Australia: Independent Contractors Act 2006 (Cth) Revisited – Informax International Pty Ltd v Clarius Group Limited [2012] FCAFC 165

On 21 November 2012 the Full Federal Court handed down a significant ruling on remedies available under the Independent Contractors Act 2006 (Cth) (IC Act) in relation to an appeal brought by an IT Project Manager seeking to vary an independent contractor agreement and obtain compensation from Clarius Group Limited (previously Candle Australia Ltd).

The decision adopts a technical process of statutory construction to achieve the outcome of enabling orders to be made under the IC Act that have, for all practical purposes, a retrospective application.


The IT project manager (the Principal) provided her services through the company Informax International Pty Ltd (Informax), which entered into a contract with Candle Australia Ltd (Candle) in February 2007 (the Candle Contract). Candle agreed to provide personnel to Woolworths pursuant to a contract dated 23 August 2006 (the Woolworths Contract) which, following a series of extensions, ceased on 30 June 2008. In July 2008, Informax and Woolworths entered into a contract stating that Informax would provide the Principal's services to Woolworths until 30 September 2008 pursuant to the execution of a service schedule. After Candle became aware of this agreement, Candle accused Woolworths of being in breach of the provisions of the Woolworths Contract. Clause 7.2 of the Woolworths Contract precluded Woolworths from soliciting any person whose services had been supplied by Candle to provide services for Woolworths, without the written consent of Candle for 12 months after the date when the services ceased to be provided. Following this, Woolworths did not execute any further service schedules with Informax.

Informax and the Principal (together the Applicants) claimed:

  1. that the Candle Contract was unfair and/or harsh and should be varied under Section 16 of the IC Act; and
  2. damages for breach of Clause 2.1 of the Candle Contract.

The Applicants also argued that Clause 4.4 of the Candle Contract (which precluded Informax or the Principal for a period of 6 months after termination of the contract from working for Woolworths) was an invalid restraint of trade.

Initial Proceedings

In March 2011, Justice Perram found that neither Clause 4.4 of the Candle contract nor Clause 7.2 of the Woolworths Contract were valid because they were unlawful restraints of trade. As such, it was not considered whether these restraints were harsh or unfair within the meaning of Section 12 of the IC Act. Orders were made to vary the Candle Contract to preclude Candle from taking any step to enforce the restraint against Informax or the Principal. Justice Perram did not accept that there had been any breach of Clause 2.1 of the Candle Agreement.

In August 2011, the Applicants made an application to amend their pleadings to allege that Candle, by persuading Woolworths to dispense with the services of Informax and the Principal, breached the terms of the Contract inserted by the Court in March 2011. Justice Perram rejected the application because Section 16(4) of the IC Act provided that an order varying an unfair contract takes effect from the date of the order or a later date specified in the order, rather on a retrospective basis.

Decision of the Full Federal Court

On appeal to the Full Federal Court there were two issues to be determined:

  1. Whether the primary judge's finding that the Candle Contract was unfair or harsh within the meaning of Section 12(1) of the IC Act was correct; and
  2. If such contract was found to be unfair or harsh, whether an order may be made to vary the contract with effect from a date which predates the Court order having regard to Clause 16(4) of the IC Act.

In reversing the second decision of Justice Perram the Court relied on the following reasoning:

  1. Notwithstanding the invalidity of the restraints of trade in the Candle Contract and the Woolworths Contract, such clauses could also be unfair or harsh within the meaning of Section 12(1) of the IC Act. A party may choose to claim relief under Part 3 of the IC Act whether or not the party may also have available other claims in common law and equity.
  2. The application in relation to Part 3 of the IC Act was limited to the Candle Contract to which the Applicants were parties; they could not have applied for such relief in relation to the Woolworths Contract. That the Principal did not know of Clause 7.2 of the Woolworths Contract was characterized as unfair within the meaning of Section 12(1) of the IC Act, as was the fact that the restraint period in the Woolworths Contract was for 12 months whereas the restraint period in the Candle Contract was only for 6 months.
  3. It was unfair for the extended contracts to contain the restraint in Clause 4.4 without qualification and this restraint should only have effect if Candle had made real and consistent efforts to secure ongoing work for the Principal under the extended Candle Contract.
  4. The restraint in Clause 4.4 should be valid for a period of 4 weeks rather than totally invalid. However, to the extent that it was valid it was unfair given that Clause 7.2 of the Woolworths Contract purported to impose a 12 months restraint of the same conduct. Specifically in relation to labour hire contracts, the Court stated that the short-term nature of these engagements and the diminished nature of the exposure to risk compared to that generally faced by an employer from the solicitation of customers by a former long term employee means that adequate protection would generally be afforded to a labour hire firm by a shorter period of restraint than which would be required by a former employer.
  5. In relation to the making of retrospective orders, the Court held that the construction of Section 16(4) (that orders may only be prospective in operation) does not mean that such orders may not have a remedial effect on events or transactions which predate the date upon which an order is made. Further, it does not mean that any order made may not give rise to any duty, obligation or liability which operates from a time prior to making the order. The Court reasoned that this construction was consistent with the text of Section 16(4) and the plain meaning of the words "takes effect". Moreover, the Court held that the intention of the Parliament in regard to Section 16(4) was that the mischief it seeks to rectify be identified at its source (being when the contract was made) also be remedied from its source (from when the contract was made). It further held that to construe any other meaning would render the scheme of the Act almost certainly inapplicable to contracts which have been terminated and this outcome was inconsistent with the High Court decisions in Dingjan; Exparte Wagner (1995) 183 CLR 323 and Gerrard v Mayne Nickless Ltd (1996) 135 ALR 494 on the basis that the scheme considered by those authorities has been essentially re-enacted in the IC Act.

Based on this reasoning, the Full Court held that it was open for Informax to have sought and for the Court to have made, an order which varied the Candle Contract which had a remedial scope going back to the date of the contracts formation but with an operative effect from the date of the Court's order. The relevant unfairness in this case was the failure of the contract to prevent Woolworths employing the Principal and Informax at the time when the Candle Contract no longer restrained Informax or the Principal from doing so. The potential for unfairness could have been remedied at its source by an order which varied the Candle Contract from the date of making the order by including a term in that contract to the effect that Candle would be liable for any loss or damage suffered by Informax or the Principal resulting from such conduct.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Kemp Strang has received acknowledgements for the quality of our work in the most recent editions of Chambers & Partners, Best Lawyers and IFLR1000.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.