Industrial Relations Commission of New South Wales CITATION: Transport Industry - Car Carriers Contract Determination [2009] NSWIRComm 1044 APPLICANT Australian Industry Group PARTIES: RESPONDENT Transport Workers' Union of New South Wales FILE NUMBER(S): IRC 202 of 2009 CORAM: Connor C CATCHWORDS: contract determination - transport industry - car carriers - application for the reduction in rates of remuneration - formula used for the calculation of adjustments to rates of remuneration - reduction in fuel costs - application granted LEGISLATION CITED: Industrial Relations Act 1996 Australian Social Welfare Union v. Westhaven Association - unreported Bryce v. Apperley (1998) 82 IR 448 Contract Haulage Contract Determination Case - unreported CASES CITED: General Steel Industries Inc v. Commissioner for Railways (1964) 112 CLR 125 George A Bond and Company Limited v. McKenzie (1929) AR 498 Red Funnel Trawlers Limited v. Bruce (1936) AR 61 Transport Industry - Car Carriers Contract Determination Case - unreported Transport Industry - General Carriers Contract Determination Case - unreported HEARING DATES: 05/08/2009 DATE OF JUDGMENT: 13 August 2009 APPLICANT Brent Ferguson Australian Industry Group LEGAL REPRESENTATIVES: RESPONDENT Oshie Fagir Transport Workers' Union of New South Wales DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Thursday, 13 August, 2009 Matter No IRC 202 of 2009 Transport Industry - Car Carriers Contract Determination Application by the Australian Industry Group for variation re reduction in rates of remunerations DECISION [2009] NSWIRComm 1044 1 Pursuant to the provisions of Part 2, Contract Determinations, of Chapter 6, Public Vehicles and Carriers [Ss.311 to 331], of the 1996 Industrial Relations Act, the Australian Industry Group has lodged an application for a variation to Schedule 2 of the Transport Industry - Car Carriers Contract Determination. Schedule 2 provides a formula under which adjustments to the rates and allowances applying to contract car carriers in this State are made. Those adjustments are made on an annual or, relevantly for current purposes, an interim basis, with certain specified indicia used as a benchmark, ie the cost of insurance, the cost of tyres, repair and maintenance costs and the cost of fuel. 2 In that respect, Clause 5 of Schedule 2 provides for those interim adjustments, viz: "If the benchmark for the cost components of insurances, tyres, repairs and maintenance and fuel increases between adjustments to the extent that it causes an increase to the total rates greater than 2%, then an interim adjustment may be applied for." The AIG's application seeks an interim adjustment to the rates of remuneration in the contract determination in accordance with that formula. However, on this occasion there is a negative outcome in that the rates of remuneration are reduced by 1.97% according to the formula contained in the contract determination, due essentially to a substantial reduction in fuel costs. 3 The matter was allocated to me and I set it down for a mention on Thursday, 5 March, 2009 and for the conferences required by S.315 on Thursday, 2 April, 2009, Wednesday, 15 April, 2009 and Thursday, 23 April, 2009. Conciliation failed to settle the matter, however, and I programmed it for arbitration, setting it down for a further mention for that purpose on Tuesday, 9 June, 2009 and ultimately a hearing on Wednesday, 5 August, 2009. Mr Ferguson represented the AIG in that hearing. He called three witnesses: Mr David Sturrock, the managing director of Advanced Car Carriers Pty Limited, Mr Steve Wise, the manager of Toll Auto Logistics Pty Limited and Mr David Clarke, manager of Ceva Logistics Pty Limited. Mr Fagir represented the Transport Workers' Union of New South Wales in the hearing, calling as witnesses Mr Greg Selig, a TWU organiser, and Mr Phillip Boncardo, a TWU legal officer. 4 The rates and other relevant amounts related to them in the car carriers contract determination were last adjusted by consent of the parties, effective on and from the first pay period to commence or after Monday, 13 April, 2009. Calculations at that time were based on the relevant cost components as at September, 2008. There is inevitably a delay between the actual movement in relevant costs and the subsequent adjustment to the rates of remuneration in the car carriers contract determination, which relies on application. As Mr Fagir indicated in his submissions, that delay is ordinarily suffered by the contract car carriers, since the customary outcome is that costs are increased. However, on this occasion, the reduction in fuel costs, which is far from a common event, has meant that the car carrier principals have suffered from any delay in concluding this matter. 5 The relevant cost components in the benchmarks contained in Clause 5 have moved since the last time the rates of remuneration were adjusted according to the formula: insurance costs have increased [1.65%]; cost of tyres has also risen [1.95%]; repair and maintenance costs have increased as well [0.88%]; but fuel costs have fallen substantially [18.15%]. The effect has been an overall negative movement of 3.2% to total rates, ie in excess of the 2% referred to in Clause 5. That is the justification for the interim adjustment sought in the AIG application. 6 At the present time, it is commonly acknowledged throughout the community that there has been a substantial reduction in the sale of automobiles. Statistical information provided by Mr Ferguson shows a current 14.8% decrease in car sales in New South Wales. That reduction in car sales inevitably flows down to the work available for car carriers. It is in that light that the car carrier principals have sought a reduction in costs and the AIG application has to be considered in that light. But it is a modest adjustment sought by the AIG in its application. Applying the established formula in the car carriers contract determination, Mr Ferguson has proposed a downward movement of the remuneration provided to contract car carriers by 1.95% to apply retrospectively from the beginning of the first pay period to commence on or after Sunday, 24 May, 2009. The AIG application was lodged on Wednesday, 18 February, 2009. 7 Mr Fagir has opposed the application and, indeed, argued initially that the AIG application should be dismissed as frivolous, pointing out that S.162(2)(h) authorises the Commission to: "....dismiss at any stage any proceedings before it if it considers the proceedings are frivolous or vexatious..." I see no justification to dismiss the AIG application. To dismiss a matter it would have to be, using the language adopted by Barwick CJ of the High Court in General Steel Industries Inc v. Commissioner for Railways (1964) 112 CLR 125 at p.129: "...so obviously untenable that it cannot possibly succeed; manifestly groundless; so manifestly faulty that it does not admit of argument; discloses a case which the Court is satisfied cannot succeed; under no possibility can there be a good cause of action; to manifest that to allow them (the pleadings) to stand would involve useless expense..." That certainly is not the case with the AIG application before me in this hearing. 8 There appears to be no argument that the AIG and the TWU are content to retain the existing formula - and there has been nothing put forward before me in this hearing by either Mr Ferguson or Mr Fagir to suggest any fundamental change to it. Such formulas are a common devise for a range of contract determinations for different groups of contract drivers and, in the absence of any evidence to the contrary, should continue to apply. As I indicated in my unreported decision of Wednesday, 4 October, 1995 in the Contract Haulage Contract Determination Case [Matter No.IRC 919 of 1995 at p.3]: "....The existing formula used to adjust the rates in the contract determination does have the force of tradition behind it, even though those adjustments have in the past been made on all occasions by consent of the parties. I would not wish to advance the formula to the level of Holy Writ. Nor do I believe that it should have the status of a presumption which would reverse the onus of proof which rests on the TWU in this hearing. But, in the absence of concrete evidence to challenge the formula, I believe I should apply it..." 9 And in his unreported decision of Wednesday, 25 February, 1998 in the Transport Industry - General Carriers Contract Determination Case [Matter No.IRC 3713 of 1997], Peterson J commented (at p.3): "....The existence of the formula...and its application (and practical application) to the rates by the Commission since the determination was first made does not, in my opinion (and the parties appear to accept this), mean that the formula is set in stone or is immutable. The requirement that there be an application for variation of the determination from time to time means that on each occasion an application is made there will be a discretion, to be exercised judicially, in relation to the application.." 10 The emphasis of the submissions in this hearing by both Mr Ferguson and Mr Fagir centres on Clause 5. Mr Fagir relies essentially on the actual words of Clause 5 which, according to him, only authorises an interim adjustment where there is an increase in fuel costs, not a decrease. According to the established formula where "...the benchmark for the cost components of insurance, tyres, repairs and maintenance and fuel increases..." have moved by 2% since the last review, an interim adjustment to those rates of remuneration may be contemplated. Clause 5 does not speak of a decrease in any of those benchmarks. 11 Mr Ferguson has described Clause 5 as a "rise and fall" provision and that is the view of Mr Sturrock, Mr Wise and Mr Clarke. It is not the view of Mr Selig who in his evidence traced the history of Clause 5, pointing out that it emerged in the car carriers contract determination following negotiations between the parties which culminated in a consent position confirmed in the unreported decision of Macdonald C on Friday, 23 May, 2008 in the Transport Industry - Car Carriers Contract Determination Case [Matter Nos.IRC 1418 of 2007 and 562 of 2008]. In particular, in his written statement, Mr Selig drew my attention to the comments of Macdonald C in his decision (at p.3), viz: "....This amendment will provide for interim adjustments, on condition that a certain criterion is met. The amendment goes to the 'trigger' by which the union can make an application to recover costs borne by contract carriers..." My emphasis. 12 Mr Selig adds in his written statement that it was clearly indicated from the negotiations culminating in Macdonald C's decision that the TWU may apply for an interim increase to the rates of remuneration in the car carriers contract determination. An application on behalf of the car carrier principals for a reduction in those rates of remuneration was not contemplated. Mr Selig writes: "...I note that at no point during the discussions surrounding the new determination was the inclusion of a clause providing for interim decreases ever discussed. This point was not even canvassed. The parties, throughout the process, only ever contemplated and discussed, and ultimately agreed to a clause allowing for interim adjustments based on increases in the four component costs to be reflected in the determination..." 13 Mr Ferguson pointed out in his submissions that I should read Clause 5 in the context that it was made by industrial parties in the settlement of protracted negotiations for the car carrying industry and they should be considered in that context. It has been my experience that industrial documents, including State awards and contract determinations, often present something of a problem when questions of interpretation arise. Whilst they lay down the law affecting employers and employees, they are often made in the light of negotiations and are frequently framed in words intelligible only to the parties and without a great deal of care in drafting [George A Bond and Company Limited v. McKenzie (1929) AR 498 at pp.503 and 504]. 14 But strictly speaking, Clause 5 appears to me only to be open to the interpretation actually given to it by Mr Fagir in this hearing. When interpreting any provision in a State award or contract determination, it is still the literal meaning of the words used on which I am obliged to rely. For instance, in Bryce v. Apperley (1998) 82 IR 448 the Full Bench of the Commission (Hungerford, Marks and Schmidt JJ) explained the position (at p.452) in the following manner: "...In our view, in construing the true meaning of an industrial award, like any other instrument with legal force, the task requires an approach according to the actual words used and their plain, ordinary English meaning..." 15 The intention of the parties - the car carrier principals and the TWU - in the negotiations which led to Clause 5 being inserted in the car carriers contract determination do not match. In my unreported decision of Tuesday, 24 August, 1993 in Australian Social Welfare Union v. Westhaven Association [Matter No.973 of 1993] I explained the situation I was faced with in interpreting an enterprise agreement (at pp.5 and 6), viz: "…The intention of (the parties) when they entered into the enterprise agreement is not ad idem . Both sides simply cancel one another out… I am obliged to turn to the ordinary rules of construction for industrial awards and agreements, ie they are like any other legal instrument and the meaning of provisions in them must primarily be obtained from an examination of the actual words used in their setting: the language of the enterprise agreement itself must be interpreted [ Red Funnel Trawlers Limited v. Bruce (1936) AR 61 at p.64]…" Clause 5 is in clear enough terms to suggest to me that Mr Fagir's interpretation of it is correct. 16 Nevertheless, I believe that to prevent car carrier principals the same rights that were available to the car carrier contract drivers by virtue of Clause 5 is fundamentally inequitable and, in my view, contrary to the spirit of the provision. As I indicated in the course of the hearing, my task with the AIG application is not necessarily restricted to a simple question of interpretation of Clause 5. My task is to consider whether or not the rates of remuneration in the car carriers contract determination should be reduced by the modest amount sought - 1.97%. And as Peterson J indicated (at p.3) in the Transport Industry - General Carriers Contract Determination Case, that remains a matter for my discretion. In exercising that discretion, S.163(2)(c), obliges me to act: "....according to equity, good conscience and the substantial merits of the case..." It is not a question of the car carrier principals forcing any loss of business down on their contract drivers. Those contract drivers have had the benefit of the higher remuneration calculated at a time when the fuel costs they incurred were substantially greater. 17 It is, of course, unusual for there to actually be a reduction in remuneration for contract drivers. But if the rates of remuneration are kept at an inflated level, as Mr Ferguson has submitted, it may ultimately effect their livelihood as car dealers may make alternate arrangements for the transportation of their vehicles. And whilst contract drivers receive the benefit of Chapter 6, they are nevertheless carrying on a business and, in my opinion, are therefore subjected to fluctuations in remuneration of the type contemplated in the AIG application (where employees may not necessarily be). 18 For those reasons, I propose to vary the car carriers contract determination in terms of the AIG application. I reject Mr Ferguson's submission that the reduction in remuneration should apply retrospectively from the beginning of the first pay period to commence on or after Sunday, 24 May, 2009. It is customary for variations to rates of remuneration in contract determinations to apply from the date of the decision and the administrative difficulties to both the contract drivers and their principals for any retrospectivity on the new rates of remuneration would, in my opinion, preclude retrospectivity. The variation to the car carriers contract determination shall apply from the beginning of the first pay period to commence on or after Thursday, 13 August, 2009. P J CONNOR Commissioner 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.