(Published in The Last Word, Vol 3 Pt 4 (Dec 2012) of Workplace Review)
By Jeffrey Phillips SC
opportunistic disintermediation … the middle man’s risk of being cut out. (Perram J in Informax International Pty Ltd v Clarius Group Ltd (2011) 192 FCR 210 at )
The Full Court of the Federal Court has revisited on appeal Perram J’s decision in Informax from which is drawn the exquisitely evocative restraint of trade expression recorded above – an expression perhaps more amenable to a course of antibiotics rather than injunctive relief. Although the Full Court largely upheld Perram J’s findings, primarily under challenge was the trial judge’s reasoning that s 16(4) of the Independent Contractors Act 2006 (Cth) (IC Act) did not permit the variation of a contract, found to be unfair or harsh, with operative effect from a date which predates the making of the court’s order. Commentary on Perram J’s view of the Act has suggested the Act was a “Paper Tiger” (see (2011) 2 WR 152).
In relation to the term “opportunistic disintermediation”, the Full Court said in Informax International Pty Ltd v Clarius Group Ltd  FCAFC 165, that it is:
more apt to describe the mischief which is to be avoided rather than the interest to be protected. We doubt its utility as a descriptor of a protectable interest and also the validity of the suggestion that all “middle men” have a protectable interest and that such an interest is always the same. (at )
However, in considering whether orders could be made retrospectively, the Full Court relied upon the legislative history and purpose of comparable earlier provisions in both federal and State legislation (at ), in particular, ss 127A-127C of the Industrial Relations Act 1996 (Cth). In its construction, s 16(4) of the IC Act relied upon the policy and purpose of it as a remedial and beneficial legislation (at ). The scheme of Pt 3 of the IC Act is only concerned to remedy unfairness in the contract as existing at the time it was made (at ). But the Full Court differed from the trial judge by saying:
to construe the scheme as being confined to only addressing the potential for future unfairness in the period which post-dates the order of the Court would render the scheme almost entirely inapplicable to contracts which have been terminated. (at )
Further, as s 16(4) states that orders “may only be prospective in operation”, this does not mean that such orders may not have remedial effect on events or transactions which predate the date upon which an order is made (at ). Accordingly, it was open to the court to make a remedial order dating back to the contract’s formation but operative from the date of the court’s order (at ).
Also, it may be relevant to consider how the contract operated between its formation and any orders being made, as such evidence may shed light on its potential to operate unfairly (at ). The Full Court was critical of the applicants’ pleadings as not accurately relying upon the power found within the IC Act’s scheme. Yet in the unique circumstances of the case, and consistent with the Full Court’s interpretation of the purpose of the Act, it permitted the applicants to amend their notice of motion to claim an order which is within the court’s power to make (at ). If that amendment is successful, the matter is to be remitted back to the primary judge for re-determination.
Unfair contracts will probably never reach the dizzy heights of the largely defunct New South Wales s 106 jurisdiction but the Full Court has given the Paper Tiger some teeth.
Citation: (2012) 3 WR 182.