Industrial Court of New South Wales CITATION: Toll Transport Pty Ltd v Transport Workers' Union of New South Wales [2010] NSWIRComm 58 Toll Transport Pty Ltd (First Appellant) PARTIES: Toll Holdings Pty Ltd (Second Appellant) Transport Workers' Union of New South Wales (Respondent) FILE NUMBER(S): IRC 801 of 2009 CORAM: Boland J President at [1]; Walton J Vice-President at [22]; Kavanagh J at [34] APPEAL - Unfair contract - Owner/drivers - Refusal by successor company to allow sale of truck with work - Whether there was a promissory representation by successor company to owner/drivers that was intended to induce them to provide their services on the basis that the terms of their engagement would be no less favourable than those that applied to them under the previous owner of the business - Whether contracts between owner/drivers and successor company contained terms that provided for the sale of truck with work - Whether conduct of successor company in refusing to allow sale of truck with work caused contracts to be unfair - Whether refusal was a breach of contract and not amenable to relief under unfair contract provisions of Industrial Relations Act 1996 - Whether primary judge erred in finding that contracts between owner/drivers and successor company did not contain terms that provided for the sale of truck with work but nevertheless determined contracts were unfair - Remitter - Whether there was a sufficient basis upon which the Full Bench could determine whether or not the relevant contracts were unfair and to proceed to determine compensation and interest issues - Whether the contracts were relevantly connected to work in the road transport industry - Finding that proceedings did not involve breach of contract - Majority decision to remit to determine whether contracts unfair CATCHWORDS: UNFAIR CONTRACT - Appeal - Owner/drivers - Refusal by successor company to allow sale of truck with work - Whether there was a promissory representation by successor company to owner/drivers that was intended to induce them to provide their services on the basis that the terms of their engagement would be no less favourable than those that applied to them under the previous owner of the business - Whether contracts between owner/drivers and successor company contained terms that provided for the sale of truck with work - Whether conduct of successor company in refusing to allow sale of truck with work caused contracts to be unfair - Whether refusal was a breach of contract and not amenable to relief under unfair contract provisions of Industrial Relations Act 1996 - Whether primary judge erred in finding that contracts between owner/drivers and successor company did not contain terms that provided for the sale of truck with work but nevertheless determined contracts were unfair - Remitter - Whether there was a sufficient basis upon which the Full Bench could determine whether or not the relevant contracts were unfair and to proceed to determine compensation and interest issues - Whether the contracts were relevantly connected to work in the road transport industry - Finding that proceedings did not involve breach of contract - Majority decision to remit to determine whether contracts unfair Industrial Arbitration Act 1940 LEGISLATION CITED: Industrial Relations Act 1991 Industrial Relations Act 1996 Abboud v State of New South Wales (Department of School Education) (No 2) [2000] NSWIRComm 110; (2000) 99 IR 299 Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528 Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 Caterpillar of Australia Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 83; (2009) 181 CLR 286 DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 Fish v Solution 6 Holdings Ltd [2006] HCA 22; (2006) 225 CLR 180; (2006) 151 IR 256 Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 Hyundai Elevator Co Ltd v Liftronic Pty Ltd [1994] NSWCA 144 CASES CITED: Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 Kriketos v Livschitz [2009] NSWCA 96 Oates v Consolidated Capital Services Ltd [2009] NSWCA 183 McDonald's Australia Holdings Ltd v Industrial Relations Commission of NSW [2005] NSWCA 286; (2005) 223 ALR 78 Ross v Allis-Chalmers (Australia) Pty Ltd (1980) 55 ALJR 8 Solution 6 Holdings Ltd v Industrial Relations Commission of NSW [2004] NSWCA 200; (2004) 60 NSWLR 558 Sydney Water Corp Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661 TD Preece & Co Pty Ltd v Murton [2007] NSWIRComm 130; (2007) 164 IR 396 TD Preece & Co Pty Ltd v Industrial Court of New South Wales [2008] NSWCA 285; (2008) 177 IR 172 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 Transport Workers' Union of New South Wales v Toll Transport Pty Ltd & Anor [2009] NSWIRComm 42 Transport Workers' Union of New South Wales v Toll Transport Pty Ltd & Anor (No 2) [2009] NSWIRComm 62 HEARING DATES: 29 and 30 October 2009 DATE OF JUDGMENT: 13 May 2010 Mr A R Moses SC with Mr Y Shariff of counsel (Appellants) Clayton Utz Lawyers LEGAL REPRESENTATIVES: Mr A A Hatcher of counsel with Mr D Nagle of counsel (Respondent) Maurice Blackburn Pty Ltd JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES FULL BENCH CORAM: BOLAND J, President WALTON J, Vice-President KAVANAGH J Thursday 13 May 2010 Matter No IRC 801 of 2009 TOLL TRANSPORT PTY LTD AND ANOTHER v TRANSPORT WORKERS' UNION OF NEW SOUTH WALES Application by Toll Transport Pty Ltd and another for leave to appeal and appeal against orders and judgment of Staff J given on 31 March 2009 and 8 May 2009 in Matter No IRC 2522 of 2005 JUDGMENT OF THE COURT [2010] NSWIRComm 58 JUDGMENT OF BOLAND J, PRESIDENT 1 I have had the benefit of reading the extensive analysis and findings of Kavanagh J in this appeal. I agree with her Honour's findings regarding the terms of the contracts (that is, they included cl 11 of a 1989 Agreement) and I agree with her Honour's finding that this is not a breach of contract case falling foul of the Court of Appeal's decision in Sydney Water Corp Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661. 2 There are two matters, however, in respect of which I need to distinguish my position from that of her Honour. The first relates to a letter dated 25 June 1996, given by the appellant, Toll Transport Pty Ltd ('Toll'), to owner/drivers represented in these proceedings by the Transport Workers' Union of New South Wales, which her Honour found was a promissory representation. The second is her Honour's finding that there was a sufficient basis upon which the Full Bench could determine whether or not the relevant contracts were unfair (and to proceed to determine compensation and interest issues) and that, accordingly, it was unnecessary to remit the matter. 3 As to the first matter, the facts are recorded in her Honour's judgment. It will be seen that in 1996 Toll purchased a transport business located at Revesby and owned by Brambles Transport Services ('Brambles'). An agreement existed between the owner/drivers and Brambles that contained a provision (cl 11.1) that: In the event of a Lorry Owner Driver wishing to terminate his contract with the Company, he may introduce a new Lorry Owner Driver to the Company. Provided the new Lorry Owner Driver is acceptable to the Company, then the Company, at its absolute discretion may offer work to that Lorry Owner Driver. 4 It would appear from the evidence it was generally a matter of course that Brambles would agree to the sale of the truck and the new driver would take over the previous driver's work with Brambles. 5 Toll was keen to secure the services of owner/drivers who had been engaged with Brambles. To that end Toll issued a letter to each of the owner/drivers dated 25 June 1996. The letter relevantly provided: Under the sale arrangements between Toll and Brambles, the terms of your engagement with Toll will be no less favourable (than) those currently applied to you. Your service with Brambles will be recognised by Toll and any benefits you have accrued will be transferred. 6 Kavanagh J relevantly held that the letter was a promissory representation made by Toll to the owner/drivers with the intention of gaining the services of the owner/drivers. Further, that the letter was accepted by the owner/drivers, who then transferred their services to Toll. In that context her Honour held that consideration was given for the representation and the letter expressly imported into the contracts with the owner/drivers the promise by Toll to the individual owner/drivers that the terms and conditions that applied to the owner/drivers under their contracts with Toll would be no less favourable than those they enjoyed at Brambles. 7 I had formed the tentative view that the letter did not constitute a promissory representation and was merely a pre-contractual representation. However, I have had the benefit of reading the judgment of the Vice-President who has taken the view that it was not appropriate to determine the nature of the letter. I agree with his Honour in that respect and with his Honour's reasons. 8 As to the second matter concerning remitter, there is no doubt that the joining of issue at first instance was confused by the alternative submissions put by the respondent and the change in position of the appellants. The respondent contended primarily that cl 11 was not in the contracts. However, it submitted in the alternative that it was in the contracts. This was not a stance involving a slight or subtle shift but one that reflected diametrically opposite positions. 9 Similarly, the appellants embarked on a case theory that propounded cl 11's exclusion from the contracts. Counsel, however, quite properly, on a consideration of the evidence, changed his position to cl 11 being in the contracts. 10 The result was that neither the respondent nor the appellants directly or adequately addressed the question of how the contracts permitted conduct by Toll that rendered the contracts unfair in the context of cl 11 being in the contracts. The highest it got in the respondent's case was an assertion, made in the alternative, that Toll exercised its discretion under cl 11 in various ways adverse to the interests of the owner/drivers. For the appellants the contentions regarding unfairness were confined to two propositions: that the respondent had failed to show the impugned contracts were unfair, noting that witnesses for the TWU had conceded the 1989 Agreement, including cl 11, was fair; and that the grounds of unfairness as pleaded were in reality allegations of breach of contract. 11 Staff J, of course, held that cl 11 was not in the contracts. His Honour, nevertheless, found the contracts were unfair. But because his Honour took the view that cl 11 was not in the contracts, there was no consideration of the significance of the absolute discretion held by Toll under cl 11.1. That is to say, the primary judge gave no consideration as to whether the exercise by the appellant of its discretion under cl 11 was or was not unfair. 12 TD Preece & Co Pty Ltd v Industrial Court of New South Wales [2008] NSWCA 285; (2008) 177 IR 172 is authority for the proposition that the Full Bench, after identifying error, may proceed to find unfairness on an alternative basis to that at first instance, provided the alternative is properly raised. 13 Has the alternative basis been properly raised and if not should the unfairness question be remitted? This is a question not easily resolved. It is clear from the proceedings at first instance that inadequate attention was given to whether the contracts were unfair in circumstances where cl 11 was in the contracts. And although the appellants do not challenge the primary judge's findings of unfairness, those findings of unfairness were made on the basis that cl 11 was not in the contracts. The question now is whether there was unfairness in circumstances where cl 11 constituted part of the contracts and that involves the question of the exercise by Toll of its absolute discretion. 14 On the other hand, given the finding of Kavanagh J, with which I agree, that cl 11 is in the contracts, is it open to draw an inference from the facts that the contracts permitted Toll to conduct itself in such a manner as to cause the contracts to be unfair by exercising its absolute discretion adversely to the interests of the owner/drivers? There were a number of facts found by Staff J that led his Honour to conclude that the contracts were unfair in the context of cl 11 not being in the contracts. It may be arguable that these same facts could lead to a conclusion that the contracts were unfair in the context of cl 11 being in the contracts. 15 For example, if Toll was aware of the practice of selling trucks with work prior to entering into the contracts, obtained warranties as insurance against any later claim by the owner/drivers, did not advise the owner/drivers of Toll's goodwill policy at the time of entering into the contracts, promised that the owner/drivers would be engaged by Toll on terms no less favourable than what they enjoyed with Brambles and then refused to recognise the practice of selling trucks with work, it may be arguable that an inference may be drawn that the contracts permitted Toll to exercise its discretion under cl 11 in such a way as to render the contracts unfair. 16 On balance, however, I consider the question of unfairness in the alternative case should be remitted. I do not consider there is a sound footing on which to proceed to deal with the unfairness issue: the issue was not adequately addressed by the parties at first instance, the trial judge dealt with unfairness on a different factual basis to that which has been found on appeal is the proper factual basis (that is, the contracts include cl 11) and I would have to resort to drawing inferences. I consider that would be quite an unsatisfactory foundation to determine whether or not the contracts were unfair given there appear to be very significant compensatory issues to be addressed if the contracts are to be found unfair. 17 Accordingly, I would remit the question of whether the contracts are unfair. That question is to be determined in the context of cl 11 being part of the contracts. The retrial on this question should proceed upon the basis of the record of the proceedings before Staff J and, by leave, with any further evidence admitted by the judge to whom the question is remitted. 18 Section 106(5) of the Industrial Relations Act 1996 provides that: 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. 19 It follows that orders for compensation, if any are to be made, will depend on the orders made consequent upon the findings regarding unfairness. Accordingly, it is in my view appropriate also to quash the decision and orders of Staff J as they relate to compensation and interest and it would be a matter for the judge who hears the remitter to determine what part of the record before Staff J is relevant, if at all, to a reconsideration of compensation and interest issues and whether leave should be granted in this respect to admit further evidence. 20 In the light of my conclusions it is necessary that leave to appeal be granted. 21 I would propose the following orders: 1. Leave to appeal is granted. 2. The appeal is upheld and the decision and orders of Staff J are quashed. 3. The question of whether the relevant contracts are unfair is remitted for hearing before a judge allocated by the President to be dealt with in accordance with this decision and upon a direction made pursuant to s 191 of the Industrial Relations Act , that the record of the proceedings before Staff J in Matter No IRC 2522 of 2005 shall form the record of the proceedings subject to, upon leave, additional evidence being admitted and/or adduced in the proceedings. Provided that it shall be a matter for the judge to whom the question is remitted to determine what part of the record before Staff J relating to compensation and interest is relevant, if at all, to a reconsideration of compensation and interest issues and whether leave should be granted in this respect to admit further evidence. 4. As to the costs of the appeal, the appellants are to file and serve written submissions within 14 days and the respondent has 14 days to file and serve its response, with a further seven days for the appellants to reply if it is considered necessary. The question of costs will be determined on the papers unless a party requires to be heard orally. JUDGMENT OF WALTON J, VICE-PRESIDENT 22 My consideration of the issues in this matter has led to a view, in accordance with that expressed by the President and Kavanagh J, that the trial judge was in error in finding that the impugned contracts (defined in paragraph [29] below) did not incorporate the provisions of cl 11 of the 1989 Industrial Agreement. I also agree with their Honours' conclusion that the alternative case brought by the respondent, that the impugned contracts (inclusive of cl 11) were unfair for the purposes of s 106 of the Industrial Relations Act 1996 ("the Act"), was not beyond the jurisdiction of the Court under that section having regard to the principles stated by the New South Wales Court of Appeal in Sydney Water Corp Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661 ("Sydney Water"). I agree, for the reasons given by him, with the conclusion reached by the President that there should be a remitter of the proceedings for the hearing of that alternative case, and the orders proposed by his Honour in paragraph [21] of his judgment. The orders, so made, are confined so as to permit the respondent to pursue that alternative application. 23 I am indebted to Kavanagh J for her detailed exposition of the relevant facts and issues arising in this appeal and the President's discussion of the remitter question. In the circumstances, I shall refrain from embarking on a lengthy judgment of my own and make some short observations bearing upon the questions of the proper identification of the impugned contracts and their terms (this being a prerequisite to the exercise of the Court's jurisdiction under s 106 of the Act: TD Preece & Co Pty Ltd v Industrial Court of New South Wales [2008] NSWCA 285; (2008) 177 IR 172 at [10] - [14]), the legal nature of the representation made by the appellants on 25 June 1996 and jurisdiction (as to the application of the principles stated in Sydney Water). 24 The respondent alleged that contracts between the appellants and certain lorry owner drivers whereby those drivers performed work in the transport industry ("the impugned contracts") were unfair, harsh, unconscionable and against the public interest. The lorry owner drivers were each based at the Revesby Depot hitherto operated by Brambles Pty Ltd ("Brambles") and, until 1991, engaged upon terms and conditions governed by an industrial agreement between Brambles and the respondent (entered into in 1989) ("the 1989 Industrial Agreement"). The 1989 Industrial Agreement was made and registered pursuant to s 91H of the Industrial Arbitration Act 1940 and continued in operation by virtue of s 91I of that Act until its repeal (accompanying the passage of the Industrial Relations Act 1991). Thus, until 1991 the terms of the lorry owner drivers' engagement were established by force of those statutory provisions. 25 At least from the cessation of that statutory regulation of their engagement, the lorry owner drivers had their terms and conditions of engagement fixed by a contract between each such driver and Brambles. That contract was not committed to a written form, per se, but may be inferred from the acts and conduct of the parties: Kriketos v Livschitz [2009] NSWCA 96 at [115] (per McColl JA with whom Allsop P and Macfarlan JA agreed) (following Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117-11,118). The terms of the contract were relevantly the same terms as the 1989 Industrial Agreement. I understand this conclusion to be accepted by the parties to the appeal and effectively adopted by the trial judge. 26 The appellants acquired the business of Brambles in mid 1996. It was also common ground that contracts were formed between the appellants and the lorry owner drivers after that acquisition (I will not pronounce upon whether the appellants entered such contracts severally or, jointly or collectively). I consider that the contracts, so formed, may again be inferred from the acts and conduct of the parties. However, under the "contract ground" relied on by the appellants, it was contended that the trial judge erred in concluding that the terms of those contracts excluded cl 11 of the contract entered with Brambles, that is, the terms excluded cl 11 of the 1989 Industrial Agreement. 27 I agree with the President and Kavanagh J that his Honour's conclusion in this respect was incorrect. There are two bases for my concurrence with this conclusion. First, the trial judge's conclusion relied, at its foundation, upon the subjective beliefs of the appellants and, accordingly, was contrary to ordinary principles applicable to contract formation: see Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [35]-[40]. 28 Secondly, when regard was had to the objective factors, it should have been concluded that cl 11 formed part of the contract between the appellants and the lorry owner drivers. I accept the reasons provided by Kavanagh J, to sustain this finding, but would make particular reference to three factors: 1. The appellants and Brambles entered into an agreement for the sale of Brambles' business to the appellants, which sale agreement contained a term that the appellants would engage all lorry owner drivers on the same basis as they had been engaged with Brambles; 2. The terms and conditions of the lorry owner drivers were governed by the 1989 Industrial Agreement, as I have found, immediately prior to the sale; 3. The representation in the letter dated 25 June 1996 made clear the terms of the engagement of the lorry owner drivers with the appellants would be no less favourable than those then applying to those persons. 29 The trial judge's finding as to what constituted the actual contract, the subject of proceedings brought under s 106, was an error of law. The nature of that error warrants, in my view, the grant of leave to appeal (in order to deal with the principles of industrial and contract law involved), the appeal being upheld and the decision and orders at first instance being quashed. 30 I do not propose to pass upon the issue as to whether the letter of 25 June 1996 contained a representation which was promissory in nature. I have adopted that approach for the following reasons: 1. It is unnecessary to resolve that issue in order to adjudicate upon the "contract ground" raised by the appellants. The representation, per se , illustrates why cl 11 formed part of the contract; 2. Given that I agree that the appropriate order for the disposition of this appeal is a remitter, it is more appropriate that the trial judge resolves any question as to the nature of the representation made in the context of any adjudication upon the respondent's alternative case as to why the impugned contracts were unfair contracts for the purposes of s 106(1) of the Act. (I note, in this respect, that the fact of such a "representation" constitutes a ground for the establishment of the requisite unfairness under that sub-section in the respondent's amended summons.); 3. The resolution of the issue as to whether the representation in the letter of 25 June 1996 was promissory, and not merely representational, will involve, in part, a consideration of the question as to whether the phrase employed in the letter, "the terms of your engagement with Toll will be no less favourable", was, when seen in an industrial context or the context of the dealings between the parties and viewed objectively, a contractual promise (in this respect, see the discussion by the High Court of the effect of the words "common benefit" and, the discussion by that Court of the distinction between representations which are promissory and those which are merely representational in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 (at 89, 91-92, per Mason J; 116-117, per Wilson J; and 120, per Deane J; see also JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 at 442). These questions may involve issues of fact (including fresh evidence led in the proceedings) which are properly resolved at the trial of the matter. 31 Given that this Court has determined, on appeal, that the impugned contracts have as one of their provisions cl 11 of the 1989 Industrial Agreement, I do not consider that the appellants have demonstrated, to borrow the phrase employed by former President, Wright J, in Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 at 448, that there is no power in the Commission to grant any relief with respect to the respondent's alternative application. 32 I agree, in this respect, with Kavanagh J's review of the grounds relied upon by the respondent in its amended summons and would only add that the pleadings should be construed in the light of the alternative case brought by the appellants from which they take their colour. In any event, I agree with Kavanagh J, that the Court may have regard to the submissions advanced by the respondent for the purposes of resolving any jurisdictional question raised (see Sydney Water at [56] and [57]). When seen in that light, the alternative application brought by the respondent may be characterised as a claim that the impugned contracts permitted the appellants to unfairly (for the purposes of s 106(1)) reject the disposition of a "truck in work" and that the contracts had operated (or will operate) in that manner. So formulated (and confined), the alternative application is amenable to the provisions of s 106 of the Act and does not offend the principles in Sydney Water (see the judgment of Mason P at [33]). 33 When expressed in this manner, the alternative application is consistent with the long history of "truck in work" matters heard by this Court and its predecessors under various industrial legislation containing provisions akin to s 106. A claim which was predicated on legal right for the sale of a "truck in work" under cl 11 would attract a number of legal difficulties which are unnecessary to fully discuss in the light of the manner in which the respondent may develop its alternative application. JUDGMENT OF KAVANAGH J 34 Toll Transport Pty Ltd and Toll Holdings Pty Ltd (the appellants) appeal the whole of the judgments and orders of the primary judge, Staff J, in Transport Workers' Union of New South Wales v Toll Transport Pty Ltd & Anor [2009] NSWIRComm 42 (the first judgment) and Transport Workers' Union of New South Wales v Toll Transport Pty Ltd & Anor (No 2) [2009] NSWIRComm 62 (the second judgment). 35 In the proceedings below, the Transport Workers' Union of New South Wales (the respondent), sought relief pursuant to s 106 of the Industrial Relations Act 1996 for nine of its members who were owner/drivers (sometimes known as contract carriers) currently or formerly engaged by Toll Transport Pty Ltd (Toll), which conducts a transport and distribution business. The second appellant, Toll Holdings Pty Ltd, wholly owns the first appellant. His Honour's first judgment determined the terms of the contract between the owner/drivers and Toll and set out the reasoning for his Honour's findings that the contracts were unfair and his Honour's orders of just compensation in the circumstances. In the second judgment, his Honour gave reasons and made orders for the payment of interest arising from his compensation orders. 36 The appellants contended Staff J erred in his determination as to the terms of the contracts of employment between Toll and the owner/drivers. It was further asserted each claim was a breach of contract claim and, therefore, not within the jurisdiction of the Industrial Court of New South Wales. The appellants also challenged his Honour's associated orders for just compensation and interest, which orders, the appellants contended, were neither supported by his Honour's reasoning nor by the evidence. The Background 37 Staff J, in the first judgment, addressed the background to the s 106 application as follows: [1] … [2] This particular case concerns nine current, or former owner/drivers who are, or were engaged by Toll. The owner/drivers all formerly worked in a transport business located at Revesby operated by Brambles Transport Services ("Brambles"). While Brambles operated the business, a practice of selling trucks with work, that is at a price higher than those trucks that are sold as a piece of mechanical equipment, developed as a result of Brambles allowing the owner/drivers to sell their vehicles to persons who would then take their position in the Brambles yard. The premium paid has loosely and inaccurately been called "goodwill" [3] The practice was formalised in an agreement which was reached between the applicant and Brambles in 1989 ("the 1989 agreement"), which was registered pursuant to s 91H of the Industrial Arbitration Act 1940. [4] In 1996, Brambles sold the business to Toll. Upon the sale occurring, Toll issued a letter to each of the owner/drivers dated 25 June 1996. Although it will be necessary to discuss this letter in more detail, for present purposes, the letter relevantly provided: Under the sale arrangements between Toll and Brambles, the terms of your engagement with Toll will be no less favourable (than) those currently applied to you. Your service with Brambles will be recognised by Toll and any benefits you have accrued will be transferred. [5] Toll has refused to allow any sale of vehicles to proceed and has maintained a policy that under no circumstances would it engage any driver who purchased a vehicle from an existing owner/driver. [6] The fundamental issue, therefore, requiring determination in these proceedings is whether, in light of Toll's representation and subsequent refusal to allow any sale of vehicles, the contracts between the owner/drivers and Toll are, or have, become unfair. 38 A number of further facts were agreed or established at first instance. The owner/drivers had been engaged by Brambles under a 1989 Agreement, which agreement had a statutory base until the Industrial Arbitration Act 1940 was replaced by the Industrial Relations Act 1991, after which the agreement purported to operate as a common law agreement between the parties. 39 Under cl 11 of the 1989 Agreement, Brambles had adopted a policy of approving the sale of trucks with work for its owner/drivers. Clause 11 of the agreement relevantly stated: Sale of Vehicles 11.1 In the event of a Lorry Owner Driver wishing to terminate his contract with the Company, he may introduce a new Lorry Owner Driver to the Company. Provided the new Lorry Owner Driver is acceptable to the Company, then the Company, at its absolute discretion may offer work to that Lorry Owner Driver. 11.2 There is guarantee of continuity of work for any new Lorry Owner Driver engaged in these circumstances. Should any retrenchments take place then the principles of "last-on first-off" will apply to any such Lorry Owner Driver within the section he is so engaged. These sections are: Feeder Service and Prime Movers. 11.3 Under no circumstances shall the Company be a party to any arrangements that may be entered into between the Lorry Owner Drivers upon sale of vehicles. 11.4 After acceptance of new Lorry Owner Driver he will become permanent, provided he has satisfactorily completed three (3) months probationary period in which time the Company and the Owner Driver will mutually agree that they are satisfied with the Company and the Company is satisfied with them. The same entitlements as existing Lorry Owner Driver with the difference that he goes to the end of the seniority list, will apply. 11.5 The incoming Owner Driver is not permitted to re-sell until a qualifying period of three (3) years has elapsed unless there be extenuating circumstances agreeable to all parties concerned. If and when any Owner Driver sells his vehicle after fulfilling the requirements of this document, he will not be permitted to buy back under this document under the period of three (3) years. 40 Toll wanted to have continuity of service for the conduct of the transport service it was purchasing from Brambles and recognised it needed to entice the owner/drivers engaged by Brambles to work for Toll. Under the Sale Agreement between Toll and Brambles, Brambles was required to facilitate the engagement of its owner/drivers. Clause 10 of the Sale Agreement provided: 10. EMPLOYEES AND SUB-CONTRACTORS 10.1 On or before the Completion Date, the Purchaser or the Purchaser's Guarantor must make an offer of employment, conditional on Completion, in the form in schedule 7, to each Employee listed in exhibit 2, on terms of employment no less favourable than the terms of employment of the Employee with the Vendor at the Completion Date , including in relation to superannuation. Between execution of this agreement and Completion the parties will consult with each other, the Employees and the relevant trade unions to ensure an efficient transfer of the employment of the Transferring Employees to the Purchaser or the Purchaser's Guarantor … … 10.4 The Vendor agrees to use its best endeavours to co-operate with the Purchaser to induce the Employees to accept the offers of employment which will be made to them by the Purchaser or the Purchaser's Guarantor pursuant to clause 10.1. (emphasis added) 41 Prior to signing the Sale Agreement, the appellants conducted due diligence. Toll, on reviewing documentation related to Brambles' engagement of the owner/drivers, was not satisfied as to the assurance it received from Brambles' management that there was no practice as to the payment of "goodwill" in place with the owner/drivers. Toll required a warranty from Brambles, which warranty was attached to the Sale Agreement and stated there were "no arrangements" in place at Brambles for the payment of goodwill. Brambles' General Manager, when questioned, qualified this assurance with the words "things happen that (he) may not have been aware of". Toll's General Manager suggested that the matter of goodwill should be "warranted". The Sale Agreement had the following warranty attached: Warranties, Representations and Indemnities … Warranty 11 Employees 11.1 Application to Sub-contractors Except for Warranty 11.2, the warranties contained in Clause 11 shall apply to Sub-Contractors as if they were Employees. … 11.11 No goodwill clauses in Sub-contractor agreements To the best of the Vendor's knowledge having made due and proper enquiries, the Vendor is not a party to any contracts with Sub-contractors that provide for goodwill payments upon termination, whether on the grounds of redundancy or otherwise. 11.12 No Yard Agreements To the best of the Vendor's knowledge and belief, the Vendor is not a party to any written yard agreements. 42 A term of the Sale Agreement, cl 18, also gave Toll an indemnity from Brambles for a breach of this and other warranties: 18. Warranties, Representations and Indemnities 18.1 ... 18.2 The Vendor indemnifies the Purchaser from and against any loss incurred or suffered by the Purchaser arising from or in connection with any breach by the Vendor of any of the Warranties, the amount of such loss to be determined in accordance with the provisions of clauses 18.3 to 18.11 (inclusive) of this agreement, save with respect to any loss incurred or suffered by the Purchaser arising from or in connection with any breach by the Vendor of Warranty relating to the Plant and Equipment, which is dealt with exclusively in clause 12.8(c). I note at this point that Toll has not relied on the warranties which, I understand, expired by the effluxion of time. 43 On 25 June 1996, a letter was sent to the owner/drivers by Toll assuring them the terms of the Sale Arrangement with Brambles ensured their engagement, if they joined Toll, would be no less favourable than their current terms and conditions with Brambles. Each of the nine drivers represented by the Transport Workers' Union were provided with the following letter by Toll's General Manager of Human Resources: … The Brambles forwarding businesses have been very successful historically and there is industry wide recognition that their success is due not only to the support of their blue chip client base, but also the dedication and skill of its many hard working employees and sub-contractors. Under the sale arrangements between Toll and Brambles the terms of your engagement with Toll will be no less favourable than those currently applied to you (emphasis added). Your service with Brambles will be recognised by Toll and any benefits you have accrued will be transferred. We look forward to welcoming you as a sub-contractor to Toll. Yours faithfully, Mark Rowsthorn Group General Manager TOLL HOLDINGS LIMITED 44 A second letter, dated 26 June 1996 and signed by Peter O'Brien, Financial Controller for the second appellant, requested the owner/drivers to fill out a new PPS payee declaration form because of the change of the legal entity owning the business. The letter included the following statement: We look forward to continuing the relationship which has been developed between Brambles Transport Services and yourselves to our mutual benefit. 45 It appears to have been accepted by the primary judge that the appellants, at the time of purchasing the Brambles Transport Division, had a policy that Toll would not approve the passing over of its work on the sale of a truck by any of its carriers. Toll did not reveal this policy to the Brambles' sub-contractors before their transfer of employment. The policy was not in writing. 46 Toll took over the business from Brambles on 1 July 1996 and each of the owner/drivers joined Toll from that date. 47 After the appellants' acquisition, within two to three months, negotiations between the owner/drivers and Toll management, instigated initially by Toll, were conducted for the purpose of reaching an Enterprise Bargain Agreement. No agreement was concluded. Further negotiations took place in 1999 and then again after 2000. None of these negotiations were successful in that no Enterprise Bargain Agreement was concluded. The question as to the ability of the owner/drivers to sell their trucks with work was raised in the negotiations, which negotiations were being conducted by a committee. 48 The claim was filed by the respondent, on behalf of the owner/drivers under s 106, when various dispute procedures failed to resolve the dispute over the 'goodwill' issue, that is, the issue of whether the owner/drivers could sell their trucks with work. At first one, then two other owner/drivers, attempted to sell their trucks with work. They were informed of the Toll policy. Toll took the position it did not recognise the "goodwill" allegedly held by the owner/drivers. Their applications to sell their vehicles in accordance with cl 11 of the 1989 Agreement were refused. The Grounds of Appeal 49 The appellants have pleaded 11 grounds of appeal but did not press grounds 9 and 10: 1. The trial judge engaged in an error of law and fact in determining the terms and conditions of the contracts under which the Appellants engaged the Contract Carriers ( the Impugned Contracts ). 2. The trial judge erred in finding that the Impugned Contracts excluded clause 11 of that 1989 Brambles Agreement. 3. The trial judge engaged in jurisdictional error by finding that the Court had jurisdiction to hear and determine the Respondents' claims of unfairness contrary to the principles established in Sydney Water Corporation Ltd and Anor v Industrial Relations Commission & Anor (2004) 61 NSWLR 661. 4. The trial judge engaged in jurisdictional error in finding that the Court had jurisdiction to hear and determine the Respondents' claims in relation to a term in respect of the Contract Carriers' rights to sell their trucks with goodwill and that such claims were amenable to jurisdiction under s106 of the Act. 5. The trial judge engaged in jurisdictional error in finding that a term relating to the sale of trucks with goodwill is: (a) a contract or arrangement within the meaning of s106 of the Act; (b) directly and intimately connected to the performance of work; (c) a related condition or collateral arrangement within the meaning of s 106(2A) of the Act; and (d) a matter in respect of which the Court has jurisdiction to vary, void ab initio or grant compensation pursuant to s 106 (5) of the Act. 6. The trial judge engaged in an error of law by awarding relief to the Contract Carriers that was not claimed by the Respondent. 7. The trial judge engaged in an error of law by calculating compensation and awarding relief to the Contract Carriers that was neither claimed by the Respondent nor raised by the Respondent during submissions. 8. The trial judge erred in: (a) providing inadequate reasons in respect of the monetary compensation determined in relation to each Contract Carrier; (b) awarding monetary compensation to a Contract Carrier who had not initially paid any goodwill at all; (c) awarding monetary compensation to the Remaining Contract Carriers and in determining their future earnings in the absence of any evidence as to those future earnings. 9. ... 10. ... 11. The trial judge erred in awarding interest in respect of the monetary orders from the date of the application for relief. 50 However, counsel for the appellants, Mr A R Moses SC, in opening, submitted the grounds for appeal could be conveniently addressed as five separate issues, namely, whether the trial Judge erred: · in determining the terms of the contracts between the first appellant and the lorry owner/drivers (the contract issue); · in failing to dismiss the application on jurisdictional grounds (Sydney Water Corporation Ltd and Anor v Industrial Relations Commission & Anor (2004) 61 NSWLR 661) (the jurisdictional issue); · as there was insufficient evidence on which to base his finding of fact (the jurisdictional fact issue); · in making compensation orders and in failing to give reasons for his compensation orders (the compensation issue); · in the orders as to interest. Ground 1: The Contracts 51 It will be recalled that the primary judge found that the contracts between the owner/drivers and Toll were constituted by the terms of the 1989 Agreement, minus cl 11 of that Agreement dealing with the sale of vehicles: see [95]. The primary question raised by the appellants before the Full Bench, was whether the trial judge erred in so finding. The appellants do not challenge his Honour's finding that the relevant contracts were constituted for the most part by the 1989 Agreement. What they challenge is his Honour's finding that cl 11 did not constitute part of the contracts. At first glance, this might appear odd because the appellants were seeking to avoid cl 11. But the position taken by the appellants has to be seen in the light of their contention that the whole of the respondent's claims under s 106 were, in effect, claims for breach of contract and, therefore, beyond the Industrial Court's jurisdiction: Sydney Water Corp Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661. 52 The first challenge, therefore, is to his Honour's reasoning and finding that cl 11 was not a term of the contract. His Honour in the first judgment reasoned as follows: [93] It was common ground that the 1989 agreement did not, as an industrial agreement in force under the relevant statute at the time, transmit to Toll upon the sale of the business by Brambles to Toll. It is trite law that a legally binding contract may be proved by what the parties said and did, as well as what they wrote: Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, McHugh JA at 337 - 338. The evidence discloses that each of the owner/drivers understood and operated on the basis that the terms of the 1989 industrial agreement continued to operate as between them and Toll. There was (sic) no written contracts entered into between Toll and the owner/drivers. This is therefore a case where the terms of the contract need to be inferred from the dealings between the parties. [94] On 28 June 1996, Brambles entered into an agreement for the sale of business to Toll Holdings Pty Ltd and Toll Transport Pty Ltd. Clause 10.6 of the sale of business agreement provided that Toll would engage the owner/drivers on the same basis as they had been engaged with Brambles. Toll forwarded a letter to each of the owner/drivers on 25 June 1996, which stated that "under the sale arrangements between Toll and Brambles, the terms of your engagement with Toll will be no less favourable (than) those currently applied to you". Toll recognised the service of the owner/drivers with Brambles and acknowledged that any benefits they had accrued would be transferred. This letter was drafted by Mr Walters who, at the time, was the Human Resources/Employee Relations Manager with Toll and had been involved in Toll's acquisition of Brambles as part of Toll's due diligence activities in respect of this issue. In respect of this aspect of the matter during the course of the proceedings, Mr Moses made the following concession: That it will be conceded by the respondent that at the time the carriers were provided with the pro forma letters that was set out in paragraph 8 of this witnesses evidence [Mr Walters] being the letter of 25 June 1996, there was no disclosure to the contract carriers that Toll had a policy on goodwill and the sale of goodwill and that the representation contained in that letter did not avert to that issue and the carriers wouldn't have known about Toll's policy at the time they made their decision, either expressly or by implication to come on board with Toll. 53 His Honour then came to the following conclusions with respect to the contracts between the appellant and the owner/drivers at [95]: [95] I therefore find that the terms of the individual contracts between Toll and the owner/drivers are inferred contracts which contain the same terms as those found in the 1989 agreement with the exception of cl 11, the Sale of Vehicle clause, which in light of the evidence and Toll's policy at the time could not objectively be inferred as being part of Toll's policy which meant that it could never have made a contract which contained a sale of vehicle clause and by its conduct it has never acquiesced in such a provision being part of its agreement with its owner/drivers. 54 His Honour, therefore, acknowledged, in his reasoning, the terms of the contracts had to be inferred; that the owner/drivers made their decision to transfer without knowing Toll's policy did not allow the sale of trucks with work, but in the context of an assurance from Toll that the terms and conditions of their engagement would be no less favourable than those at Brambles, for whom they were engaged at that time under the 1989 Agreement. However, his Honour went on to determine, while the 1989 Agreement was the basis of the contracts, cl 11 of the Agreement was not an agreed term of the contracts between the owner/drivers and Toll because Toll had the policy which meant "objectively", because of its policy, Toll: [C]ould never have made a contract which contained a sale of vehicle clause and by its conduct it has never acquiesced in such a provision. 55 It is settled law, in the consideration of an application to void or vary an unfair contract under s 106 of the Act, the precise terms of the contract must first be identified: Fish v Solution 6 Holdings Ltd [2006] HCA 22; (2006) 225 CLR 180; (2006) 151 IR 256 at [19] and [43]; TD Preece & Co Pty Ltd v Murton [2007] NSWIRComm 130; (2007) 164 IR 396 at [18]. It is only upon this basis that one can address "the critical issue: was the actual contract unfair?": TD Preece & Co Pty Ltd v Industrial Court of New South Wales [2008] NSWCA 285; (2008) 177 IR 172 (at [14]) per Spigelman CJ. Staff J applied the appropriate test when his Honour reasoned in his first judgment at [86]: [I]t is an indispensable step for the Court to decide the terms of the impugned contract: T D Preece & Co Pty Ltd v Industrial Court of New South Wales & Anor [2008] NSWCA 285 at [10] - [14]; Alliance Motor Auctions Pty Ltd v Industrial Relations Commission of New South Wales (2005) 146 IR 99 at [20]; see also Fish & Another v Solution 6 Holdings Limited (2006) 225 CLR 180 at [19]. 56 The appellants' grounds of appeal also acknowledge Staff J had turned his mind to the terms of the contracts: 1. The trial judge engaged in an error of law and fact in determining the terms and conditions of the contracts under which the Appellants engaged the Contract Carriers ( the Impugned Contracts ). 2. The trial judge erred in finding that the Impugned Contracts excluded clause 11 of that 1989 Brambles Agreement. Further, there is also no challenge to his Honour's finding at [93]: This is ... a case where the terms of the contract need to be inferred from the dealings between the parties. The relevant principles 57 The rights and liabilities of the parties to a contract are to be determined "objectively" by the court and are not governed by the subjective beliefs of the parties. In Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 (at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ) it was held as follows: This Court, in Pacific Carriers Ltd v BNP Paribas [20], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. 58 Whilst Staff J, correctly at [95], identified the appropriate test to be applied in identifying the terms of a contract as an "objective" one, it is, nonetheless, asserted his Honour misapplied the relevant "objective" test. 59 McColl JA, in Kriketos v Livschitz [2009] NSWCA 96, conveniently summarised the relevant principles applicable to the circumstance before the court: [106] It is trite law that there is no contract unless two parties mutually consent to be bound one to the other by one agreement. However, as Higgins J thought it necessary to add to that statement of the law, "it is one thing for two parties to settle what are to be the terms of an agreement, if it should be made; and quite another thing to make the agreement": Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 (at 650), approved on appeal per Griffith CJ (at 666); O'Connor J (at 671); Isaacs J (at 671). [107] Whether a contract has been formed, and the terms of any contractual arrangement, requires objective determination : Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 (at [22]) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 (at [40]) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 (at [34]) per Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 (at [25]) per Gaudron, McHugh, Hayne and Callinan JJ. [108] The exercise of objective determination requires the court to consider the text of relevant documents, and also the surrounding circumstances known to participants, and the genesis, purpose and object of the transaction, but not the participants' subjective beliefs: Pacific Carriers Limited (at [22]); Toll (at [40]); International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3; (2008) 234 CLR 151 (at [8]) per Gleeson CJ; (at [53]) per Gummow, Hayne, Heydon, Crennan and Kiefel JJ; (at [127]) per Kirby J. The surrounding circumstances include the parties' relationship to one another: Ermogenous (at [25]). [109] "[P]ost-contractual conduct is admissible on the question of whether a contract is formed": Brambles (at [25]) per Heydon JA; see also Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154; (2007) Aust Contract R 90-263 (at [59]) per Campbell JA (Beazley JA agreeing); Sagacious Procurement Pty Ltd v Symbion Health Ltd (formerly Mayne Group Ltd) [2008] NSWCA 149 (at [99] ff) per Giles JA (Hodgson and Campbell JJA agreeing); special leave to appeal refused: Sagacious Procurement Pty Limited v Symbion Health Limited [2009] HCATrans 23. [110] The conventional approach to the question whether a contract has been formed turns on determining whether there has been offer and acceptance, that is to say, a "clear indication by one party of a willingness to be bound on certain terms, accompanied by an unqualified assent to that offer communicated by the other party": J Carter, E Peden, G Tolhurst, Contract Law in Australia , 5th ed (2007) LexisNexis Butterworths at [3-02]. Offer and acceptance analysis is "normal" and "conventional": Brambles (at [74]). As McHugh JA (with whom Samuels JA agreed) said in Empirnall Holdings Pty Ltd v Machon Paull (1988) 14 NSWLR 523 (at 534): "The objective theory of contract requires an external manifestation of assent to an offer. Convenience, and especially commercial convenience, has given rise to the rule that the acceptance of the offer should be communicated to the offeror." 60 Deane J, in Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539, guides the court when entering into a consideration as to what were the terms of a contract (at 570): The first stage is essentially one of inference of actual intention: what, if any, are the terms which can properly be inferred from all the circumstances as having been included in the contract as a matter of actual intention of the parties? The second stage is one of imputation: what, if any, are the terms which are, in all the circumstances, implied in the contract as a matter of presumed or imputed intention? 61 Further, mutual assent can be found in a "body of conduct" even if it be the case the parties did not consciously advert to or discuss the relevant aspect of the relationship: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 (at 525) per Allsop J, with whom Drummond and Mansfield JJ agreed. Inference can be cast from the parties' words and conduct: Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528 (at 532) per Stephen, Mason and Murphy JJ; Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 per McHugh JA (at 337D). The conduct of parties may demonstrate a "tacit understanding or agreement", but such conduct must be capable of proving all the essential element(s) of a contract: Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 (at 11,117) per McHugh JA, with whom Hope and Mahoney JJA agreed. 62 In the application of these principles to a contract, whereby work was performed in the trucking industry for Toll by the owner/drivers, it is, therefore, necessary to examine the inference cast from the words and conduct of both parties to determine the intention of the parties as to whether cl 11 of the 1989 Agreement was an agreed term of the contracts. I firstly consider the words and conduct of Toll. The terms of the contract 63 Toll's pre-contractual conduct is relevant to a consideration of the terms of the contracts. The knowledge of Toll, at the time of the transfer, was considered by Staff J to be as follows (at [46] and [47]): [46] In the middle of 1993 Mr Tim O'Brien became Operations Manager at the Revesby Depot, and subsequently became Branch Manager in the middle of 1995. After he became Branch Manager, he familiarised himself with the 1989 agreement. He understood from the terms of the 1989 Agreement, the practice in the yard and his previous employment experience with TNT that: (a) existing owner drivers would sell their trucks to new owner drivers; (b) the new owner driver would take the position at Brambles of the previous owner driver from whom he had purchased the truck; (c) the new owner driver would receive a guarantee of work - initially just a general guaranteed of continuity of work over 48 weeks per year, and from about 1995-6 a specific guarantee of 50 hour work per week; (d) the new owner driver would be classified as a permanent owner driver (as distinct from a permanent casual owner driver, who did not have the benefit of these guarantees); and (e) that the right to sell a truck in these circumstances would attract a price that the owner driver could never get simply by selling the truck in a truck yard – i.e. a higher price. [47] The evidence discloses and I find that Mr O'Brien knew, at all relevant times, that the owner/drivers had the capacity to sell their trucks "with work" at Brambles and that this meant that the truck would attract a premium above the value of the truck as a piece of mechanical equipment - which is colloquially known in the industry as "goodwill". 64 Mr O'Brien moved his employment from Brambles to Toll. The appellants did not challenge his Honour's findings as to the knowledge of Toll at the time the contracts were entered into. 65 The terms of the Sale Agreement with Brambles revealed Toll was motivated by a desire to have the owner/drivers continue to operate within the transport business on the transfer of that business from Brambles to Toll. Toll required an agreement from Brambles to use its best endeavours to "induce" the transfer of the services of the owner/drivers to Toll (Sale Agreement, cl 10.4). The owner/drivers were identified (in Exhibit 2 of the Sale Agreement) as "employees" Toll wanted to transfer. Toll's evidence revealed there was concern throughout the negotiations that there may have been a practice by Brambles to allow the sale of trucks with work (notwithstanding some assurance from Brambles that the position was otherwise). Toll therefore required, in this circumstance, a warranty from Brambles (Warranty 11.1). It may be inferred, because of the warranty, Toll was comfortable that any claim for goodwill by the owner/drivers had been insured against under the terms of the warranty. This is particularly so where the evidence also established some of the senior Brambles' management in the Brambles Transport business also transferred to Toll and with them went the knowledge of Brambles' business practices prior to the sale. Further, because of the due diligence procedure conducted prior to the sale, Toll's existing management were also aware of the 1989 Agreement, under which terms and conditions the owner/drivers worked. The Toll policy 66 However, at the time of the sale, Toll had a policy that it would hire no owner/driver who expected to have the right to sell his/her truck with work. Toll's management knew of the policy (not in writing) and conceded Toll did not inform the owner/drivers of the policy before the sale and transfer of their services. 67 The respondent had submitted that: His Honour's conclusion that it could not "objectively be inferred" that clause 11 formed part of the contract by reference to Toll's policy against goodwill did not constitute reliance upon any "subjective belief" about the terms or meaning of the contracts. The policy had nothing to do with Toll's understanding of the contracts; it was rather an "objective background fact" concerning the basis upon which Toll chose to engage with lorry owner drivers generally – a policy which dated at least back to 1995 (i.e. well prior to the engagement of the particular LODs here), and which has governed Toll's dealing with the LODs at all times since. 68 This submission must be rejected. Toll's policy, which effectively meant no owner/drivers would have an opportunity to re-sell, cannot have been an "objective background fact" relevant to assist the court in determining whether cl 11 was a term of the contracts. Evidence from the owner/drivers revealed they were not made aware of the policy until 1999. An "objective background fact" must be a fact of which both parties had knowledge at the time the contracts were struck. The fact must be a mutually known fact to be viewed objectively as a background fact, able to affect the terms of the contract. In DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423, the High Court held (at 429): Since there was no evidence of a circumstance (known to both parties) that there were to be two stages of subdivision and consequently two plans of subdivision, evidence of the intentions of one party was not admissible in aid of the interpretation of the written contract. A court may admit evidence of surrounding circumstances in the form of "mutually known facts" "to identify the meaning of a descriptive term" and it may admit evidence of the "genesis" and objectively the "aim" of a transaction to show that the attribution of a strict legal meaning would "make the transaction futile" ( Prenn v Simmonds ). But it cannot receive oral evidence from one party as to its intentions and construe the contract by reference to those intentions. 69 It may be Toll, with its knowledge of the goodwill policy, had believed it had entered into contracts that did not contain cl 11 (and that was the view expressed in evidence by its management), but such a subjective belief is not persuasive as to the terms of the contracts. The letter of 25 June 1996 70 Furthermore, Toll management, with the knowledge of pre-existing policy and prior to the purchase, chose to write a letter to the owner/drivers with the clear intention of inducing them to provide their services to Toll on the basis that the terms of their engagement with Toll would be no less favourable than those that applied to them under the Brambles' ownership of the business. 71 The appellants sent the letter on 25 June 1996 to the owner/drivers, five days before the transfer. It is necessary to consider whether this letter was contractually binding. 72 In the course of oral argument on appeal, Mr Moses, for the appellants, submitted: [A]s a matter of general principle the statement in the letter 25 June 1996 was promissory in nature and therefore was contractually binding on the appellants, and the words were promissory. ... … Once regard is had to the full set of objective facts and the whole context of the transaction it is clear the trial Judge erred in making the findings which are the subject of the contract agreement, contrary to the trial judge's findings there was contractual consensus between Toll and the lorry owner drivers and they were operating on the basis the same terms and conditions as they had with Brambles would apply. Toll's subjective views believing a policy were irrelevant to the objective intentions relating to the transactions between Brambles and their lorry owner drivers. 73 Mr A Hatcher of counsel for the respondent, contended: [T]he letter constituted itself in contractual terms. The terms of the letter and the way it is expressed, and the broad proposition that conditions not less favourable would be provided, simply reading it as a matter of plain English does not permit the conclusion that thereby clause 11 in the express terms provided for the 1989 agreement was a term of contract. … We say it [the letter] is a pre contractual representation and we are saying, in effect, we will enter into a contract with you and the terms of that contract would be at least as good as the one you previously had. When characterised that way, it cannot be described as a promise of a specific contract on specific terms. 74 A further matter to be taken into account is that following evidence given by Toll managers in their cross-examination, although some expressed the view as the appellants had pleaded, that the 1989 Agreement was not the contract, counsel for the appellants quite properly conceded: [T]hat at the time the carriers were provided with the pro-forma letter … being the letter of 25 June 1996 there was no disclosure to the contract carriers that Toll had a policy on goodwill at the time they made their decision either expressly or by implication to come on board with Toll… 75 It may be seen that, on the one hand, against the background of a concession by counsel for the appellants that "there was no disclosure to the contract carriers that Toll had a policy on goodwill at the time they made their decision either expressly or by implication to come on board with Toll", the appellants submitted the promissory nature of the June 1996 letter worked to import the entirety of the 1989 Agreement, including cl 11, into the contracts between Toll and the owner drivers. The respondent, on the other hand, in its first alternative submission, asserted that the letter did not necessarily mean that cl 11 of the 1989 Agreement constituted a part of the contracts and that the letter merely constituted a pre-contractual representation. 76 Of relevance is the decision in Hospital Products Limited v United States Surgical Corporation and Ors [1984] HCA 64; (1984) 156 CLR 41 (at 61): A representation made in the course of negotiations which result in a binding agreement may be a warranty -- i.e., it may have binding contractual force -- in one of two ways: it may become a term of the agreement itself, or it may be a separate collateral contract, the consideration for which is the promise to enter into the main agreement. In either case the question whether the representation creates a binding contractual obligation depends on the intention of the parties. In J. J. Savage & Sons Pty. Ltd. v. Blakney [50], at p. 442 and Ross v. Allis-Chalmers Australia Pty. Ltd. [51], at pp. 565, 567, it was said that a statement will constitute a collateral warranty only if it was "promissory and not merely representational", and it is equally true that a statement which is "merely representational" -- i.e., which is not intended to be a binding promise -- will not form part of the main contract. If the parties did not intend that there should be contractual liability in respect of the accuracy of the representation, it will not create contractual obligations. In the present case Mr. Blackman, who made his statements fraudulently, had, of course, no intention that they should amount to contractual undertakings, but he could not rely on his secret thoughts to escape liability, if his representations were reasonably considered by the persons to whom they were made as intended to be contractual promises, and if those persons intended to accept them as such. The intention of the parties is to be ascertained objectively; it "can only be deduced from the totality of the evidence": Heilbut, Symons & Co. v. Buckleton [52], at p. 51. In other words, as Lord Denning said in Oscar Chess Ltd. v. Williams [53], at p. 328: "The question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice." and as Deane J held (at 120): The test for determining whether any, and if so which, of those statements in fact constituted an express term of the contract is whether the proper inference is that the relevant statement or representation was, when viewed objectively and in context, offered and accepted as, or as part of, a contractual promise. 77 In the application of the test as posed by the High Court in JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 (at 442) and paraphrasing the question there framed to this circumstance: the question is whether there was a promise by the appellants to the owner/drivers that their terms and conditions of engagement would be no less favourable than those at Brambles, the entry into the contract to work providing the consideration to make the promise effective. 78 Toll cannot rely on its secret knowledge, that it had a policy against the sale of trucks with work, to escape liability from its representation which was made to the owner/drivers and which was reasonably considered by the owner/drivers as intended to be a contractual promise. This could not be in the circumstance, called an innocent representation that induced the contract (Ross v Allis-Chalmers (Australia) Pty Ltd (1980) 55 ALJR 8). It was, in my view, a fraudulent promise. The owner/drivers reasonably accepted the promise as such and entered into the principal contract to provide their services to Toll. Objectively a reasonable person would infer a warranty was intended. 79 In my view, Toll made this promissory representation with the intention of gaining the services of the owner/drivers and in the knowledge of the Brambles practice under cl 11. It was accepted by the owner/drivers, who then transferred over their services to Toll. In that context consideration was given for the representation and my view of the letter is it expressly imported into the contract the promise by Toll to the individual owner/drivers that the terms and conditions that applied to the owner/drivers under their contracts with Toll would be no less favourable than those they enjoyed at Brambles. 80 However, whether the letter has the status of a promissory representation and is contractually binding or a mere representation, this is an application under s 106 and once the terms of the contract are determined and if the application is held to be within jurisdiction - the question then is given the promise was false or at least misleading (Hyundai Elevator Co Ltd v Liftronic Pty Ltd [1994] NSWCA 144) - whether there was by Toll an unfairness in the conduct of the contract such as to make the contract unfair. 81 This promissory representation, in my view, affects the obligation imposed on the appellants in considering applications under cl 11, if cl 11 is found to be in the contract. 82 As to that question, namely: whether cl 11 was incorporated into the contract of employment between Toll and the owner/drivers, I find the following matters relevant to my consideration. 83 First, the owner/drivers gave evidence that, in deciding to enter into the arrangement with Toll, the letter provided them with the assurance the 1989 Agreement (which agreement with Brambles had, by way of cl 11, allowed them a right to sell their trucks with work) would be the vehicle for recording their conditions of employment and those conditions would be ongoing. The owner/drivers (while it was their subjective belief all the terms of the 1989 Agreement became part of the contract), in accordance with the promissory assurance from Toll, transferred their services to Toll. The letter, therefore, had an effect on the conduct of the owner/drivers in that it led to the owner/drivers entering into the arrangement, as defined by Toll, as one where their engagement would be no less favourable than those employed under the 1989 Agreement with Brambles. 84 Secondly, once the owner/drivers entered into their working arrangements with Toll, Toll had generally complied with the terms of the 1989 Agreement until the dispute as to the effect of cl 11. Given post-contractual conduct is admissible as to whether a contract was formed (Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25]-[26]) it is relevant also to note that the owner/drivers, in the conduct of their affairs, made no attempt to re-sell their trucks until after three years of service with Toll had passed, in accordance with their obligations under the 1989 Agreement (cl 11.5). They had, under that clause, to service Toll for three years before there could be any trigger under cl 11.1 of the 1989 Agreement which would allow them opportunity to approach Toll with a new owner/driver. 85 Thirdly, at the relevant time Toll was aware the owner/drivers had the capacity to sell their trucks "with work" at Brambles and that this meant that the truck would attract a premium above the value of the truck as a piece of mechanical equipment. With this knowledge, Toll sought to induce the owner/drivers to work for the company by promising that their engagement would be on terms no less favourable than what they enjoyed with Brambles. If it was Toll's belief that the provisions of cl 11 would not apply to the owner/drivers, Toll offered nothing to the owner/drivers that would offset the benefit of cl 11 such that the terms of their engagement with Toll could be said to be no less favourable than the terms applied by Brambles. 86 Fourthly, Toll did not advise the owner/drivers of its 'goodwill' policy and the owner/drivers had no knowledge of the policy when they accepted the contracts with Toll. Toll's non-advice to the owner/drivers was in circumstances where Toll sought to indemnify itself against any 'goodwill' arrangement observed by Brambles. One inference that could be drawn from this is that Toll deliberately did not tell the owner/drivers that it would not observe cl 11 of the 1989 Agreement out of a concern that owner/drivers would not transfer to Toll or that it would cause an industrial dispute. Instead, Toll sought to protect itself by obtaining an indemnity from Brambles. Quite how Toll could have regarded that indemnity as protection against owner/drivers seeking to apply cl 11 is not apparent, but the indemnity secured from Brambles cannot relieve Toll of its contractual obligations towards the owner/drivers. 87 Fifthly, after ownership of the business passed to Toll in June 1996, Toll undertook negotiations with the owner/drivers and proposed in the negotiations in 1999 that the Sale of Vehicle clause remain, but with Toll having the first option to buy and with the guarantee of continuity of work for the incoming owner/driver being removed. Those negotiations were unsuccessful. Given that Toll knew of cl 11 at the time it offered to owner/drivers terms no less favourable than those that applied under Brambles' ownership, and sought to negotiate an amendment to the provision after taking over ownership, an inference is available that Toll knew precisely that, in offering terms on a 'no less favourable' basis, one of those terms was cl 11. 88 Staff J at [95] relied upon the evidence of a pre-existing policy of Toll to infer that Toll 'could never have made a contract which contained a sale of vehicle clause'. In doing so, I am of the view his Honour erred. Toll's subjective belief that because of its policy against 'goodwill' it could not enter into or be bound by a contract inconsistent with that policy is not the test for determining its rights and obligations under the contract: Alphapharm. 89 At the time when the contracts were struck I am of the view a reasonable person, whether in the shoes of the appellants or the respondent, would have had to conclude from the conduct of each party that there was a mutual intention to enter into contracts that incorporated all of the terms of the 1989 Agreement, including cl 11. A finding that cl 11 was not part of the contract would have quite a perverse effect in law. A defendant party to a contract might secretly maintain a policy, the implementation of which would deny the other party certain benefits to which it had been led to believe it was entitled, under the contract. The defendant party might then deny its contractual liabilities by pointing to the existence of its secret policy as an "objective background fact". This is not the position in law. 90 I would add that as Staff J erred in finding that cl 11 did not constitute part of the contracts for the reason that Toll's "goodwill" policy prevented it from entering into such contracts, there is no other basis for excluding cl 11 from the contracts particularly in light of the fact that the parties were at one in agreeing that all other elements of the 1989 Agreement constituted the relevant contracts. 91 I am, therefore, of the view the evidence establishes that cl 11 of the 1989 Agreement constituted an element of the contracts between Toll and the owner/drivers. I would uphold the first ground of appeal. Ground 2: The Jurisdictional Ground Remit application 92 Ground 2 of the appeal challenges the jurisdiction of the Industrial Court to hear the claim that the appellants contend was pleaded as a breach of contract claim. 93 Mr Moses, for the appellants, submitted on appeal that if Ground 1 is upheld, that is, the Full Court finds cl 11 forms part of the contracts, then the appropriate course is for the Full Bench to remit the matter for re-trial before another judge and the respondent would not be bound as to how it puts its case. Mr Moses submitted: If your Honours grant leave to appeal and accept his Honour erred in respect of the contract grounds - the Sydney Water ground - it could of course be determined by the Full Court, but more properly should be the subject of a retrial before a differently constituted Court, as it may permit the respondent to take a different course in respect of the matter. 94 Staff J did not consider the jurisdictional challenge, holding that: [100] [I]t is unnecessary to deal with the respondents' challenge to jurisdiction that the primary grounds of unfairness amount to allegations of a breach of contract and therefore the principles found in Sydney Water Corporation Ltd and Another v Industrial Relations Commission of NSW and Another (2004) 61 NSWLR 661 applied. Indeed, the respondents' evidence went so far as to deny that Toll had any contractual obligations to maintain the sale of vehicle arrangements. 95 The appellants, therefore, on the remit application, in their submissions rely solely on succeeding on the contract issue and a proposition that would give the respondent an opportunity to call further evidence. 96 The respondent, as to the remit application, submitted the appellants were raising (now it is found cl 11 is in the contracts) a different case than that litigated in the court at first instance and should not now be allowed leave for an opportunity to raise again the jurisdictional issue but in a different context at a new hearing. 97 The applicable principles in that regard have been collated and considered in Oates v Consolidated Capital Services Ltd [2009] NSWCA 183 by the Court of Appeal recently at [176]: In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. ... The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings. Nevertheless, failure to amend will not necessarily preclude a verdict upon the facts as they have emerged: See Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658. It is necessary to look to the actual conduct of the proceedings to see whether a point was or was not taken at trial, especially where a particular is equivocal. And at [180]: In Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 646, Mason P (with whom Gleeson CJ and Priestley JA relevantly agreed) [citing Della Patrona v Director of Public Prosecutions (Cth) [No 2] (1995) 38 NSWLR 257] stated the following principles: … it is a sound general principle, leading not only to the maintenance of fair play, but also to the repression of unnecessary litigation, that parties must be bound by the course they deliberately adopted at the trial': Rowe v Australian United Steam Navigation Co Ltd [1909] HCA 25; (1909) 9 CLR 1 at 24, per Isaacs J; see also Browne v Dunn (1893) 6 R 67 at 75; Banque Commerciale SA (In Liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 284. In Coulton [ Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1] (at 7), Gibbs CJ, Wilson J, Brennan J and Dawson J said that: It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish. And at [181]: In Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598; 200 ALR 447 Gleeson CJ, McHugh and Gummow JJ said, at [51]-[52]: It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial: University of Wollongong v Metwally (No 2) [1985] HCA 28; (1985) 59 ALJR 481 at 483; [1985] HCA 28; 60 ALR 68 at 71; Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 8-9; Liftronic Pty Ltd v Unver [2001] HCA 24; (2001) 75 ALJR 867 at 875 [44]; [2001] HCA 24; 179 ALR 321 at 330-1; Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491 at 496-7; cf R v Birks (1990) 19 NSWLR 677 at 683-5. Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action: Multicon Engineering Pty Ltd v Federal Airports Corp (1997) 47 NSWLR 631 at 645-6. Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs. As Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491 at 498 makes clear, a point may be a new point even though it is within the pleadings or particulars. The pleadings and particulars are frequently decisive in determining whether a party is seeking to raise a new point on appeal. But they are not conclusive. To determine whether a party is raising a new point on appeal, it is 'necessary to look to the actual conduct of the proceedings': Water Board v Moustakas at 497. Thus in Water Board , the plaintiff's case at trial had been that his employer was negligent in failing to prevent traffic from crossing in to the lane in which he was working. On appeal, the Court of Appeal of New South Wales allowed the plaintiff to raise a case that the employer was negligent in failing to provide a barrier to prevent the plaintiff from straying into the adjoining lane. This Court held that, although this alternative case was within the particulars, it had not been the plaintiff's case at the trial and the Court of Appeal had erred in allowing it to be raised on appeal. Consideration must therefore be given to: the conduct of the case; the pleadings; whether the issue raised is a new issue; the question of fair play; and the principle of finality in litigation. 98 As to the remit application, I would reject the proposition the Full Court should remit the matter having found cl 11 is a term of the contracts. The appellants at first instance, in their Amended Reply to the Summons, clearly pleaded a challenge to the jurisdiction of the court to hear a claim which, it asserted, was pleaded as a breach of contract claim. They then pressed this substantive argument in the hearing at first instance and in final submissions (having conceded that the court could conclude cl 11 was in the contracts thereby making their case even more persuasive, it was submitted), contending before Staff J that the court had no jurisdiction to hear the claim because it was a breach of contract claim. 99 The issue was raised in the court below and both parties had every opportunity to place before the court in the hearing at first instance, any evidence to be relied upon on the point. This is not a case where the challenge to jurisdiction is raised for the first time on appeal. Rather, all the evidence upon which the appellants wished to rely was placed before Staff J. Further, all the facts have been determined beyond controversy. There is no appeal by the appellants on the facts as found by Staff J. Mr Moses' proposition, that the respondent should have an opportunity to refashion its case on a remitter now cl 11 is found to be in the contracts, is a proposition which would also allow the appellants the same licence. While Mr Moses proposes the respondent may wish to refashion its case, the respondent makes no such application nor does the respondent contend it would need to call further evidence. 100 Parties to litigation are bound by the conduct of their case at trial. No injustice between the parties is relied upon to support the application. Further, the Full Court, under a s 106 review has full discretionary powers. In TD Preece, the Court of Appeal considered the discretionary powers of the Full Bench in the context of s 106 and said at [40]-[41]: [40] The power to vary an order is expressly conferred by s 192(1)(a). Although the nature of the hearing is not a hearing de novo, that does not mean that the Full Bench cannot, after identifying error, proceed to find unfairness on an alternative basis that has been properly raised. [41] The applicant contended that the Full Bench was not entitled to substitute its own decision for that of the trial judge. The applicant's submissions do not give any weight to the word "merely" in s 191(3). The Full Bench is entitled to "substitute its decision" for that of a trial judge. That is what an appeal, capable of leading to a variation of the order, is for. Section 191(3) affirms a traditional form of restraint upon the exercise of an appellate function with respect to discretionary decisions. It does not prevent the Full Bench from determining the appeal on a basis different from that of the trial judge. 101 I am satisfied the issue was clearly raised at first instance and the Full Bench has power to consider the second ground of appeal. Whether pleadings reveal a breach of contract case 102 The appellants, in pressing the jurisdictional ground of appeal, namely, that this was a breach of contract case and, therefore, there is a bar to suit before the Industrial Court, placed reliance before both the court at first instance, and on appeal, upon the view expressed by the Court of Appeal in Sydney Water at [39]: If contractually prohibited conduct occurs, the innocent party is armed with a quiver of remedies under the general law. These include remedies for the payment of money due and for compensatory damages that are available as of right. If the guilty party's conduct is repudiatory or involves a breach of a substantial nature, the innocent party may elect to be discharged from further performance. Discretionary remedies such as injunction and orders for specific performance may be available in particular circumstances. Restitutionary orders may follow. The remedies involve regard for the position of the guilty party as well, including rights of counter-restitution for value conferred. 103 The appellants, therefore, contended unfair conduct, in breach of a contract, does not render a fair contract unfair and thereby amenable to relief under s 106 of the Industrial Relations Act. The appellants contended, "… the Court does not have jurisdiction to find that a contract is unfair due to one party denying the other a contractual right". 104 It is necessary, in a consideration of the appellants' contention that it is the "pleadings" which reveal this was a breach of contract case, to recite the particulars pleaded by the respondent as to the asserted unfairness. The claim came before Staff J by way of an Amended Summons for Relief and pleaded as follows: 34. The Contracts are unfair, harsh and unconscionable and against the public interest, in that: (a) they permit the First Respondent to deny the Carriers the right to sell their trucks with their positions or with "introduction to work" in the future so that they may recover or obtain a return on the investments they have already made in purchasing their trucks with their position or with "introduction to work"; (b) they fail to give effect to, and permit the First Respondent to depart from, the representation made by the Second Respondent to the Carriers upon the acquisition of the Brambles Transport Services business that the terms of their engagement would be no less favourable than they had been with Brambles and that the relationship the carriers had developed with Brambles would continue; (c) they deny the Carriers the legitimate expectation which they had at the time that they purchased their vehicles that they would be able to sell them together with their positions or with "introduction to work" at a time of their choosing, provided that a period of 3 years had passed; (d) they have allowed the Respondents to obtain the benefit of the required 3 year minimum engagement of the Carriers without allowing the Carriers in return to have the benefit of being able to sell their vehicles together with their positions with "introduction to work" at a time of their choosing; (e) they invest in the First Respondent discretionary powers which the First Respondent is able to, and does, exercise arbitrarily, capriciously, unfairly, and without regard to the legitimate interests of the Carriers; (f) they allow the First Respondent to terminate the Carriers without any compensation for the losses of their investments in their trucks and positions or for the losses associated with their legitimate expectation that they would be able to sell their trucks with their positions or with "introduction to work" in the future; (g) they allow the First Respondent to unilaterally and fundamentally alter the conditions of engagement of the Carriers, to the detriment of the Carriers; (h) they allow the First Respondent to act without any regard to the value of the investments which the Carriers have made in their trucks and positions or for the loss of their legitimate expectations of being able to sell their trucks with their positions or with "introduction to work" in the future; (i) they allow the First Respondent to act without any proper regard for the health or personal or financial circumstances of the Carriers; (j) the Carriers were at all relevant times in a position of unequal and inferior bargaining power in respect of their dealings with the First Respondent and were specifically so at times when they sought permission to proceed with sales of vehicles which they had negotiated; and are otherwise unfair, harsh and unconscionable and contrary to the public interest upon such grounds and for such reasons as the Commission in Court Session may find. 105 The appellants contended on a reading of the particulars it was pleaded that there was: the denial of a right (34(a) of the pleadings); the need to give effect to a representation (34(b) of the pleadings); the denial of the asserted legitimate expectation (34(c) of the pleadings); a unilateral variation (34(d) of the pleadings); arbitrary conduct (34(e) of the pleadings). This was pleaded as a breach case. It was further submitted, both at first instance and on appeal, the variation and orders sought by the respondent supported the appellants' contention. Such proposed orders were in the form of variations to the contracts, which variations would allow the owner/drivers the right to sell, the right to object, acknowledgement of alleged market value and, a right to compensation. These variations were fashioned, the appellants contended, to reflect the asserted unfairness, namely, the asserted denial of rights, false representation, legitimate expectations and the arbitrariness of the contracts. Each of the variations/orders sought by the TWU, the appellants contended, fell foul of the principle enunciated in Sydney Water that, namely, breach of contract claims are matters which belong within the general jurisdiction of the courts which have jurisdiction to consider such claims and not within the ambit of s 106 of the Industrial Relations Act, which is limited to claims of asserted unfairness of contracts. The court should, therefore, dismiss the claim, it was contended. 106 Mr Moses submitted he "was entitled to put the Sydney Water point not on the evidence but on the pleading". To determine whether this case is a breach matter, he submitted, the court does not look at the evidence in the conduct of the case, but at the terms of the originating process to make its determination. The same submission was pressed by the appellants before Staff J in the case at first instance: Now, in determining whether something is a breach case the court doesn't look at the evidence, the court looks at the terms of the originating process to determine, what it is that is being sought to be done by the applicant. That's how the matter is addressed in terms of whether or not there is jurisdictional error by way of what it is that the court is being asked to do, which is what the court looked at in Sydney Water. What we say is, if we look at what it is that the applicant is asserting, this is a breach case in respect of clause 11 and nothing more. 107 However, in relying solely on the pleadings of the respondent in this appeal, the appellants discount how the case was conducted at first instance. It is necessary to consider, not only the effect of the respondent's pleadings, as relied upon by Mr Moses, but also how the case was conducted. 108 Mr A Hatcher, for the TWU, opened his case much more generally than was initially pleaded in the Amended Summons. He, in opening, addressed the court as to what were the contracts and their terms. He put to the court two alternative propositions and this was done in the context that counsel recognised the pleading had not addressed an elementary issue, namely, what was the contract. The appellants took no objection to the respondent's opening address. The respondent placed two alternative submissions before Staff J at first instance, namely, cl 11 was not in the contracts, but alternatively, if cl 11 was found to be in the contracts, Toll used the discretion contained in the clause arbitrarily and unfairly in applying the terms of the contracts. Mr Hatcher opened as follows: We say the evidence will demonstrate that for the most part the terms of the 1989 agreement became the terms of the contracts between each of the owner drivers and Toll, that is the various conditions, the rate structure which was adjusted from time to time, they were effectively incorporated into individual contracts. The important exception however is the sale of vehicle clause. Toll, and this is the bone of contention which is the subject of the fundamental element of the proceedings, Toll has refused to allow any sale of vehicle to proceed. That refusal didn't become apparent for a long time until approximately 2001 because for a long time no owner drivers sought to sell. But when they did Toll refused by saying that under no circumstances would it ever be engaging anybody who purchased a vehicle from an existing owner/driver. Two alternative inferences can be drawn from that, either that Toll simply did not regard the sale of vehicle clause as forming part of its contract because Toll as evidence would show basically indicate as far as their sale would show [sic], that there will be no introduction of vehicles in its businesses, or, alternatively, it regarded the clauses as binding but it was using the discretion vested by the clause to block any incoming carrier in a way which we would say constitutes an arbitra[ry] … exercise of discretion. In either case we say that the contracts between the owner drivers and Toll are or have become unfair. (emphasis added) 109 Therefore, while the TWU's primary submission before Staff J was that cl 11 did not form part of the owner/driver contracts, it also advanced, as an alternative submission before his Honour, that cl 11 was not in the contracts because of Toll's policy or, if cl 11 was a term of the contracts, the contracts were or became unfair because the discretion conferred on the principal, Toll, under that clause, was, inter alia, exercised arbitrarily, capriciously and unfairly such as to make the contracts unfair. 110 That alternative submission was also elaborated upon by Mr Hatcher for the respondent in his closing address before Staff J as follows: It is possible, again given the state of the evidence, that an alternative characterisation might arise, that is, that the clause was in some way incorporated, but that Toll has used its discretion to refuse to allow any sales to occur, however, we think the court would not be attracted to that alternative proposition because it is not consistent with Toll's conduct in which, rather than simply exercising its discretion for approval with respect of individual carriers based upon their personal characteristics, it has rather adopted a blanket policy in which no sale of vehicles may occur under any circumstances whatsoever. 111 Staff J acknowledged in his first judgment, the alternative submission had been a contest before him when at [95] he concluded: An alternative characterisation, which I am not attracted to because of Toll's conduct, is that cl 11 was incorporated into the owner/drivers contracts but that Toll used its discretion to refuse to allow any sales to occur. The evidence prevents me finding that Toll exercised its discretion for approval with respect to individual owner/drivers because it adopted a blanket policy in which no sales of vehicles could occur under any circumstances whatsoever. and at [100]: ... Indeed, the respondents' evidence went so far as to deny that Toll had any contractual obligations to maintain the sale of vehicle arrangements. 112 Mr Moses contended his Honour's comments at [95] and [100] were made in the context of the appellants' submission as to how the case could be viewed as a breach case. I cannot see that this submission does other than endorse the fact a number of alternative propositions were squarely placed before his Honour and Staff J gave each his consideration. Further, Mr Moses, on appeal also acknowledged the alternative submission was before Staff J when he submitted: [T]hat's the basis upon which my friend invited the trial judge to draw that inference which flies in the face of the actual commercial transaction between Toll and Brambles and the provisions I have taken the court to, as well as the letter that was provided to each of the lorry owner drivers. The alternative inference my learned friend invited the court to find is that it regarded the clause as binding but it was using the discretion vested by the clause to block any incoming carrier in a way which we say would constitute an arbitrary exercise of discretion. ... 113 The appellants can gain no comfort in placing reliance solely upon the respondent's pleadings and to ignore the way the case was conducted before Staff J as the ground to deny the jurisdiction of a court. This is particularly so where the appellants, in their pleading at first instance, consistently and expressly denied the existence of a contractual provision which required Toll to consider any sale of trucks with work by the owner/drivers. The appellants in pleading in the Amended Reply to the Amended Summons, had pleaded at par 8: (j) ... the Respondents dispute that the 1989 Agreement was binding upon the Respondents or either of them at any time, including following the Purchase. (k) ... the Respondents contend that the 1989 Agreement lapsed and did not continue to have binding legal force following the repeal of the Industrial Arbitration (NSW) Act 1940 by the Industrial Relations (NSW) Act 1991, and/or following the repeal of the Industrial Relations (NSW) Act 1991 by the Industrial Relations (NSW) Act 1996; (l) ... (m) ... the Respondents deny that they had knowledge of any arrangements between Brambles and contract carriers, including the Contract Carriers, regarding the payment of goodwill or the existence of any entitlement by contract carriers, including he Contract Carriers, to sell such goodwill or to charge a premium for the introduction to work of a new driver, or that the communications outlined ... referred to or contemplated such arrangements or entitlements; 114 What was pleaded by the appellants, therefore, was the 1989 Agreement was not legally enforceable against Toll by virtue of it not being caught by the operation of the 1996 Act or the 1991 Act, yet it led evidence from witnesses the result of which, after cross-examination, caused Mr Moses at the hearing to properly concede as follows: The appellants' evidence was in contradiction to its own pleading. The appellants' managers agreed they knew of the 1989 Agreement and generally had applied to the owner/drivers those working conditions. 115 Both parties changed positions from their pleadings in the conduct of the case and raised alternative propositions before Staff J. The respondent in its pleadings did not identify the terms of the contracts, but in the course of its submissions proposed two alternatives: first, if cl 11 was in the contracts, the conduct of the appellants was unfair and in the alternative, if cl 11 was not in the contracts, the appellants were misled by the representations of Toll and by post-contractual conduct. 116 The appellants conducted its case at first instance firstly, by denying the 1989 Agreement was binding and denying it had knowledge of the Brambles' practice regarding the payment of goodwill but then, after its witnesses gave evidence, it made a concession as to Toll's knowledge of the practice at Brambles. The appellants then proceeded to submit the 1989 Agreement with cl 11 constituted the contracts. 117 Given the way the case was conducted, Staff J considered a number of alternative propositions as to the terms of the contracts between the parties. Both parties approbated and reprobated as to what were the terms of the contract. His Honour was dealing with at least four alternative submissions placed before him in the conduct of the matter. While I find his Honour erred in his conclusion as to one term of the contract, I cannot accept, in such a circumstance, the determination of the most serious question, the jurisdiction of the court, should be made solely on an analysis of one single pleading amongst many and that of but one party. This is especially so given the alternative ways the case was both pleaded and conducted by each party at first instance. 118 The respondent's use of the word "right" in its first particular of the asserted unfairness is the essence of the appellants' attack on the pleadings. There was but one pleading by the respondent in its Amended Summons that contained the word "right". The singular use of the word is not considered by the court as a substantial ground to uphold the jurisdictional challenge. The Industrial Court is not a court of strict pleading. The use of the word "right" in pleading 34(a), in my view must be examined in its context. The "right" to sell was a practice acknowledged and accepted by Brambles and the pleading (at 34(a)), I accept, merely asserts the contracts did not provide for a continuation of that "right". In other words, having regard to its context when the pleadings are read as a whole, I do not regard the use of the word "right" as pleading a contractual right breached by Toll, but rather it was referring to a benefit enjoyed by the owner/drivers under Brambles in respect of which they had come to regard as being available as a matter of course and about which they held a legitimate expectation would continue under Toll, but which Toll denied. Other pleadings reinforce and give support for this view. On an analysis of all the particulars of the respondent, while each was fashioned as a separate ground, on my understanding of the particulars, when read as a whole there was, by the conduct of the appellants in refusing the sale of trucks with work, an unfairness in the performance of the contracts. 119 In any event, even if the pleading in paragraph 34(a) of the Amended Summons for Relief could, on its own, be regarded as a pleading of breach of contract because it refers to a denial of a contractual right, other pleadings of unfairness fit squarely into the mould of unfair contract pleadings. 120 Thus, if it be accepted by me, as it is, that the respondent was contending in its pleadings and in the case it presented, that the contract consisted of the 1989 Agreement minus cl 11, but in the alternative, inclusive of cl 11, a pleading, for example, that the terms of the contract (inclusive of cl 11) permitted Toll to unilaterally and fundamentally alter the conditions of engagement of the owner/drivers to the detriment of the owner/drivers (34(g)), is not a pleading that Toll breached the contract. Nor is it a breach of contract pleading that the contract (inclusive of cl 11) permitted Toll in its discretion, to act arbitrarily, capriciously or unfairly and without regard to the interests of the owner/drivers (34(e)), given that it was asserted in the pleadings the owner/drivers had a legitimate expectation of being able to sell their trucks with their positions or with "introductions to work" in the future. 121 In such a circumstance, I reject the contention of the appellants that the pleadings should be held to be persuasive evidence in support of the proposition the court has no jurisdiction to hear a claim pleaded under s 106 of the Act. 122 It follows from what I have said regarding the pleadings and the conduct of the respondent's case, the case the appellants were required to meet in the alternative, was that the contracts permitted the conduct by the appellants but that conduct, because of the contractual force of the promissory representation or simply because of the representation, made the conduct of the appellants unfair, thereby making the contract unfair. In Sydney Water, Mason J, President said at [33]: A contract may "permit" certain conduct either by sanctioning it expressly or by failing to prohibit it. In either circumstance the other party has no contractual remedy to prevent that conduct. Either type of "permission" may properly lead to an appropriate remedy in the Commission, if the Commission finds that the contract is unfair. 123 On my finding, and consistent with the alternative case pleaded by the respondent, the contracts contained cl 11. Clause 11 provided to the appellants the absolute discretion as to whether it would offer work to the purchaser of the owner/driver's truck. Because of its promissory representation, however, the respondent pleaded, inter alia, that the appellants exercised its discretion under the contracts: arbitrarily, capriciously or unfairly vis a vis the owner/drivers; or so as to permit the appellants unilaterally and fundamentally to alter the conditions of engagement of the owner/drivers, to the detriment of the owner/drivers; or so as to deny the owner/drivers the legitimate expectation which they had at the time they entered into service for Toll that they would be able to sell the truck together with their positions or with "introductions to work" at a time of their choosing, provided that a period of three years had passed. By so doing, it was contended that each of the contracts was rendered unfair. 124 I reject the appellants' contention that on the authority of Sydney Water, the Court is without jurisdiction to hear the claim. While the conduct of the respondent was permitted under cl 11, the question as to whether that conduct was unfair such as to make the contracts unfair is a question within the jurisdiction of the Industrial Court under s 106 of the Act. Ground 3 - The jurisdictional fact 125 Before considering whether there was any unfairness in Toll's conduct in refusing the applications by the owner/drivers, there was a further ground of appeal relied upon which, if upheld, would act as a bar to suit. The appellants submitted his Honour erred in concluding (at [91]) that the impugned contracts were: ... contracts that were directly and intimately connected to the performance of work in the Road Transport Industry. And further erred in his finding that even if the "sale of vehicle clause" was considered independently, it was, nonetheless, a clause that was (at [92]): ... intimately connected with the performance of work because, just like a notice clause, or termination clause, it determines a benefit or set of arrangements beneficially to owner/drivers to operate when their work comes to an end. And there was further error in his Honour's conclusion that s 106(2A) of the Act operated to "allow ... a remedy to operate" (at [92]). 126 In Solution 6 Holdings Ltd v Industrial Relations Commission of NSW [2004] NSWCA 200; (2004) 60 NSWLR 558 at [95] and McDonald's Australia Holdings Ltd v Industrial Relations Commission of NSW [2005] NSWCA 286; (2005) 223 ALR 78 at [66], [81]-[84] it had been held that the court's powers to declare void or vary a contract or arrangement extended only to those parts of the contracts or arrangements that were closely related to the performance of work in an industry. 127 Section 106 was subsequently amended to include s 106(2A) which provides: (2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. 128 In Caterpillar of Australia Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 83; (2009) 181 CLR 286, Spigelman CJ referred to the relevant Second Reading Speech of the mover of the Bill in the Legislative Assembly introducing the amendment that is s 106(2A) at [111]: The amendments aim to reverse the decision in Solution 6 , insofar as it held that the power to declare void or vary a contract, or arrangement, under section 106, extended only to such aspects of it as closely relate to the performance of work in an industry. The Chief Justice then concluded at [112]: This last sentence [of the second reading speech] is clearly a reference to the insertion of subs (2A) which does have that effect. Subject to that matter, the analysis in the joint judgment of the High Court in Fish, applied in Batterham and Old UGC , remains applicable. 129 The Court of Appeal concluded as to the effect of s 106(2A) (at [156]-[158]): [156] With respect to the challenge to the orders for payment of money, which are claimed in the Sixth Further Amended Summons and which have not yet been determined by the Industrial Court, the applicants rely on my observations in Solution 6 at [95] and in McDonald's at [66] and [81]-[84], generally to the effect that orders should relate closely or otherwise to the performance of work in an industry. They submit that the introduction of s 106(2A) does not overcome what is characterised as a "requirement" arising from that reasoning. [157] In relevant respects, the reasoning upon which the applicants rely has been superseded by the approach of the High Court in Fish, Batterham and Old UGC. However, it is not necessary to seek to analyse the judgments in that respect because the introduction of s 106(2A) undermines the basis of the reasoning. [158] Where the legislature, albeit only with respect to a "related condition" and "collateral arrangement", has indicated that orders can be made which do not involve performance of work in an industry, then it can no longer be said that the power to vary a contract, which does lead to such performance, must be so limited. As the respondents submitted, it would be perverse if a particular non-work related element could be set aside or varied if found in a collateral arrangement, but could not be set aside or varied if found in the contract for the performance of work itself. 130 Therefore, s 106(2A) has the effect of removing any requirement that only those parts of the contract or arrangement which closely relate to the performance of work in an industry may be the subject of orders. 131 The High Court majority in Fish made it clear that the jurisdiction of the Industrial Court was "hinged" about the performance of work in an industry at [41]: At the same time, to read s 106 as hinged about performance of work in any industry and empowering the Commission to deal only with such of the arrangements between parties as can be described as a contract whereby a person performs work in any industry confines the jurisdiction of the Commission to declare a contract void or to vary it within bounds that leave intact the jurisdiction of the Supreme Court over other kinds of contractual obligations. 132 In my opinion, the jurisdictional "hinge" as identified in Fish has been satisfied. I am of the view his Honour did not err in his finding the contracts were directly and intimately concerned with the performance of work in the trucking/transport industry when his Honour held at [92]: Mr Hatcher correctly, in my view, submitted that, in any event, the sale of vehicle clause was, even considered independently, intimately connected with the performance of work because, just like a notice clause, or termination clause, it determines a benefit or a set of arrangements beneficially to owner/drivers to operate when their work comes to an end. It follows, in my view, that there is a direct relationship made out and it is therefore unnecessary to have regard to the provisions of s 106(2A). If I am wrong about this characterisation, s 106(2A) would operate to allow, in any event, a remedy to operate. 133 I would dismiss this ground of appeal. Unfairness 134 Having found cl 11 is in the contracts and that the court has jurisdiction to hear the claim, it is necessary to consider the findings of unfairness on which hinges the application of s 106 orders. In Sydney Water it was held: [25] Section 106(2) states in the plainest of terms that a contract may become unfair, so as to attract the jurisdiction of the Commission, because of post-contract conduct of the parties. But it is the "contract" that is to be held unfair, and not the conduct, in the final analysis. Unfairness may of course stem from what the contract fails to provide, for example as regards termination procedures. [26] The Commission may examine not merely the terms of the contract (or arrangement) as originally negotiated, but also the manner in which it has ultimately "worked out and operates as between the parties to it" ( Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 133–134, per Kirby P. See generally Walker (at 145–149); Rothmans Distribution Service Ltd v Full Court of the Industrial Court of New South Wales (1994) 53 IR 157 at 160). 135 Staff J, as to the asserted unfairness, concluded (at [96] and [104]): [96] I turn to consider whether the contracts between the owner/drivers and Toll were unfair. It will be recalled that the applicant contends that the contracts were unfair because they did not contain terms which reflected, or were consistent, with the representation made by Toll to the owner/drivers that the terms of their engagement would be no less favourable than those applying at Brambles. However, such contracts did not contain a sale of vehicles clause, which they should have, if the representations were to be made good by Toll. The evidence establishes that the sale of vehicles practice was in place, known by Brambles, and formally acknowledged and agreed to between Brambles and the owner/drivers and was included in a registered industrial agreement. The sale of vehicle clause clearly conferred valuable rights on the owner/drivers, that being a capacity to effect what in substance, if not in law, resulted in an assignment of their position of contractual rights with Brambles. Brambles had a discretionary right of approval in respect of an assignment which was exercised by reference to the specific personal characteristics of the owner/driver but not by some reference to a broader policy in respect of goodwill. … [104] In my view, Toll either knew, or should have known about the pre-existence of the sale of vehicle practice. The existence in the industrial agreement of a sale of business clause and the value of the rights conferred by that clause, resulted in premiums being paid when purchasing a truck with work. The position adopted by both Brambles and Toll in respect of the sale of vehicle practice gave both parties an unconscionable advantage over the owner/drivers. Toll, in not disclosing their practice of not recognising the sale of trucks with goodwill to the owner/drivers, resulted in both Brambles and Toll ignoring the investments which the owner/drivers had made in their vehicles to the detriment of the owner/drivers. Toll unconscionably departed from the representation which it had made that the owner/drivers would enjoy the same conditions as they had with Brambles. The benefit that Toll obtained was the services of the owner/drivers through a smooth transmission of the business on a totally false basis. In these circumstances, the owner/drivers should be compensated for what they were denied, that is, the right to sell their trucks with work in circumstances which were not lost to them. In considering a somewhat similar set of circumstances, Hungerford J in a separate judgment agreeing with Fisher CJ and Peterson J in Myer Stores Limited, t/as Grace Bros v Stowart and Others (1994) 55 IR 21 observed at 38 - 39. ... It is worth repeating, I think, the words of Sheldon J as to s 88F of the repealed Industrial Arbitration Act 1940 as the statutory predecessor of s 275, in Davies v General Transport Development Pty Ltd [1968] AR NSW (371) at 374: " it is a plain matter of morals not law ." To a like effect, Beattie J said of s 88F in Agius v Arrow Frankways Pty Ltd [1965] AR (NSW) 77 at 88: "... it is plainly designed to protect citizens from unfair and harsh dealing". 136 Mr Moses does not challenge as a ground of appeal, his Honour's findings as to unfairness. However, as I noted earlier, Mr Moses, on appeal, when considering a circumstance where this appeal court could conclude cl 11 was in the contract and the court has jurisdiction to hear the claim, submitted if that were the circumstance then the question as to fairness should be remitted. 137 The appellants contended there was "prejudice" against their interests in having the findings of unfairness stand in a circumstance where the appeal court finds cl 11 is in the contract and the court after finding it has jurisdiction goes on to consider the claim as determined by Staff J. In support of the proposition that the appellants would suffer "prejudice" and, therefore, the question as to "unfairness" should be remitted for further hearing, Mr Moses again relied upon the pleadings of the respondent to submit there was no pleading that "the contract (is) unfair because it permitted us to act in a capricious manner" and the respondent in its pleading had sought no order to that effect. He further contended that the "prejudice" suffered by the appellants was in the context: · the unfairness findings were made on the basis cl 11 was not in the contract, · the respondent's submissions on unfairness were general and not particular on the point of unfairness, · variations sought in the pleadings (to ensure the opportunity to sell for goodwill was retained) would have been out of jurisdiction (the purpose of s 106 is not to make a fair contract fairer: Kofler v Boral Gas (NSW) Pty Ltd [1996] NSWIRComm 216), · a finding of unfairness cannot be used to cloak the court with jurisdiction. 138 I am of the view while Staff J's findings of fact in the primary matter are not challenged on appeal, the Full Court should consider the question of unfairness in the performance of the contract on the evidence given at first instance because the question of unfairness was fully litigated and was in fact the essence of the claim. 139 The facts relevant to this consideration were established on the evidence. The evidence of the three drivers (as his Honour determined) and which I find was established on the evidence was as follows: Mr Drakopoulos, having reached an agreement with a buyer at a first meeting, was informed by Toll management he would not be allowed to sell out for $95,000. A Toll manager informed him that Toll would consider allowing him to sell his truck for value only. At a second meeting he was told Toll would not approve his selling of his truck for value. Mr Felice, whose wife died, leaving him with three sons, also reached an agreement with a buyer and approached Toll. From the evidence, his Honour concluded, "Mr Felice's proposed sale was blocked by Toll because of its Policy that trucks could not be sold with goodwill on work." Mr Whitten also had a buyer but Mr O'Brien (from Toll) confirmed to Mr Whitten that Toll would not allow him to sell. 140 No owner driver was given the opportunity to introduce the proposed new driver. 141 The fourth driver's circumstance was slightly at variance but relevant: Mr Novack, in the course of negotiating to take an employee position with Toll, was required by Toll to execute a deed of release, which contained provisions excluding any liability on the part of Toll for goodwill. Mr Novack refused to execute the deed containing such a provision. 142 The other drivers all gave evidence of their earnings before and after joining Toll and each opined it was of no benefit to them to seek a buyer for their truck with work as they knew Toll would not approve such a sale. Consideration as to Unfairness 143 Consistent with the alternative case pleaded by the TWU and as I have found, the contract contained cl 11. Clause 11, the appellants contended, provided Toll with an "absolute" discretion as to whether it would offer work to the purchaser of the owner/driver's truck. However, because of the contractual force of the promissory representation, that "absolute" discretion was trammelled by the promise. Therefore, Toll had to consider such applications under cl 11 in the context of the assurance it gave to the owner/drivers that this term and condition of their engagement would be no less favourable than that which applied when they were at Brambles. 144 The question as to unfairness, in the conduct of the case at first instance, was addressed. In the TWU's final submission, in putting his alternative propositions, Mr Hatcher submitted before Staff J: In so far the first pillar of the argument is concerned that is how we ran our case. We repeat our primary submission that the sale of vehicle clause, could not objectively be discerned as a term of the contract. That fact arises in the evidence which demonstrated firstly, that, the respondent at all relevant times including from the very affirmation of contract had policy, which would have prevent a sale of truck and work in any circumstances. Secondly, that policy has been consistently applied in all circumstances including the very first occasion, when somebody sold their truck with work. That is an undisputed fact. The existence of that fact means that the court could not objectively find that Toll had entered into agreement whereby the same(sic) of vehicle clause was a term of that agreement. Clearly it was not. I thought I made it clear in both opening and closing but I say it again. If in the alternative we are wrong about that and the sale of vehicle clause is a term of contract we don't plead unfairness because it is breached. We pleaded unfairness because it invested a discretionary power in the respondents. Your Honour will remember the discretionary reference in clause 11 point 1 of the 1989 agreement. That was too broad and unfair in the circumstances and allowed by use of that discretion the respondents to ignore the investments which the owner drivers had made in their vehicles to their detriment. That alternative, is pleaded paragraph 34 (e) and (h) of pleadings. So, even if we are wrong about the contract it does not say anything about unfairness breach of the Clause. 145 Therefore, before the court at first instance, the TWU was seeking a finding of unfairness to obtain from the court a variation to the contracts so the opportunity held by the owner/drivers with Brambles was an opportunity retained by the owner/drivers with Toll (and not affected by a policy about which they did not know, nor were they told at the time of entering the contracts). Clause 11, the TWU submitted, needed to be executed by reference to the suitability of the purchaser, not by reference to an extraneous goodwill policy. 146 Toll, in the context of their concession, had submitted at first instance the court could conclude cl 11 was in the contracts. It then went on to submit with cl 11 in the contracts, the case was a clear breach of contract case and not within jurisdiction. At no time did Toll truly meet the TWU's case on unfairness. 147 The TWU was always pressing for a finding the contracts, by virtue of Toll's conduct, were unfair whether cl 11 was in or out of the contract and, under s 106, the court could give relief to the owner/drivers. Toll submitted before the court at first instance and on appeal, not that the objective facts (not appealed against) did not give substance to the claim for unfairness, but rather that the owner/drivers may have a "right" for an action for breach of contract, but not for a declaration of unfairness under s 106. In pressing its case in this way, Toll failed to meet the TWU's claim that the contract offended against s 106. 148 Toll submitted in reply on appeal that it would suffer "prejudice" because the court must accept that while acknowledging cl 11 was in the contracts Toll did not know what the TWU's allegations were as to unfairness. Toll submitted on appeal it did not know the allegation was it had acted arbitrarily or capriciously under the contract. I reject this proposition. The TWU's case made it clear that on either of its alternative submissions Toll's conduct gave rise to an unfair contract. In particular, pars 34(e) and 34(h) of the Amended Summons for Relief pleaded: The Contracts are unfair, harsh and unconscionable and against the public interest, in that: … (e) they invest in the First Respondent discretionary powers which the First Respondent is able to, and does, exercise arbitrarily, capriciously, unfairly, and without regard to the legitimate interests of the Carriers; … (h) they allow the First Respondent to act without regard to the value of the investments which the Carriers have made in their trucks and positions or for their the (sic) loss of their legitimate expectation of being able to sell their trucks with their positions or with "introduction to work" in the future; … 149 In opening, Mr Hatcher referred to the TWU's alternative submission to the effect that Toll used the discretion vested in it by cl 11 to block any incoming carrier in a way that constituted an unfair exercise of that discretion and in that way the contracts were, or became, unfair. 150 As to the submission that Toll would suffer prejudice if the Court, on appeal, was to consider the question of unfairness it is of relevance that prejudice was never pleaded as a ground of appeal, was never raised in the substantive hearing, and, in effect, raises a new ground of appeal where the authorities referred to in [97] above would require consideration as to whether any such argument should be considered on appeal given the rights of the TWU in this litigation. However, in the public interest, to bring this litigation to a conclusion I will consider the submission. 151 I find the fact that there has been a finding cl 11 was in the contracts does not expose Toll to any prejudice in the consideration of the claim pressed clearly by the TWU that there was an unfairness in the conduct of Toll such as to make the contract unfair. I find Toll had every opportunity to meet the alternative claim as to unfairness, which claim was clearly pleaded in the amended summons and articulated by the TWU in its submissions at first instance. 152 The findings by Staff J of unfairness followed from his Honour's finding that cl 11 was not a clause of the owner/drivers' contracts and I have found his Honour erred in that respect. However, while it might follow that his Honour also erred in relation to the basis upon which he concluded the contracts were unfair, I do not believe, on a consideration of the evidence and his Honour's findings, this question should be remitted. 153 The evidence has established the contracts permitted Toll to exercise its "absolute" discretion as to whether it would offer work to a new owner/driver. That discretion, however, as I have held is affected by the promissory representation of Toll that in its application of the terms and conditions of employment Toll promised the owner/drivers the terms of their engagement would be no less favourable than those which were applied to the owner/drivers by Brambles. This promise is applicable when there is examination made as to how Toll applied cl 11 of the Contracts which clause defines a condition of their employment. However, it was Toll who offered no attack on the evidence of the owner/drivers as to their earnings. Toll, for example, never proposed that any of the terms and conditions of the owner/drivers applicable at Toll were such as to make the contracts more favourable under Toll than they were with Brambles. 154 Toll refused to exercise its discretion in favour of the owner/drivers on the basis that it was inconsistent with its policy, a policy that was never conveyed to the owner/drivers at the time they accepted the contracts with Toll. The owner/drivers were induced to work for Toll on a false premise; that is, that their terms and conditions were promised by Toll to be no less favourable than the terms and conditions they enjoyed with Brambles including the benefits of cl 11, in circumstances where Toll, I have no difficulty in inferring, had no intention of applying cl 11 because of its policy regarding 'goodwill'. There was never going to be an exercise of discretion in favour of the owner/drivers in accordance with the discretion available under cl 11, which had generally been exercised in favour of the owner/drivers by Brambles. Toll never even bothered to interview or consider the proposed new drivers. Toll simply refused to grant any application. 155 As a matter of fact it could be held, whether cl 11 was in or out of the contracts, the contractual force of the promise was such that upon an application by an owner/driver, Toll had to give that application positive consideration given Toll knew of the Brambles practice. 156 Toll contended the claim of unfairness as pleaded and argued by the TWU was too general and not particularised sufficient for Toll to meet the claim. I reject this proposition. It was always asserted the acts of Toll clearly were unfair conduct under the contract solely in relation to the issue of the owner/driver sale of trucks with work. There could be no doubt from the pleadings, in the conduct of each case, and on the evidence, that the loss of the opportunity to sell was the issue being litigated. Further, it cannot be said that under s 106, in the circumstance before this Court, the findings of fact and the unfairness findings have in any way been used to either cloak the Court with jurisdiction or through those findings make a fair contract unfair. What the evidence, I am satisfied, proves is that Toll by its conduct, which was conduct permitted under cl 11, considered applications from some of the owner/drivers and applied its goodwill policy to refuse the applications, ignoring the contractual assurance it gave that in that consideration it would ensure an owner/driver's opportunity to sell would be given no less favourable treatment than that applied to the owner/drivers when they were with Brambles. 157 The refusal of Toll to give any consideration to exercising its discretion other than against the interests of the owner/drivers was unfair conduct under the contract and caused the contracts to be unfair and I so find. Grounds 4 - The compensation orders 158 Having found unfairness, Staff J ordered variation and awarded compensation which, in the exercise of his discretion, he determined was just and fair in the circumstances. His Honour calculated the payments of compensation for each of the owner/drivers who lost their opportunity to on-sell their trucks with work by valuing the loss through reference to the amount initially paid for goodwill; the change in the value of money since the 1990s; and the reasonable value of the earnings which the owner/drivers had enjoyed over the period of time. His Honour further took into account some of the owner/drivers would continue to receive earnings from Toll. 159 His Honour considered the evidence and submissions of both parties then determined at [112]: [112] One of the difficulties in this case in determining quantum is that the last sales occurred in the 1990s, when the premium or goodwill price ranged from $45,000 to $67,000. More recently, owner/drivers were able to find prospective purchasers of their vehicles, including goodwill, but because of Toll's policy, such sales were not completed. The evidence discloses Mr Drakopoulos was offered $75,000, Mr Felice $71,000 and Mr Whitton, approximately $90,000, although Mr Whitton had a much larger truck, being a semi-trailer. However, as I have already observed, this evidence is worthless. The determination of quantum has been impeded by the failure of the applicant to call accountancy evidence. Doing the best I can, therefore, the approach that I propose to adopt amounts, in my view, to a proper assessment of compensation. My determination is that each of the owner/drivers should receive, by way of compensation for goodwill, the amount that they initially paid for the goodwill, or where such a figure is not available, the average of what was paid by all the owner/drivers. In reaching this conclusion that the owner/drivers should be compensated by the amounts they paid for goodwill, I have been mindful that the value of money has changed since the 1990s. However, this determination seeks to take into account that the owner/drivers have received reasonable earnings over a significant period of time and some of the owner/drivers will continue to receive such earnings as long as they wish to remain with Toll. It follows that I do not find that an averaging approach as submitted by Mr Hatcher is appropriate. This would result in the following compensation to be paid to the owner/drivers: · Mr Victor De Angelo $45,000.00 · Mr Wayne Kennett $42,000.00 · Mr Bill Marcinasko $40,000.00 · Mr Dominic Lamacchia $18,000.00 · Mr Nick Kouverianos $56,500.00 (being the average of what he contended he paid for goodwill) · Mr Carlos Ferreira: $55,000.00 · Mr James Novack $25,000.00 · Mr Len Felice $67,000.00 · Mr Francis Whitten $43,562.00 (being the average of the total amount paid by all the owner/drivers in respect of goodwill). 160 As to Mr Novack's special circumstances, his Honour concluded at [115]: It seems to me that it is clear that there is a contract before the Court which, until 2002, had Mr Novack as a party. That contract I have found to be unfair on the basis that it did not contain a provision consistent with the representation made in 1996. 161 Toll contended the relief given by his Honour through his Honour's orders for compensation were not in accordance with the claims and were given without adequate reasons, both as to the value given by his Honour to the income earned and the value given to the owner/drivers' continuous service. 162 Toll submitted the methodology adopted by his Honour in his calculation of the relief ordered was unfair. I do not accept Toll's contention that the court at first instance or the appellate court had an obligation to put each party on notice as to the precise manner in which the court intends to take into account the parties' submissions as to just compensation. I find his Honour, as a matter of fact, took into account Toll's submission, namely: if there was to be any relief granted, the amounts paid by the owner/drivers originally for their trucks with work should be considered and had to then be amortised having regard to the earnings of the owner/drivers with Toll. I am satisfied, on the evidence, weighing up the various contentions submitted by each party, in the use of the court's discretion, his Honour made appropriate orders. 163 As to the second ground relied upon by Toll in their challenge to the compensation orders, namely, the assertion his Honour failed to give adequate reasons for those orders, it is clear allowance was made for the value paid for each truck amortised because of the earnings each driver had enjoyed with Toll. His Honour also took into account the changing value of money since 1996. His Honour then determined to recompense each owner/driver, not for any increased value in a truck with work, but rather on the basis of the 'value of the capacity to sell a truck with work to an acceptable person at a price that the buyer is prepared to pay…' (at [109]). I find such a step was an appropriate use of the discretion held by the court. 164 Toll particularly argued Mr Whitten and other drivers who are still working with Toll should be given no order as to compensation. While Mr Whitten had not purchased his truck with goodwill initially, I accept that while, with Brambles, Mr Whitten held the opportunity to sell his truck with work and that opportunity has been lost to him when he entered his arrangement with Toll, whose unfair conduct took away Mr Whitten's opportunity to sell. In such a circumstance, Mr Whitten was ordered to receive a payment based on "the average of the total amount paid by all the owner/drivers in respect of goodwill". This discretionary consideration is applicable to any driver named in the litigation who is in Mr Whitten's circumstance. Further, I find the orders of Staff J are a proper application of the principles and are supported on the evidence. 165 I reject the reliance placed by Toll on the authorities which considered claims made under s 349 of the Industrial Relations Act. Those matters allowed for orders of compensation which had to be calculated in the confinement of a specific statutory regime under a different provision, the Contract of Carriage provision. 166 While those orders were fashioned in the context of Staff J's findings, cl 11 was not in the contract. I have considered each circumstance and the evidence upon which Staff J made his findings and I find the orders he gave are proper in the circumstances. I find no error in the use of the discretion by Staff J in fashioning the relevant orders. Ground 5 - Interest 167 The trial judge ordered interest in his second judgment from the date of the application, placing reliance upon principles enunciated in Abboud v State of New South Wales (Department of School Education) (No 2) [2000] NSWIRComm 110; (2000) 99 IR 299 at [44]-[48] and his Honour gave interest orders where he considered "just and fair" in the circumstance of the case. Toll contended: The orders made had the effect of granting each of the owner/drivers a new right to the payment of compensation in respect of goodwill ... This was not a right which had previously existed. 168 Toll proffered this proposition as the basis for a submission that the interest order should be from the date of judgment rather than the date of the application. Alternatively, Toll contended there should be no interest order applicable to the claim by those five owner/drivers who had not sought to sell and were still in the employ of Toll. 169 The date of filing of the application brought by the Transport Workers' Union on behalf of the owner/drivers was delayed by attempts made to conciliate the dispute through s 130 of the Act. While five of the owner/drivers have not sought to sell their trucks with work, this decision has been made in the context that Toll has, since its refusal of the first application in 1999, implemented Toll's Policy against goodwill and intended to refuse all such applications. In the circumstance, I do not accept his Honour erred in ordering the payment of interest on the sums of just compensation from the date of the application and I find the interest order an appropriate order. 170 The TWU filed a Notice of Contention which directs the court to evidence in support of the orders made by Staff J. Given my decision, I have no reason to give further consideration to the Notice. 171 In the circumstance, I accept the appeal raises questions as to the jurisdiction of the Industrial Court and the construction and formation of contracts upon the sale and acquisition of a business. The claim raises, therefore, matters of importance and in the public interest and, consequently, I grant leave to appeal. The purpose of the original predecessor legislative provision to s 106, s 88F of the Industrial Arbitration Act, which was inserted into that Act in 1959 by way of an amendment, was to deal with contracts/arrangements where there was, on the evidence, fraud on the unwary or simply exploitation by one party of the other. The first cases dealt with the "sale" of transport businesses, sometimes including a truck. This case is one such matter. As was recognised in Sydney Water, where a party permissibly under a contract conducts itself unfairly and the other party has no contractual remedy to prevent that conduct, in such a circumstance the appropriate remedy is in the Industrial Court, if the Court under s 106 finds that the contract is unfair. This was such a circumstance. 172 I find there is warrant for a grant of leave to appeal. Orders 173 I would make the following orders: 1. Leave to appeal is granted. 2. The appeal as to Grounds 1, 2 are upheld. The orders of the court are those of Staff J as to compensation and interest. 174 The parties are to be heard as to costs. ORDERS OF THE FULL BENCH 175 The Full Bench makes the following orders: 1. Leave to appeal is granted. 2. The appeal is upheld and the decision and orders of Staff J are quashed. 3. The question of whether the relevant contracts are unfair is remitted for hearing before a judge allocated by the President to be dealt with in accordance with this decision and upon a direction made pursuant to s 191 of the Industrial Relations Act , that the record of the proceedings before Staff J in Matter No IRC 2522 of 2005 shall form the record of the proceedings subject to, upon leave, additional evidence being admitted and/or adduced in the proceedings. Provided that it shall be a matter for the judge to whom the question is remitted to determine what part of the record before Staff J relating to compensation and interest is relevant, if at all, to a reconsideration of compensation and interest issues and whether leave should be granted in this respect to admit further evidence. 4. As to the costs of the appeal, the appellants are to file and serve written submissions within 14 days and the respondent has 14 days to file and serve its response, with a further seven days for the appellants to reply if it is considered necessary. The question of costs will be determined on the papers unless a party requires to be heard orally. ______________________________________ 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.