Industrial Relations Commission of New South Wales CITATION: Transport Industry - Mutual Responsibility for Road Safety (State) Award and Contract Determination, Re [2006] NSWIRComm 30 APPLICANTS ON NOTICE OF MOTION New South Wales Road Transport Association Inc Australian Business Industrial Employers First Australian Retailers Association of New South Wales Boral Group of Companies PARTIES: Aldi Stores (A Limited Partnership) Toll Pty Ltd RESPONDENT TO NOTICE OF MOTION Transport Workers' Union of New South Wales INTERVENER Minister for Industrial Relations FILE NUMBER(S): IRC4219 of 2005 CORAM: Wright J President; Walton J Vice-President; Sams DP; Tabbaa C CATCHWORDS: Award - Contracts of carriage - Transport industry - Safety Issues - Applications by TWU for award and contract determination concerning safety in the transport industry - Interlocutory application challenging jurisdiction to hear application - Challenge concentrating on jurisdiction to make contract determination - Whether discretion should be exercised to determine challenge at preliminary stage - Motion dismissed. LEGISLATION CITED: Industrial Relations Act 1996 s313 Chan v Cresdon Pty Ltd (1989) 168 CLR 242 Electrical Contractors Association of New South Wales v Electrical Trades Union of Australia, New South Wales Branch (2003) 130 IR 284 Federal Commissioner of Taxation v Sara Lee Household and Body Care (2000) 201 CLR 520 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Lend Lease Hotel Intercontinental (Stage 1) Project Award [2003] NSWIRComm 314 CASES CITED: Nagle v Tilbury (1993) 51 IR 8 R v Moore Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470 R v Industrial Commission of South Australia Ex parte Master Builders Association of South Australia Incorpiorated (1981) 26 SASR 535 Solomons v District Court, 30 May 2002 76 ALJR 1601 Virtue v Department of Education and Training (1999) 92 IR 428 HEARING DATES: 01/12/2005 DATE OF JUDGMENT: 02/20/2006 APPLICANTS ON NOTICE OF MOTION Mr H J Dixon SC and Mr A Gotting of counsel Clayton Utz Lawyers LEGAL REPRESENTATIVES: RESPONDENT TO NOTICE OF MOTION Mr A Hatcher of counsel Transport Workers' Union of New South Wales INTERVENER Mr I Taylor of counsel for the Minister of Industrial Relations JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES FULL BENCH CORAM : Wright J President Walton J Vice President Sams DP Tabbaa C Monday 20 February 2006 Matter No IRC 4219 of 2005 TRANSPORT INDUSTRY - MUTUAL RESPONSIBILITY FOR ROAD SAFETY (STATE) AWARD AND CONTRACT DETERMINATION Application by the Transport Workers' Union of New South Wales for a new award and contract determination DECISION OF THE COMMISSION [2006] NSWIRComm 30 1 The Full Bench of the Commission has before it interlocutory proceedings arising from a notice of motion filed or supported by various employer respondents to substantive proceedings filed by the Transport Workers' Union of New South Wales ('the TWU') on 11 August 2005; being an application for a new award and contract determination. For convenience we shall refer to the applicants in the notice of motion as the "respondent employers". 2 Shortly stated, the notice of motion, filed on 11 November 2005, seeks to have the substantive proceedings set aside at a preliminary stage based on jurisdictional grounds. In order to understand the nature and scope of the jurisdictional challenge, it is necessary to firstly describe the application in the substantive proceedings. This may be conveniently done in two ways; firstly by reference to the application itself; and secondly, by the description of the purpose of the application and the type of case relied upon by the TWU in the substantive proceedings. The purpose of the proposed award and contract determination are recorded at cl 1 of an Amended Schedule A, filed by the TWU on 3 November 2005: 1.1 all parties connected with the road transport of goods, including consignors, transport operators, employees, contract carriers and the Union take responsibility for health and safety issues; 1.2 long distance road transport work is carried out safely and in accordance with applicable laws and industrial instruments; 1.3 the performance of long distance road transport work is properly planned in order to prevent driver fatigue; 1.4 employees and contract carriers are properly trained in matters relating to health and safety; 1.5 safety is not compromised as a result of the underpayment of employees and contract carriers; and 1.6 professional drug taking is eliminated from the transport industry, and employees and contract carriers do not otherwise perform work whilst affected by drugs and alcohol. 3 Mr Hatcher of counsel, for the TWU, described the purpose of the application in this way: I think it might be of use if I try to commence by outlining the purpose of the application of my client and the type of case, in very broad terms, it would bring in support of that application. As the applicant on the motion identified, turning to the application itself in its amended form, the purposes of the application are set out in cl 1 and cl 1.1; the purpose stated in 1.1 perhaps clearly connected with the issues raised in the motion, that is "all parties connected with the road transport of goods, including consignors, transport operators, employees, contract carriers and the Union take responsibility for health and safety issues". We point out, as Mr Dixon did, that the term "consignor" as well as the term "transport operator" are defined in cl 2. A consignor is defined a certain way but is in effect a subcategory of transport operator, and a transport operator must be an employer or principal contractor so that, to the extent that the instruments sought by the application applies itself to consignors and transport operators, it does so in their capacity as either employers of labour or principal contractors engaging contract carriers pursuant to contract of carriage as defined in section 309 of the Act. In this case we intend to present evidence, and our evidentiary case has been filed, to demonstrate that the road transport industry, particularly in its long distance sector, is marked by contractor chains whereby head consignors - and that is a term defined in the application but is not a category upon which any obligation is imposed - assign contracts to transport companies who perform the work and subcontract further elements, and there might be many steps in the chain until one gets to the extent where one gets to subcontractors and drivers performing the work. The application fundamentally seeks to regulate consignors and transport operators as employers and prescribe contractors in relation to a range of identified safety matters. In cl 3 a regime of safe driving plans is sought to be established by the instrument in so far as long haul transport work is concerned, and that provision in broad terms requires transport operators, including consignors, to plan how any particular long distance work is to be performed in a safe and lawful manner, taking into account a number of issues, including fatigue, rest breaks, appropriate method of remuneration, hours of work and the like. Those provisions are intended to avoid a situation which we say the evidence will demonstrate that currently happens commonly now; whereby work is simply allocated to employers and contract carriers for the direction that the job be completed within a certain time, and nobody apart from employee or contract carrier is saying how the work might be performed safely or in accordance with the law. We will be presenting evidence that as a result of those sorts of practices this is an industry which is marked in terms of particularly long distance driving by speeding, drug use, both lawful and unlawful, driving of huge numbers of hours in breach of the law, and the falsification of log books, among other things. Clauses 4 and 5 of the application contains ancillary provisions which will support and assist in the operation of this safe driving plan regime. In cl 6 and cl 7 through the blue card concept and induction training concept, the instrument seeks to require employees and contract carriers to undergo certain basic forms of training which we will contend are fundamental to the safe performance of driving work. In cl 8 the application seeks to require persons, that is employers and contract carriers, to be bound by the instrument to, within a certain period of time, implement drug and alcohol policies to apply to their employees and contract carriers. Again this is obviously intimately linked to the issue of safety and is designed to deal most particularly with what we say the evidence will demonstrate is the widespread use of unlawful drugs to allow work to be performed as required by employers and principal contractors. While I'm dealing with cl 8, in relation to cl 8.1 my learned friend Mr Dixon pointed to the words "industrial award", and I think his intention was to observe that that was anomalous. His point was correct, that should read "industrial instrument" rather than "award" so it applies to contracts of carriage, rather than employment relationships. That in broad is the scope and purpose of application and in broad the type of evidentiary case which will be presented in support of it. Now, our case will have one further important element and that is because of the existence of these contractual chains and what we say is the tendency of transport operators and consignors to subcontract work in order to avoid issues of safety, of compliance with the law and of cost effective returns from the work, we say it is necessary as an incident of the direct regulation of employment and contractual relationships with contract carriers to regulate the way in which that work is subcontracted. 4 In further submissions, Mr Hatcher made it clear that the TWU application: a) does not seek to impose any obligations upon the head consignor as such as long as that is the entity which does not operate in the transport industry itself or engage truck drivers as employees or owner/drivers; b) does seek to operate at the next element of the chain, and that would be where the consigner takes a transport contract from the head consignor; that work will be distributed among direct employees of the consignor, among contract carriers engaged by the consignor, possibly labour hire employees used by the consignor, and then some part of the work may be subcontracted to another transport operator; c) seeks to impose requirements with respect to the relationship between the consignor and the employees and contract carriers and any labour hire employees and also as ancillary to or incidental to that it seeks to place conditions upon the way in which any other part of the work is subcontracted to another transport operator. That is said, in effect, to be protective of the conditions applying in a direct relationship; that is, to ensure that the work cannot simply be subcontracted in a way that obligations applying to direct engagements with employees and contract carriers do not apply; d) would apply to the next level; that is, the application would seek to regulate the direct relationships between the transport operator and its employees, contract carriers and labour hire employees; but if that transport operator in terms decided to further subcontract the work, the application would seek in a protective way to place conditions upon the terms in which that might occur in order to protect the scheme or regulation that is erected with respect to the direct relationships between the transport operators, its employees and contract carriers; e) seeks to advance a claim that employees and contracting entities in the contractual chain take mutual responsibility for the performance of safe and lawful driving at all stages of the chain. 5 The notice of motion, while somewhat complicated, seeks to impugn the TWU application on the following general bases, that: 1) certain provisions of the proposed award seek to impose on the employer parties obligations which are not conditions of employment for their employees; 2) certain other provisions in the proposed award are beyond the jurisdiction of the Commission; 3) certain provisions in the proposed contract determination impose on a transport operator who is a principal contractor obligations: (i) which are not conditions under a contract of carriage and/or (ii) in respect of persons who are not parties to the contract of carriage; and 4) certain other provisions in the proposed contract of carriage are not conditions under a contract of carriage and are beyond the jurisdiction of the Commission. 6 However, in the affidavit in support of the notice of motion sworn by a solicitor acting for the respondents, Simon Geoffrey Brown, Mr Brown said at par 6: Cognisant of rulings by the Commission that the question of jurisdiction be determined at the "appropriate stage" ( Nagle v Tilbury (1993) 51 IR 8 at 11) and subsequent cases) the applicants wish to contend, and Senior Counsel retained by them will submit, that in respect of the matters referred to in par A(i) (a), (b) and (c) of the notice of motion, it is highly unlikely that the facts, many of which will, or may be contentious, will be capable of being sufficiently established at a preliminary stage to enable the commission to be satisfied that it has the necessary material to reach a clear and final decision on the questions. It may thus be more appropriate for those matters to be determined by the Commission at the final hearing of the application. We note the references to A(i) (a), (b) and (c) are references to the proposed TWU application insofar as it seeks the making of an award. 7 This evidence led to the following exchange between the Bench and Senior Counsel for the respondents: PRESIDENT: We will take a short adjournment, but just one matter I wish to raise with Mr Dixon. Mr Dixon, paragraph 6 of Mr Simon Brown's affidavit in support of the notice of motion, is that still your position in respect of the matters that paragraph deals with, is that still your client's position? DIXON: As submitted earlier, that is correct in respect of the award matter; but we submit there is a fundamental distinction between what might be done in an award regime and under section 313. Even if one looked at the matter at its highest and were to assume that there could be evidence which would justify ancillary matters, for the reasons we have outlined that does not overcome the jurisdictional issues in respect of the contract determination matters. 8 We regard this as an important concession by the respondent employers; that is, they have conceded that they do not seek to strike out, or preclude at the present stage, the TWU's application insofar as it applies to the proposed award, as distinct to that part of the application dealing with the proposed contract determination. 9 In that respect, it is important to also note that, although the TWU application seeks a single industrial instrument relying on the power of the Commission to make awards and contract determinations, the respondent employers accept that it is open to the Commission to make separate and discrete industrial instruments, subject to the assumption (not conceded by the respondents) that the Commission has relevant jurisdiction and, as a matter of discretion would grant any of the relief sought by the TWU. FURTHER SUBMISSIONS 10 Mr Dixon of Senior Counsel for the respondent employers, referred to the definitions in the amended application of Head Consignor, Consignor, Transport Operator and Contract Carrier. These definitions are in the following terms: "Head consignor" shall mean any person, not being a transport operator, who enters into or contract with a transport operator under which the transport operator carries freight for the head consignor. "Consignor" shall mean any person, being a transport operator, who enters into a transport contract with another transport operator under which that transport operator carries freight for the head consignor. "Transport Operator" shall mean any employer or principal contractor engaged in the business of transport of freight by road, or who employs persons or engages contract carriers to transport freight by road. "Contract Carrier" as defined in s309 of the Act. 11 Mr Dixon then examined a number of clauses in the amended application and submitted that to the extent these clauses apply to a "consignor", they impose an independent obligation on the consignor, even though the consignor is not a party to the contractual relationship between the "transport operator" and the "contract carrier". 12 It was submitted that, properly construed, a contract determination under s 313 of the Industrial Relations Act can only be made with respect to the remuneration or conditions "under a contract" between the principal contractor and the carrier acting in their respective capacities. For a condition to be under a contract, the contract must be the source of the rights and obligations as between the parties to the contract (compare, for example Federal Commissioner of Taxation v Sara Lee Household and Body Care (2000) 201 CLR 520 at 537 and Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 249). A condition that regulates the relationship between a principal contractor and the contractor to that principal contractor (such as a "consignor" or a "head consignor") is not a "condition under such a contract" between the principal contractor and the carrier. 13 Thus, for this reason, it is said that these and the other various obligations sought to be imposed on the consignor are outside the jurisdiction of the Commission or otherwise beyond power. 14 Mr Hatcher, in response, observed that the respondent employers' submissions now conceded that certain of the claimed provisions may be made as award provisions applying to transport operators which are employers. It is well established that award provisions may be made in certain circumstances which regulate the circumstances in which, or the conditions upon which, an employer may engage and utilise subcontractors: see R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia (1978) 140 CLR 470; R v Industrial Commission of South Australia; Ex parte Master Builders Association of South Australia Incorporated (1981) 26 SASR 535; Lend Lease Hotel Intercontinental (Stage 1) Project Award [2003] NSWIRComm 314; Electrical Contractors Association of NSW v Electrical Trades Union of Australia, NSW Branch (2003) 130 IR 284. 15 Counsel for the TWU submitted that these observations were of significance in deciding whether the notice of motion ought be determined at this preliminary stage. The point raised by the respondent employers would not, if upheld, result in the striking out of the application or any part of it relating to the subcontracting aspect. At its highest, the success of the motion would mean that some provisions in the TWU's application might not have as wide an application as has been sought. This is far from meeting the tests for the preliminary determination of whether an application ought be struck out as enunciated by Barwick CJ in General Steel Industries Inc. v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128 (as applied in this jurisdiction in Nagle v Tilburg (1993) 51 IR 8 at 11). 16 The proposed clauses have a similar primary purpose: to ensure that employers and principal contractors do not avoid the obligations sought to be imposed upon them with respect to their employees and contract carriers by the use of subcontractors. A fundamental point of the TWU's application is that, in the long distance sector of the road transport industry, subcontracting chains are used by employers and principal contractors to avoid responsibility for a range of legal obligations which would otherwise apply to them with respect to any direct engagement of employees and contract carriers. Unless there is industrial regulation of those subcontracting chains, provisions limited in application to the direct engagement of employees and contract carriers will be rendered largely ineffective. 17 Mr Hatcher also dealt with the definition of "with respect to" in s313(1) of the Act. The section is expressed as follows: The Commission may inquire into any matter arising under contracts of carriage and may make a contract determination with respect to remuneration of the carrier, and any condition, under such a contract. 18 By referring to the authority in Solomons v District Court (2002) 76 ALJR 1601, Mr Hatcher concluded that: [T]he claimed provisions seeking to place conditions on the use of subcontractors by principal contractors are clearly within power. They have the necessary "industrial flavour", and also the necessary "discernible and rational link" with conditions under contracts of carriage. Indeed, just as the claimed provisions would relate to the employment relationship in a "close and obvious way", so also would they relate to conditions under contracts of carriage. 19 Mr Taylor of counsel, for the Minister for Industrial Relations generally supported the TWU's submissions and submitted: a) the respondent employers do not challenge at this time the said clauses to the extent that they are sought to be placed in an award; b) even if the Commission did not have jurisdiction to include the said clauses in a contract determination, the Commission would nevertheless need to otherwise consider and determine the claim for a contract determination, including hearing such evidence as is relevant to that claim; c) cases in which the Commission has entertained an objection to jurisdiction at an early stage of the proceedings have usually been cases where the objection would, if upheld, terminate an action: see for example Nagle v Tilburg (1993) 51 IR 8 and Virtue v Department of Education and Training (1999) 92 IR 428; d) this jurisdictional challenge, if it succeeds, would not "knock out" the claim in its entirety. Given that the claim would proceed unaffected in respect of the claim for an award and only partially affected in respect of the claim for a contract determination, it is not immediately apparent that the claim, even if successful, would save any significant costs or inconvenience attached to the hearing; e) in any event, this is not a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation; f) the provisions challenged are put in issue on the basis that the Commission's jurisdiction under s 313 is not broad enough to include such matters in a contract determination; g) given the breadth of s 313, there is at least a good argument that the section is wide enough to provide to the Commission jurisdiction to include in a contract determination provisions which establish a mechanism for the protection of the terms and conditions of those working under a contract determination. In this regard, an analogy may be drawn with decisions of the Commission as to the extent to which an award can contain provisions which impose obligations on an employer vis a vis contractors that the employer uses: see Electrical Contractors Association v ETU (2003) 130 IR 284 at [173]; and Lend Lease Hotel Intercontinental (Stage 1) Project Award [2003] NSWIRComm 314; and h) the question whether the particular clauses sought to be included in the contract determination are ones that can be properly characterised as establishing a mechanism to protect terms and conditions of those engaged pursuant to a contract determination is a matter which would ordinarily be determined based on the totality of evidence in the proceedings. Accordingly, this is not the appropriate stage to determine that question. CONSIDERATION 20 It must be accepted that the industrial regulation of the transport industry in this State, and the legislation underpinning that regulation, has had to take cognisance of the fact that the industry utilises two primary forms of working arrangements: on the one hand, the relationship of employer and employee, and on the other, of principal contractor and subcontractor or independent contractor. 21 Often an employer who employs employees will also utilise independent contractors; others will compete with one company using only employees against another using only subcontractors; and others may use a combination of both. 22 The different forms of industrial regulation have been a response to the way the different forms of "employment" in the transport industry have developed in New South Wales during the twentieth century. In this case, without determining the correctness or merits, or otherwise, of the TWU application, it is plain that the issue at the core of the application - the safety of drivers - is not limited to one sector of the industry but is an industry wide issue. To uphold the jurisdictional argument of the respondents at this stage of the proceedings would, in our opinion, artificially constrain the orderly presentation and testing of the evidence in what may be a very significant case; particularly, as we have observed, because many operators appear to use two forms of regulation. 23 Therefore, having regard to the respondent employers' concession earlier referred to (a concession which we consider was correctly and appropriately made) we conclude that it would not be appropriate to deal with the jurisdictional issues at this stage, in that to do so may well lead to unnecessary complication and possible confusion of the orderly hearing of the proceedings. 24 That is not to say that there may well be significant jurisdictional barriers to some, or all, of the relief sought by the TWU, but those issues may be more conveniently dealt with when the Full Bench considers whether relief should be granted and, if so, what relief. These determinations will be made at the conclusion of the evidence. 25 We therefore dismiss the employer respondents' notice of motion. Finally, we note that late last week, at the request of the Full Bench, the Registrar advised the parties of the decision in this matter and that reasons for the decision would be published as soon as possible. _______________ 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.