Industrial Court of New South Wales CITATION: Kennett and Anor v Mayrana Pty Ltd and Ors (No 4) [2006] NSWIRComm 357 This decision has been amended. Please see the end of the judgment for a list of the amendments. Matter Number IRC 3679 of 2003 _____________________________ KEITH FRANKLIN KENNETT First Applicant KF KENNETT NOMINEES PTY LIMITED (ACN 007 739 568) Second Applicant MAYRANA PTY LTD (ACN 101 363 688) First Respondent GARRATTS LIMITED (ACN 000 003 725) Second Respondent CHRISTOPHER CAMPBELL Third Respondent PARTIES: MIKE TRAYNOR Fourth Respondent Matter Number IRC 3680 of 2003 _____________________________ MYONG HO PAK Applicant MAYRANA PTY LTD (ACN 101 363 688) First Respondent GARRATTS LIMITED (ACN 000 003 725) Second Respondent CHRISTOPHER CAMPBELL Third Respondent MIKE TRAYNOR Fourth Respondent FILE NUMBER(S): IRC 3679 and 3680 of 2003 CORAM: Schmidt J CATCHWORDS: Unfair contract - jurisdiction of Industrial Court to vary sale of business agreement - work performed by applicants for respondent after the sale of business - whether work was performed under contracts or arrangement in question - restraint of trade entered - construction of s 106(2A) of Industrial Relations Act - contracts related - performance of work a significant purpose of the contract - application of s 106(5) considered - jurisdiction to vary sale of business agreement found - courts jurisdiction to make orders against fourth respondent - not a party to the contract - applicants claim fourth respondent is culpably associated with the operation of the contract - court does not lack jurisdiction to make orders sought against fourth respondent - motions refused - orders made - costs reserved Industrial Relations Act 1996 LEGISLATION CITED: Industrial Relations Amendment Act 2005 Trade Practices Act 1974 Barataud v Chipperfield (No 3) [2006] NSWIRComm 249 Brown v Rezitis (1970) 127 CLR 157 Bull v Attorney General (NSW) (1913) 17 CLR 370 Burgess v Mount Thorley Operations Pty Limited (2002) 115 IR 13 Burgess v Mount Thorley Operations Pty Limited (2003) 132 IR 400 Euphoric Pty Limited v Ryledar Pty Limited and Anor (2002) 117 IR 1 Fish v Solution 6 Holdings Ltd and Others (2006) 80 ALJR 959 McDonalds Australia Holdings Ltd v Industrial Relations Commission of New South Wales (2005) 144 IR 219 CASES CITED: MMAL Rentals Pty Ltd v Bruning (2004) 139 IR 377 News Limited v South Sydney District Rugby League Football Club Limited and Others (2003) 215 CLR 563. Old UGC v Industrial Relations Commission in Court Session (2006) 80 ALJR 1018 Production Spray Painting & Panel Beating Pty Ltd and Ors v Newnham and Ors (1991) 27 NSWLR 644 Solution 6 Holdings Ltd and Others v Industrial Relations Commission of New South Wales and Others (2004) 60 NSWLR 558 Sydney Water Corporation Ltd and Anor v Industrial Relations Commission of NSW and Anor (2004) 61 NSWLR 661 Tracy v Repatriation Commission (2000) 101 FCR 149 V.G. Haulage Services Pty Ltd; Re Industrial Commission of New South Wales [1972] 2 NSWLR 81 Wirraway (NSW) Pty Ltd and Anor v Ultra Tune Australia Pty Ltd [2006] NSWIRComm 300 HEARING DATES: 20/09/2006, 21/09/2006, 25/09/2006 DATE OF JUDGMENT: 11/09/2006 APPLICANT: Dr J Berwick of counsel SOLICITORS: GH Healey & Co FIRST, SECOND AND THIRD RESPONDENTS: Mr M Kimber SC LEGAL REPRESENTATIVES: Mr A Bulley of counsel SOLICITORS: Gordon & Johnstone FOURTH RESPONDENT: Mr G Watson SC SOLICITORS Colin Biggers and Paisley Lawyers JUDGMENT: - 39 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Schmidt J Thursday 9 November 2006 Matter No IRC 3679 of 2003 KEITH FRANKLIN KENNETT AND ANOTHER v MAYRANA PTY LTD AND OTHERS Application under s 106 of the Industrial Relations Act 1996 Matter No IRC 3680 of 2003 MYONG HO PAK V MAYRANA PTY LTD AND OTHERS Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2006] NSWIRComm 357 1 Mr Kennett and Mr Pak commenced proceedings in 2003 pursuant to s 106 of the Industrial Relations Act 1996 ('the Act'). The applications finally pressed challenged the fairness of a contract, arrangement or collateral arrangement, for the sale of Excelsior College and the performance of work by the applicants for the first to third respondents. The respondents denied that they ever employed the applicants, or that any contracts were unfair as claimed. 2 When this hearing commenced, the claims pressed were contained in amended summonses filed on 21 April 2005. In September 2005, the respondents had filed a motion seeking that the proceedings be dismissed for want of jurisdiction. That motion was listed for hearing before Staunton J in January 2006, but the hearing did not proceed when the applicants filed further affidavits, shortly prior to the hearing. The parties later agreed, after all affidavit material had been filed, that the question of the Court's jurisdiction to entertain the claims advanced would be dealt with at the outset of the hearing of the proceedings. 3 The parties' agreement was accepted in circumstances where the parties proposed to lead extensive competing expert evidence on accounting matters which related to the sale price agreed for the College and the orders pressed in the amended summonses, as to the fairness of that aspect of the agreement. The claims advanced in the two amended summonses were similar. It was common ground that if there was no jurisdiction to entertain the claims so advanced, a significant amount of hearing time would be saved by the jurisdictional issue being determined at the outset. 4 There was then a change in representation, so far as the fourth respondent was concerned and amendments to the motion pressed by the respondents, as the result of various developments. The respondents' motions, in their final form, sought orders dismissing both summonses for want of jurisdiction. 5 When the hearing of the jurisdictional matters relied upon commenced, the first to third respondents also announced that they would seek to argue that the Court had no jurisdiction to entertain the claims brought, because in truth they amounted to a claim for breach of contract, relying on Sydney Water Corporation Ltd and Anor v Industrial Relations Commission of NSW and Anor (2004) 61 NSWLR 661. That issue had also been raised in an amended motion filed for the fourth respondent. The applicants opposed that argument being advanced at that stage of the proceedings, given the lack of notice they had received. Consequently, this judgment does not deal with that question, which was left to be dealt with in the balance of the hearing, if it proceeded. 6 On the second day of the hearing the applicants further amended their summonses, without objection. The claims advanced were similar. In Mr Kennett's case, the claims finally pressed were: 1. An Order declaring that the Contract, Arrangement or Collateral Arrangement between the First and Second Applicants and the First, Second and Third Respondents consisting of the negotiations to provide employment to the First Applicant and associated sale of Excelsior College Pty Ltd is an unfair Contract pursuant to Section 106 of the Industrial Relations Act 1996 ("the Act"). 2. An order declaring the Contract, Arrangement or Collateral Arrangement between the First Applicant and the First, Second and Third Respondents to be an unfair Contract pursuant to Section 106 of the Act. 3. An Order declaring void from its commencement or from some other time (except to the extent to which money has been paid to the Applicants) the Arrangement consisting of the Contracts bearing the date 5 July 2002, 9 July 2002, 18 July 2002, 19 July 2002, 6 August 2002 and 8 August 2002, between the First and Second Applicants and the First, Second and Third Respondents having regard to the circumstances under which the Applicants sold their interest in the business known as Excelsior College (conducted by Excelsior College Pty Ltd ACN 081 128 207) and the First Applicant performed work for the First, Second and Third Respondents. 4. An Order varying from its commencement any Contract, Arrangement or Collateral Arrangement by inserting the following provisions: (a) That any Contract, Arrangement or Collateral Arrangement will not be terminated without the consent of the First Applicant except for serious misconduct unless the Respondents jointly or individually pay the First Applicant: (i) a period of notice of not less than the equivalent of 12 months remuneration at the rate of $120,000.00 per annum, (ii) an amount of $24,000.00 in respect of unpaid consultancy invoices, (iii) a payment of $200,000.00 as a consequence of the three year restraint of trade imposed, (iv) that any Contract, Arrangement, or Collateral Arrangement shall not be terminated for reasons relating to the Applicant's conduct or performance unless: (a) the First Respondent shall give the Applicant notice of intention to terminate the Contract and provide to the Applicant reasons for the proposed decision, (b) the Applicant has been given an opportunity to defend himself against any allegations made in relation to his conduct or performance by the First, Second and Third Respondents, (c) the First, Second and Third Respondents have undertaken a thorough investigation of any allegations made in relation to the Applicant's conduct or performance and any matters presented by the Applicant in his defence. (c)(sic) The First, Second and Third Respondents shall not make any decision to terminate the Contract, Arrangement or Collateral Arrangement, save for serious misconduct and/or unreasonably having regard to: (i) the First Applicant's personal circumstances in that he was: · 66 years of age; · Suffered from diabetes; · Was dependent as to capital needs upon completion of the contract; · Subject to a three year restraint of trade imposed by the contract. (ii) the satisfactory performance by the First Applicant of his obligations under the Contract. (iii) The representations made to the First Applicant by and on behalf of the First and Second Respondents by the Third Respondent that he would be engaged at a senior executive level on a full-time basis. 5. An order that the First, Second, Third and Fourth Respondents be held jointly and severally liable for the amounts claimed. 6. In the alternative, an Order that the Respondents jointly and severally pay the Applicants such sum of money in connection with the Contract as the Commission considers just in circumstances of the case. 7. Further, or in the alternative, each Respondent be held jointly and severally liable for such amount as the Commission considers to be just in the circumstances of the case. 8. An Order for payment of interest on sums of money ordered to be paid by the Commission. 9. Such further and other Orders as the Commission deems fit. 10. An Order that the Respondents pay the costs of the proceedings. 7 The money orders claimed were: (i) a period of notice of not less than the equivalent of 12 months remuneration at the rate of $120,000.00 per annum, (ii) an amount of $24,000.00 in respect of unpaid consultancy invoices, (iii) a payment of $200,000.00 as a consequence of the three year restraint of trade imposed, (iv) an amount of money equal to the value of 420,000 shares in the Second Respondent, at the value of $0.50 per share as at 5 July 2002, being part of the original agreed consideration (less the value of 420,000 shares in the Second Respondent, as at the date this matter is heard), (v) payment of $89,400 being 60% of $149,000 pursuant to clause 2.2(b) of the Amending Deed to Call Option Deed. (vi) a sum representing 60% of $200,279.94 (as per paragraph 41 of the affidavit of P. Kennett of 5 April 2005) being $120,167.96. 8 The claims advanced have to be understood in the context of answers earlier provided by the applicants to a request for particulars, in which the respondents were advised that it was claimed that the contract whereby the applicants will perform work was partly written and partly oral. The written documents identified included the sale agreement and the oral parts of the contract were identified by reference to various conversations outlined in the affidavits filed in the proceedings. 9 Mr Kennett held a 60% interest in Excelsior College Pty Ltd, which owned the College and Mr Pak a 40% interest. They each worked at the College, as consultants, through their personal companies. In 2002, Mr Christopher Campbell, the third respondent, approached them about selling the College as a going concern to Garratt's Limited, the second respondent, and their continuing to work in the ongoing College business. In August 2002, the College was sold to the first respondent, Mayrana Pty Limited, a subsidiary of Garratt's. At the time Garratt's was also acquiring another educational institution. It already owned others. 10 Mr Kennett's evidence was that part of the agreement which he reached with Mr Campbell, was that he would be employed as the President of Garratt's combined colleges, to be known as Academies Australasia. Mr Pak's evidence was that he had agreed to be employed in marketing. Mr Kennett and Mr Pak provided personal warranties under the sale agreement. The vendor company, Excelsior College Pty Ltd, which is not a party to the proceedings, Mr Kennett and Mr Pak, each also agreed to a three year restraint: 12.1 RESTRAINT OF TRADE (a) The Vendor and each Warranty Provider must not within 3 years from Completion engage or involve itself in a business or activity which is the same as the Business. (b) Clause 12.1 (a) applies whether the activities of the Vendor or the Warranty Provider under that clause are: (i) direct or indirect; and/or (ii) as a principal, agent, partner, employee, shareholder, unitholder, director, trustee, beneficiary, manager, consultant, advisor or financier except where the Vendor, or the warranty Provider is carrying out those activities in relation to the Purchaser. (c) Clause 12.1(a) applies throughout Sydney Metropolitan Area. (d) The Vendor and each Warranty Provider must not within 3 years from Completion solicit the custom of a person who is a student of or customer of the Business. (e) Clause 12.1(d) applies to a person who is a student or a customer at any time within 3 years. (f) The Vendor and each Warranty Provider must not within 3 years from Completion encourage an employee or consultant to leave or cease performing services for the Purchaser. 11 The applicants' case was that without the agreement they had each made about ongoing employment, they would not have sold the College. The Deed of Sale which the parties entered in August 2002 required the services of all the vendor company's employees and consultants to be terminated, 'to take effect at completion'. The vendor company provided indemnities in relation to claims arising out of such termination (clause 7). The agreement to purchase was expressed to be conditional on: The agreement of employees of the Vendor (including teaching staff) to which the Purchaser wishes to offer employment from Completion accepting such employment on such terms as may be offered by the Purchaser. (clause 3.1(iv)) 12 In their reply, the respondents claimed that the Deed of Sale of the College required that Excelsior College Pty Limited terminate the employment of all of its employees and consultants. While the College was sold as a going concern, Mr Kennett and Mr Pak were never employed by the first respondent and never performed any work for any of the respondents, as they claimed. Various representations relied upon were also denied. 13 The sale of the College resulted from a series of deeds and contracts which the parties and Excelsior College Pty Limited entered. 14 In their motion, the respondents claimed that the contract of 5 July 2002 on which the applicants relied, was a contract whereby the respondents, other than the fourth respondent, confirmed their intention to make a particular offer to purchase Excelsior College and that the applicants indicated that they were prepared to accept such an offer, when made. Neither this document, nor the later deed of sale which the parties entered, nor any of the other documents relied upon, was a contract whereby any work was performed, as s 105 of the Act requires. 15 A call option deed was entered by each applicant and the first respondent on 19 July 2002, whereby the applicants agreed to sell the College. The respondents' case was that this was also not a contract whereby any work was performed, as s 105 of the Act requires. Even if it were a related condition or collateral arrangement, the performance of work was not a significant purpose of the contract, as s 106(2A) requires. An amending deed was entered on 7 August. It was submitted to be in the same position, merely being an amended contract for sale of a business and was not a contract whereby any work was performed, as s105 of the Act requires. Even if it were a related condition or collateral arrangement, the performance of work was not a significant purpose of the contract. 16 On 16 August, a deed of completion was entered. It was also argued not to be a contract whereby any work was performed, as s 105 of the Act requires. Even if it were a related condition or collateral arrangement, the performance of work was not a significant purpose of the contract. 17 Even if the view was reached on the evidence, that some form of contract or arrangement existed, under which work was performed by the applicants for the respondents, separate from these sale of business contracts, it was the respondents' case that the Court had no jurisdiction to deal with claims for any relief advanced in relation to the sale of business contract, because the claims advanced and the money orders sought, did not directly or closely relate to the performance of work in an industry. Evidence 18 The applicants' affidavit evidence was tendered and received without any objections being dealt with, on the basis that the respondents accepted that the applicants' evidence had to be dealt with at its highest, given the time at which the claim as to lack of jurisdiction was pressed. A number of other documents were also tendered by the parties. The parties' cases 19 The case advanced for the first to the third respondents was that none of the written agreements provided for the employment of the applicants. There was no scope for the claim that the business sale agreement was partly written and partly oral, given the express provision made in the deed, which included a provision merging all previous representations in the deed which the parties entered. 20 The applicants' evidence, taken at its highest, did not support a conclusion that employment of the applicants was a part of the business sale contract. At best, the applicants gave evidence as to their state of mind, that 'but for' the offers of employment they received, they would not have sold the College. The documents, however, evidenced no such linkage. It was submitted that the case was indistinguishable from Production Spray Painting & Panel Beating Pty Ltd and Ors v Newnham and Ors (1991) 27 NSWLR 645 and the transaction considered in Fish v Solution 6 Holdings Pty Ltd (2006) 80 ALJR 959. 21 It was further argued that the evidence did not even permit the conclusion that employment contracts had ever come into existence, so as to provide a basis for the conclusion that the business sale agreement was a collateral arrangement or a related condition, as s106(2A) envisaged. The evidence did not demonstrate that the business sale agreement was conditional on such employment agreements. That was not how the case was pleaded in any event, as the applicants' further amended summons confirmed. 22 It was submitted that in any event, the necessary interrelatedness which s 106(2A) required, could not be established. Nor could it be established that the performance of work was a significant purpose of the contractual arrangements made. 23 At best, if it could be concluded that an employment relationship had come into existence, it was a contract for 6 months' casual employment. In truth however, the evidence showed that only Mr Kennett was ever made an offer of employment after the sale, which he rejected. Mr Pak never received any offer. 24 It was also argued that the evidence demonstrated that the central focus of the applicants' case was the relief sought in relation to the variation of the sale of business agreement. It was accepted that s 106(2A) did not require it to be established that the sale agreement itself provided for the performance of work, unlike the section as it stood when Solution 6 Holdings Ltd and Others v Industrial Relations Commission of New South Wales and Others (2004) 60 NSWLR 558 was decided. Nevertheless, the claim could not fall within the section, because it could not be established that the performance of work was a significant purpose of the contractual arrangements in question. The construction of the word 'purpose', it was submitted, ought to be approached in accordance with the discussion of the High Court in News Limited v South Sydney District Rugby League Football Club Limited and Others (2003) 215 CLR 563. 25 Even if those submissions were wrong, it was further submitted that s 106(5) did not permit the making of the money orders claimed. The money orders sought in relation to the purchase price were not 'closely connected with the performance of work' and hence not within jurisdiction (See Solution 6 at [73], [92]-[95] and [160].) 26 In addition to the matters pressed for the other respondents, the case advanced for the fourth respondent, Mr Traynor, was that the claims advanced were, in reality, seeking to have the Court create an employment relationship which did not exist. Such an order was beyond jurisdiction and made it apparent that there could be no jurisdictional foundation for the claims advanced by the applicants. 27 Further, as to the claims advanced against Mr Traynor, it was submitted that the complaint was that he undertook a due diligence for the purchase of the College and that the applicants placed some reliance upon him. It was not alleged that he was concerned in the creation of any unfair contract. His calculations were made under the contract which others had agreed. It was argued that if Mr Traynor's calculations had been carried out incorrectly, no relief could flow under s 106, although it might give rise to other claims against him. If his calculations were correct, but the contract under which they were made was unfair, there could also be no relief granted against him under the section. 28 In any event, s 106(2A) did not go far enough to permit the relief claimed in relation to the business sale agreement. The allegation made in the further amended summons was that Mr Traynor did not perform his work with due care, an allegation of professional negligence and that he had a duty not to undertake that work. Neither claim could ground relief under s 106. A breach of either type might ground relief in damages, but not under the section, because it presupposed that the contracts were fair, but were breached in some way. 29 That Mr Traynor should be made vicariously liable for the conduct of the other respondents, was not a claim available under the section, it was argued. Nor could it be claimed in proceedings such as this, that he had got his calculations wrong. Nor was a claim available on the basis discussed by the High Court in Brown v Rezitis (1970) 127 CLR 157, even on the basis that Mr Traynor had some involvement in the operation of the contract in question. The High Court was not there speaking of a professional negligence claim. 30 The case advanced for the applicants, was that their primary case was that whether or not the parties' negotiations resulted in a concluded employment agreement, the negotiations were about work in an industry, so as to attract jurisdiction. (See V.G. Haulage Services Pty Ltd; Re Industrial Commission of New South Wales [1972] 2 NSWLR 81 at 86 - 87). Those negotiations were inextricably linked with the sale process. The applicants relied on undertakings given during the negotiations. Given the time at which the jurisdictional argument was pressed, their claim of causative effect had to be taken at its highest. 31 In any event, the evidence showed that work was performed by the applicants during the period of the sale of the College and that the sale contracts were concerned with the performance of work, containing as they did restraint of trade clauses. The restraints had been observed by the applicants. 32 The submission that s 106(2A) of the Act was not relied upon, given the way in which the case was pleaded, was denied. Whether the sale documents were seen as a related condition or a collateral arrangement, the applicants' case was that they intended to enter on a joint endeavour, in which they would each continue doing work in an industry, in the context of a change in ownership of the college. They were led to this view by the respondent's representations. The applicants would demonstrate that reasonable people in their position were entitled to rely on such representations, where they had been promised work into the future and had continued to carry out that work. 33 As to the construction of s 106(2A), it was accepted that the High Court's approach in South Sydney District Rugby League Football Club was relevant. It followed that attention had to be paid to the applicants' evidence, as well as to the words of the written documents the parties had entered, in order to establish what the parties had set out to achieve in their agreements. 34 As to the fourth respondent, it was submitted that Mr Traynor played a significant role in triggering the mechanism whereby the sale price was reduced substantially. The due diligence investigation he conducted was central to the question of whether the applicants would continue to work within the College, as well as the consideration they would receive from, amongst other things, entering into the restraint of trade agreed. 35 The expert evidence led by the applicants raised concerns as to the adequacy, accuracy and propriety of Mr Traynor's work. While at one point it was asserted that the College had made a substantial loss of over $120,000, the respondents later varied the figure to a profit of $35,000. In the circumstances, Mr Traynor was a proper party to the proceedings, on the basis that he had contributed to the unfairness complained of, even though he was not a party to the contract. See Brown v Rezitis (1970) 127 CLR 157 at 168. 36 In further written submissions, it was noted that the respondents had sought to suggest that: .. the applicants could not rely on s 106(2A) of the Act because it was not pleaded. Orders 1 and 2 in the Further Amended Summons rely on s 106, that is, on all of that section as currently enacted. This discussion on the hearing of this Motion demonstrates that the Respondents were in no way prejudiced. Indeed, their Amended Motion calls s 106(2A) into play. 37 This prompted the response that the applicants could not rely 'on all of that section as currently enacted' for the reasons enunciated in Burgess v Mount Thorley Operations Pty Limited (2002) 115 IR 13 at [112] to [122] and on appeal in Burgess v Mount Thorley Operations Pty Limited (2003) 132 IR 400 at [83]-[105]. It was submitted that the applicants had never contended that they had contracts of employment with the respondents or that the sale for business agreement was properly to be regarded as collateral to them and that it was too late to make those claims, at this stage for the proceedings. 38 In any event, it was submitted there was no arguable case that the requirements of s 106(2A) was satisfied on the evidence as it stood. The 'significant purpose test' was not satisfied. Performing some casual work for the respondents after the sale couldn't be enough. The evidence showed that the purpose of the transaction entered was to sell the business as quickly as possible, at whatever price the respondents were prepared to pay, because the business was in financial difficulty and was about to go under. Consideration 39 The claims which Mr Kennett and Mr Pak seek to advance are, in essence, that they were the working proprietors of the College; that Mr Campbell approached them with a proposal that Garratt's buy the College as a going concern and that they would then continue to work in the new expanded business which it was seeking to establish in the educational field. Garratt's already owned other colleges and was in the process of acquiring another college, as well as Excelsior College. Mr Kennett and Mr Pak accepted Mr Campbell's proposals, but the respondents managed to engineer a situation wherein on the one hand, Mr Kennett and Mr Pak neither had ongoing work in the expanded business, nor ever received the price for which they had agreed to sell the College, and on the other, they were bound by a three year restraint. The applicants seek to attack both the sale agreement and what was agreed in relation to the performance of work, which they claim was unfair. They also each claim that they in fact, performed work after the sale, but they were never paid for that work. They seek orders against Mr Traynor, on the basis of his alleged involvement in the operation of the unfairness they complain about. 40 The respondents for their part, contend that while employment was discussed, it was not formally agreed and that the Court's jurisdiction is not broad enough to permit the claims which the applicants pursue to be dealt with, despite the enactment of s 106(2A). On their case, the applicant's claims have even less foundation than those dealt with by the High Court in Fish. Furthermore, they claim that properly understood, the summonses pressed do not claim that any employment contracts existed between the parties and that the applicants are not entitled to rely on s 106(2A) of the Act, given the way their claims are pleaded. The arguments advanced in relation to Burgess v Mount Thorley Operations Pty Limited 41 It is convenient to deal first with this aspect of the respondent's case. As has oft been observed, this is not a Court of strict pleading. In that context, the decisions in Burgess v Mount Thorley Operations Pty Limited, both at first instance and on appeal sought to emphasise the need to ensure that justice is achieved between the parties, by the Court ensuring that it is the case sought to be pressed in the pleadings and not new claims advanced for the first time only in final submissions, which the respondent is called upon to meet. 42 This, like many other cases, undoubtedly involves a summons which, despite its repeated amendment, could have been better framed. What was clear from the summons pressed, however, was that both applicants claim that they had worked for the first to third respondents after the sale. They each sought orders of variation and/or avoidance of that aspect of their agreements. In that respect, they sought orders of variation as to the circumstances in which their contracts might be brought to an end, other than for 'serious misconduct' (claim 4). Consequential money orders were also pressed in relation to the 12 months' notice necessary to bring the relationship to an end (claim (i)), and for unpaid invoices for work actually performed (claim (ii)). Those claims were pressed in the context of alleged representations, that the applicants would be engaged full time 'at a senior executive level.' 43 Given the way in which the claims were framed, it was no surprise to find that in their submissions, the applicants asserted that they had performed work for the respondents under contractual arrangements which they had entered, after they had received representations on which they had relied. Those submissions were also consistent with the particulars of the claims earlier provided, although, again, I accept that the particulars too, could have been better expressed. 44 The question of whether or not the applicants were entitled to rely on s 106(2A) of the Act, must be answered in the context of the claims made in the summons. Those claims must be considered in the context of the legislation as it stands, when the matter is heard, given the basis upon which the amending legislation here in question was introduced. (See Industrial Relations Amendment Act 2005 transitional provisions inserted as clause 19B of Schedule 4 of the Act.) That explains why the parties devoted their attention to the proper construction of the legislation as they did, in the cases which they each advanced. 45 What ought not to be overlooked in this case, is that these proceedings were commenced in 2003, well before the Court of Appeal's decision in Solution 6 was given in 2004. The adoption of the narrower approach to the construction of the section in that case, and the subsequent amendment of the legislation no doubt explains some of the history of the proceedings in the meantime. 46 In 2005, the Parliament saw fit to amend s 106 to overcome the effect of the approach adopted in Solution 6. The result was the enactment of s 106(2A). There was no necessity for the applicants to amend their summonses to specifically plead the amended section, in order to be entitled to rely upon it at the hearing of their claims. The section as it stands is the basis of the Court's jurisdiction to consider the claims which the applicants seek to advance. Just as the applicants were not entitled to complain about the jurisdiction being narrowed, as the result of the Court of Appeal's decision in Solution 6 and could not prevent the respondents from relying on that decision, the respondents are not now entitled to complain, or to prevent the applicants from relying upon the enactment of s 106(2A). The provisions of s 106 47 The parties' competing cases must be considered in the context of the provisions of ss 105 and 106 of the Act. They provide: 105 Definitions In this Part: contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. unfair contract means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. 106 Power of Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss. Was work performed? 48 As the Full Bench of the Court recently observed in Wirraway (NSW) Pty Ltd and Anor v Ultra Tune Australia Pty Ltd [2006] NSWIRComm 300 at [42], in relation to the High Court's judgment in Fish: '... in applying s106 the Court is to first establish whether any work has been performed in an industry and then to identify the contract or arrangements whereby that work is performed. The High Court specifically stated that it was to invite error to begin by identifying the contracts and the way in which they are related.' 49 This is one of those cases where the respondents contend that neither Mr Kennett nor Mr Pak performed any work in an industry, as they claimed in their summonses and as the section requires. Further, that even if it could be found that such work was performed, the evidence did not establish that it was performed under the contracts sought to be attacked in these proceedings. 50 Accordingly, what must first be considered is whether or not the evidence, as it stands, permits the conclusion that work was performed for the respondents after the sale, as the applicants claim. There was no issue that if the work was performed, it was work in an industry. 51 It was common ground that prior to the sale of the College, Mr Campbell and Mr Kennett discussed Mr Kennett being employed as President of the College after the sale and that Mr Pak would be employed in marketing. Mr Campbell also discussed such marketing work with Mr Pak. Mr Kennett and Mr Pak each gave evidence that after the sale, they performed work at the College. That evidence was supported by the evidence of Ms Carol Brash, a teacher employed at the College, who continued working there after the sale. Her evidence was that after the sale, both Mr Kennett and Mr Pak continued attending the College and performing the work they had previously performed. 52 After completion of the sale, on 19 August Mr Kennett was given a written offer of employment as a casual consultant for 10 hours per week by Academies Australasia (Management) Pty Limited, another of Garratt's subsidiaries. He did not accept that offer. It was Mr Kennett's evidence that the offer was inconsistent with his earlier discussions with Mr Campbell. Discussions about the August offer ensued, but no agreement was reached and on 10 October, Garratt's advised Mr Kennett that the 19 August offer had lapsed, it not having been accepted. 53 It was the respondents' case that this was the only offer of employment ever made to Mr Kennett and that Mr Pak was never made any offer at all. 54 It was common ground that Mr Kennett and Mr Pak were not paid by the respondents for any work. In January 2003, they each provided Garratt's with an invoice for the work they claimed to have performed at the College between 19 August 2002 and 31 January 2003. Those invoices were not paid and Garratt's denied that it had engaged them to provide any services. No claim was made against Mayrana, which had purchased the College. 55 It was accepted by the respondents that taken at its highest, this evidence was capable of providing the basis for a finding that Mr Kennett and Mr Pak performed work at the College after its' sale to Mayrana. That concession was properly made, in the face of this evidence. Was the work performed under the contract or arrangements in question? 56 In those circumstances, what next falls to be determined is whether or not the evidence was capable of providing the basis for a finding that Mr Kennett and Mr Pak performed that work under the contract or arrangements sought to be attacked in these proceedings. 57 The contract or arrangements to which the orders sought are addressed, comprise of a number of written documents, as well as oral representations and offers claimed to have been made by Mr Campbell, a director of Garratt's, prior to the sale, which Mr Kennett and Mr Pak claim they accepted and relied upon. 58 None of the sale documents relied upon evidence any offer of employment having been made by Garratt's to either Mr Kennett or Mr Pak, although the deed of sale includes a restraint provision which contemplated that they would work for Mayrana. Garratt's was not a party to any of the documents entered by Mr Kennett or Mr Pak in relation to the sale of the College. It was Garratt's subsidiary, Mayrana, which purchased the business and was a party to the transaction as documented. The deed of sale contemplated offers of employment being made to employees of Excelsior College Pty Limited who Mayrana selected, on terms it wished to offer, before completion of the sale. The deed did not identify those employees, nor did it provide for the terms which they were to be offered. 59 The evidence showed that Excelsior College Pty Limited wrote to its employees advising of the sale and the possibility of offers of continuing employment being made to them by the purchaser. There was no evidence that Mr Kennett or Mr Pak were employees of Excelsior College Pty Limited or that they were sent such a letter. They were shareholders and directors of Excelsior College Pty Limited, working at the College as consultants, through their own companies. There was evidence that Mayrana made written offers to employees of Excelsior College Pty Limited, after the completion of the sale. It was the respondents' submission that nothing turned on this, even though the deed of sale required acceptance of such offers before completion of the sale. There was no evidence that such offers were made to Mr Kennett and Mr Pak. 60 It was common ground, however, that Mr Kennett and Mr Campbell discussed his employment before the sale, which was completed in August. Mr Campbell also discussed Mr Pak's employment with Mr Kennett. In Mr Kennett's case, his evidence was that he had discussed his future role with Mr Campbell on various occasions, but in June suggested that the discussion continue, 'if we sell Excelsior College'. On 10 July, the matter was again discussed, as well as the announcement of the sale. Mr Kennett's evidence was that he agreed to accept the offer of the position of President of the College, with Mr Campbell advising him that he would be provided with a formal agreement in his new capacity, after the sale. It was in that context, that the sale was later announced by Garratt's to the Australian Stock Exchange on 19 July, in terms discussed between Mr Kennett, Mr Campbell and Mr Traynor. In that announcement, extensive reference was made to Mr Kennett, but not to Mr Pak. Mr Kennett was quoted as saying: I am looking forward to working with the Garratt's Group with the view to making Academies Australasia a leading educational group in this country. 61 On 24 July Mr Campbell discussed with Mr Kennett a document which he provided to Mr Kennett. It provided: On Completion of Acquisition 1. Director of acquiring company (to be renamed Excelsior College Pty Limited). 2. Principal of all colleges within Excelsior College Pty Limited. 3. Contract for 6 months reviewable after 3 months, following which 1-month's notice. 4. 10 hours a week @ $65 per hour. 5. Terms in regard to overseas trips to be agreed on a case by case basis. 6. Other standard terms (eg. confidentiality, etc,) to be in formal letter of appointment. 62 On Mr Kennett's evidence, the document was in quite different terms to his earlier discussions with Mr Campbell, but after further discussion, Mr Kennett again accepted what was proposed by Mr Campbell. Again, Mr Campbell told him that these terms would later be formalised in a document. 63 The formal offer of employment which emerged in August from another subsidiary of Garratt's, Academies Australasia, was in very different terms to those discussed with Mr Kennett in July. Mr Kennett rejected that offer and no further written offers were forthcoming. 64 No written offer of employment was ever made to Mr Pak. On his evidence, he had only one conversation with Mr Campbell, in which he accepted a position in marketing, to be paid at the same rate as Mr Kennett, $65 per hour. Mr Pak also relied on Mr Kennett's evidence of a conversation in July, prior to the sale, during which Mr Kennett and Mr Campbell discussed his future employment after the sale. Mr Kennett said he wished Mr Pak to continue working in marketing after the sale and Mr Campbell agreed to discuss such a position with Mr Pak. Mr Pak's evidence was that he did discuss such a position with Mr Campbell prior to the sale. 65 On completion of the sale Mr Pak and Mr Kennett became shareholders of Garratt's. They were not shareholders of Mayrana, which had purchased the College, or of Academies Australasia, which later offered Mr Kennett employment. They were not directors of any of these three companies. 66 Despite the absence of any formalisation of their employment contracts, on the evidence of both Mr Kennett and Mr Pak, they continued to work at the College, after the sale, doing what they had previously done. The College was sold as a going concern and continued to operate after the sale. They both attended to various administrative work. Mr Kennett also did some teaching and Mr Pak attended to his marketing work. 67 Taking the evidence at its highest, as it must be at this stage of the proceedings, it must be inferred that the work they each performed at the College after the sale was of benefit to Mayrana, as owner of the College, as well as to Garratt's, given that Mayrana was its wholly owned subsidiary. The evidence as it stands also permits the conclusion that the work was performed in accordance with oral agreements which Mr Kennett and Mr Pak had each reached with Mr Campbell, prior to the entry of the sale agreement, as to their ongoing employment in the College business after the sale. 68 The sale agreement later executed in August did not require that any offers of employment made be written. It contemplated that offers of employment would be made to the vendor's employees, prior to completion of the sale. That did not occur in the case of the College's employees who received offers after the sale. On the evidence, both Mr Kennett and Mr Pak had reached agreement on their future roles with Mr Campbell, before the sale deed was executed. The sale agreement contemplated such employment being agreed. It was expressly referred to in the restraint provision. 69 Employment agreements do not need to be evidenced in writing. On their evidence in each case, the applicants claim that without those agreements, they would not have sold the College. 70 It follows that on the current state of the evidence, the conclusion that work was not performed by Mr Kennett and Mr Pak pursuant to contracts sought to be attacked in the proceedings, is not open, given the way in which the claims advanced are framed and explained in the particulars. Is the sale agreement within jurisdiction? 71 The next question which requires consideration is whether the sale agreement is within jurisdiction. 72 Section 106(2A) provides: (2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. 73 The Full Bench in Wirraway observed at [51] in relation to the High Court's decision in Fish at [38]: …it is to be observed that the High Court was not called upon to consider the effect of the amendment brought about by s106(2A) and on its face the 2005 Amendment appears to re-state the broader approach adopted prior to the Court of Appeal decision in Solution 6 . In light of the arguments put by the parties it is unnecessary to consider the operation of s 106(2A) to determine this jurisdictional challenge as the provisions of the Franchise Agreement are sufficient to resolve the issue at this stage in the absence of further evidence 74 In this case, the operation of s 106(2A) arises more directly, as it did in Barataud v Chipperfield (No 3) [2006] NSWIRComm 249. There the Full Bench observed: 35 The new s 106(2A) was referred to by the High Court in Fish , but its effect not considered. (See [45] and in footnote 69. It was also mentioned, but not dealt with, in Old UGC v Industrial Relations Commission in Court Session (2006) 80 ALJR 1018 (at [31]). 36 Section 106(2A) empowers the Commission to declare void or vary any "related condition" or "collateral arrangement" to a contract whereby a person performs work in an industry, even if the related condition or collateral arrangement does not relate to the performance of work, so long as the performance of work is a significant purpose of the contractual arrangements made by the person. In our view, this latter condition requires a factual assessment of the contractual arrangements, viewed as a whole, to determine whether the performance of work could be described as a significant purpose. 75 Given the way in which the summonses have been pleaded in this case and having regard to the point at which the jurisdictional argument has been pressed, I am unable to come to the conclusion that the claims advanced about the deed of sale are not within jurisdiction, for reasons which I will explain. Were the contracts related? 76 It was argued that any work agreement between the applicants and the respondents and the sale agreement were not related in the way required by s 106(2A). Reference was made to the dissenting judgment of Kirby J in Solution 6 on the point. At [55] to [69], his Honour considered the way in which the two contracts there in question related to each other, both having regard to the time at which they were made and by reference to the terms of the agreements themselves. As his Honour observed, in order to determine whether or not the agreements here in question were related, requires 'a thorough understanding of the facts' (at [68]). 77 On the evidence as it stands, it is plainly arguable that the written and oral contracts attacked in the summonses, even if not part of one overall arrangement between the parties, were nevertheless related, as s 106(2A) contemplated. So much must flow from the terms of the restraint provision alone, as well as from the applicants' evidence that they agreed to take employment in the College business after the sale and that they then did work there for the respondents' benefit. The applicants' evidence that but for these employment agreements, they would not have sold the College, as well as the timing of their acceptance of the positions offered, prior to the sale being finalised, must lead to the same conclusion. Was the performance of work a significant purpose of the contractual arrangements? 78 The meaning of the phrase 'a significant purpose' is a question of construction. Neither word nor the phrase is defined in the Act, and they must, therefore, be given their ordinary meaning where used in s 106(2A). Also of relevance to the construction of the phrase, is that it must be given meaning and effect in the context of remedial legislation, s 106 having been amended by ss(2A). The subsection was introduced to deal with the effect of the Court of Appeal's decision in Solution 6, later approved by the High Court in Fish, in which a less beneficial construction of s 106 of the Act was adopted, than that which had previously been applied to the section. (In this respect see the discussion of the Full Federal Court in Tracy v Repatriation Commission (2000) 101 FCR 149 at 156.) 79 The word 'purpose' is defined in the Oxford and Macquarie dictionaries: The Oxford English Dictionary , Second Edition I. Simple Senses. 1. a. That which one sets before oneself as a thing to be done or attained; the object which one has in view. b. with vb. of motion implied. 2. a. without a or pl . The action or fact of intending or meaning to do something; intention, resolution, determination. b. to take purpose : to determine, resolve. 3. The object for which anything is done or made, or for which it exists; the result or effect intended or sought; end, aim 4. a. That which one propounds; a proposition, question, or argument, a riddle; pl ., a game consisting of questions and answers. Macquarie Dictionary , Revised Third Edition noun 1 . the object for which anything exists or is done, made, used, etc. 2 . an intended or desired result; end or aim. 3 . intention or determination. 4 . that which one puts before oneself as something to be done or accomplished. 5 . the subject in hand; the point at issue: to the purpose . 6 . practical result, effect, or advantage: to good purpose. - verb (t). 80 The word 'significant' is defined as: The Oxford English Dictionary , Second Edition 1. Full of meaning or import; highly expressive or suggestive: a. Of words, etc b. Of things, gestures, actions, etc c. Important, notable. 2. a. Having or conveying a meaning; signifying something Macquarie Dictionary , Revised Third Edition adjective 1 . important; of consequence. 2 . expressing a meaning; indicative. 3 . having a special or covert meaning; suggestive. - noun 4. archaic something significant; a sign 81 The respondents advanced arguments as to the way in which the words 'significant purpose' in s 106(2A) (b) are to be construed, I accept the respondent's submission that useful guidance as to the meaning of the word purpose is also to be found in the approach of the High Court in South Sydney District Rugby League Football Club Limited. 82 In South Sydney District Rugby League Football Club Limited the construction of the word 'purpose', when used in s 4D of the Trade Practices Act 1974, was considered. Gleeson CJ observed at [18]: Purpose is to be distinguished from motive. The purpose of conduct is the end sought to be accomplished by the conduct. The motive for conduct is the reason for seeking that end. The appropriate description or characterisation of the end sought to be accomplished (purpose), as distinct from the reason for seeking that end (motive), may depend upon the legislative or other context in which the task is undertaken. Thus, for example, in describing, for the application of a law relating to tax avoidance, the purpose of an individual, or of an arrangement, it will be necessary to look at what is sought to be achieved that is of fiscal consequence, not at a more remote, but fiscally irrelevant, object, such as increasing a taxpayer's disposable income. Similarly, in the context of competition law, it is necessary to identify purpose by describing what is sought to be achieved by reference to what is relevant in market terms. The purpose of the 14 team term was the objective, in relation to the nature of their business arrangements, that News and ARL sought to achieve; not the reason why they sought to achieve that objective. They may have had different, and multiple, reasons for their conduct. The manifest effect of a provision in an agreement, in a given case, may be the clearest indication of its purpose. In other cases, it may be difficult, or even impossible, to determine the purpose (of a kind relevant to the operation of the Act) of a provision in a written contract merely by reading the document. And, of course, the legislation deals with contracts, arrangements or understandings. 83 Plainly enough, contractual arrangements may have more than one 'significant purpose'. As Callinan J concluded in South Sydney District Rugby League Football Club Ltd at [212], with Gummow J's agreement, purpose must be discerned from evidence as to subjective reasons, and in the case of a party which is not a natural person, from evidence of those people who in fact made the contractual arrangements on its behalf. This idea is taken up directly in the case of s 106(2A), where reference is made to 'the person' who made the contractual arrangements. In this case of course, the respondents have not yet led their evidence. At this stage, evidence as to purpose must therefore be found in the applicants' evidence, as well as in the documents. 84 On the approach of the High Court in South Sydney District Rugby League Football Club Ltd, the purpose or the end result intended by the parties' 'contractual arrangements', is distinct from their motive for seeking that end. Even in the case of a written document however, purpose may not necessarily be revealed merely by reading the provisions made in the contract, arrangement or condition concerned. 85 On their evidence, a significant purpose of the contractual arrangements which Mr Kennett and Mr Pak each made, was that they would have ongoing employment in the expanded business which Garratt's was establishing with the acquisition of the College. That is denied by the respondents. The question must be resolved by having regard to the evidence as to the approach made to Mr Kennett and Mr Pak by Mr Campbell; the ensuing negotiations about both the sale of the College as a going concern and their continuing to work in the expanded business after the sale; the work which they, in fact, performed after the sale; their prior agreement to perform such work and the inclusion of the restraint provision in the sale agreement, which contemplated the performance of such work at the College for Mayrana. 86 There is also evidence that the applicants were anxious to sell the College, having regard to its financial position and competition in the market place. That evidence is no doubt of relevance to the cases which the parties will advance on the merits, but cannot overwhelm the remainder of the evidence as to the purpose of the parties contractual arrangements. 87 In my view, the practical effect of the restraint to which the parties agreed also cannot be overlooked in considering the overall purpose of the arrangement. They were the working proprietors of the College and having agreed to accept ongoing employment in the College, also agreed to tie themselves to work for Mayrana, for a period of three years. What was restrained was not only solicitation of students, staff and customers of the College, but also engaging in a business or activity which was the same as that of the College in Sydney, apart from such work being performed for Mayrana. 88 In the light of all of that evidence, I am unable to come to the conclusion that the necessary purpose cannot be established on the evidence as it presently stands. That conclusion rests on the evidence of Mr Kennett and Mr Pak, that the proposal with which Mr Campbell approached them from the outset and their subsequent discussions, were concerned with both the sale of the College and that they have an ongoing role at the College afterwards; that but for ongoing work after the College was sold as a going concern, they would not have agreed to the sale; that they reached agreement about the performance of work for the purchasers prior to the sale and later performed such work, as the restraint agreement in the deed of sale expressly contemplated; that the sale deed required the vendor to terminate the contracts of its employees and consultants prior to completion and made completion contingent on those Mayrana wished to employ, accepting its offer prior to completion. On the applicants' case, they had already made such agreements, even before the sale agreement was finally executed. 89 While the restraint clause in the sale deed provides only for work being provided by Mr Kennett and Mr Pak to Mayrana, by way of exemption from the restraint agreed, on the submissions advanced for the respondents, the performance of work for Garratt's, or Academies Australasia, would involve no breach of the restraint, but would have amounted to a waiver by Mayrana, given the accepted relationship between it and those companies. 90 I do not overlook that it was also argued for the respondents, that on the evidence, taken at its highest, that all that could be found was an agreement for the performance of casual work for a period of 6 months, which could not provide a basis for the view that the performance of work was a significant purpose of the contractual arrangements made. I am not able to come to the conclusion that what was agreed was so confined, on the evidence as it currently stands. Did the amendment to s 106 go far enough? 91 While it was submitted for all of the respondents that the amendment to s 106 made by the enactment of s 106(2A) did 'not go far enough' to overcome the limitations in the Court's jurisdiction identified in Solution 6, I am unable to accept that submission. 92 The question is one of construction. I am bound by the Full Bench's decision in Barataud, which is not consistent with the construction urged by the respondents. There is, it seems to me, no ambiguity on the face of s 106(2A) which could properly lead to the narrow construction urged and that it is not one consistent with the words used. The amendment to the section must be given its full effect. The subsection provides that in a case where parties have not only entered a contract 'whereby a person performs work in any industry', but also 'a contract that is a related condition or collateral arrangement', the Court is empowered to declare void or to vary such a related condition or collateral arrangement, even though 'it does not relate to the performance by a person of work in an industry, so long as': (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. 93 To my mind, the Second Reading Speech to which reference was made in submissions, also leaves no doubt that the words were intended to mean what they say and that they cannot be construed on the narrower basis urged for the respondents. The problem to which ss (2A) was addressed was explained at p 2 as: In Solution 6 , the Court of Appeal held that the Commission may only declare void or vary a collateral arrangement or related condition that itself leads directly tot he performance e of work. This interpretation of the section significantly narrows the scope of the Commission's unfair contracts jurisdiction. It is problematic because an arrangement that leads directly to the performance of work may consist of a formal work contract as well as related agreements, which, if themselves, may not lead to the performance of work. If this interpretation were continued, and a person's total package were not reviewable, then the Commission's unfair contracts jurisdiction would be narrowed to a significant extent for employees and independent contractors. It would then be open to unscrupulous employers to ensure that the contract for work was minimalist and carefully quarantined from other aspects of the relationship that are set out in different documents, or entered into at different times. 94 Examples given of related conditions or collateral arrangements which themselves did not relate to a person's performance of work, but which the Court could declare void or vary under s 106, were a 'superannuation arrangement, share option agreement or franchise agreement' (at p 2). 95 It follows from s 106(2A) that there will be cases where it will be concluded on the evidence that the performance of work was not 'a significant purpose of the contractual arrangements' in question, even though one part of those contractual arrangements was a contract 'whereby a person performs work in any industry'. Nevertheless, if the necessary purpose be found, s 106(2A) expressly permits the variation or avoidance of 'a contract that is a related condition or collateral arrangement'. Whether or not the performance of work was a 'significant purpose' of the particular arrangements is a question of fact to be determined in each case. On the evidence, as it stands in this case, it cannot be concluded that no such significant purpose here existed. 96 The meaning of the phrase which the Parliament has elected to use in s 106(2A), 'a significant purpose', is one which also may conveniently be considered in the context of the pre-existing approach to the proper construction of s 106, in which purpose played an important part. The approach of Mahoney P in Production Spray Painting & Panel Beating Pty Ltd and Ors v Newnham and Ors (1991) 27 NSWLR 645, was applied in later decisions of the Full Bench of the Court (see Euphoric Pty Limited v Ryledar Pty Limited and Anor (2002) 117 IR 1, for example.) 97 Production Spray Painting was a case where a business was sold as a going concern and the performance of work after the sale by the purchaser, rather than by the vendor, was said to give rise to jurisdiction. Mahoney P's approach required a focus on the purpose of the transaction in question. His Honour observed at 649 - 650: In my opinion the section looks to the purpose of the transaction itself and to whether the purpose of the transaction was that relevant work be performed. In the terms of the section, it is the transaction, that is, the "contract or arrangement or ..." that is to be the cause of ("whereby") the work being performed. This suggests, I think, that what is in question is not merely an accidental consequence of the transaction but that which was its purpose to bring about. If this be so, then, in my opinion, the purpose must be that of both of the parties. If, for example, X a car dealer sells Y a motor vehicle, it may be the purpose of Y that it be used as a taxi cab and so that a person be employed to drive it in the transport industry. Y's purpose in buying the car was that such work be done and in that sense the performance of the work was a consequence of the sale of the car. But, in my opinion, it is not to that kind of transaction that the section is directed. It is the transaction which, in the contemplation of the section, is to be seen as having as its purpose the performance of the relevant work and, in that sense, it is to be the purpose of both of the parties which leads to the work being performed. This understanding of "whereby" is, in my opinion, in accordance with the decisions which, for this Court, establish the meaning of the section. Thus, it was the purpose of the share-farming agreement considered in Stevenson v Barham that work be done in the relevant industry. The operation of the relevant service station by the individuals concerned was the purpose which was sought to be achieved by the "Solus Contract" considered in the Caltex case (at 170B, 171C-172C). In Ex parte VG Haulage Services Pty Ltd; Re The Industrial Commission of New South Wales [1972] 2 NSWLR 81, a case cited subsequently by the High Court, it was the purpose of the transaction whereby the lorry and the work agreement were purchased that the purchaser should be given work to do with the lorry and that he should do it (at 83-84). 98 His Honour also doubted that the 'section would apply to a transaction in which the performance of work was merely an accidental incident or consequence of it', such as the purchase of an article from a retail shop (at 651). Even where the transaction contemplated or envisaged that work was to be performed, it would not necessarily be one whereby work was performed on his Honour's approach, because there was 'a distinction between the purpose of a transaction and that which the parties have stipulated shall be done in order that the purpose of the transaction be achieved' (at 651). The contract there in question also required the vendor to perform certain work, prior to the sale being completed. His Honour concluded that the purpose of the vendor doing the work of managing the business until completion, was so that the purpose of the transaction be achieved, that is, that the purchasers have the benefit of the goodwill they had purchased. In this case, of course, the circumstances were different, in that it is the work which the vendors argue they agreed to perform after the sale, in the ongoing College business, which is said to ground jurisdiction. 99 His Honour finally observed at 651: Reference was made in argument to the fact that one at least of the mischiefs which the section intended to alleviate was the use of subterfuge transactions to avoid the ordinary incidents of the employment of persons to do work in an industry covered by award conditions. The arguments suggested, I think, that if a meaning were given to "whereby" narrower than that adopted by the majority of the commission, such subterfuge agreements would be successful. I do not think that that is so. The section operates by reference to a contract, an arrangement, a condition or a collateral arrangement. In some contexts, the purpose of a contract has been said to be that which the contract does or causes to be done. But in determining the relevant purpose of the matters to which s 88F attaches, the commission is not confined in any such way. It is entitled to look to that which it was the purpose of the contract, arrangement, condition or collateral arrangement to bring about and that may appear, not merely from the terms of a formal contract, but from those arrangements or collateral matters relating to it. It is in that sense that the commission is to determine whether it was the relevant transaction "whereby" the work in question was performed. 100 Consistently perhaps with these last observations, in amending s 106, to introduce ss (2A), the Parliament has not used the phrase 'the purpose of the transaction', which Mahoney P had earlier discussed, but rather 'a significant purpose of the contractual arrangements made by the person'. That approach is consistent with that discussed by the High Court in South Sydney District Rugby League Football Club Ltd, in relation to the ascertainment of purpose in the context of Trade Practices legislation. (See for example the observations of Gummow J at [62]). 101 The Parliament also did not refer, as it could have done, to the contractual arrangements made by 'the parties' to the contractual arrangements. What s 106(2A) requires is that the performance of work be 'a significant purpose of the contractual arrangements made by the person', not the narrower focus that it be 'the purpose of the transaction' or even that it be 'a significant purpose of the contractual arrangements made by the parties', which might imply that the purpose must be jointly that of all of the parties. 102 In conclusion, therefore, on this aspect, I am satisfied that while the sale transaction undoubtedly had the purpose of the transfer of the College as a going concern to Mayrana and that the purpose of the restraint agreed was to ensure that Mayrana had the benefit of the goodwill of the business it acquired, the restraint also had the purpose of ensuring that Mr Kennett and Mr Pak could perform work for Mayrana, during the three year period of the restraint they had given. That was consistent with the agreements earlier reached with Mr Campbell, that the applicants would each perform work at the College after the sale. On the evidence it cannot be concluded that the sale agreement and the work agreements were not related. The purpose of the work agreements was undoubtedly the performance of work in the ongoing College business. It cannot be concluded that that purpose, was not a significant purpose of 'the contractual arrangements made', or that the agreement that Mr Pak and Mr Kennett would work in the College after the sale, was only the means by which the parties to the sale agreement ensured that their other purposes were achieved, as was concluded in Production Spray Painting. 103 In Fish, Gleeson CJ observed in relation to the construction of s 106, as it then stood that: [40] The answers to these questions are to be found in two considerations. The first is to recognise that when s 106 speaks of "any contract whereby a person performs work in any industry", the expanded meaning given to the term "contract" must be read into s 106. When that is done, it is apparent that the "contract", no matter whether it is a legally enforceable contract, an unenforceable arrangement, a related condition, or a collateral arrangement, must meet the description "whereby a person performs work in any industry". [41] The second consideration was mentioned earlier in these reasons and is not unrelated to the first. Performance of work in an industry is the hinge about which s 106 turns. It is the arrangements (contractual and non-contractual) whereby a person performs work in an industry that the Commission may avoid or vary. That is, it is the arrangements (contractual and non-contractual) according to which a person performs the work (or in consequence of which or in fulfilment of which a person performs that work) which may be avoided or varied. And although the notion of "avoiding" an arrangement that is not enforceable may be awkward, determining that some new arrangement will obtain for the future (thus "varying" the arrangement) presents no such awkward juxtaposition of ideas. Further, to focus attention upon the arrangements whereby a person performs work in an industry, no matter whether the arrangement is found in the contract the parties have made or only in some related condition or collateral arrangement, sufficiently meets the need, identified by Barwick CJ in Brown v Rezitis [38], to recognise that these provisions of the Act have, as one important purpose, dealing with subterfuges which take workers outside the operation of industrial instruments intended to protect workers in an industry. At the same time, to read s 106 as hinged about performance of work in any industry and empowering the Commission to deal only with such of the arrangements between parties as can be described as a contract whereby a person performs work in any industry confines the jurisdiction of the Commission to declare a contract void or to vary it within bounds that leave intact the jurisdiction of the Supreme Court over other kinds of contractual obligations. 104 These conclusions have been overtaken by what the Parliament did in enacting s 106(2A), as his Honour later noted. The respondents seek to avoid the consequences of the amendments made by the Parliament, in the construction pressed. To accept their arguments would be, in my opinion, to fail to give effect to the Parliament's clear intent. Orders under s 106(5) 105 The respondents also submitted, however, that a further difficulty arose, in relation to the money orders sought by the applicants. Once 'a contract that is a related condition or collateral arrangement' is declared void or varied, as s 106(2A) permits, then the question of the money orders which the Court might make as a matter of discretion under s 106(5), will arise for consideration. 106 The respondents submitted that s 106(2A) does not 'go far enough', so as to permit the money orders sought to be made in respect of orders of variation or avoidance directed to the 'related condition or collateral arrangement', the sale. 107 In Solution 6 at [95] Spigelman CJ said: In my opinion, the power of the Commission to declare void or to vary a contract or arrangement does not extend to a provision which has no relationship whatsoever to the performance of work. Specifically, the formula for computation of the purchase price, in my opinion, has no such relationship and the Commission has no power to vary it. 108 In McDonalds Australia Holdings Ltd v Industrial Relations Commission of New South Wales (2005) 144 IR 219 Spigelman CJ (with whom Mason P and Handley JA agreed), found at [78] that the impugned arrangement under s 106 was not within jurisdiction, because there was an insufficient connection between the relief sought and the performance of the work. According to Spigelman CJ there had to be a close connection between the relief sought and the performance of work: Plainly it cannot be said in the light of the authorities to which I have referred above, which hold that the requisite jurisdictional element is made out in the case of franchise agreements, that it is essential there be in existence something analogous to a payment by one party to a contract or arrangement in exchange for the performance of work for or on behalf of that party by the other party to the contact or arrangement. Nevertheless, on the authority of Solution 6 , there must be at least some, indeed a close, connection between relief sought and the performance of work. 109 The precise nature of the close connection between the relief sought and the performance of work which his Honour was discussing is not entirely clear, although plainly the existence of the connection is a question of fact, to be determined on the evidence in each case. By way of example, in MMAL Rentals Pty Ltd v Bruning (2004) 139 IR 377, the Court of Appeal varied a share allotment agreement to require the respondent to pay fair market value for the applicant's shares and made money orders under s 106(5) of $2 million in the applicant's favour, in connection with that variation. At [125]-[145], the question of jurisdiction to make the orders sought under s106, in light of the judgment given in Solution 6, was considered by Spigelman CJ. At [135] an 'interrelationship' between the share allotment agreement and the management agreement under which Mr Bruning performed work was considered. At [143] -[144] his Honour concluded: [143] This finding is also, in my opinion, determinative of the second matter which the Appellants sought to raise in this regard, namely whether the power in s106 extended to variation of the price determination formula of "fair market value" under cl 11.2.3. What is required is a close relationship between the performance of work and the aspect of the relevant contract that the Court is called upon to declare void or to vary. (See Solution 6 supra at [83]-[95].) I reiterate the view I there expressed at [94] that: "It is not appropriate … to take a narrow approach to the total package of benefits, conditions, rights and obligations which relate to performance of work." [144] In Solution 6 the Court concluded that the computation of the purchase price for the business had no relationship whatsoever to the performance of work. That case concerned the sale of an asset. In the present case Mr Brunning acquired equity at the very commencement of his relationship with Mitsubishi in a form envisaged to endure for the period of his employment, and no longer. Mitsubishi acquired a call option and, if that were not exercised, Mr Brunning had a put option, each exercisable after termination. His Honour's finding that the salary component of Mr Brunning's remuneration package was determined in part by reason of the existence of an incentive to perform in the form of an equity investment was, in my opinion, such as to establish the requisite close relationship between the performance of work and the mechanism for determining the price at which either option would be exercisable. 110 The respondents relied on the approach of Spigelman CJ in Solution 6 to advance the narrow construction of s 106(5) which they here urged, despite the amendment of the section. It is apparent, however, that even on his Honour's approach to the construction of the section prior to its amendment, that so long as there was a close relationship between the performance of work and the sale price of the College, the challenge to the fairness of these contracts would have been within jurisdiction, as would the making of the consequential money orders in relation to the sale price, which are sought under s 106(5). 111 The answer to the question of whether the orders sought in this case may now be made under the section as amended, is to be found in the section, which in this respect is to my mind, also unambiguous. As Spigelman CJ also observed in Solution 6 at [81]: [81]. In contemporary Australian jurisprudence, a purposive approach to interpretation is to be adopted, not a narrow literalism. That approach is expressed in a joint judgment of Brennan CJ, Dawson , Toohey and Gummow JJ in CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384. (See also the joint judgment of McHugh , Gummow , Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority at [69]), and the joint judgment of McHugh ACJ, Gummow and Hayne JJ in Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 78 ALJR 585 at [11].) The Courts no longer "make a fortress out of the dictionary" Cabell v Markham 148 F 2d 737 (1945) at 739 per Learned Hand J. 82 The CIC Insurance judgment (at 408) said: "… [T]he modern approach to statutory interpretation (a) insists that the context be considered in the first instance , not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous . In particular as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd [(1986) 6 NSWLR 363 at 388], if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent." [Emphasis added] 112 Section 106(5) provides: (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. 113 Here, neither inconvenience or improbability of result, suggests that the literal meaning of s 106(5) was not what the Parliament intended, particularly having in mind the amendment made with the introduction of s 106(2A). 114 The word 'contract' wherever used in s 106, is used in its defined sense, as provided in s 105 - that is 'any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument .... '. In its express terms, s 106(5) is concerned with money orders to be made by the Court 'in connection' with such contracts, which the Court has 'declared wholly or partly void, or varied'. The scheme of s 106 permits such money orders to be made in relation to both contracts under which work is performed (s 106(1)) and those which 'are a related condition or collateral arrangement' (s 106(2A)), so long as, in the latter case, the requirements of s 106(2A) are met and the Court has ordered their variation, or has declared them void. 115 In discerning legislative purpose in this case, it may not be overlooked that s 106(2A) was enacted to overcome the Court of Appeal's decision in Solution 6, which had the result of narrowing the broad construction of the section which had earlier viewed the Court as having jurisdiction to make both orders of avoidance and variation as to related conditions and collateral arrangements, as well as to make money orders in connection with such orders. That the High Court later agreed with the Court of Appeal's narrow approach to the construction of the section, does not take away from the Parliament's earlier decision to amend the section to overcome the approach which the Court of Appeal had adopted. I am satisfied that it did so in a particular and unambiguous way, which must now be given effect. 116 To adopt the narrow construction urged for the respondents would also be directly contrary to the ordinary cannons of statutory construction, which require that in the case of ambiguity, beneficial legislation such as s106 be construed 'so as to give the fullest relief which the fair meaning of its language will allow.' (See Bull v Attorney General (NSW) (1913) 17 CLR 370 at [384] and the discussion in Statutory Interpretation in Australia 6th Ed Pearce and Geddes at [9.2]) 117 In any event, as I have said, I am satisfied that there is no ambiguity and that nothing in the language of the section, as amended by the insertion of s 106(2A), would permit a proper reading of its terms to confine s 106(5), by excluding the making of money orders in respect of 'any contract declared wholly or partly void, or varied', pursuant to the express provision made for such orders in s 106(2A). The fourth respondent 118 As to the position of the fourth respondent, Mr Traynor, the case advanced against him is not as a party to any of the contracts or arrangements in issue, but as a person culpably associated with their operation. In this respect the applicants rely on the approach of the High Court in Rezitis at 168. 119 Mr Traynor was an accountant engaged by the respondents to conduct a due diligence of the accounts and operations of the College. The sale price depended in part on the College's profitability, about which Mr Kennett and Mr Pak had made certain representations, as to which the purchaser was to satisfy itself. Mr Traynor was engaged to conduct the resulting due diligence for the purchaser. The sale price was later reduced as a result and the applicants advance various complaints as to how Mr Traynor's involvement amounted to a culpable association with the operation of the unfair aspects of the contract and arrangements about which complaint is made. 120 It might be that the applicants face difficulty in making out a case where a proper exercise of the Court's discretion would permit money orders to be made against Mr Traynor under s 106(5). What had to be demonstrated at this stage of the proceedings, however, was that the Court had no jurisdiction to make any orders against him, given the claims advanced and taking the applicants' evidence at its highest. The applicants complain in their cases, that Mr Traynor was involved in conduct which permitted unconscionable advantage to be taken of them. They seek to rely on expert evidence, to make good that claim. 121 Given the conclusions which I have reached in relation to the question of the Court's jurisdiction to deal with the sale agreement and having regard to the particular claims advanced against Mr Traynor and the evidence which seeks to make it out, at this stage of the proceedings I am unable to conclude that the Court lacks jurisdiction to make orders sought against Mr Traynor. Breach of contracts 122 As I have noted, the respondents have also raised the question of whether, in truth, the cases advanced against them are claims that they had breached contracts which had been entered and were therefore not within the Court's jurisdiction. (See Sydney Water Corporation Ltd and Anor v Industrial Relations Commission of NSW and Anor [2004] NSWCA 436.) Given the time at which that issue was raised, I did not permit the respondents to put that part of their case, at this stage of the proceedings. This judgment accordingly does not deal with that matter. Costs 123 As to the question of costs, I am satisfied that the appropriate course is to reserve on that question, given that the parties agreed that the respondents' motions at this stage of the proceedings should be heard and that this judgment cannot finally dispose of the jurisdictional questions raised, given the way in which the parties finally dealt with the evidence. Orders 124 For the reasons given, the respondents' motions must be refused in relation to the matters dealt with. I order accordingly. ------------------------ AMENDMENTS HISTORY: 24/05/2007 - (line 3 of para [123]) - repetition of phrase 'at this stage of the proceedings' has been deleted - Paragraph(s) [123] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.