Industrial Relations Commission of New South Wales in Court Session CITATION : Chiodo v Hobbs Bros (Carriers) Pty Ltd [2000] NSWIRComm 166 APPLICANT Antonio Chiodo PARTIES : RESPONDENT Hobbs Bros (Carriers) Pty Limited & anor FILE NUMBER: IRC 3293 of 1999 CORAM: Glynn J CATCHWORDS : Unfair contract - transport industry - subcontractor - alleged misrepresentation as to annual earnings - long term social/business relationship between parties - held that misrepresentation not made out - application dismissed. LEGISLATION CITED : Industrial Relations Act 1996 s 105 s 106 A & M Thompson Pty Ltd v Total Australia Ltd 1980 AR 399 CASES CITED : Davies v General Transport Development Pty Ltd 1967 AR 371 Leda Holdings Pty Limited v Oraka Pty Limited (FCA, Beaumont, Branson and Emmett JJ, NG320 of 1997, 9/12/97) HEARING DATES: 04/10/2000; 04/11/2000; 05/16/2000 DATE OF JUDGMENT: 08/24/2000 APPLICANT Mr I Sanderson of counsel SOLICITORS Mr A J Rollins Crichton-Brownes LEGAL REPRESENTATIVES: RESPONDENT Mr J Higgins of counsel Mr M Baroni New South Wales Road Transport Association Inc JUDGMENT: - 15 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: GLYNN J 24 AUGUST 2000 MATTER NO IRC3293 OF 1999 ANTONIO CHIODO v HOBBS BROS (CARRIERS) PTY LIMITED & ANOR Application under s 106 of the Industrial Relations Act 1996. JUDGMENT 1 Antonio Chiodo (the applicant) makes the following application for relief under s 106 of the Industrial Relations Act 1996 (the 1996 Act): 1 A declaration that the contract made between the Applicant and the First Respondent on or about 27 February 1996 is an unfair contract within the meaning of s 106 of the Industrial Relations Act. 2 An order that the Respondents pay to the Applicant the sum of $157,305-92. 2 That relief is sought against Hobbs Bros (Carriers) Pty Limited (the first respondent) and Graeme Hobbs (the second respondent). The applicant worked for the respondents as a subcontracting truck driver between April 1996 and March 1998, at which date he refused further work from the respondents. 3 The grounds for the relief are that: 1 The Applicant entered into an arrangement with the First Respondent at the instigation of the Second Respondent to drive a truck delivering goods for the First Respondent. As part of that arrangement the Applicant purchased a truck using borrowed funds. The Respondents were aware of that fact. 2 The Second Respondent on behalf of the First Respondent represented that a certain amount of work would be available to the Applicant and that the Applicant would earn at least $130,000 per annum. 3 The First Respondent failed to provide work at the level offered and failed to provide work sufficient to generate an income of $130,000 per annum. The Applicant has suffered loss of income, and has paid finance charges and income on the borrowed funds. 4 The particulars of the way the amount is claimed are: 1 The Applicant was promised an income of $130,000-00 per annum. 2 During the period April, 1996 to March, 1998 the Applicant earned $153,509-00 from the Respondents. 3 The Applicant has paid $50,305-92 in finance charges for his borrowings on the truck. 5 It was common ground that this is not a case dealing with some termination payment at the end of the contract. It is a case about a representation and alleged unfairness during the course of the contract. 6 The applicant gave evidence on his own behalf. 7 The only other witness in his case was Mervyn Baker who worked for Hobbs Carriers from 1993 as transport manager until his employment was terminated on 15 May 1997. Mr Baker is employed as transport co-ordinator and now lives in Queensland. 8 The respondents called as witnesses: Graeme Henry Hobbs, co-director of the first respondent since 1984. Between 1974 and 1984 he worked as a lorry owner driver (LOD) with several companies. Leslie Graeme Hobbs, director of the first respondent since 1984. Prior to becoming a director of the respondent he had his own semi-trailer and operated as an owner-driver in the transport industry principally in the timber and container sectors working for various companies. Scott William Lovatt, Operations Manager for Lovatt Transport for approximately the past twelve months. Prior to that he was the Operations and Export Manager for Hobbs Bros Carriers Pty Ltd. He held that position for approximately four and a half (4 ½) years. Prior to that he was the Operations Manager for Railor Transport. As the Operations Manager at Hobbs Bros his duties included controlling the exports, controlling and overseeing the allocation of work to the employees and owner-drivers and also generating new business. 9 All affidavits tendered into evidence were admitted without objection. Submissions - Applicant 10 Mr I Sanderson of counsel on behalf of the applicant stated that the applicant had been a truck driver for a number of years with the respondent on a subcontracting basis. In about 1994, the truck which he was using as a subcontractor was stolen and he ceased to work as a truck driver. 11 In early 1996, there was an approach made by Mr Graeme Hobbs for the respondents to the applicant in which they asked him if he was prepared to do some short-term subcontracting driving. That short-term arrangement was completed, but shortly after that the applicant was again approached by Mr Hobbs and asked whether or not he was prepared to work on a full-time basis as a subcontractor with the respondents. 12 There is a significant dispute about the terms of the initial conversation between Mr Chiodo and Mr Hobbs. Mr Chiodo's version is to the effect he would have more work than he knew what to do with. Mr Graham Hobbs' version of the conversation is far more circumspect, suggesting that perhaps there would be quiet times and he would have to go elsewhere to get work in those quiet times. Not much turns on those disputes because the important aspect of matters so far as the applicant is concerned is the fact that in the course of those negotiations, Mr Graham Hobbs signed a letter dated 27 February 1996. 13 There is some dispute about how the letter came into existence. On either version of events, it was a document which Mr Hobbs treated very carefully. 14 That letter was to the effect that Mr Chiodo could expect to earn $130,000 gross per annum while employed with Hobbs Bros. Armed with that letter, Mr Chiodo borrowed $100,000 to purchase the truck and in April 1996 began to work as a subcontractor. 15 This letter came into existence before Mr Chiodo had bought his truck and before Mr Chiodo had commenced to work for Hobbs Bros on 1 April. Without this letter there was time for Mr Chiodo to have changed the arrangement and simply not entered into it. Hobbs Bros had promised that if he started working for them, he could expect so much work that he would not know what to do with it. This letter quantifies what "so much work" meant in financial terms and it also established that the respondents were aware that on the basis of this promise Mr Chiodo was committing himself to a significant financial burden by borrowing the sum of $100,000. 16 Given the particular circumstances of this arrangement, for the respondents to in effect resile from it gives the requisite degree of unfairness to bring the matter within s 106 of the Act in accordance with the principles set out in A & Thompson Pty Ltd v Total Australia Ltd (1980 AR 399). 17 There are two relevant types of unfairnesses involved. The first is that the original arrangement was unfair in that it was brought into existence pursuant to representations by the respondents that the applicant could expect to earn $130,000 gross per annum from the Hobbs Bros work, and that was a representation that could never have been justified on the facts as they unfolded. 18 The second relevant unfairness in the applicant's submission is that process whereby work was allocated to the applicant by the respondents was such that again there was never enough work to allow Mr Chiodo to reach break-even or make any sort of reasonable money out of the arrangement. Such work could have been offered and it was not. So as the arrangement unfolded, the day to day operation of the arrangement was unfair. 19 There are a number of things that are significant in that letter. First, it shows at 27 February the respondents were quite clear that Mr Hobbs was considering purchasing a semi trailer, not a flat-topped truck before the arrangement was finalised. 20 Even assuming that a flat-top truck was what Mr Chiodo was expected to buy, the evidence of Mr Graham Hobbs, was that if Mr Chiodo had purchased a flat-topped truck he could expect to earn between $400 and $500 a day. Mr Hobbs agreed that meant $2,000 to $2,500 per week. Even if Mr Chiodo had bought a flat top truck, he could not have made the promised amount. Of course the arrangement did contemplate at the time it was finally brought to fruition the purchase of a semi trailer. The matter of the flat-topped truck is a red herring. 21 It was also a red herring to say that even though the applicant knew how the trucking industry generally works and how this particular company worked as far as the allocation of work to company trucks and to subcontractors, Mr Chiodo came into the arrangement. He was still reliant on the promises of the respondent in making his own assessment of whether or not he should go into it. He had no means of knowing that there was not the work for a subcontractor that would generate $130,000. 22 The favoured subcontractors were also to an extent a red herring because regardless of whether or not they were favoured, Mr Chiodo could still have had his promise satisfied. Mr Chiodo was promised $130,000. He did not get it. What the respondents promised other subcontractors did not affect the promise that Mr Chiodo had made to him. 23 Furthermore, those in-coming subcontractors bought company trucks. Those trucks were too old to get external finance on. Presumably those trucks were a lot cheaper than the truck that Mr Chiodo bought. The rate of interest that was paid by those favoured subcontractors was a favourable interest rate. Although all the subbies got the same amount of money, it is unfair because those other favoured subcontractors were in a financially much more favourable position than Mr Chiodo. They were not committed to external finance. 24 The reason the respondents had to get a "subbie" in was because the work was uneconomic for them. That is a degree of unfairness. There is the tendency of the respondent to do things such as this, as demonstrated by the Minutes of the meeting that was held by the various participants including Mr Les Hobbs and Mr Graham Hobbs, whereby they discussed schemes, such as hiding trucks, to make the company look more attractive to potential subcontractors. That is the way this company and Mr Graham Hobbs work. 25 Both Mr Les Hobbs and Mr Graham Hobbs acknowledge that there was work in the company that meant that they could have in fact given work to Mr Chiodo that would generate $130,000. However, they organised the affairs of their company such that Mr Chiodo was left to pick up the crumbs. They had made him a promise, on the basis of the promise he borrowed a significant amount of money and they left him withering on the vine because it did not suit them. That was the unfairness in the way that the contract was administered. 26 In the context of the promise that was made by Hobbs Bros to Mr Chiodo, the external earnings should not be factored into the equation. The only period in which he made a profit was 1 April 96 to June 96 period when he made the measly profit of $1,220.84. On each other period he made losses and the total losses which he made were $22,312.04. That is a matter which the Court should take into account on the question of unfairness. 27 There are some questions of credit that the Court must resolve. To an extent the presence of the letter promising $130,000 resolves most of the important issues of credit. If the Court did consider that credit is a factor in determining the final award, Mr Sanderson reminded it of the way in which Mr Graham Hobbs in particular gave his evidence. He was generally evasive. There are questions of direct conflict with the evidence for the respondents. There is some internal conflict between the witnesses for the respondents and if the Court does find it necessary to resolve questions of credit between the respective parties the evidence given by the applicant should be favoured over that of the respondents. Submissions - Respondents 28 Mr J Higgins of counsel appeared on behalf of the respondents. There are two issues. 29 The first issue is the alleged allegation of representations made. The second issue is that during the course of the engagement, there was favouritism of some sort shown to others. 30 The relevant principles to be applied are set out in Davies v General Transport Development Pty Ltd (1967 AR 371) 31 What the Court needs to consider in this case is whether the applicant is a victim of wrong dealing. The evidence reveals that the contrary is in fact the case. This is one of those unfortunate cases where the litigants involved had been friends for many years. The applicant had worked for Hobbs Carriers for many years prior to the work that was performed which is the subject of these proceedings. With that background there would be a presumption that the Hobbs brothers, the friends of the applicant, would not set out to perpetrate some wrong on him. 32 The fact was that the applicant was unemployed. He was in a difficult financial situation and he was extremely evasive about whether Hobbs Bros knew that he was in a difficult financial situation. He finally conceded that they did know he was unemployed. They offered him some casual work. He conceded that he said to Graham Hobbs that he was looking at purchasing a business, though he said that he was referring to a restaurant or the like. What has eventuated is that there was an opportunity given to the applicant to set up his own business. He still operates a transport business as a result of the opportunity that was given to him and in setting up that business, he had a core of work from Hobbs Bros, a significant amount of work. 33 The case appears to turn on two elements. The first is that there was some sort of representation that $130,000 would come from Hobbs. It apparently does not matter if the applicant earns $200,000, for example, working as he did for other companies. He has to get this $130,000 from Hobbs. 34 Graham Hobbs in re-examination said that Mr Chiodo would earn $130,000 per annum through other contacts. It was always understood by Mr Chiodo that he would be able to work for other companies and that was part of the bargain that was made. He worked for numerous companies, not just one or two and not just occasionally, but consistently. He conceded in re-examination that he started working for other companies within a few weeks after purchasing the semi trailer and within a few weeks of starting to work with Hobbs Carriers. 35 If one looks at what he earned in the context of that letter, working for Hobbs and for others he earned $119,642. Now it is true that that is not $130,000, but it is around the ballpark of that amount of money. The word "should" is used in that letter and quite deliberately used. If one goes to the financial year ending 30 June 1998 the position is that he earned $134,145. There was no false representation made at all. There was a letter which has one purpose only and that was for the bank. There was an understanding between the applicant and the respondent that he would receive work from Hobbs Carriers and be able to work for others. That arrangement came to fruition and was made good. The representation was made good. 36 The letter had a very narrow specific purpose. It was understood by all. 37 Relying upon a decision of the Federal Court of Australia in Leda Holdings Pty Limited v Oraka Pty Limited (NG 320 of 1997; 9/12/97), Mr Higgins contended that Mr Chiodo was an experienced subcontractor, not only experienced in the context of the transport industry, but he was an experienced subcontractor in the context of Hobbs Carriers. He certainly knew and he conceded that he knew that company trucks got priority. He knew that, but the fact is that Mr Chiodo got priority too as against outside subcontractors. He was always allowed to work for others. Mr Graham Hobbs gave evidence that never once did the applicant have to stop performing a job that he had started to perform for other companies to work for Hobbs. But of course if he was not doing work for other companies, then he was expected to make himself available to Hobbs. That was part of the arrangement. There is certainly nothing unfair about that. In fact what is alleged to be unfair is that he did not get to work for Hobbs more than he did. 38 The applicant was in the fortunate position of starting up a transport business to have a core of solid work available, together with the opportunity to develop the contacts that he already had, and build up a transport business which he is still running. His evidence was quite evasive, even on that point in that he acknowledges that Mr Graham Hobbs asked him whether he had other contacts in the transport industry, but he denies that Mr Hobbs said to him that he should use them, which would be a strange situation. Graham Hobbs puts that he said that he should utilise those contacts and not just at the initial meeting. The documentary evidence about all the work that this applicant did for other companies is overwhelmingly supportive of the submission that it was always part of this arrangement that he work for others. 39 Of course, if that was part of the arrangement, then what is being dealt with is a letter that says "should earn $130,000". What he did earn tends to balance out at around the $130,000 area. If that be the case then the applicant has no claim. This is one of those cases where there is not any unfairness at all. 40 There was some suggestion that the parking of trucks around the back somehow set out to perpetrate some sort of unfairness on perceived prospective purchasers of trucks. There is nothing wrong with the company parking idle trucks around the back of the office. In any event, the prospective purchasers were taken around the back by Les Hobbs to see the trucks. They had to be taken around the back to see the trucks, because that is what they were looking at buying. There was no improper conduct there. As for matters that were discussed at the meeting, if that is to be held against the company, there is a free exchange of views, Minutes are recorded. 41 There was nothing unfair perpetrated upon the applicant as a result of that meeting or as a result of trucks being parked around the back. It is raised simply to try to impugn in some way the general conduct of Hobbs Carriers and it simply does not do that. The two elements that the applicant put as being in issue are not in issue in these proceedings. 42 In terms of the second limb, which alleges some sort of discrimination against the applicant, the earnings of the applicant are entirely consistent with the earnings of the other subcontractors. The applicant actually acknowledged in cross-examination that on the basis of those figures he was not discriminated against, at least during the six month period relating to the latter part of 1997, once the subcontractors had started working. Taking into account that very low figure for one month when he was working for other companies, notwithstanding that he was still, over that six month period, earning roughly what the other subcontractors earned from Hobbs. He was of course earning more money than that because he was working elsewhere. So it simply does not support any assertion that there was any discrimination against the applicant in relation to the allocation of work. He knew that company trucks get priority from the outset based on his previous experience. He had a priority on occasion as against outside contractors. 43 The application should be dismissed. Submission - Applicant - In reply 44 On one view of this case, what happened is that Mr Chiodo had a representation made to him that he would have so much work he would not know what to do with it. The clear implication of that representation is that that work was from Hobbs Bros. That work, it became apparent fairly early on in the relationship, was not going to happen. It was then that Mr Hobbs went out looking for other people with whom to do work. 45 If the Court accepted that it should bring into account the earnings elsewhere and as it were top those up to see if they reached or exceeded $130,000 there were still shortfalls. For the first period from 1 April 1996 to 30 June 1996, there was a shortfall of 14 odd thousand dollars. In the next year, there is still a shortfall of about $10,000. For the last period it is not clear how much of his work was for Hobbs and how much was not. The evidence would lead to the assumption that the majority of the income in that period was earned at a time when he was receiving very little work from Hobbs Bros. 46 The fact that he may have been able, after cutting off the relationship with Hobbs Bros, to go out and earn more money does not effect the fact that in the time that he was working for Hobbs Bros, he was earning a figure significantly below that which he had been promised by Hobbs Bros. The Court should not take into account the earnings for that period exceeding $130,000 because a significant part of that was in fact earned when he was out there free-lancing rather than being tied to Hobbs. Even though Hobbs Bros may not have required him to come off jobs to go back to work for them, there was a clear expectation that he would be, as his first priority, available to Hobbs Bros. So there is that degree of unfairness in that even though the respondents had this expectation of having first call on his services, they still were not providing the income that would bring him up to that which they had promised him. 47 Leda Holdings is of minimal relevance. The matter prohibited in the Trade Practices Act is a prohibition against misleading conduct. That is something different to unfair arrangements. Consideration 48 The first respondent was described as being principally engaged in the carriage of timber and also of containers. To perform this work it employs eighteen (18) truck drivers and approximately ten (10) forklift drivers. The respondent has eighteen (18) company vehicles and twenty-five (25) forklifts. The forklifts are generally used at the respondent's yard in the storage areas adjacent to the container operations. 49 The first respondent is a company run by the Hobbs brothers since 1984, at which date their father retired from the company that had been in existence since 1946. Both Graeme and Leslie Hobbs had previously worked as lorry owner drivers with various companies. 50 Each of the brothers has specific functions in running the company. The second respondent looks after the financial side, Mr Leslie Hobbs looks after the "outside" - the trucks and the forklifts. There is an allocator of work employed, but the evidence of Mr Lovatt, for instance, made it clear, that either of the brothers might be approached by drivers as to operational matters. 51 The circumstances which ultimately led to the contract now under attack were described by Mr Baker in his affidavit dated 12 July 1999: In late 1995 or early 1996 a company called Tasman KB timbers [TKBT] moved its operation from a yard at Kemps Creek to the Hobbs Bros yard at St Marys. At the same time the arrangement between Hobbs Bros and Tasman KB that Hobbs Bros would do the Metropolitan delivery work for Tasman KB out of that yard was put into effect. As Hobbs Bros, among other things, specialised in moving large amounts of timber, using semi trailers, they did not have suitable trucks to do this work. Because the work involved delivering relatively small loads to many places it was inefficient to use semi trailers. 52 Mr Baker's evidence of his discussions with the second respondent as to the new work for Tasman KB Timbers was that he had told him that the first respondent had lost approximately $12,000 over a period of three months doing that delivery work with the respondent's semi-trailers. Mr Baker in those discussions kept pursuing the fact that the second respondent needed a flat top to do the deliveries out of TKBT's yard, because some of the places were inaccessible to a semi-trailer. There was discussion as to getting in a sub-contractor to do that work. 53 According to Mr Baker, as far as TKBT was concerned, flat tops would have been more suitable vehicles on those occasions, but the first respondent did not have flat tops. Mr Baker's further evidence was that insofar as new work for the first respondent from Tasman KB Timbers was concerned, that work was sometimes suited to semi-trailers and sometimes not, depending upon the yard to which the timber had to be delivered. 54 In early 1996 Mr Graeme Hobbs approached the applicant and offered him some short term casual work to drive one of the trucks of Hobbs Transport as a casual driver. That continued for a couple of weeks. At that time the applicant was unemployed and receiving unemployment benefits. He said that Graeme Hobbs obviously knew he was unemployed. 55 The second respondent said that when he later raised the topic of Tony Chiodo coming back to work for Hobbs Bros, Tony Chiodo was the subcontractor he intended to employ for the Tasman KBT work. At that stage he did not have the view that Mr Chiodo would be working almost exclusively for the first respondent. He was being brought in because Tasman KBT was a big client of Hobbs and the expectation was that he would be spending a major part of his work with Hobbs servicing that client. The second respondent thought that Mr Chiodo should expect to earn with Hobbs servicing TKBT four to five hundred dollars a day with the flat top, or two and a half thousand dollars per week. 56 The applicant and the respondents had a long history of working together. It was deposed by the second respondent that since 1984 the applicant had performed work on an ad hoc basis for Hobbs Bros. During that time the applicant owned a flat top rigid truck with a carrying capacity of approximately 12 tonnes. The primary type of work which the applicant performed for the respondent during that time was the cartage of timber from the wharves and various yards. The applicant ceased providing his services to the respondent some time in 1994, when his truck was stolen. 57 The first discussion that the applicant had with the second respondent as to the contract now under attack was after he had completed the short term casual work and was in the following terms: 6. A few days later I went to the premises of Hobbs Bros and met with Graeme Hobbs. He said, "I have something which I think you can make a go of. You would be working for Hobbs doing deliveries for Tasman KB - the timber importers." I said, "it sounds good." Graeme Hobbs then called in Merv Baker, Hobbs Bros foreman. Graeme Hobbs said, "Tony is going to get a truck. We think he can be a better operator getting a dollar out of this part of the business." He then said to me "You'll have that much work that at some stage you will not be able to handle it. When it gets quiet, if it gets quiet, we will throw you into the general operations of the company." I said, "When do it start? I will have to get a truck." There was then a discussion between Graeme Hobbs, Mr Baker and myself about how the work would be organised. In the course of the discussion Graeme Hobbs said to Merv Baker "Make sure he gets work." 58 The applicant denied that the second respondent in advising him that the first respondent had taken over the TKBT contract had said a flat top was needed. The applicant said that a flat top was not suited to do the TKBT work, but a semi-trailer was suitable. He said that four years later TKBT still does not have a flat top doing that work. Mr Baker, his own witness, was in error in saying that a semi-trailer was not suited to the TKBT work. 59 (I do not accept that contention by the applicant. He in fact did very little, if any, TKBT work while he worked with the respondents. Moreover, Mr Baker's evidence that the first respondent specialised in moving large amounts of timber using semi-trailers supports the evidence of the respondents as to why a flat top truck not a semi-trailer was needed to do the TKBT work. If a semi-trailer had been a suitable vehicle to undertake the work, the respondents could have accommodated that work by using their own company owned vehicles, and would not have needed to get a sub-contractor in to do it.) 60 Having looked at a number of vehicles, the applicant decided to buy a second-hand Mercedes Benz prime mover from Milperra and a trailer from Southern Cross Trailers. The prime mover cost $68,000 on the road and the trailer cost $18,000 on the road. The applicant borrowed $100,000 from CBFC Leasing Pty Ltd. He said that as part of the process of applying for the finance from CBFC he was required to prove what his income would be. He said to Graeme Hobbs words to the effect "The bank wants something to prove I'm going to work for you and capable of paying it back and living and paying off the house. I am borrowing $100,000 to pay for the truck". 61 There were further discussions between the applicant and the respondent, the outcome of which was the document I later refer to as "the February statement". That document is at the heart of the applicant's claim for relief pursuant to s 105 and s 106. 62 The statement dated 27 February 1996 (the February statement) set out under the first respondent's letterhead was in the following terms: 27th. February 1996. TO WHOM IT MAY CONCERN This is to certify that Mr. Antonio Chiodo is considering purchasing a Semi Trailer motor vehicle, and Hobbs Bros. (Carriers) Pty. Ltd. can guarantee him employment as a Sub Contractor which should return Mr. Chiodo a minimum of $130,000.00. per annum. Graeme Hobbs. Director. 63 The origin of that statement was in dispute, Mr Graeme Hobbs saying that the applicant had brought him a handwritten draft of it which Mr Hobbs had amended by using the word "should" instead of "would" as originally proposed by the applicant. He said the word "minimum" was in the wording the applicant gave him. Although the second respondent took the draft February statement away to consider, it does not seem, however, that he took any legal advice as to it. (In cases such as this what more usually arises for consideration is whether the applicant took legal advice.) 64 The second respondent said he had not been "happy" as suggested by the applicant's counsel to provide the letter for the applicant to use in his application for finance. His then manager and his brother had advised against giving the letter. He had given the letter because "Tony was a friend" and "had worked for us before. He had no other way of getting a truck". (One of the contradictions in the respondents' evidence was that Mr Leslie Hobbs said he did not discuss the letter with the second respondent.) 65 The second respondent was sufficiently concerned with the form of the letter to change the word "will" for "should", but he was not concerned about saying the applicant earned this money from Hobbs Bros, because "I trusted Tony. He was a friend". 66 The applicant said that he did not give the second respondent a draft statement. Mr Hobbs had drafted the statement. 67 The applicant said that prior to the February statement the precise amount of money that he would receive from Hobbs had not been discussed. In the earlier discussions with the second respondent, the latter had not put a figure on the number of days the applicant would be working nor given any guarantee as to the volume of work in terms of units or of numbers of containers "or anything like that, only that there would be more than enough there, that [the applicant] would not be able to handle it". The discussion during which those statements were made, took place before the applicant had selected a vehicle. 68 The second respondent accepted that the words in the February statement, "Should return Mr Chiodo a minimum of $130,000 per annum" implied that Mr Chiodo could expect to get that amount from Hobbs Bros Carriers, but that statement, as he and the applicant were discussing what work was available was made in a context of working for other people. In re-examination he said in purchasing a semi trailer would have expected Tony to generate $130,000 per annum through Hobbs and other contacts. 69 In the context of getting the February statement, the applicant said he had asked the second respondent what he was going to earn and "it was agreed it would be around $130,000 a year". He had not ever discussed the precise amount of money he would receive from the first respondent. 70 On the evidence of the applicant and of the second respondent, I find that the first time that the figure of $130,000 was raised was during their discussions in relation to the February statement. 71 I accept the evidence of the second respondent as to the origin of the statement. The statement was one needed by the applicant to support his application for a loan. There was no cause for the second respondent to initiate such a statement. 72 That statement has to be considered in the context of all the circumstances that led up to it. 73 The negotiations between the applicant and the second respondent were not the arms length negotiations that would more usually accompany the making of a contract such as this one. As already noted, the approach of the second respondent was based on his view that "I trusted Tony. He was a friend". 74 Most of the negotiations with the applicant were carried out with the second respondent, Mr Leslie Hobbs not playing much part in those. He said that he had not seen the February statement. He did not have much to do with the financial side of the business, his involvement basically concerning the outside movement of the trucks and organising forks. 75 The parties had known each other for at least 14 years. The applicant had for 12 years or so operated as a sub-contractor for the respondent. The applicant and the Messrs Hobbs and their families had had a social relationship. Since 1984 the second respondent said he would, on occasions, go to dinner to the applicant's house or alternatively the applicant would visit him and his family. He also recalled that after the applicant ceased working for the respondent that he went and had a look at the applicant's new home that he had built. On a couple of occasions after 1994 the applicant had invited the second respondent to the Harold Park Trots, where the applicant is or was a member. 76 The second respondent knew more of the applicant's financial affairs and personal foibles than the applicant was happy to admit in these proceedings. Although his evidence on the point was contradictory, I accept that the applicant had told the second respondent that he was "broke" before the offer to sub-contract was made by the second respondent. The second respondent knew that the applicant was looking for a business opportunity. 77 The offer that was originally made was predicated on the basis that the respondents needed a flat top truck to do the TKBT work. The discussions and the advice that the applicant would have so much work he would not have time for sleep were all based on the work that would flow from possession of such a truck. The applicant did not buy a flat top. He bought a prime mover and trailer. 78 If the negotiations between the parties had been of a strictly commercial nature, the negotiations would have stopped at that point, the applicant not providing to the respondents the type of truck they saw as necessary for the TKBT work and the basis on which they had originally approached him. They already had 18 semi-trailers. They lacked a flat top. 79 The respondents did express their doubts to the applicant as to the wisdom of his choice, but they did not otherwise seek to influence his choice. The applicant accepted that at the time that February statement was being discussed the second respondent had asked why the applicant did not get a cheaper truck. He said he had in fact picked out a cheaper truck but because of its age, could not get finance on that vehicle. It is indicative of the relationship between all the persons concerned, that there was no obligation on the applicant to pay any heed to the doubts raised by the Hobbs brothers and he did not do so. 80 The special relationship that existed between the second respondent, Mr Leslie Hobbs and the applicant was one that continued to influence the dealings between them after the applicant had started back as a sub-contractor in April 1996. On 9 May 1997 the first respondent had advanced the applicant $1,500, since repaid, to establish Bayview Transport Pty Ltd, that being the applicant's business. 81 The applicant was also treated differently by the respondents as compared with the treatment of the other subcontractors. The amounts the applicant was invoicing Hobbs Bros when he did work tended to be in the thousands of dollars. The applicant invoiced the second respondent when he needed money and sometimes asked for it at that time. When he had done that, the second respondent paid him, sometimes for work done that day. The position with other sub contractors was that they waited until the end of the month when Hobbs assessed the bill and they were paid after that. The applicant was also given fuel on several occasions before payment, "on tick". 82 The February statement has to be seen in the light of that relationship. 83 It was said by counsel for the applicant that if the applicant had not received a statement from the first respondent that he should earn $130,000 per annum from the first respondent, he could have decided not to go ahead with the purchase of the truck and trailer. 84 It is true that if the applicant had not received that statement from the first respondent, the finance company might not, unless the applicant could have come up with some alternative, have proceeded to offer the loan. However, what might have happened is a matter for speculation only. The applicant had already decided to take up the subcontracting offer without specific details as to projected income returns, though it was certainly expected he would receive more work than he could handle. He had made his own decision as to the more expensive vehicle he wanted, against the advice of the second respondent. He might have looked for a less expensive vehicle. He might have looked to a different finance company. It is not known what equity he had in his new house that might have been used to supplement projected earnings as a basis for a loan. 85 What is known is that the applicant went ahead with the loan and completed the purchase of his chosen vehicles. Although the applicant denied that he had suggested the figure of $130,000 to be included in the letter, that figure was arrived at in discussions that only occurred after he approached the second respondent for a letter to confirm to the finance company that he had already approached for a loan, that he could sustain the repayments for that loan. 86 The discussions between the applicant and the second respondent as to the figure that should go into the February statement had to be based on the fact that the applicant was acquiring a semi trailer, not a flat top. 87 I find that the figure of $130,000 that was eventually decided, was arrived at jointly by the applicant and the second respondent, and, in the light of the evidence, was one that two men experienced in the transport industry, were confident would be the possible return for a semi-trailer operated on a sub-contract basis out of the respondents' yard with access to other work, either from the respondents' or from the applicant's own contacts. 88 That conclusion is supported by the fact that the applicant in cross-examination agreed that his total business income for the financial year 1996/1997 was approximately $120,000, and for the financial year 1997/1998 was $134,145. It is also confirmed by the second respondent's acknowledgment that the applicant could have been given work by the first respondent that would have returned him $130,000, but that to do so, would mean using one less of their own trucks. (I do not find it feasible that the second respondent in his discussions with the applicant would have had such an action in mind.) 89 It was contended for the applicant that he was reliant upon the assertions of the second respondent that the work for a subcontractor would generate $130,000. If it were the case that the second respondent had been asserting that the applicant would derive the amount of $130,000 per annum solely from the respondents, that would be true. However, I do not accept that the main point of the discussions between the applicant and the second respondent in the lead up to the February statement was what amount of income would be guaranteed as coming solely from the first respondent. In my view, the discussions, as reflected in the February statement, went firstly, to the guarantee of employment by the first respondent, and secondly, to the monetary returns that could be expected by the applicant using a semi-trailer. 90 The February statement does not, as was submitted by counsel for the applicant, quantify what the words "so much work" used by the second respondent to the applicant, meant in financial terms. At the time the amount of $130,000 per annum was discussed, the earlier basis, as to which I accept it was said by the second respondent that the applicant would have more work than he could handle, had gone by the board. That work was tied to carriage of TKBT products using a flat top truck and picking up other work as described by the second respondent. Because Hobbs worked for wholesalers in general, the second respondent's idea had been that with the flat top, the applicant could make contacts with Hobbs' smaller retail suppliers to see if he could pick up the smaller deliveries of concrete or other such deliveries that are made using a smaller truck. Such deliveries would not be taking away the respondent's own accounts. 91 It was a matter of dispute as to when the second respondents had raised the matter of the applicant's industry contacts with him. That matter was relevant to the issue as to whether there had existed an understanding that the $130,000 referred to in the February statement would come from work provided solely by the first respondent. 92 The applicant said he was, from the outset, primarily employed to do a specific job for the first respondent. That, of course, was the TKBT work. What is certain, however, is that the applicant commenced working for Hobbs in April 1996 but did very little Tasman KBT work. He carried bulk timber from the wharf to various customers and did so throughout the period of his engagement. 93 The applicant said that when the work started to diminish at the first respondent's yard, the second respondent had asked if the applicant had any contacts with other transport companies to pick up work. He denied that conversation had taken place when he advised the respondents as to the type of truck he was buying. 94 I accept that the second respondent did raise the matter of what industry contacts the applicant had at the first meeting in February but that was in the context of the applicant doing work with a flat top. I think that it likely that, once the applicant made it clear that he was getting a semi-trailer, that the matter of the existence of industry contacts became a matter of real relevance as to the applicant's ability to secure the work to justify that purchase in the minds of the second respondent and of Mr Leslie Hobbs, and that their concerns were conveyed to the applicant. 95 It was claimed on behalf of the applicant that the respondents could have organised their operations so that the applicant could have been given work that would generate $130,000 per annum. Instead, it was said, the applicant was left to pick up the crumbs. 96 From August 1996 onwards he had worked for various other companies. 97 The second respondent said that a pattern of payment to the applicant as shown in the applicant's invoices from other transport companies in amounts of hundreds of dollars was the action the second respondent expected. They were companies the applicant was introduced to by Hobbs Bros. The second respondent expressed the view that $120,000 to $130,000 return for a truck is not lean. 98 In my view, the relationship between the respondents and the applicant, as understood and acted upon by the applicant, is embodied by the applicant's responses in the following extract from transcript: Q. Do you recall him [the second respondent] saying the words I have put to you, "That's fine, I've got no problems with that because you've got to keep your wheels turning"? A. Yes, he had no choice because there would be no work at that stage. Q. There was no problem working for CTC when you asked him about it? A. He couldn't do much about it. Q. He couldn't do much about it because you are a sub-contractor? A. Primarily to Hobbs Bros. Q. You were a sub-contractor from the beginning? A. Primarily to Hobbs Bros. 99 The applicant was a subcontractor, as he said primarily to Hobbs Bros. He was not subcontracting exclusively to Hobbs Bros. The respondents could not "do much about" his working with other companies. 100 At some point in 1996/1997 Hobbs Bros decided to sell some of its trucks to subcontractors, the initial decision to do so being made around July/August 1996. The respondent had attempted to sell the trucks for a period of time, but it was not until mid 1997 that Hobbs eventually succeeded in selling two trucks to subcontractors. The sale of the trucks was aimed at relieving financial pressure on Hobbs Bros. 101 The selling by the first respondent of the company trucks to two lorry owner drivers was finalised in May/June 1997. Those sales were more than one year after the applicant started back with the first respondent in the now impugned contract. In the period July to December 1997, the above mentioned subcontractors received $60,167 and $66,835 from the first respondent as against the amount of $57,240 received by the applicant. 102 The second respondent said it was a quiet period through 1997 and the start of 1998. The first respondent had stopped giving work to its casual drivers. The effect of his evidence was that the first respondent would have had to take one of its trucks off the road to ensure that the applicant received from it $130,000 per annum. 103 The second respondent said he expected Mr Chiodo to be available for doing Hobbs' work when Hobbs Bros had work available for him. Whether he could do Hobbs' competing work depended on when he was finishing with the other people. The fact was that the applicant tended to go to other people for fill-in jobs when Hobbs Bros' work was not available. That evidence of the second respondent fitted in with the evidence of the applicant who said that if the first respondent had given him work he would more than likely have taken it because Hobbs Bros was the best firm to work for at that time. 104 The applicant did not take up subcontracting for the respondents on an unequal basis. He had previously operated a truck as a subcontractor for the first respondent for about 10 years. He knew that the policy that operated in the respondents' yard as to allocation of work was that which operated in the transport carrying industry generally. Cream work is the most lucrative work, which would earn people most money. That is either work that involves full loads or a drop off and pick up at the same place so the truck was never running empty. Cream work goes first to company trucks. 105 Mr Baker, who left the first respondent in May 1997, said the applicant did not do cream work because he never allocated cream work to a subcontractor. 106 Mr Lovatt, employed after Mr Baker, said that in allocating work for the respondents, first priority was given to the company's own employees. After June 1997, the second priority was given to two lorry owner drivers who had bought into the first respondent's business. (The second respondent said that was because they had paid money and bought trucks and Hobbs felt they were "part of the family sort of thing" then and just put them in a higher pecking order.) The next priority was to all other outside subcontractors, of whom the applicant was one. However, while Mr Lovatt was in control of allocation, the applicant always received first preference over those other outside contractors, including Mr Lovatt's own truck which was subcontracted out to a number of companies, including to the first respondent. Mr Lovatt said that that preferential treatment was given to the applicant because of instructions from management. 107 Mr Lovatt said that as far as he was aware Mr Chiodo did no work for other companies. There were times when Mr Chiodo was not at Hobbs Bros while Mr Lovatt was allocating work, and he did not know what he was doing on those occasions. The applicant did not ever come to ask Mr Lovatt whether it was all right for him to go and work for other companies, but the applicant could have asked either Les or Graeme Hobbs. In the light of the extensive evidence before the Court as to work undertaken by the applicant for other companies, that evidence supports my view that the applicant adopted an independent approach to his work relationship with the respondents, an approach that, understandably, looked after the applicant's own business interests. 108 It was not only the subcontractors who suffered when there were downturns in what Mr Lovatt described as a cyclical industry. They were times when alternative work had to be found for permanent employees of the company. That involved Mr Lovatt in seeking to hire out the trucks of Hobbs to other transport companies. His practice when work levels fell was to contact subcontractors, including the applicant, and provide them with alternative contact names and numbers of other companies who had work in other services. 109 The circumstances under which the applicant ceased working for the respondents in early March 1998 are in dispute, but it does seem, on any version, that in the final instance, it was the applicant's decision. He then sought regular work with CTC Carriers. 110 I find that the applicant was given assistance by the respondents to obtain work from other companies, including rival companies, when work was not available for him from the respondents. 111 It was not unfair, as was submitted by the applicant for the respondents to seek the services of a sub-contractor to do the TKBT work they found uneconomic for the company. In this case the work was uneconomic when undertaken by semi-trailers, rather than by the flat tops which, according to the evidence, would have been more suitable. Furthermore, in discussions with the applicant, the second respondent had referred to other work that could be picked up from the retailers and the smaller yards he would have been servicing while undertaking the TKBT work. 112 The applicant devoted some time to the Minutes of a company meeting held on 2 April 1997 at which the sale of trucks was specifically considered. Those Minutes noted some proposed solutions to the difficulties the first respondent was having in selling some trucks: parking idle trucks out of sight, putting on a named casual driver and giving him a lot of work to encourage him and others to buy and offering vendor finance up to a maximum of 50% of the asking price over a 4 year period, thus creating the impression that the actual contract was for a longer term than the 1 year stated. 113 Counsel for the applicant said that the Minutes evidence went to a propensity of the first respondent to deceive potential purchasers of trucks and potential subcontractors. 114 The Minutes themselves stated that over a period of a normal month there was sufficient work for all 19 trucks, but idle trucks the respondents were trying to sell sitting in exposed areas gave the perception that there was not enough work. The proposal was to put them out of sight, not hide them as contended for by the applicant. Mr Leslie Hobbs said he took prospective purchasers around the back to show them those trucks. He had wanted to stop such persons from talking to drivers. He said that was because Hobbs initially offered to its own drivers the proposition of buying the trucks and there was some rejection to it by the drivers. They saw it as being a threat on their living. They were protecting their position by telling people the wrong thing. The company drivers at the time thought Hobbs were going to eventually get all subcontractors. 115 If the applicant had been offered vendor finance, the last proposal would have had to be scrutinised more closely as to whether it had moved beyond a proposal. Vendor finance was not a factor in this case. 116 I find that the Minutes do not support the applicant's submission as to the propensity of the first respondent to deceive potential subcontractors, including the applicant. 117 There were mutual recriminations as to credit. I have been able to make findings as necessary, eg as to the origin of the February statement, on the evidence overall. I do note, however, that, in cross-examination, the applicant said that in May 1999, when he swore his affidavit, he could remember his conversation in January 1996 better because at the time he made his initial inquiry as to his complaint, which is this case, he had made notes while it was fresh in his mind and it was all written up immediately. Despite saying that, his oral evidence as to whether, or when, he had told the second respondent he was broke, differed from his earlier affidavit evidence. When questioned about working elsewhere, in literally the one sentence he first said that he was virtually told to look elsewhere for work because Hobbs Bros could not satisfy his needs and, second, that he actually asked permission to go to look elsewhere. 118 There was conflict in the evidence of the second respondent with that of other witnesses, but not such as to call for adverse findings as to his credit. Such conflict is understandable when it is remembered that the applicant finished work with the first respondent in March 1998 and this application was filed on 25 June 1999. The second respondent did not have the advantage of knowing nearer to the relevant times, as did the applicant, that the applicant was contemplating filing a summons for relief under s 105 and s 106 and so did not have the opportunity to write down his recollection of events, while they were fresher in his memory. Conclusion 119 Sections 105 and 106 of the 1996 Act are set out below: 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. Note . The jurisdiction of the Commission under this Part is exercisable only by the Commission in Court Session. Division 2 Unfair contracts may be declared void or varied 106 Power of the 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. (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. 120 The applicant had been looking for an opportunity to go into business. That opportunity had not eventuated in the restaurant industry where he had first looked. The second respondent had presented him with an opportunity to get back into the transport industry. That opportunity was offered on the basis of the applicant obtaining a flat top vehicle and primarily undertaking carrying work for a specified company, that being Tasman KB Timbers. The applicant adopted a quite independent approach to his relationship with the respondents, for instance, the applicant did not purchase a flat top truck. He decided to buy a semi-trailer. He said he thought the Mercedes semi-trailer he purchased would be ideal for the TKBT work, though that was not the view held by the respondents. His statement that buying a Mercedes semi-trailer would enable him to get a better load on his trailer, suggests that he was looking beyond the respondents' requirements in making that purchase. He still retains that truck. 121 He continues to foster his business interests. In more recent times, he negotiated with CBC, carriers described as low payers in the industry, a better rate than he had with the respondents. He had first done work for that company, a rival of the respondents, around May/June 1997, which was during the course of his association with the respondents. (The respondents knew of that work and I find nothing untoward in his doing it.) 122 The applicant's case is pressed on the basis that the respondents represented to him that his employment as a subcontractor would, not should, return him a minimum income of $130,000 per annum from the first respondent. It is said that the respondents' failure to ensure that outcome rendered the contract unfair. 123 The core issue before this Court for determination is whether, on the basis of the February statement, it had been agreed by the respondents that the entire amount of $130,000 was to be derived from work actually provided by the first respondent itself. 124 If the February 1997 letter was indeed a representation to the applicant that he would receive a minimum of $130,000 per annum from the first respondent, then factors such as the incoming company LODs and the applicant's knowledge of the order of allocation of work to employees/subcontractors by the respondents would not of themselves prevent orders being made in his favour. This decision, if that claim had been made out, would be very different. However, I have found that there was not such a representation. 125 I find that the contract made between the applicant and the first respondent on or about 27 February 1996 is not an unfair contract within the meaning of the Industrial Relations Act 1996. The application is dismissed. 126 The parties are to confer as to costs and if agreement cannot be reached they may make further short submissions as to that issue. ********************* 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.