Industrial Court of New South Wales CITATION: Gerard Landman and Michael Clapham v Grange Securities Limited [2006] NSWIRComm 253 APPLICANT TO THE NOTICE OF MOTION: Grange Securities Limited PARTIES: RESPONDENTS TO THE NOTICE OF MOTION: Gerard Landman Michael Clapham FILE NUMBER(S): IRC 2823 & 4560 of 2005 CORAM: Staunton J CATCHWORDS: Unfair contract - notices of motion - orders sought dismissing applications for relief on three jurisdictional grounds - (i) that remuneration payable or receivable is in excess of remuneration cap provided in s 108A; (ii) that the claims are for breach of contract only as per Sydney Water; (iii) that the claim for tortious conduct is outside Court's jurisdiction - held it cannot be said at this stage that no order could be made in relation to Sydney Water and tortious conduct points that would be within jurisdiction - principle of Nagle v Tilburg and Majik Markets v Brakes and Service Centre applied - motion to dismiss claims on points (ii) and (iii) refused - ascertainment of the remuneration cap as expressed in s 108A - consideration on the facts as to whether bonus paid or received (or payable or receivable) as understood at law - held bonus payment discretionary and at best only claimable at time of termination - remuneration cap provisions of s 108A not offended - discretion arising under s 106 significant in final determination of substantive proceedings - orders sought to have both summonses dismissed for want of jurisdiction pursuant to the provisions of s 108A refused - order as to costs. LEGISLATION CITED: Industrial Relations Act 1996 Industrial Relations Amendment (Unfair Contracts) Act 2002 Commander Australia Limited v Kerr (2004) 134 IR 160 Crowe v UCS Developments Pty Limited (2003) 130 IR 266 King v State Bank of New South Wales (No. 2) (2002) 126 IR 407 Majik Markets Pty Limited v Brakes and Service Centre Drummoyne Pty Limited and ors (1991) 39 IR 169 Mayne Nickless Limited v Industrial Relations Commission of New South Wales (2004) 141 IR 1 CASES CITED: Merrill Lynch International (Australia) Limited and ors v Commissioner of Taxation (2001) 113 FCR 79 Nagle v Tilburg (1993) 51 IR 8 Pullen v R & C Products Pty Limited (1994) 60 IR 183 State of New South Wales v Banas (2004) 137 IR 63 Stonham v Speaker of the Legislative Assembly (2000) 97 IR 325 Sydney Water Corporation Limited and anor v Industrial Relations Commission of New South Wales and anor (2004) 61 NSWLR 661 HEARING DATES: 11/8/2006 DATE OF JUDGMENT: 09/22/2006 APPLICANT TO THE NOTICE OF MOTION: Mr J Phillips SC SOLICITORS: LEGAL REPRESENTATIVES: PricewaterhouseCoopers Legal (fomerly Deacons) RESPONDENTS TO THE NOTICE OF MOTION: Mr P Ginters of counsel Gilbert & Tobin Lawyers JUDGMENT: - 10 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Staunton J DATE: 22/9/2006 Matter No IRC 2823 of 2005 Gerard Landman v Grange Securities Limited Application under s 106 of the Industrial Relations Act 1996 Matter No IRC 4560 of 2005 Michael Clapham v Grange Securities Limited Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2006] NSWIRComm 253 1 The common respondent in the substantive proceedings in these matters has filed notices of motion with respect to both applications, seeking orders that the respective applications for relief be dismissed. 2 The first and primary basis for the respondent's motions is that the provisions of s 108A of the Industrial Relations Act 1996 take both matters outside the jurisdiction of the Court in that, it is said, the remuneration payable or receivable to each applicant is in excess of the monetary cap provided in s 108A of the Act. That cap is $200,000. 3 The second basis grounding the respondent's motion is that the respective claims for relief are no more than claims for breach of contract and, having regard to the principles enunciated by the Court of Appeal in Sydney Water Corporation Limited and anor v Industrial Relations Commission of New South Wales and anor (2004) 61 NSWLR 661, are outside the jurisdiction of the Court. 4 Thirdly, in relation to Matter No IRC 2823 of 2005 where the applicant is Mr Gerard Landman, the respondent's motion contends that Order 3(c) sought in the summons for relief seeks a remedy for tortious conduct that is outside the jurisdiction of the Court. The substantive applications 5 Both applications are brought pursuant to s 106 of the Act. Both applicants are former employees of the respondent. Both applicants seek relief from the alleged unfairness of their respective employment contracts. 6 Matter No IRC 2823 of 2005 concerns Mr Gerard Landman. Mr Landman commenced employment with the respondent on 1 May 2002 in the position of Manager, Fixed Interest. He was summarily terminated on 6 September 2004. 7 At the time of his appointment, the terms of Mr Landman's employment contract included the following: (i) remuneration of $85,000 per annum, including superannuation; (ii) reimbursement of reasonable work related expenses incurred by the applicant and approved by the respondent, subject to evidence of the expense; (iii) 4 weeks notice (or 4 weeks pay in lieu of notice) by the respondent to terminate the applicant's employment for 'performance reasons, following the appropriate counselling or disciplinary procedures'; (iv) summary termination of the applicant's employment by the respondent with written notice for misconduct, amongst other grounds; and (v) an entitlement to participate in the respondent's bonus scheme which is to be paid on an annual basis during August each year. 8 During his employment, Mr Landman's salary was increased and he was promoted to the position of Associate Director, Fixed Interest. His entitlement to participate in the respondent's bonus scheme continued. 9 When Mr Landman was terminated on 6 September 2004, no bonus was paid to him for the year ending 30 June 2004. 10 In his application for relief, Mr Landman seeks orders declaring the contract void in whole or in part either ab initio or some other time and that the contract was unfair, harsh and unconscionable and contrary to public interest. 11 Further, Mr Landman seeks orders: (i) Varying the contract by insertion of a formula to determine the bonus payable to him in respect of his employment for the bonus period ending 30 June 2004. (ii) Increasing the notice period of four weeks to six months; and (iii) The insertion of a new clause that 'the Company will not defame or otherwise disparage [Mr Landman] to third parties during or following the termination of [his] employment'. 12 By way of variation, the clause Mr Landman seeks to be inserted into his contract of employment in relation to a bonus payment is pleaded as follows: In respect of the bonus period from 1 July 2003 to 30 June 2004 (the Bonus Period), you are eligible to participate in the Bonus Scheme on the following basis: (a) In respect of the Bonus Period, you are entitled to a bonus of $400,000 calculated as follows: B = PC x BP where: B means the bonus for the Bonus Period; PC means your contribution to the Company's net revenue for the financial year ending 30 June 2004. Such contribution is expressed as a percentage; and BP means the bonus pool for the Bonus Period. (b) Your entitlement to the above bonus will not be lost or adversely affected in any way in the event your employment ends for any reason before the bonus is paid. 13 Consequent upon the above contractual variations, Mr Landman seeks a money order together with interest and costs. 14 Matter No IRC 4560 of 2005 concerns Mr Michael Clapham. Mr Clapham commenced employment with the respondent on or about 23 February 2004 in the position of Associate Director, Fixed Interest. He resigned on 1 September 2004 in circumstances relevant to the contractual unfairness alleged. 15 The terms of Mr Clapham's employment contract included the following: (i) the applicant was entitled to 'full participation in the Company's Bonus Scheme, which will be paid on an annual basis, around September each year'. (ii) remuneration of $175,000 per annum including superannuation; (iii) 6 months probationary period; and (iv) 4 weeks notice of termination by either party. 16 When Mr Clapham resigned on 1 September 2004, no bonus was paid to him for the period ending 30 June 2004. 17 In his application for relief, Mr Clapham seeks orders declaring the contract void in whole or in part either ab initio or some other time and that the contract was unfair, harsh and unconscionable and contrary to public interest. 18 Further, Mr Clapham seeks an order to vary the contract of employment by inserting a clause providing for a formula for the calculation of a bonus payment to him for the period ending 30 June 2004. The specific order sought is pleaded as follows: In respect of the bonus period ending 30 June 2004 (the Period), you are eligible to participate in the Bonus Scheme on the following basis: (i) You are entitled to a bonus of $425,000 calculated as follows: B = (S + B) - GS where: B means the bonus for the Bonus Period. S means your annual salary of $180,000 from Toronto Dominion (Toronto) immediately before accepting this offer of employment; B means the bonus you would have received from Toronto (if you had not accepted this offer) in respect of its first bonus period ending after you commence employment with Grange Securities, namely $420,000. GS means your annual salary from Grange Securities of $175,000, including superannuation. (ii) Your entitlement to the above bonus will not be lost or adversely affected in any way in the event your employment ends for any reason before the bonus is paid. 19 Consequent upon the above contractual variation, Mr Clapham seeks a money order together with interest and costs. Considerations 20 The three issues identified by the respondent that, it is said, take the substantive applications outside the jurisdiction of the Court may be identified for current purposes as follows: (i) the s 108A point; (ii) the Sydney Water point; (iii) the tortious conduct point. 21 I propose to deal firstly with points (ii) and (iii) as identified above. The Sydney Water point 22 The basis of this point is that the respondent contends the respective claims for relief are no more than claims for breach of contract and are accordingly outside the Court's jurisdiction. 23 The approach that should be taken where jurisdiction is raised as a threshold matter before all relevant matters of fact and substance have been heard and determined is well settled. It was enunciated in the decision of the Full Court of the Industrial Court of New South Wales in Nagle v Tilburg (1993) 51 IR 8 and particularly at 11 where the Court stated: ... whilst it is desirable for a case to be determined at an early stage it is only open to do so at the appropriate stage of the proceedings, that is, where the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, it seems to us, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such a determination to be made. 24 Further, as was highlighted in Nagle v Tilburg, the Court of Appeal considered the principle to apply where a court was considering a challenge to jurisdiction as a threshold matter in Majik Markets Pty Limited v Brakes and Service Centre Drummoyne Pty Limited and ors (1991) 39 IR 169 at 170 where Kirby P said: ... Such a course is often a sensible one where a party has a substantial threshold argument which, if it succeeds, will knock out the claim and save the costs and inconvenience that attend a protracted hearing of proceedings on the merits. But, as with any threshold relief of this kind, it must be conserved to a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation. Necessarily, refusal of relief at the threshold will not finally determine that jurisdiction exists for any order which the Commission might make between the parties. This is because, to secure relief, the claimants must demonstrate that no order could be made which would be within jurisdiction . (emphasis added) 25 The Sydney Water point so described in these proceedings is, in my view, a matter that cannot be said to be so clear cut on the pleadings that it could definitely be said that no order could be made in relation to it which would be within jurisdiction. In Sydney Water Corporation Limited and anor v Industrial Relations Commission of New South Wales and anor (2004) 61 NSWLR 661 the Court of Appeal determined that unfair conduct in breach of a contract of employment does not render a fair contract unfair and amenable to relief under s 106 of the Act. It is the contract itself that must be demonstrated to be or to have become unfair. On that point, Mason P in Sydney Water said: [25] Section 106(2) states in the plainest of terms that a contract may become unfair, so as to attract the jurisdiction of the Commission, because of post-contract conduct of the parties. But it is the "contract" that is to be held unfair, and not the conduct, in the final analysis. Unfairness may of course stem from what the contract fails to provide, for example as regards termination procedures. [26] The Commission may examine not merely the terms of the contract (or arrangement) as originally negotiated, but also the manner in which it has ultimately "worked out and operates as between the parties to it" ( Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 133-134 per Kirby P. See generally Walker at 145-149; Rothmans Distributions Services Ltd v Full Court of the Industrial Court of New South Wales (1994) 53 IR 157 at 160). 26 In the substantive proceedings, the applicants claim their respective contracts of employment were or became unfair on the basis of precise factual circumstances relating, inter alia, to representations made by the respondent, particularly going to the applicants' entitlement to be paid a bonus for the period ending 30 June 2004. 27 In reply, the respondent denies much of the factual circumstances and alleged representations pleaded by the applicants. As well, the respondent asserts there was no contractual right for the applicants to be paid any bonus. The payment of any bonus, it is said, was discretionary calculated according to a particular formulaic approach to be undertaken by the respondent. As well, the respondent contends the purpose of the bonus scheme was to retain employees as well as a reward for past performance. Further, it was not the respondent's practice to pay bonuses to employees who are not employed (Mr Landman) or who resign from their employment (Mr Clapham) prior to a bonus being paid. 28 The representations allegedly made by, and the latter assertions of, the respondent go to the heart of the applicant's claim of contractual unfairness. 29 Beyond the bare pleadings filed by the respective parties in the substantive proceedings and given the above outline to which I have but generally adverted, the Court is simply not in a position to determine those matters that require to be ventilated before any finding of contractual unfairness could be conclusively determined. 30 In other words, on any prima facie consideration, it cannot conclusively be said that no order could be made in relation to this particular point that would be within jurisdiction. Accordingly, the respondent's motion at this threshold stage in the proceedings to dismiss the applications on this point, that is, the Sydney Water point, is refused. The tortious conduct point 31 I turn now to the tortious conduct point raised by the respondent as being outside the jurisdiction of the Court. Specifically, the order sought in Matter No IRC 2823/2005 is to vary the contract between Mr Landman and the respondent by inserting a new clause to the following effect: The Company will not defame or otherwise disparage you to third parties during or following the termination of your employment. 32 In his application for relief, Mr Landman pleads that his contract of employment was and is unfair, harsh, unconscionable and contrary to public interest because, inter alia: It permitted the respondent to defame the applicant by its imputations that the applicant: (i) acted in such an unprofessional manner to justify being dismissed; (ii) acted in such a dishonourable manner as to justify being dismissed; and (iii) is not a person of integrity. 33 In the summons for relief filed on behalf of Mr Landman, the summary of matters of fact and law state relevantly as to this point: [29] On 6 September 2004, the respondent contacted some of the applicant's clients and made statements to the following effect: "Mr Landman no longer works for Grange, effective immediately". "I've been instructed not to say anything further". "I've been instructed not to say anything but it is effective immediately. It's disappointing but lets just say that sometimes this sort of thing happens in this industry." [30] The defamatory imputations which arise from the respondent's statements referred to in paragraph 29, include the following: (i) the applicant acted in such an unprofessional manner to justify being dismissed; (ii) the applicant acted in such a dishonourable manner as to justify being dismissed; and (iii) the applicant is not a person of integrity. 34 On behalf of Mr Clapham, it was submitted that the jurisdiction of the Court to make orders under s 106 that have regard to or take into account physical or mental injury have been considered in a number of authorities in this jurisdiction. See, for example, Marks J in Pullen v R & C Products Pty Limited (1994) 60 IR 183 at 215-216, where his Honour considered there was jurisdiction to make money orders for distress although in that case his Honour declined to do so; Hungerford J in Stonham v Speaker of the Legislative Assembly (2000) 97 IR 325 where his Honour formed the tentative view that the 'present state of authorities on this aspect would seem to favour a view that the power exists to entertain' a claim for money orders for stress and suffering; the Full Court in King v State Bank of New South Wales (No. 2) (2002) 126 IR 407, where the Court upheld such an order made at first instance by Marks J, although the quantum was reduced from $15,000 to $5,000; and the Full Court in State of New South Wales v Banas (2004) 137 IR 63 where an appeal from such an order was rejected and the quantum maintained - although the Full Court made it clear that such cases should be carefully scrutinised. 35 In State of New South Wales v Banas the Court said: [87] We note that in King v State Bank (No 2) the Full Bench was dealing with a situation in which the respondent was not challenging generally the Commission's jurisdiction to make orders under s 106 that had regard to or took into account "distress" caused upon termination of employment; the respondent had limited its jurisdictional challenge to the facts of that case. The Full Bench commented at [102] that it considered the respondent's concession as to the Commission's jurisdiction "to make monetary orders under s 106 which have regard to or take into account "distress" caused upon termination [was] properly made." [88] Whilst the issue of the Commission's jurisdiction to make orders under s 106 that have regard to or take into account physical or mental injury or "stress and suffering" was not the subject of full debate in King v State Bank (No 2) and that the Full Bench's conclusions regarding this aspect of the Court's jurisdiction were somewhat tentative , there was nothing put by the appellant in the present proceedings that would lead us to take a different view. In this respect we note the interlocutory judgment of Hungerford J in Stonham v The Speaker of the Legislative Assembly (NSW) (2000) 97 IR 325 and his Honour's tentative view that the "present state of the authorities on this aspect would seem to favour a view that power exists to entertain" a claim for stress and suffering. We also note the discussion on this issue in Pullen v R & C Products Pty Ltd (1994) 60 IR 183 at 215 - 216 where Marks J appears to accept there was jurisdiction to make money orders for distress although in that case his Honour declined to do so. [89] We consider that there was jurisdiction to make orders to compensate the respondent for a period of absence without pay brought about by his illness and for stress and suffering. 36 While the order sought by Mr Landman does not go to 'illness and stress' as considered and understood in the above-mentioned authorities, the order does go to matters that, on first considerations, arise directly from the contractual relationship between the parties and go, in the widest sense, to the notion of personal injury as understood at law. 37 Ultimately, it will turn on the evidence adduced in support of the order sought. Whether or not such a variation of the type sought would be granted by this Court if the relevant unfairness is made out is a matter for the discretion of the Court in light of all the facts and circumstances established by the evidence before it. Further, I am not persuaded at this threshold stage of proceedings that no order could be made in relation to this particular point that would be within jurisdiction. 38 Having regard to the above, the respondent's motion to dismiss Mr Landman's application at this stage for want of jurisdiction on this point, that is, the tortious conduct point, is refused. The s 108A point 39 I now turn to the s 108A point which is the primary basis of the respondent's motion to dismiss the substantive applications for want of jurisdiction. 40 As a general proposition, this point is, I believe, readily amenable to threshold determination as a discrete issue. It goes squarely to one issue, that being whether the applicants' remuneration package that was paid or payable, received or receivable during the twelve month period (in whole or in part) immediately before the applicants termination exceeded the remuneration cap of $200,000. 41 In most circumstances, given the definitions that accompany s 108A, the determination of an employee's remuneration at the relevant time is resolved by arithmetical calculation based on readily ascertainable and indisputable financial data. Having said that, there have been and, as this matter demonstrates, there are circumstances where the ascertainment of the remuneration cap as expressed in s 108A is open to arguments of statutory construction. 42 Section 108A(1) of the Act provides: 108A Employment contracts in respect of which applications cannot be made (1) An application cannot be made for an order under this Division if the application relates to a contract of employment under which: (a) a remuneration package that exceeds the remuneration cap is paid or received (or is payable or receivable) during the period of 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination), or (b) a remuneration package is paid or received (or is payable or receivable) during a period of less than 12 months immediately before the application is made (or, if the application concerned relates to a contract that has been terminated, immediately before the termination) that would, if the remuneration package had been paid or received (or been payable or receivable) for a period of 12 months, have exceeded the remuneration cap. 43 The relevant definitions as provided by s 108A(3) of the Act for the purposes of s 108A are: contract of employment means any contract or arrangement under which work is done by a person in the capacity of an employee, and includes a related condition or collateral arrangement with respect to such a contract. employment benefit means a benefit provided to an employee at the cost of his or her employer (being a benefit of a private nature) and, without limitation, includes: (a) contributions payable to a superannuation scheme by an employer in respect of the employee, including any liability of that employer to make any such contributions or to pay costs associated with that scheme, or (b) the provision by an employer of a motor vehicle for private use by the employee, or (c) any other benefit prescribed by the regulations for the purposes of this definition. monetary remuneration includes any performance-related bonus or incentive payment. remuneration cap means: (a) $200,000, except as provided by paragraph (b), or (b) any greater amount prescribed by the regulations (being a regulation that increases the amount by reference to increases in the amount referred to in section 83 (1) (b)). remuneration package means the total value of monetary remuneration and employment benefits payable or receivable under a contract of employment. 44 In these proceedings, the respondent contends, having regard to the respective substantive applications for relief, what is being asserted is that Mr Clapham and Mr Landman, for the period ending 30 June 2004, were entitled to receive or be paid, a bonus. Accordingly, it is said, on their own cases, each is asserting a bonus that is payable or receivable. In Mr Landman's case, it is $400,000 and for Mr Clapham $425,000, which clearly places both of them above the remuneration cap as provided by s 108A. 45 I have to say I am not persuaded the applications for relief can be so readily characterised. In saying that, some background as to the respective employment contracts of the applicants, reference to relevant correspondence between the parties together with the formal pleadings filed in the substantive applications warrants consideration. Those background matters, essentially undisputed, have been helpfully detailed on behalf of the applicants as follows: (i) The offer of employment to Mr Landman dated 22 April 2002 contained the following clause: You are entitled to full participation in the Company's bonus scheme, which will be paid on an annual basis, around August each year. (ii) The offer of employment to Mr Clapham dated 13 January 2004 contained the following almost identical clause: You are entitled to full participation in the Company's bonus scheme, which will be paid on an annual basis, around September each year. (iii) In a letter to solicitors acting for Mr Landman by solicitors acting for Grange, it is stated at page 10, paragraph 46: Mr Landman had no contractual entitlement to be paid a bonus for the year ended 30 June 2004 for the reasons already outlined. Mr Landman's contract entitled him to participate in the bonus scheme. It did not entitle him to a bonus. That is a matter within Grange's discretion. As already mentioned, it is Grange's practice not pay bonuses to employees whose employment ceases before bonuses fall due. At the time of Mr Landman's dismissal, no bonus had been determined for him. (iv) A further letter from solicitors for Grange to solicitors for Mr Clapham reads: It is true that there is no policy or other document recording terms and conditions upon which bonuses are paid. Bonuses are determined by Grange Securities after the company's financial performance has been determined, taking into account a range of factors including those already mentioned. (v) Furthermore, at paragraph 10(i) the letter continues on the same page that: No representation was made to Mr Clapham that he would be entitled to a bonus in the period ended 30 June 2004. Mr Clapham was told that he would be eligible to participate in the company's bonus scheme, nothing more. (vi) In Matter No IRC 2823 of 2005 concerning Mr Landman, the employer's Reply states at B7: The applicant was entitled to participate in the respondent's bonus scheme under the terms of the Employment Contract (Bonus Scheme) but the applicant has no contractual entitlement to receive a bonus payment under the Bonus Scheme. The allocation of bonus payments to the respondent's eligible employees under the Bonus Scheme is at the absolute discretion of the respondent. (vii) In Matter No IRC 4560 of 2005 concerning Mr Clapham, the employer's Reply at paragraph B24 uses the same wording. (viii) In Matter No IRC 2823 of 2005 concerning Mr Landman, the employer's Reply provides at paragraph B8: The terms of the Bonus Scheme are not reduced to writing and are not provided to the respondent's employees. (ix) In the matter of Landman, at paragraph B9 of the employer's Reply, the calculation of any bonus payable to an eligible employee under the bonus scheme is set out in eight paragraphs as follows: (a) after shareholders receive a minimum return on equity, a share of the profit over and above the required return on equity is incrementally added to the bonus pool in the Bonus Scheme; (b) the base capitalisation of the respondent for return on equity calculations is adjusted for any capital movements (such as increased by any capital contributions and reduced by any dividends); (c) no bonus payment calculation is undertaken for the Bonus Scheme unless the required minimum return on equity achieved. Any net profit percentage over and above that minimum return on equity is then shared between the shareholders and the total bonus pool in accordance with a sliding scale; (d) when the total bonus pool has been calculated, the distribution of the amount of the total bonus pool between the various divisions of the respondent is determined by the Executive Management Committee of the respondent; (e) the heads of each division of the respondent then exercise their discretion to allocate the share of the total bonus pool for their division between the staff in their division; (f) the factors relevant in determining any bonus payment to an individual eligible employee include but are not limited to past performance, the objective of retaining valued employees, prevailing market conditions, the employee's contribution to the respondent's financial performance, and the employee's non-financial contribution such as collegiate performance with other team members, contribution to developing new business and strategic development, and compliance with regulatory requirements; and (g) the final individual bonus payment allocations are reviewed and ratified by the Remuneration Committee of the respondent; (h) to be eligible to receive a bonus payment, an otherwise eligible employee must remain in employment with the respondent until such time as the bonus payments are made, which is usually August/September of each year. (x) In the matter of Clapham, at paragraph B26 of the employer's Reply, the calculation of any bonus payable to an eligible employee under the bonus scheme is set out in nine paragraphs. With the exception of the final criteria, it is identical to that set out above. The additional criteria states: An otherwise eligible employee must not have given notice of resignation from their employment, or have resigned from their employment, with the respondent prior to bonus payments being paid by the respondent. (xi) In Landman, the applicant in his Response to the employer's Reply states that the contents of the rules under which the bonus scheme operated were not known to him. (xii) In the matter of Clapham, the applicant states at paragraph 28 of his Response to the employer's reply that he did not know and cannot admit those terms by which the respondent says its bonus scheme operated. 46 Section 108A was inserted into the Industrial Relations Act 1996 by the Industrial Relations Amendment (Unfair Contracts) Act 2002. 47 Since s 108A was inserted into the Act, the Court has been required to consider the proper construction and application of s 108A(1) with particular reference to the words paid or received (or is payable or receivable). That issue was considered by the Full Bench of the Court in Commander Australia Limited v Kerr (2004) 134 IR 160 at [47] where it was said: The ordinary meaning of "paid" and "received" refers to the amount or sum in question having actually been paid and accepted, rather than an entitlement to receive at some future time. Similarly, the ordinary meaning of "payable" and "receivable" refers (to) the amount in question being owed or already able to be given and received or accepted. In Carlton Brewery Limited v Federal Commissioner of Taxation (1947) 73 CLR 446 the majority of the High Court held that the words "paid" or "payable" in taxation legislation must refer to a payment that has in fact been made or one that must be made to discharge a liability (see especially per Dixon J at 455). 48 On this point, reference should also be made to the decision of Lindgren J in Merrill Lynch International (Australia) Limited and ors v Commissioner of Taxation (2001) 113 FCR 79. In that matter, the applicants were part of a corporate group that rewarded employees with annual bonus payments. Although the bonus scheme was described as 'discretionary' and 'based on an employee's performance', bonuses in the industry were the norm and had become an integral part of the remuneration packages of the company's employees. 49 In respect of the year ended 31 December 1994, the company sought to claim as deductions the outgoing represented by bonuses which were paid to employees in late January 1995. The Commissioner of Taxation disallowed such deductions for the year ending 31 December 1994. The Commissioner determined that the amounts claimed were not deductible in respect of the 1994 year in that they were not 'incurred' in that year. The company appealed against the Commissioner's determination on that point. 50 In upholding the determination of the Commissioner, Lindgren J held that in order for the company to have 'incurred' by 31 December 1994 the amounts represented by the payment of the bonuses, the company must have completely subjected or definitively committed themselves by that time to pay bonuses to their employees and that, in resolving this question, a legal or jurisprudential approach must be pursued rather than a commercial or accounting approach. Further, his Honour held it was insufficient for the applicants to have made a commitment to itself to pay the bonuses. The relevant commitment was to each individual recipient of the bonus. In order for the amounts to be deductible in the 1994 year, a legal liability to the individual employee in respect of the bonus must have been imposed on the applicants by 31 December 1994. The company did not become subject to a legal liability to pay the bonuses by 31 December 1994. Therefore, it did not incur the outgoings by that date and accordingly it was not entitled to a deduction in respect of the 1994 year. Further, as his Honour said at [100]: Even if the applicants had promised to pay their employees "a bonus", the amount of it would have been inherently incapable of "ascertainment" or of "estimation" because the exercise by Merrill Lynch of its discretion was an essential step in the process of the determination of the amount. 51 In these proceedings, it seems apparent to me what the applicants contend is that they had the right to participate in a bonus scheme. Any allocation of payments pursuant to that scheme was at the absolute discretion of the respondent. That is a matter not disputed by the respondent. 52 Given that be the position, there could be no binding contractual term that any bonus was 'payable' or 'receivable' as those terms have been construed in prior relevant authorities on this point. At best, any bonus arising pursuant to any contractual agreement between the applicants and the respondent at the time of the termination of their employment was claimable on the part of the applicants. That must be so given that, at the time of the cessation of their employment, the quantum of any bonus was not known and was discretionary at the behest of the respondent in accordance with the process by which such a bonus was determined, as detailed above. 53 Accordingly, it seems clear to me, at the time of the respective applicants termination of employment, payment of the bonus was not payable or receivable as understood at law. On that basis, the remuneration of the respective applicants, as defined for the purposes of s 108A, was not in excess of the remuneration cap provided by s 108A. 54 There are, however, additional issues to consider before finally determining this point. 55 As applicants to the motion, the respondent contended, in considering this point, that regard must be had to the relief sought in each of the applications filed. It was submitted that when that was done, it was clear that both applications offended the remuneration cap provisions of s 108A when one had regard to the intention of the amending Act. 56 I believe the substantive applications for relief, as presently pleaded, do pose a potential problem for the applicants. That is, what the applicants are wanting the Court to do, by order, is to vary their respective contracts of employment by the insertion of a formula by which a bonus is to be precisely quantified and paid referable to the 'bonus period from 1 July 2003 to 30 June 2004' with respect to Mr Landman and for the 'bonus period ending 30 June 2004' with respect to Mr Clapham. In short, what the applicants seek from the Court are orders to vary the relevant contract of employment to make the bonus payable in a precise amount directly referable to the employment period encompassing the twelve month period immediately before the termination of their employment. With respect to Mr Landman, the bonus claimed is $400,000 and with respect to Mr Clapham, it is $425,000. 57 In my view, if such a variation to the respective employment contracts was pressed, it would provide a significant discretionary hurdle to overcome having regard to the provisions of s 108A. For example, in Crowe v UCS Developments Pty Limited (2003) 130 IR 266, the Full Bench of the Court considered the approach to, and construction of, s 108A of the Act. That approach was further considered and approved in Commander Australia Limited v Kerr (2004) 134 IR 160 at [39] and [40] where the Court said: [39] In Crowe v UCS Developments Pty Ltd the Full Bench referred to the Explanatory Memorandum to the Industrial Relations Amendment (Unfair Contracts) Act 2002 . It is plain that reference to extrinsic material, such as parliamentary debates and papers, is permissible in the process of statutory interpretation: see s 34 of the Interpretation Act 1987. The intention of the Bill and of the Explanatory Memorandum to the Bill was considered in Crowe v UCS Developments Pty Ltd at [34] in the following way: Section 108B was enacted as a part of the amendments made to the Industrial Relations Act by the Industrial Relations Amendment (Unfair Contracts) Act 2002 which took effect on 24 June 2002. The intention of the amending Act in relevant respects is reasonably plain on its face. It was intended that applications seeking orders directed towards contracts of certain identified types and satisfying certain conditions, should be removed from the scope of the unfair contracts provisions of the Act; namely, those applications which seek to vary or avoid contracts (as defined) providing a remuneration package that exceeds an identified `remuneration cap', or those which seek an order to vary or avoid the terms of certain kinds of partnership agreements. The amending Act also required that any application for an order under s 106(1) be brought within 12 months of the termination of the relevant contract or arrangement. Those observations seem to be confirmed by the objects of the amending Act, identified in this way in the Explanatory Memorandum to the Bill: (a) to prevent an application being made to set aside or vary a contract of employment by the making of an unfair contract order if the remuneration package paid or receivable under the contract during the 12 months preceding the application (or, if paid or receivable for a shorter period, that would have been paid or receivable if converted to an annual basis) exceeds $200,000 (or a greater indexed amount), and (b) ... (c) ... (d) ... 58 On behalf of the applicants it was said that even though an order pursuant to s 106 may vary a contract from it's inception, or some other time prior to the application for relief being made, the legal obligation to pay any money runs only from the time any such an order is made by the Court. In other words, as I understand this proposition, an order to vary the contract to make a bonus payable at a time removed from the employment year to which the money order is referable, cannot be said, as a matter of law, to render that money payable or receivable during the period twelve months immediately before the terminations took place as the legal obligation to pay any money runs only from the time such order is made by the Court. 59 Further, it was said, the mere fact that the remedy sought by the applicants would, if granted, place the applicant over the monetary cap had the monies been payable under the contract as originally formulated by the parties does not constitute a jurisdictional bar given that the remedy granted by the Court is dependent upon the exercise by the Court of it's discretion according to the facts and circumstances of the particular matter before it. 60 The above contentions raise squarely the proper approach to be taken to the construction of s 108A of the Act. Such contentions cannot be divorced, at this stage of the proceedings, from the ultimate discretion that s 106 provides. For example, if the contractual unfairness asserted is established, it is arguable, in my view, for the Court to consider, inter alia, the making of a money order for the payment of an amount that represents a part of the bonus claimed by Mr Landman or Mr Clapham which, when taken together with the base salary paid, would not exceed the remuneration cap that s 108A provides. At the time of his termination, Mr Landman's 'remuneration' was $100,000 including superannuation. At the very least the Court could vary his employment contract in the terms sought and, in the exercise of it's discretion, as compensation for the unfairness established, order the payment of an amount that would not offend s 108A. 61 Further, it is also open, I believe, for the Court to give favourable consideration to the making of a money order that compensates the applicants for any contractual unfairness established without necessarily characterising it as remuneration referable to the twelve month period immediately preceding the applicants' termination. It would seem to me that such an approach is capable of being captured within the discretionary power that resides in s 106(5) which permits the Court to make a money order 'in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case'. 62 On that point, it was said on behalf of the applicants that it was open to them to amend their applications for relief prior to the hearing of the substantive matters. My understanding of such a submission was that rather than seeking an order varying the contract for the payment of a bonus directly referable to the applicants' remuneration in the twelve month period immediately preceding the termination of employment, the applications could be amended seeking a money order as compensation for contractual unfairness under s 106(5) of the Act - the outcome being that such an approach would avoid the remuneration cap provisions of s 108A. That is a proposition that cannot be dismissed. 63 There is no doubt the applicants would, in the normal scheme of things, be entitled to amend their applications for relief. As was said by Mason P in Mayne Nickless Limited v Industrial Relations Commission of New South Wales (2004) 141 IR 1 at [61]: The Court of Appeal will not prohibit proceedings in the Commission where jurisdiction can be established by an amendment asserting that undisputed facts have a particular legal effect (see Solution 6 at [36], Old UGC at [51]. 64 For the reasons set out, I am of the view, at this stage of proceedings, the applicants' respective summons for relief do not offend the jurisdictional test that s 108A provides. 65 Accordingly, the order sought by the respondents as applicants to the motion to have both summonses dismissed for want of jurisdiction pursuant to the provisions of s 108A is refused. 66 Taking together all jurisdictional points raised by the respondents, the notices of motion seeking orders dismissing the respective applications for relief are refused. 67 As applicants to the motions, the respondent is to pay the applicants' costs of these proceedings. 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