work in any industry - Share-farming agreement - Industrial Arbitration Act, 1940 (N.S.W.), s.88F (1)*.

* Section 88F (1) of the Industrial Arbitration Act, 1940 (N.S.W.), as amended, provides: "The commission may make an order or award declaring void in whole or in part or varying in whole or in part and either ab initio or from some other time any contract or arrangement or any condition or collateral arrangement relating thereto whereby a person performs work in any industry on the grounds that the contract or arrangement or any condition or collateral arrangement relating thereto - (a) is unfair, or (b) is harsh or unconscionable, or (c) is against the public interest. Without limiting the generality of the words 'public interest' regard shall be had in considering the question of public interest to the effect such a contract or a series of such contracts has had or may have on any system of apprenticeship and other methods of providing a sufficient and trained labour force, or (d) provides or has provided a total remuneration less than a person performing the work would have received as an employee performing such work, or (e) was designed to or does avoid the provisions of an award or agreement."

HEARING

Sydney, 1976, October 26; 1977, February 1. 1:2:1977
APPEAL from the Supreme Court of New South Wales.

DECISION

1977, February 1.
The following written judgments were delivered:-
BARWICK C.J. This appeal raises a fundamental question relating to the the Industrial Arbitration Act, 1940 (N.S.W.) (as amended) ("the Act"). 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 the Agricultural Holdings Act, 1941 (N.S.W.). Barham then sought to have the share-farming agreement declared void under s. 88F of the Act. The Industrial Commission held that it had no jurisdiction to entertain Barham's application. On appeal to the Supreme Court, an order was made directing the Commission to hear and determine Barham's application (1975) 1 NSWLR 31 . (at p192)

2. 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. (at p192)

3. Since forming this conclusion I have had the advantage of reading the reasons for judgment prepared by my brothers Mason and Jacobs. I agree with their conclusion and with their expressed reasons for it. I also agree with their comments upon the reasons for judgment of the Chief Justice of New South Wales. (at p192)

4. Accordingly, I agree that this appeal should be dismissed. (at p192)

STEPHEN J. The question in this appeal is whether the agreement between the parties, referred to in argument as a share-farming agreement, is one to which s. 88F of the Industrial Arbitration Act, 1940 (N.S.W.) applies. (at p193)

2. That section appears in full in other judgments, it is concerned with "any contract ... whereby a person performs work in any industry". As a description of any particular class of contract these words are at first sight far from explicit but on further examination, and with the aid of statutory definitions and context, they may be seen to convey a quite precise meaning. (at p193)

3. The word "whereby" must, I think, here bear one of its ordinary meanings, that of "in consequence of, as a result of, or owing to which" (Shorter Oxford English Dictionary); the contract must thus be one in consequence or as a result of which a person performs work. The section requires the work to which it refers to be work in an "industry", a term defined, so far as presently relevant, as "craft, occupation or calling in which persons ... are employed for hire or reward" (s. 5 (1) ). The contract is then one in consequence of which a person performs work in any occupation etc. in which persons are employed for hire or reward. (at p193)

4. Standing on its own a reference to a person performing work might perhaps describe no more than his physical actions; when qualified by reference to it being performed in an occupation etc., in turn described as one in which persons are employed for hire or reward, the sense it conveys is, I think, that of work being performed for another. This is, moreover, consistent with the work being performed in consequence of entry into a contract. (at p193)

5. Section 88F may then be seen to be concerned with any contract in consequence of which a person performs work for another in any occupation etc. in which persons are employed for hire or reward. This meaning of "performs work" receives quite emphatic confirmation from the language of par. (d) of s. 88F (1), made applicable when the contract earlier mentioned "(d) provides or has provided a total remuneration less than a person performing the work would have received as an employee performing such work". This paragraph assumes that the work earlier referred to in the opening words of s. 88F (1) is work being performed for another, although not as an employee. The terms in pars (c) and (e) also lend further support to this interpretation of the phrase "performs work". (at p193)

6. That s. 88F should be concerned with contracts under which work is performed by one person for another, although not as an employee, is precisely what, on first reading the section in its statutory context, one would conclude to be its purpose. The Industrial Arbitration Act consolidates "the Acts relating to Industrial Arbitration" and confers upon the tribunals it creates wide powers in relation to the employer-employee relationship; s. 88F then meets the case of those industrial relationships in which the parties are not in any master and servant relationship yet the one is performing work for the other in consequence of a contract. (at p194)

7. If s. 88F, as so construed, is then sought to be applied to the present agreement the question which immediately arises is whether under it Barham, the farmer, was to perform work for Stevenson, the owner. If not the section will have no application. (at p194)

8. In his reasons for judgment my brother Aickin has examined in detail the terms of the agreement; I find it unnecessary to arrive at any conclusion whether or not the parties were partners. There are, of course, strong indications pointing in that direction, they were to share in the profits of the business, itself prima facie (although only prima facie) evidence of partnership - Partnership Act 1892 (N.S.W.) s. 2 (iii); property found to be necessary for the running of the business was to be partnership property and the agreement on one occasion speaks of them as "partners"; the accounts maintained over the years repeatedly speak of "the partners" when referring to Stevenson and Barham. Cases abound in which relationships such as that created between these parties have had to be subjected to close analysis, either in order to determine specifically whether a partnership existed or for other purposes in the pursuit of which courts have passed upon the question of the existence of any partnership; instances are provided by Cribb v. Korn (1911) [1911] HCA 9; 12 CLR 205 , Barker v. Law (1919) St R Qd 152 , McKenzie v. McKenzie (1921) NZLR 319 and George Hall & Son v. Platt (1954) 35 Tax Cas 440 . A reading of them emphasizes the accuracy of the observation of O'Connor J. in Cribb v. Korn (1911) 12 CLR, at p 218 that such agreements "vary infinitely in form and in legal effect". No general rule, applicable to all such agreements as are commonly described as share-farming agreements, can be laid down concerning the relationships they create. (at p194)

9. I do, however, regard it as clear that, whether or not there was here a partnership, the present agreement is not one in consequence of which Barham was to perform work for Stevenson. In Cribb v. Korn [1911] HCA 9; (1911) 12 CLR 205 there was held to be no partnership; it was a case of an agreement the effect of which was that "in short respondent Cribb supplied lands, tools, implements, and live stock, and respondent Rano labour, and they were each to take one-half of the proceeds of the produce grown when the same was realized and marketed" (1911) 12 CLR, at p 210 . The question was whether, for the purposes of a workers' compensation statute, Cribb was liable to Rano's employee, Korn, as he would be were Rano to be held to be performing the work on the farm for or on behalf of Cribb. Griffith C.J. concluded that although Rano contracted to execute work he did not contract to do it on behalf of Cribb (1911) 12 CLR, at p 210 ; Barton J. said that "what stands out in these circumstances is that Rano was working the land on his own account and for his own benefit" (1911) 12 CLR, at p 215 ; O'Connor J. was of a like view, he was unable to regard Rano as executing the work of the farm for Cribb or on Cribb's behalf, Rano was "to cultivate the land on his own behalf so as to produce proceeds for himself" although bound to divide those proceeds, when received, with Cribb (1911) 12 CLR, at p 220 . The case provides an illustration of a contract, in some respects very similar to the present, which did not create any partnership and in which the farmer who was engaged in working the land was held to be working it not for the owner but for himself. If, in the present case, there was a partnership it might not then be accurate to describe Barham as working for himself but it would be no less inappropriate to describe him as performing his work on the farm for Stevenson in the sense in which s. 88F speaks; he might perhaps best be described, if a description of this concept be sought, as working in the interests of the partnership, which comprised the two of them. (at p195)

10. To date I have considered the matter without regard to such authorities as exist regarding the meaning of s. 88F. The decision of this Court in Brown v. Rezitis [1970] HCA 56; (1970) 127 CLR 157 was directed to a quite different question and I have not found it to bear upon the present problem. That case and also relevant decisions of courts in New South Wales are discussed in detail in the reasons for judgment of my brother Aickin. I agree with his analysis of the cases, which discloses nothing which would lead me to depart from the view which I have formed concerning the present inapplicability of s. 88F. (at p195)

11. I agree with the view expressed in the reasons for judgment of other members of the Court that the scope of s. 88F is not to be restricted to cases of contracts which are in some way thought to be subversive of the scheme of industrial regulation achieved by or under the Act. I see no warrant for any such a restriction. However to reject this restriction is not, in light of the construction which I place upon the words of the section, to conclude that it confers any jurisdiction in the present case. (at p195)

12. In their joint reasons for judgment Mason and Jacobs JJ. deal with a quite distinct matter which was argued on this appeal, namely, the propriety of permitting the defendant to take an objection as to jurisdiction without being put to his election. I agree with all that is there said on this topic. (at p196)

13. Since I regard the present agreement as not being such a contract as is described in s. 88F as that in respect of which jurisdiction is conferred upon the Commission it follows that I would allow this appeal, set aside the order of the Court of Appeal and substitute an order dismissing the application made to that Court. (at p196)

MASON AND JACOBS JJ. On 12th December 1973 in the Industrial Commission of New South Wales Kelleher J. heard an application by the first respondent under s. 88F of the Industrial Arbitration Act, 1940 (as amended) seeking relief in respect of a share-farming agreement made on 5th November 1968 between the first respondent, who was the farmer, and the appellant, who was the owner. The relief sought was based on the grounds set forth in pars (a) to (d) inclusive of s. 88F (1). The first respondent sought an order that the agreement be wholly void on and from a date six months from the date of the order and an order that the appellant should pay the sum of $20,000 to the first respondent together with costs. At the conclusion of the case for the first respondent the appellant submitted that on the evidence it was not a case in which the Commission had jurisdiction to grant relief. Kelleher J. having permitted the appellant's counsel to develop the submission without requiring him to elect not to call evidence, held that there was no jurisdiction and dismissed the application. (at p196)

2. On appeal the Court of Appeal ordered that the matter be returned to the Commission (1975) 1 NSWLR 31 . Street C.J. held that Kelleher J. erred in not requiring the defendant to elect. Hope J.A. held that the defendant failed on the substantive issue in his objection to jurisdiction. Hutley J.A. dissented, holding that there was no jurisdiction in the Industrial Commission. It is from this order that the present appeal comes. (at p196)

3. The share-farming agreement related to some 350 acres of the appellant's property. The summary of the principal provisions which follows has been taken from the judgment of Hope J.A. The first respondent agreed to provide all dairy cattle necessary for dairying operations on the property and to supply a sufficient number of milking cows to maintain the existing quota attached to the property, to provide certain farming vehicles and machinery (cl.1), and to supply all labour necessary for the normal process of dairying and farming operations upon the property (cl.2). The appellant agreed to supply certain milking machines and other farm machinery (cl. 3), to be solely responsible and liable for all major development work on the property including labour and material for fencing and fencing repairs but excluding any labour that might be supplied by the first respondent for that purpose (cl. 6), and, at his own expense, to supply all seed for pasture improvements (cl. 7). All other plant and equipment necessary for running the business was to be purchased by the parties in equal shares and was to remain their joint property. On the termination of the agreement either party was to have the right to purchase the interest of the other in the joint plant and equipment at an agreed price, and in the absence of agreement, the plant and equipment was to be sold and the net proceeds equally divided between the parties (cl. 5). In this clause the parties were referred to as partners. (at p197)

4. The net profits from all dairying and farming operations on the property were to be shared equally and all expenses were to be borne equally between the parties (cl. 8). Milk supplied from the property was to be delivered to the Wyong Co-operative Dairy Society in the joint names of the parties and the proceeds were to be credited in the joint names and distributed within one week of receipt (cl. 9). The progeny of the first respondent's stock were to remain his property, and he was given certain rights to graze them on the property (cl. 10). He was to be entitled to occupy the residence on the property free of charge (cl. 11), and was to be permitted a holiday period of three weeks per annum, the expense of replacing all necessary labour for that period to be shared equally by the parties (cl. 12). The agreement was to be deemed to have commenced on and from 26th June 1968 and was to remain in force for a period of five years from that date (cl. 13). (at p197)

5. The agreement was a share-farming agreement within the meaning of the Agricultural Holdings Act, 1941 and when its five-year term expired in June 1973 the first respondent apparently claimed to be entitled, under s. 24 of that Act, to the continuance of the agreement until terminated by a notice to quit complying with the provisions of that section. (at p197)

6. Two issues emerge in this appeal: first, whether the Industrial Commission on the evidence had jurisdiction to grant relief under s. 88F, and secondly, whether the appellant ought to have been put to his election. (at p197)

7. Section 88F of the Industrial Arbitration Act provides (so far as material):

"(1) The commission may make an order or award
declaring void in whole or in part or varying in whole or in
part and either ab initio or from some other time any contract
or arrangement or any condition or collateral arrangement
relating thereto whereby a person performs work in any
industry on the grounds that the contract or arrangement or
any condition or collateral arrangement relating thereto -
(a) is unfair, or
(b) is harsh or unconscionable, or
(c) is against the public interest. Without limiting the
generality of the words 'public interest' regard shall be
had in considering the question of public interest to the
effect such a contract or a series of such contracts has
had or may have on any system of apprenticeship and
other methods of providing a sufficient and trained
labour force, or
(d) provides or has provided a total remuneration less than
a person performing the work would have received as
an employee performing such work, or
(e) was designed to or does avoid the provisions of an
award or agreement." (at p198)

8. The section appears in Pt VIII of the Act dealing with awards and was introduced into the Act at the same time as s. 88E which deems certain persons who, but for the section, would be independent contractors, to be employees and thereby brings them within the operation of relevant industrial agreements and awards. (at p198)

9. To come within s. 88F the agreement must be one "whereby a person performs work in any industry". It is upon these apparently innocuous words that the objection to jurisdiction fastens. They have to be read in the light of the statutory definition of the word "industry" which is defined in s. 5 to mean "craft, occupation, or calling in which persons of either sex are employed for hire or reward, and unless otherwise indicated by the context of any provisions of this Act any division of an industry or combination, arrangement, or grouping of industries". (at p198)

10. It is not in doubt that the work which the first respondent was required by the agreement to undertake was work in the dairying or dairy farming industry. Is the agreement one whereby he performs work in that industry? This is the question and it is a question which might readily be answered in the affirmative but for certain limiting considerations which according to the appellant, are to be derived from the sub-section when it is viewed in its entirety. The appellant says that these considerations require the conclusion that a contract or arrangement to fall within s. 88F (1) must be subversive of the scheme of industrial regulation achieved by or under the Act. (at p198)

11. The first obstacle in the appellant's way is that the power conferred upon the Commission by s. 88F is in the widest terms. It enables the Commission to make an order or award varying a contract or arrangement or a condition or collateral arrangement relating thereto, on the grounds stated. The grounds so stated are wide-ranging and embrace many considerations. They are not all limited to considerations which are themselves industrial in character - they include the grounds that a contract or arrangement is (a) unfair, (b) harsh or unconscionable, (c) contrary to the public interest. (at p199)

12. The fact that grounds (a), (b) and (c) are included in sub-s. (1) in addition to grounds (d) and (e), indicates that the Commission's powers are not confined in point of jurisdiction to contracts or arrangements designed to avoid the industrial awards or agreements or the rates of remuneration fixed for the performance of work by employees, the matters stated in grounds (d) and (e). According to the language in which the first three grounds are expressed the Court can grant relief if a contract or arrangement is unfair or harsh or unconscionable or is against the public interest, whether it tends to subvert industrial awards and industrial agreements or not. (at p199)

13. There is little force in the argument that because the power has been entrusted to the Industrial Commission, and not to the Supreme Court, it should be circumscribed and confined to agreements which tend to subvert orderly industrial regulation. There were strong reasons for giving the power, whether it be extensive or circumscribed, to the Industrial Commission rather than to the Supreme Court. The Supreme Court does not exercise jurisdiction in industrial matters. The Industrial Commission does exercise such a jurisdiction; it was therefore an appropriate repository of a jurisdiction which includes matters having an industrial character. (at p199)

14. In the present case Kelleher J. said:

"In substance it (i.e. the agreement) was a business venture
of a type traditionally carried on in the rural sector,
conducted on a partnership basis and involving the risks
attendant upon its operation. It was not, in my view, a
transaction necessarily in intention or effect subversive of
the scheme and purposes of industrial legislation, nor a case
in which work was performed under some form of contractual
arrangement with a person who could be an employer, nor
one where the respondent was in the position of an employer
or a contractor getting or purporting to get work done for
himself in some way."

In concluding that these considerations operated to deprive him of jurisdiction his Honour relied on the decision of the Industrial Commission in In re Becker and Harry M. Miller Attractions Pty. Ltd. (No. 2) (1972) AR (NSW) 298, at p 307 where the Commission said: "We are satisfied that the limitation of the scope of s. 88F to transactions which have, in the words of Jacobs J.A., speaking for the Court of Appeal in the V.G. Haulage Case (1972) 2 NSWLR 81, at p 87 , an industrial colour or flavour arises as a matter of interpretation and therefore imposes a jurisdictional restriction." (at p200)

15. This sentence, read in isolation, gives a misleading impression of what was actually decided in the Becker Case (1972) AR (NSW) 298 and all that was said by Jacobs J.A. (with whom Mason J.A. and Hardie J.A. agreed) in Ex parte V.G. Haulage Services Pty. Ltd.; Re Industrial Commission (N.S.W.) (1972) 2 NSWLR 81 . The critical passage in the V.G. Haulage Case is (1972) 2 NSWLR at pp 87-88 :

"If the grounds upon which the powers under s. 88F might
be exercised were limited to (d) and (e) in s. 88F (1) there
might be much to be said for the restrictive view; but as
Barwick C.J. pointed out in Brown v. Rezitis
(1970) 127 CLR, at p 164 : 'The five
grounds on which the Commission may vary or avoid
contractual arrangements are not homogeneous', and as
Sheldon J. pointed out in Davies v. General Transport
Development Pty. Ltd. (1967) AR (NSW) 371, at p 373
: 'for it' (that means s. 88F) 'not
only proscribes transactions which directly undermine
awards see (d) and (e) or threaten general industrial
standards which, I think, is the most relevant "public
interest" referred to in (c), but it also, in (a) and (b), strikes
separately at those which are "unfair" or "harsh" or
"unconscionable". Presumably, this is because any
transaction, leading to work in an industry, which can be so
described is regarded as inimical to the purposes of the Act.'I
think this last sentence properly expresses the principle, in
that the transaction must directly lead to work in the
industry - that is what gives the industrial colour or
flavour - but there is no suggestion in the passage that there
must be throughout an identity between the person working
and the contracting party." (at p200)

16. When the last sentence in this passage is read in the light of the comments which precede it, it becomes obvious that what was being rejected was the argument that the powers of the Commission are confined to transactions which directly undermine awards or threaten industrial standards and what was being asserted was that so long as the transaction leads directly to work in any industry it has the necessary "industrial colour or flavour". (at p200)

17. That this was the effect of the V.G. Haulage Case seems to have been recognized in a later passage in the judgment of the Commission in the Becker Case when it said (1972) AR (NSW), at p 308 :

"Returning to the primary question whether this contract is
one 'whereby' the applicant 'performs work in any industry',
we find that it is a contract of this character. We think that
the word 'whereby' has its permitted dictionary meanings of
'by means of or by the agency of which'; 'in consequence of,
as a result of, or owing to which' (Shorter Oxford) and that
this accords with the statement of Jacobs J.A. in the V.G.
Haulage Case (1972) 2 NSWLR 81 that the transaction must 'directly lead

to

work in the industry'. Normally such a contract will be the
actual work contract." (at p201)

18. Consequently neither case properly understood provides support for the jurisdictional limitation which the appellant seeks to introduce and which Kelleher J. enunciated. (at p201)

19. There is nothing in Brown v. Rezitis [1970] HCA 56; (1970) 127 CLR 157 which supports the suggested limitation on jurisdiction. Barwick C.J. pointed out that of the five grounds, only two refer to the avoidance of an award or the underpayment of a worker in industry (1970) 127 CLR, at p 164 . Menzies J. said specifically, "Section 88F confers upon the Commission the power to make orders which cannot be comprehended within the description of orders relating to or appearing to relate to industrial matters" (1970) 127 CLR, at p 172 . (at p201)

20. It follows, then, that if the contract is one which leads directly to a person working in any industry it has the requisite industrial character - it is a contract "whereby a person performs work in any industry". This is the relevant jurisdictional fact which needs to be established. An error of law whereby the Commission assumes or declines jurisdiction may be corrected by the Supreme Court; but once the jurisdiction is established the Industrial Commission is the final arbiter both on matters of law and on matters of fact. Its decision cannot, except by way of appeal to the Commission in court session pursuant to s. 14, be challenged, appealed against, reviewed, quashed, or called in question by any court on any account whatsoever (s. 84). The plaintiff must, as a condition of making out a case for relief, show the existence of one of the five grounds set out in the sub-section. When such a ground has been established it is for the Commission in the exercise of its discretion to determine whether relief will be granted. Thus in exercising its discretion the Commission may decide, as it appears to have done in a number of cases, that relief will only be granted if the agreement appears to be one which is subversive of industrial regulation. By so deciding the Commission might or might not be acting upon a correct legal principle governing the exercise of the discretion given to it. Since s. 88F (1) includes pars (a), (b) and (c) as well as (d) and (e) it may well be that the Commission would not be acting on a correct principle if it were so to decide. But it must be recognized that the principle so adopted is one which relates, not to jurisdiction, but to the exercise of the discretion conferred by the sub-section. The various facts and circumstances relied upon by Kelleher J. as reasons for holding that he had no jurisdiction may lead him to conclude that no order ought to be made but that is a matter for the Industrial Commission. (at p202)

21. We would therefore reject the appellant's submission that the contract is not one of the kind contemplated in the opening words of s. 88F (1). The share-farming agreement provided directly for the employment of the first respondent in the dairy farming or dairying industry and, in accordance with the provisions of the agreement, he performed work in that industry. This, so it seems to us, is the end of the appellant's case in this Court. It was not suggested, nor could it be suggested, that if the agreement be held to fall within the opening words of the sub-section, there was an excess of jurisdiction on the part of the Commission in proceeding to hear and determine the respondent's claim for relief. (at p202)

22. Although this conclusion makes it unnecessary to deal with the ground on which Street C.J. decided the case, we should not wish to be taken as acquiescing in the view expressed by his Honour. Under s. 33 of the Act it is for the Commission to determine its own rules of procedure, paying due attention to the requirements of s. 83. We have been told that the Commission follows the practice of permitting questions of jurisdiction to be argued without requiring a party to elect not to call evidence. There is much to commend this approach. As a general rule it is desirable that an objection to jurisdiction be determined as early as circumstances will conveniently admit so that the tribunal does not embark on a hearing which it lacks authority to conduct. (at p202)

23. We would not apply to objections to jurisdiction the general rule that a defendant should be called upon to elect whether or not he will call evidence before he is permitted to submit that there is no case to answer. The traditional practice whereby a defendant is permitted to take a preliminary objection to jurisdiction and to argue it without being put to his election is quite at odds with the suggestion that a defendant should be compelled to elect before taking an objection to jurisdiction. Even the general rule that a defendant should be called upon to elect before submitting that there is no case to answer must give way to particular circumstances. The discretion of a court to determine a case at an early stage, when appropriate, has been repeatedly asserted (see Young v. Rank (1950) 2 KB 510 ; Ramsden v. Ramsden (1954) 1 WLR 1105, at p 1107; (1954) 2 All ER 623, at p 624 ; Union Bank of Australia Ltd. v. Puddy (1949) VLR 242 ; Sampson v. Edwards (1949) VLR 6 ). (at p203)

24. In the result we would dismiss the appeal. (at p203)

AICKIN J. This matter comes before the Court pursuant to an order granting special leave to appeal from a decision of the Court of Appeal of New South Wales. The matter before that Court was an application for an order requiring the Industrial Commission to exercise its jurisdiction in an application under s. 88F of the Industrial Arbitration Act, 1940 by the respondent in this appeal. (at p203)

2. The terms of s. 88F have already been set out and I need not repeat them. The respondent Barham had applied under that section for an order that an agreement between him and the appellant Stevenson should be declared wholly void and for the payment by Stevenson to him of the sum of $20,000 and for such other relief as might be appropriate. The grounds relied upon were all of those set out in pars (a) to (e) inclusive in sub-s. (1). The terms of the agreement in question are of importance and it is necessary to note them in some detail. The agreement was dated 5th November 1968 and was expressed to be effective as from 26th June 1968 for a period of five years. Barham's evidence was that it had arisen out of an approach which he had made to Stevenson under which Stevenson should acquire a property suitable for development as a dairy farm and that a milk quota should be obtained. Barham identified a suitable property and made appropriate arrangements with the Milk Board for a milk quota. The written agreement is a professionally drawn document said to be in accordance with a form Barham had previously used. It uses the expression "owner" to describe Stevenson and the expression "farmer" to describe Barham. It recites that Stevenson is the owner of approximately 700 acres of land together with necessary improvements thereon to enable dairying operations to be carried on and that the parties have agreed to enter into a share-farming agreement for the purpose of carrying out farming and dairying operations on an area of approximately 350 acres which is designated as "north of a new sub-division fence upon the said area of 700 acres". Clause 1 provided that the farmer should supply (a) all dairy cattle necessary for dairying operations on the property and should at all times supply sufficient number of milking cows to maintain the existing quota attached to the property, and (b) certain specified farm machinery, equipment and vehicles. Clause 2 provided that the farmer should supply "all labour necessary for the normal process of dairying and farming operations upon the property". Clause 3 provided that the owner should supply milking machines and appropriate engines and certain other specified farming plant and equipment. Clause 4 provided that notwithstanding the supply of stock, plant and equipment by the farmer and the owner as referred to in cll. 1 and 3 the said stock, plant and equipment should remain the separate property of each party. Clause 5 provided that all other plant and equipment necessary for the running of the business should be purchased by the parties in equal shares and "shall remain the joint property of the partners". Clause 6 provided that the owner should be "solely responsible and liable for all major development work upon the subject property inclusive of labour and material for fencing and fencing repairs but excluding such labour as may be supplied by the farmer for that purpose". Clause 7 provided that the owner at his expense should supply all seed for pasture improvements. Clause 8 provided that the net profits from dairying and farming on the subject property should be shared equally and all expenses, repairs and replacements to plant either owned by the farmer or the owner should be borne equally by the parties. Clause 9 provided that the milk supplied from the property should go to a specified Co-operative in the joint names of the owner and the farmer and the proceeds should be credited to the joint account. Clause 10 provided that the progeny of the stock provided by the farmer should remain his sole and absolute property. He was to have the right to graze them on the property (but at his own expense in respect of special fodder) to the age of six months. It was then provided that if the stock should be placed for use in the dairying operations they should remain on the property without charge to the farmer, but if they were sold or otherwise disposed of the farmer was to pay to the owner $1.00 per head per month from the age of six months until sold or disposed of. Clause 11 provided that the farmer was to be entitled to occupy the residence on the property free of charge. Clause 12 provided that the farmer was to be permitted a holiday period of three weeks per annum and the expense of replacing all necessary labour for such period was to be at the expense of the parties. It was finally provided that the agreement should operate as from 26th June 1968. (at p204)

3. It was regarded as clear that this agreement was a share-farming agreement within the meaning of the Agricultural Holdings Act 1941, but I do not think anything turns on this. In my opinion it is also clear that it is a partnership agreement in the proper sense of that term. The agreement is one under which each partner is to provide certain capital assets for the purposes of the partnership as particularized in the agreement itself. Each is to supply the requisite labour for certain specified partnership activities. It is I think also clear that the agreement does not require either partner to perform personally the work involved in that aspect of the partnership activities for which he is to supply labour. However, I think it fair to say that the agreement contemplated that Barham would supply at least some of the labour by his own individual work. (at p205)

4. At the hearing before Kelleher J. evidence was given on behalf of the applicant Barham and at the end of his case Kelleher J. permitted counsel for the respondent Stevenson to make a submission with respect to jurisdiction without requiring him to elect whether or not he proposed to call evidence. After hearing argument, Kelleher J. concluded that he had no jurisdiction because the agreement did not answer the description, in s. 88F, i.e., "any contract or arrangement or any condition or collateral arrangement relating thereto whereby a person performs work in any industry". He said as follows:

"It is true that the contract or arrangement led to the
performance by the applicant of work in an industry but, as
appears from the decision in Becker's Case (1972) AR (NSW) 298 , not all
such cases are necessarily within the purview of s. 88F (1). In
substance it was a business venture of a type traditionally
carried on in the rural sector, conducted on a partnership
basis and involving the risks attendant upon its operation. It
was not, in my view, a transaction necessarily in intention or
effect subversive of the scheme and purposes of industrial
legislation, nor a case in which work was performed under
some form of contractual arrangement with a person who
could be an employer, nor one where the respondent was in
the position of an employer or a contractor getting or
purporting to get work done for himself in some way." (at p205)

5. In the Court of Appeal, Street C.J. was in favour of making the order that Kelleher J. should duly hear and determine the matter because he took the view that Kelleher J. had been wrong in not requiring counsel for Stevenson to elect before hearing his submissions on want of jurisdiction. He made some general observations concerning the nature of s. 88F and said that the question of whether an agreement fell within that section could only properly be determined upon a consideration of the whole of the evidence that the parties seek to put before it and that accordingly it was not open to a party to contend at the end of an applicant's case that there was no jurisdiction unless he elects to call no evidence himself. Hope J.A. considered the terms of the agreement and referred to a number of decisions of the Industrial Commission, to the decision of the Court of Appeal in Ex parte V.G. Haulage Services Pty. Ltd.; Re Industrial Commission of N.S.W. (1972) 2 NSWLR 81 and to the decision of this Court in Brown v. Rezitis [1970] HCA 56; (1970) 127 CLR 157 . He said that it was clear that the section was not limited to a contract for the provision of services, although that was no doubt the commonest form of agreement to which the section did apply. He said that it was not enough to take an agreement outside the section that it was either a share-farming agreement or a partnership agreement or both. He concluded that the agreement of 5th November 1968 had the "necessary industrial colour and flavour" and said (1975) 1 NSWR, at p 45 :

"If the parties had so desired, the contract between them
could have been one of employer and employee, and, if the
contract which was entered into were avoided by the
Commission the defendant could be regarded as a person
standing in the position of an employer for whom the
plaintiff performed work."

He evidently regarded those conclusions as sufficient to bring the contract within s. 88F. With due respect I am unable to agree that, without substantial transformation, the contract could have been one of employer and employee. I do not think that, if it were avoided, there would be revealed a situation in which the appellant Stevenson could be regarded as a person standing in the position of an employer for whom the respondent Barham worked. If in fact the agreement were avoided, one would find Barham running and milking his own cows on someone else's property and dividing the net proceeds of that operation with the owner of the property. It is I think, a completely inadequate, and indeed misleading, description of that situation to say that it is one under which Barham performed work for Stevenson or that Stevenson stood in the position of an employer of Barham. It is not to be supposed however that an examination of what would be revealed if the contract were avoided is a test of whether it falls within the section and it is certainly not the test. It may in some cases be some indication of whether the contract, though not a sham, is the kind of subterfuge of which Barwick C.J. spoke in Brown v. Rezitis [1970] HCA 56; (1970) 127 CLR 157 . (at p207)

6. Hutley J.A. dissented upon the ground that there was material upon which Kelleher J. could properly arrive at his conclusion, notwithstanding that some other judge might have arrived at a different decision. He relied upon the authorities concerning a writ of mandamus and in particular upon R. v. War Pensions Entitlement Appeal Tribunal; Ex parte Bott [1933] HCA 30; (1933) 50 CLR 228 and the passage from the joint judgment of Rich, Dixon and McTiernan JJ. (1933) 50 CLR, at p 242 for the view that the Court of Appeal could not interfere unless Kelleher J. had either actually or constructively refused jurisdiction. Taking the view that he had not done so, Hutley J.A. held that there was no basis for the issue of an order in the nature of a mandamus. In the appeal before this Court this point was not raised, and the only point argued was whether the agreement did answer the description in s. 88F (1). (at p207)

7. In the Industrial Commission various views have been expressed from time to time as to the proper construction of s. 88F and as to whether any and what restrictions operate to confine the apparent scope of the very wide words used. It is not necessary for present purposes to review all those authorities. Many of them are referred to in the decision of the Commission in Court Session, In re Becker and Harry M. Miller Attractions Pty. Ltd. (No.2) (1972) AR (NSW) 298 , but before coming to that decision it is necessary to refer first to the decision of this Court in Brown v. Rezitis (1970) 127 CLR 157 . The actual decision in that case was that a person may be a party to proceedings under s. 88F though not a party to the contract or arrangement in question, and that the power of the Commission to make an order for the payment of money under sub-s. (2) is not limited to the making of an order for payment of money by one of the parties to the contract or arrangement but extends to such orders as can reasonably be thought to have a real connexion with the making, variation or avoidance of the contract or arrangement. Barwick C.J. said (1970) 127 CLR, at p 164 :

"It must be borne in mind that one of the purposes of the
section is to deal with subterfuges, subterfuges which will
take the worker out of the relationship of master and servant
and therefore out of the operation of an industrial award
designed, amongst other things, for the protection of workers
in industry. There may be persons involved in the subterfuge
who are not parties to the contract or arrangement but who
are in reality the actors deriving benefit from the making or
the execution of the contract or arrangement.
Also the power given to the Commission includes a power
to declare the contractual arrangements void as from their
making, not merely void as between the parties, but
absolutely void. If there are other persons whose rights are
known to depend on the continuance of the contract as a
valid instrument according to its terms, then natural justice
may in the circumstances require the Commission to afford
such persons an opportunity to be heard. Again the
avoidance of the contract or arrangement may be a step in
uncovering the real transaction benefiting at the expense of
the worker parties other than those in whose name the
contract or arrangement was apparently made."

His judgment is primarily directed to the proper construction and scope of sub-s. (2), and the question whether there was any basis for making the order actually made by the Industrial Commission in that case, namely an order that a variety of persons having connexions both close and remote with transactions could be made jointly and severally liable for the whole of the amount decided upon as necessary to restore the applicant to his previous position. (at p208)

8. Menzies J. said (1970) 127 CLR, at p 169 :

"The section is clearly intended to confer a comprehensive
power upon the Commission to go to the substance of an
arrangement made for a person to perform work in an
industry - and to do so in disregard of the legal dress in
which the arrangement has been clothed - in order to put
such a worker in no worse a position than if he had been
working under a contract of employment protected by award
conditions. The central power conferred is to avoid or vary
the contract or arrangement for work actually made, upon
proof of one of the grounds stated. These have in common the
element that advantage has been taken of a worker to obtain
cheap labour."

His judgment is however confined to the kind of connexion necessary between a respondent and the contract or arrangement in order to justify the making of an order against such person to make payments to the applicant. (at p208)

9. There was no occasion in that case for determining the meaning and scope of sub-s. (1) and I do not consider that that case provides any but the most indirect assistance in the solution of the present problem. The next case is the decision of the Court of Appeal of New South Wales in Ex parte V.G. Haulage Services Pty. Ltd. (1972) 2 NSWLR 81 , in which an order for prohibition was sought against the Commission in respect of certain orders made under s. 88F. In that case two agreements had been entered into in writing by one Kish with V.G. Haulage Services Pty. Ltd. The first agreement provided for him to buy a truck on terms over five years and to enter into a work agreement with that company and the second agreement provided for him to pay to the company the sum of $2,500 in consideration of it obtaining haulage and freight contracts for him over the five year period. The latter agreement was subject to and dependent upon Kish applying for and being allotted 1,000 fully paid redeemable preference shares and it was a term of the agreement that he would be at liberty to employ a driver for the truck. Kish was then serving in the Royal Australian Navy and he made an arrangement with one Fenning that he should drive the truck until Kish obtained his discharge from the Navy. In fact while the agreement was operative Kish did not drive the truck at all and all the driving was done by Fenning. It does not appear whether Fenning was employed by Kish at the award rate or otherwise, or whether he received in effect what Kish would have received from the cartage business if he had been performing the actual work himself. It was held by the Court of Appeal that the Industrial Commission had jurisdiction to make a declaration and orders under s. 88F in any case where the contract is for the performance of work of an industrial character and where "the contract can be regarded as inimical to the purposes of the Act". It was also held that it is not necessary that the contracting party should himself perform the work. For this proposition reliance was placed on Brown v. Rezitis [1970] HCA 56; (1970) 127 CLR 157 . The judgment of Jacobs J.A., in which Mason J.A. and Hardie A.J.A. agreed, rejected the two principal arguments advanced which were first that there was no jurisdiction where the applicant was not at all times a person who was working in the industry, which was alternatively expressed as an argument that there is no jurisdiction to declare contracts void in favour of an employer of labour. The second ground is not material in the present case. Jacobs J.A. said (1972) 2 NSWLR, at pp 86-87 :

"It is not necessary that the party making the contract or
arrangement should actually have performed work in the
industry under the impugned contract or arrangement. It is
in my view certainly sufficient in such a contract as the
present one, dealing with the use of one truck sold with a
work agreement relating thereto, that the contract or
arrangement envisages that the party to the contract or
arrangement will during its currency perform work in the
industry. Once this factor is present, certainly the
Commission has jurisdiction, provided the contract and arrangement
has an industrial colour or flavour, if I may so describe it."

He then quoted from Sheldon J. in Davies v. General Transport Development Pty. Ltd. (1967) AR (NSW) 371, at p 373 where he pointed out that s. 88F:

"... not only proscribes (sic) transactions which directly
undermine awards (see (d) and (e)) or threaten general
industrial standards (which, I think, is the most relevant
'public interest' referred to in (c)), but it also, in (a) and (b),
strikes separately at those which are 'unfair' or 'harsh' or
'unconscionable'. Presumably, this is because any
transaction, leading to work in an industry, which can be so
described is regarded as inimical to the purposes of the Act."

Jacobs J.A. went on to say (1972) 2 NSWLR, at p 88 :

"I think this last sentence properly expresses the principle,
in that the transaction must directly lead to work in the
industry - that is what gives the industrial colour or
flavour - but there is no suggestion in the passage that there
must be throughout an identity between the person working
and the contracting party."

The following paragraph appears to me with respect to be for present purposes the critical passage in his judgment (1972) 2 NSWLR, at p 88 :

"It seems to me that the legislature was concerned to
empower the industrial tribunals, more recently the
Commission alone, to examine contracts and arrangements which led
directly to the employment of persons and the performance of
work in any industry, not simply because the contract or
arrangement in a commercial sense involves the provision of
goods and services, with a consequent performance of work
in an industry, but rather because the impugned agreement
or arrangement itself directly envisages the employment of a
person or persons in industry and has a recognizable impact
upon the conditions of that employment, and, whether or not
it envisages that a contracting party will perform the work,
discloses a purpose that by the adoption of the arrangement
the industrial objectives of the legislation will be more or less
defeated."

As I read that paragraph there are two essential features required: (1) that the impugned agreement or arrangement directly envisages the employment of a person or persons in an industry and has a recognizable impact upon the conditions of that employment, and (2) that it discloses a purpose that by the adoption of the arrangement the industrial objectives of the legislation will be more or less defeated. (at p210)

10. This decision was considered by the Industrial Commission in Court Session In re Becker and Harry M. Miller Attractions Pty. Ltd. (No.2) (1972) AR (NSW) 298 where that Commission considered an agreement between an artist and a company which acted as an artist's manager or theatrical agent. Under the agreement the manager was to obtain and negotiate contracts under which the artist would be engaged or employed by other persons to perform on the stage or in films, or on radio or television. It was held that the agreement was one "whereby a person performs work in an industry". The Commission reviewed some of the authorities and referred both to the Court of Appeal decision and to the High Court decision referred to above. They said (1972) AR (NSW), at p 305 :

"In our view, 'a person performs work in any industry'
within the meaning of s. 88F when he does so either as an
employee or (the more usual case arising under the section)
by some form of contractual arrangement with a person who
could be an employer. 'Performs work' really means 'performs
work for or through another'. This meaning, in our view,
provides the necessary industrial link."

In argument before this Court counsel for the respondent accepted that construction of the words "performs work". The Commission said that "... the word 'whereby' has its permitted dictionary meanings of 'by means of or by the agency of which'; 'in consequence of, as a result of, or owing to which' ... and that this accords with the statement of Jacobs J.A. in the V.G. Haulage Case that the transaction must 'directly lead to work in the industry' (1972) AR (NSW), at p 308 ". (at p211)

11. At first sight the expression "performs work for or through another" seems unusual, but it is I think made clear by the context of the case with which the Commission was dealing. Primarily, s. 88F is concerned with some person who "performs work for another". The addition of the words "or through" extends the operation to fit the facts of the case in question, because the point relied upon had been that the artist did not perform work for the theatrical agent but obtained employment by other persons either as an employee properly so-called or perhaps as a contractor, introduced by or otherwise obtained by the theatrical agent. The conclusion therefore was that the agency agreement was within s. 88F. Whether the actual decision depending upon the extension effected by the words "or through" is correct is not material to the present case, but it is useful as emphasizing that the basic concept is of a contract whereby one person performs work in an industry for another person. The requirement is illustrated by the decision of the Industrial Commission In re Player and Kacy (1971) AR (NSW) 125 where the agreement in question was for the sale of his share in a partnership business and of his vehicle by one of four partners, the other three joining in the agreement as consenting parties. The partnership operated as general carriers and under the partnership agreement each partner contributed his own vehicle, which was not partnership property, and the partnership owned an additional vehicle used when a partner's vehicle was off the road. Sheppard J. said (1971) AR (NSW), at p 129 :

"I do not think however that the Act was intended to apply
to such an arrangement. An essential figure is missing - the
man who stands in the place of an employer and who seeks to
get around or whose activities have the effect of getting
around the award system established by the Act. No question
of any award being transgressed or bypassed is involved; no
question of any person doing work for some other person
arises." (at p212)

12. In my opinion the present agreement does not fall within s. 88F. It is not an agreement by which one person works for another. It is an agreement by which each party agrees to provide substantial capital assets to a partnership business, each retaining ownership of such assets, and to join with the other in subsequent purchases where requisite of other capital equipment which will become partnership property, and to use all such assets in conducting the partnership business of dairy farmers. Each is to be responsible for certain identified work in the business and to provide or supply the necessary labour to carry out such work. There is no obligation to perform the work personally, though, as I have said above, the agreement contemplated that the respondent Barham would perform personally at least some of the work for which he was responsible. Under such an agreement neither party performs work for the other. Each performs or procures the performance of work for the partnership, i.e. for himself and his partner. For that reason this agreement does not meet the statutory requirement of being one whereby a person performs work for another. Nor can it be said of this agreement that it "discloses a purpose that by the adoption of the arrangement the industrial objectives of the legislation will be more or less defeated". I can see nothing in the Act generally with which such a partnership agreement is inconsistent in terms or in policy. The Act is concerned with employment generally and by s. 88E and s. 88F is extended to include other situations regarded as substantially equivalent to, or as substitutes for, employment but the present agreement does not come within the words or the spirit of those extensions. This is not to say that every agreement cast in the form of a partnership agreement or of a share-farming agreement is necessarily for that reason alone outside the section, but the present agreement certainly is. (at p213)

13. For these reasons the appeal should be allowed with costs and the order of the Court of Appeal set aside and in lieu thereof there should be substituted an order that the application be dismissed with costs. (at p213)

ORDER

Appeal dismissed with costs.