Industrial Relations Commission New South Wales Medium Neutral Citation: Transport Workers' Union of New South Wales v Toll Transport (No 2) [2012] NSWIRComm 25 Hearing dates: 28 November 2011; 30 November 2011; 1 December 2011 (Written submissions 9 December 2011; 22 December 2011) Decision date: 30 March 2012 Jurisdiction: Industrial Court of NSW Before: Haylen J Decision: (a) contracts held to be unfair, harsh and unconscionable; (b) owner/drivers to be restored to the position held prior to paying premiums/ goodwill for the work with a truck; (c) applicant to draft orders reflecting the decision of the Court Catchwords: INDUSTRIAL RELATIONS ACT 1996 - s 106 application - unfair contracts - owner/drivers operate under settled system of sale of truck with work at a premium described usually as "goodwill" - sale of transport business - representations made to owner/drivers that new engagement conditions with successor company would be no less favourable than those applying under previous ownerships - owner/drivers take up engagement with new owners - new owner opposed to sale of truck with work at a premium - unwritten policy against such sales not disclosed to owner/drivers when representations made regarding continuation of previous conditions - successor company aware of written agreement with owner/drivers permitting sale of truck with work at premium - due diligence process exposes risk of sale practice - warranties and indemnity secured from vendor - successor refuses to approve any sales after purchase - at first instance contracts found to be unfair - Full Bench upholds appeal and remits case on question of terms of contract any unfairness and consequential orders - terms of Full Bench remitter considered - contracts found to be unfair, harsh and unconscionable - owner/drivers to be restored to their position prior to paying premiums - parties to discuss appropriate orders to reflect findings made by the Court. Legislation Cited: Industrial Arbitration Act 1940 Industrial Relations Act 1991 Industrial Relations Act 1996 Cases Cited: A & M Thompson Pty Ltd v Total Australia Ltd [1980] 2 NSWLR 1 Bradib Pty Ltd v Jilly Bean Pty Ltd and anor (No 1) (1987) 21 IR 90 Brown v Rezitis (1971) 127 CLR 157 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337 Darren John Palmer v TNT Australia Pty Ltd (t/as TNT Express) (1995) NSWIRComm 243 Davies v General Transport Development Pty Ltd [1968] AR (NSW) 371 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 In Re Ostoja and anor v Reeve and anor (1973) AR 414 Incitec v Industrial Court of NSW (1992) 29 NSWLR 83 J.J. Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 Monier Roofing Pty Ltd v Quintrell and anor (1997) 78 IR 38 Myer Stores Ltd t/as Grace Bros v Stowart and ors (1994) 55 IR 21 Newton v Goodman Fielder Mills (1997) 81 IR 227 R v Cameron Francis Macraild (unreported, 18 December 1997, CCA (NSW) 60324 of 1997; BC9707215) Re Guion v Hutchinson [1973] AR 454 Sydney Water Corp Ltd v The Industrial Relations Commission of NSW (2004) 61 NSWLR 661 Thomas Nationwide Transport Ltd (t/as "Altrans Bulk") v Thomas and anor (1990) 34 IR 378 TNT Management Pty Ltd v White (1984) AR (NSW) 235; 7 IR 331 Toll Transport Pty Ltd v Transport Workers' Union of New South Wales [2010] NSWIRComm 58 Transport Workers' Union of New South Wales (o/b Cruickshank Transport Pty Ltd ) v Stegbar Pty Ltd [2007] NSWIRComm 244 Transport Workers' Union of New South Wales (o/b Steve Cincotta t/as "S & M Cincotta Pty Ltd and ors) v Visy Board Pty Ltd [2005] NSWIRComm 178 Transport Workers' Union of New South Wales v Toll Transport Pty Ltd & anor [2009] NSWIRComm 42 Westfield Holdings v Adams (2002) 114 IR 241 Texts Cited: J W Carter and D J Harland, Contract Law in Australia, 4th ed (2000) Butterworths J W Carter, Carter's Guide to Australian Contract Law (2006) Butterworths Category: Principal judgment Parties: Transport Workers' Union of New South Wales (Applicant) Toll Transport Pty Ltd (Respondent) Representation: A Hatcher SC with M Gibian and D Nagle of counsel (Applicants) A Moses SC with Y Shariff of counsel (Respondent) Maurice Blackburn (Applicants) Clayton Utz (Respondent) File Number(s): IRC 2522 of 2005 Judgment BACKGROUND 1This 2005 application, brought under s 106 of the Industrial Relations Act 1996 ("the Act"), has followed a somewhat troubled course: the Court as presently constituted has been directed by the Full Court, on appeal, to further consider the application by way of remitter. The Full Court's direction was made in May 2010 but circumstances have intervened such that, in late 2011, the Court finally commenced to hear argument on the remitter. 2The application, pursued by the Transport Workers' Union' of New South Wales ("TWU") on behalf of a number of owner/drivers, revolves around the much litigated question of the alleged unfairness of a trucking company refusing to allow its drivers the opportunity of selling their truck with work at a premium price above the base value of the truck. 3The application was originally heard by Staff J. In Transport Workers' Union of New South Wales v Toll Transport Pty Ltd & anor [2009] NSWIRComm 42 his Honour described the nature of the case in the following terms: 1 The loss of opportunity of truck drivers engaged by Toll Transport Pty Ltd and Toll Holdings Pty Limited ("Toll") to sell their trucks with work and receive compensation for the opportunity or right to earn income at the Toll workplace has given rise to this action which is brought by the Transport Workers Union of New South Wales ("the applicant") pursuant to s 106 of the Industrial Relations Act 1996. 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." ... 7 The applicant, in an amended summons, contended that the contracts were unfair 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 positions 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 or 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 their (sic) the loss of their legitimate expectation 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. 8 An order was sought that each of the contracts be varied from their commencement to include the following terms: (i) The carrier shall be entitled, at any time after 3 years has elapsed since the commencement of the carrier's engagement, to sell the carrier's truck together with the carrier's rights and benefits under the Contract and the carrier's position in the First Respondent's transport fleet to a purchaser selected by the carrier and at a price agreed between the carrier and the purchaser; (ii) The First Respondent has no right to object to the acquisition by a purchaser of a carrier's truck and the carrier's rights and benefits under the Contract and the carrier's position in its transport fleet except where the purchaser is clearly and demonstrably incapable of performing the cartage work under the Contract, or except where the purchaser has previously worked as a carrier in the same yard within the last 3 years; (iii) The carrier's engagement with the First Respondent shall not be terminated unless the carrier is paid the greater of the following amounts: (a) the market value of the carrier's rights and benefits under the Contract and the carrier's position in the First Respondent's transport fleet at the time immediately before the decision to terminate was taken, or (b) $75,000. (4) Any terms of the Contracts inconsistent with the terms set out in (3) above shall be deleted or varied as appropriate. (5) An order that the Respondents be jointly and severally liable to pay each of the Carriers the amount of $75,000. (6) Further, or in the alternative, an order that the Respondents be jointly and severally liable to pay each of the Carriers such amount of money in connection with the contracts so avoided or varied as may appear to be just in the circumstances. 4A critical issue for Staff J was the effect of a 1989 agreement made under the Industrial Arbitration Act 1940 that permitted the drivers to sell their truck with work and the consequences of that clause. That agreement, (originating at the time of ownership by Brambles Transport Services ("Brambles"), continued when the work was taken over by Toll Transport Pty Ltd and Toll Holdings Pty Ltd ("Toll"). By the time Toll had engaged the drivers, having purchased the business from Brambles, the industrial agreement no longer had statutory force but its terms were said to form at least part of the contract governing the engagement of the drivers. The status of cl 11(and in particular cl 11.1) of the agreement was a major issue before Staff J. Ultimately, his Honour found that, although the terms of the industrial agreement became part of the contracts of employment for the drivers in their engagement with Toll, because of Toll's longstanding opposition to permitting the sale by its drivers of a truck in work at a premium price, the contract could not, therefore, contain the terms of cl 11.1. His Honour went on to find that there was unfairness in the contracts and that the drivers should receive compensation for losing the capacity to sell the truck in work at a premium price. 5While a number of issues were raised on appeal, (including questions of jurisdiction arising from the judgment in Sydney Water Corp Ltd v The Industrial Relations Commission of NSW (2004) 61 NSWLR 661("Sydney Water"), the use made of alleged hearsay evidence and the terms in which orders for compensation were made), the determinative issue for the Full Court was whether or not cl 11of the 1989 agreement became part of the contract of employment of the drivers when they were taken up by Toll on the purchase of the Brambles business. 6Having concluded that Staff J was in error in finding that cl 11of the agreement was not part of the drivers' contract of employment with Toll, that finding had consequences for the compensation order made: as the Full Court observed, the concentration of the parties in their submissions on cl 11 not being part of the contract of employment led to an inadequate development of the alternative case based upon that clause being part of the contract of employment. Consideration of the terms of cl 11 required a fresh analysis of the contract and whether or not there was unfairness: in such an analysis, any orders for compensation would depend upon the orders made as to unfairness. While all members of the Full Court agreed that cl 11 was part of the drivers' contract of employment, Boland J, President and Walton J, Vice-President decided that the matter should be remitted to another Judge and the matter was ultimately re-allocated to the Court as presently constituted. THE SCOPE OF THE REMITTER 7In Toll Transport Pty Ltd v Transport Workers' Union of New South Wales [2010] NSWIRComm 58 at [175] the orders of the Full Court were in the following terms: 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. 8While there was some common ground, there were divergent views as to the scope of the remitter. Senior counsel for Toll submitted that, as the "decision and orders" of Staff J had been quashed, the facts found by Staff J were not binding on the Court in the remitter hearing and the Court was free to make its own, and possibly different findings, of fact on the evidence before Staff J. In addition, it was submitted that the question of jurisdiction raised in Sydney Water was still a live question on remitter, a submission that appeared to proceed on the basis that the development of the alternate case may re-open that issue. It was further argued that it was open for the Court to find that the evidence of the drivers as to the present value of their truck and the work they carried out, although admitted by Staff J yet ultimately rejected by him as "worthless", on remitter should be rejected as hearsay. 9For the applicant, the position as to the scope of the remitter, was as follows: (a)only the issues of unfairness, compensation and interest fall to be determined; (b)those issues should be determined by reference to the record of proceedings before Staff J (ie the affidavits, documentary exhibits and transcript of evidence) and any further evidence admitted by leave should be exercised sparingly; (c)witnesses who have already given evidence contained in the record of the proceedings may not be called again to give evidence on the merits; (d)proper regard is to be had to Staff J's advantage in having seen the witnesses give evidence (although in this case, this factor is likely to be of less significance given that there is virtually no dispute as to the facts). 10The parties were in agreement that, on remitter, the Court was bound by the decision of the Full Court that cl 11 was part of the contract of employment and they were also in agreement that the Court was to consider whether the relevant contracts were unfair and if so, what part of the record before Staff J relating to compensation and interest was relevant, if at all, to a re-consideration of compensation and interest. The Court granted leave to the applicant to file further evidence which effectively updated the position of some of the drivers. The applicant also called evidence of a recent search of internet advertisements for trucks for sale with work. Those advertisements were said to be relevant to the issue of whether or not there was a market for trucks in work in the transport industry generally. Leave was given to the respondent to file expert evidence as to an assessment of what loss might be borne by the drivers should the contracts be found to be unfair because they were not able to sell their trucks with work. Supplementary affidavits were filed, largely to support the factual assumptions made by the expert on which the expert report was based. 11Having considered the submissions of the parties, the Court is of the view that the remitter order made by the Full Court places a number of limitations upon this new hearing. Although the remitter order refers to "the decision and orders of Staff J" being quashed, it is not immediately clear what is the scope of the word "decision". The orders made by his Honour may be summarised as follows: an order voiding, ab initio, contracts entered between the owner/drivers and the respondents; a declaration that the contracts or arrangements between the drivers and the respondents was unfair and the identification of those owner/drivers; and, an order that the respondents were to pay the nominated drivers varying amounts specified in the order. It might be noted that, in further orders, the varying of the contracts ab initio was itself varied in recognition of the fact that some of the drivers remained engaged by Toll. 12Those orders, voiding or varying the contracts, after declaring them unfair and ordering compensation, were set aside. It is clear that his Honour's decision (not otherwise encapsulated in an order)that cl 11of the agreement was not part of the contract between the drivers and Toll, was also set aside. The Full Court decision leading to the remitter order, in overturning that decision, set aside the most significant and far reaching decision made by Staff J. It is not clear from the remitter order itself or from any other observations made in the three separate judgments of the members of the Full Court as to what other decisions were to be caught by [2] of the remitter order. It does appear clear, however, that the Full Court has not set aside the admission of evidence, particularly that evidence to which objection was taken by the respondent. On remitter, the record of proceedings before Staff J is to form the record of the proceedings subject to additional evidence being admitted or adduced by leave. Therefore, all the evidence before his Honour is before the Court on remitter, unless found not to be relevant to the issues of compensation and interest. 13Importantly, the proviso in Order [3] directs that the Judge to whom the matter is remitted is to determine what part of the record before Staff J relating to compensation and interest "is relevant, if at all, to a re-consideration of compensation and interest issues" and whether leave should be granted in this respect to admit further evidence. A direction in those terms does not set aside any other finding of fact made by Staff J or any rulings on the admissibility of evidence; all those matters are, therefore, part of the record on remitter. 14The Court, in dealing with the remitted case is to consider afresh the fairness of the contracts and then (if necessary), determine what part of the record is "relevant" to a re-consideration of the compensation and interest issues. By confining the remitted case to considering questions of relevance on those matters, the Full Court was clearly accepting the evidence before Staff J and was not re-opening questions of admissibility. This approach is understandable against the background of the Full Court deciding there should be a remitter with restrictions rather than directing that there be a full re-hearing on remitter. If questions of admissibility of evidence were to be open for re-consideration there would be little purpose in the Full Court directing a limited form of remitter. Indeed, in agreeing with the orders of Boland J and Walton J referred to those orders as "confined so as to permit the respondent (TWU) to pursue "the alternative application." 15One issue of admissibility and perhaps the major issue raised by the respondent on remitter, concerned the evidence of the drivers themselves as to the value of their truck and the value of their work at the time they gave evidence. This was the evidence that Staff J was asked to consider by the applicant in making a compensation order. Although Staff J allowed this evidence against objection by the respondents, nevertheless, in his first judgment at [109], his Honour accepted that the evidence given in respect of the value of goodwill at today's value was "worthless". The evidence of the owner/drivers as to what they paid for their trucks with work at the time of purchase, however, was of "probative value." His honour expressed the view elsewhere that evidence of present day value of 'goodwill' should have come forward in a formal way, for instance by way of evidence from an accountant or, it might be presumed, from some other suitably qualified person. 16Another area of evidence attacked by the respondents was the evidence of offers made to particular drivers (although by no means all of the drivers) after Toll took over the business of Brambles. It was argued for the respondents that this evidence of what was offered by prospective purchasers was classic hearsay and should not have been received. The evidence appears to be that at least some of these offers were disclosed to the respondents whilst seeking approval for the sale of the truck with work at Toll but Toll did not grant permission for that to occur. 17Quite apart from the limitation placed on the remitter, as discussed above, it seems this particular evidence, in any event, might be admissible. In R v Cameron Francis Macraild (unreported, 18 December 1997, CCA (NSW) 60324 of 1997; BC9707215), the Court of Criminal Appeal held that evidence of oral discussions and representations adduced to prove the terms of an alleged agreement was not caught by the hearsay rule. That case involved a criminal offence of supplying cannabis and in dealing with the admissibility of such evidence, the court stated: It was the Crown case that, far from the appellant being a mere 'minder' of the cannabis for Dobson, as he claimed, he, Hunt and Dobson were engaged in a common purpose to supply the cannabis. It was an essential part of the Crown case to establish that there was a sale of the cannabis arranged, with the delivery thereof to take place in Griffith; otherwise the finding of the cannabis at 'Carinya' in the possession of the appellant was deprived of its relevant surrounding circumstances and proper context. The telephone conversations were tendered, not as evidence of any previous representations to prove the existence of facts the persons intended to assert by such representations, but as evidence of the making of the agreement for sale, and to that extent they were not hearsay within s59(1) Evidence Act 1995. The conversations did however contain some representations of asserted facts (eg that "they" had about 10-11 pounds available for sale), but evidence of such representations, being admissible because they formed part of conversations which were relevant to prove the making of the agreement for sale, were therefore not excluded by the hearsay rule (s 60), and so became evidence for all purposes unless its use was limited under s136. 18Despite the terms of the remitter by the Full Court, Toll argued that the variety of objections taken to the evidence of the drivers should be ruled upon in the remitter proceedings. A schedule was provided with the written submissions for Toll indicating the paragraphs or parts of paragraphs in each affidavit to which objection was taken and broadly describing the objection (eg "hearsay", "conclusion" etc). There were approximately 170 such objections but the Court was not directly addressed on the subject of each objection or, if it was appropriate to do so, by reference to classes of objection. 19It is not clear whether the Court was expected to return to the transcript and read the submissions in relation to these various objections and to make a ruling itself but that course is not only inconvenient but it also imposes a considerable burden upon the Court, especially in the context where these objections would now have to be considered against the finding that cl 11 of the agreement was part of the contract of every driver after their engagement by Toll. For reasons already outlined, that task did not come within the remitter directed by the Full Court. 20In relation to the submission for Toll that Sydney Water remained an issue on remitter, it is to be observed that Boland J agreed with Kavanagh J that the case was not one "falling foul" of the Court of Appeal decision in Sydney Water. Walton J agreed, stating that the alternative case brought by the TWU was not beyond jurisdiction having regard to the Sydney Water judgment. 21Having considered the terms of the Full Court decision, the Court accepts the submissions for the applicant that the evidence and exhibits before Staff J are to be treated as the record of the proceedings together with the new evidence that has been admitted at the remitter hearing by leave of the Court. As earlier noted, the Full Court accepted the facts found by Staff J and it is upon those facts and the new evidence that the Court shall proceed. In view of the complexity of the arguments concerning compensation, it is appropriate to treat all the evidence before Staff J as relevant to the issues of compensation and interest. It will ultimately be a question of assessment of the weight of that evidence once the Court determines what course to take, firstly on unfairness and then as to compensation. The parties were also able to produce an agreed statement of facts: that document will appear as an annexure to this judgment. The Court will also proceed on the basis of those agreed facts. THE HISTORY OF BRAMBLES AND TOLL REGARDING THE SELLING OF TRUCKS WITH WORK 22In three separate judgments all members of the Full Court on appeal accepted that, while Brambles was running the business, that company would agree to the sale of a truck with work and a new driver would take over the previous driver's work. This approval was given as a matter of course subject sometimes only to a consideration of suitability. Walton J accepted the facts as found by Kavanagh J: her Honour found that while Brambles operated the business the practice arose of selling trucks with work with the company allowing the owner/drivers to sell their vehicles to persons who would then take the previous driver's position in the Brambles' yard. Her Honour found that practice was formalised by agreement reached between the TWU and Brambles in 1989, an agreement registered under the Industrial Arbitration Act. After the introduction of the Industrial Relations Act 1991, the agreement had no statutory basis but was considered to operate as a common law agreement. 23In his judgment Staff J traced the arrangements between the owner drivers and Brambles from approximately 1981/1982 and how those arrangements applied from site-to-site as Brambles moved its business. It was approximately at this time that Brambles sold a number of its trucks to its employees so that they could become owner/drivers. His Honour noted that Mr Whitton purchased a truck from Brambles and was promised an hourly rate and three years' work: no goodwill/premium was paid. There were relocations to Moore Park and then Revesby in 1987. At [35] his Honour noted that the practice of selling trucks with work began when the first of the original owners/drivers sold his truck. Importantly, his Honour stated: Brambles permitted this practice, and on occasion facilitated it, such as when a Mr Marsden was to be terminated for fighting, but after representations from the owner/drivers' delegates, was permitted to "sell his truck and position." 24The first time Mr Len Felice bought a truck and work (1986) the purchase price was apportioned between the estimated value of the truck and estimated value of the work. The driver from whom that truck and work was purchased informed the Brambles manager that Mr Felice was taking over his position and that arrangement "was approved automatically" by the manager. In 1987, Dominic Lamacchia purchased a truck with work, again, with the purchase price apportioned between the valuation of the vehicle and a valuation of the "goodwill". Mr Lamacchia's purchase and engagement was approved by the yard manager on the basis that he filled out a Brambles' application for employment form and completed a probationary period of three months. In 1988, Mr James Novak purchased a truck in work with a sum nominated for goodwill. The yard manager approved him "virtually automatically" subject to the probation period. The yard manager informed Mr Novak that Brambles would guarantee the work "but the rest of the business" was between the previous owner/driver and Mr Novak. 25At [39], his Honour found that the 1989 agreement "largely codified existing terms and conditions of engagement" for the owner/driver. Clause 11, entitled "Sale of Vehicle", formalised the arrangement for the sale of a truck with work. From mid-1993, the Operations Manager, Mr O'Brien, understood that cl 11 of the agreement was all about selling trucks with work. 26Staff J then looked at the circumstances whereby Mr Marcinasko, Mr Wayne Kennett, Mr Nick Kouverianos, Mr Victor D'Angelo, Mr Carlos Ferreira and a further purchase by Mr Len Felice took place between 1989 and 1995. In each case there was a common thread of the sale price value of the truck being set and a larger valuation being placed on the work to be performed. In some circumstances the price of the truck and the work were separately valued - in other cases the driver gave an estimate of the value of each component with the value of "goodwill" always meeting or exceeding the value of the truck. In some cases, the approval for the sale was given by the yard manager subject to the completion of the three-month probation period and some were told by management representatives that they were buying the truck, not the customers but they would have a permanent job if they met the requirements. The company did not wish to know about the details of the payment for the business. 27The total prices paid and the element identified as goodwill in each case (except for Mr Whitton) were found by Staff J to be as follows: (a)in 1987, Mr Dominic Lamacchia paid a total of $33,000 with $18,000 assigned to "goodwill"; (b)in 1988, Mr James Novak paid a total of $40,000 with $25,000 assigned to "goodwill"; (c) in 1989, Mr Bela Marcinasko paid a total of $54,000. The truck was estimated to be worth $14,000 leaving $40,000 paid as a premium; (d) In 1990, Mr Wayne Kennett paid a total of $80,000 apportioned as $38,000 for the truck and $42,000 for "the business"; (e) in 1991, Mr Nick Kouverianos paid a total of $65,000. He estimated that the truck was worth $5,000 - $10,000 resulting in between $55,000 and $60,000 being paid for the work; (f)in 1992, Mr Victor D'Angelo paid a total of $65,000 with $45,000 assigned to "goodwill"; (g) in 1995, Mr Carlos Ferreira paid a total of $60,000 with $55,000 assigned to "goodwill"; (h) in 1995, Mr Len Felice paid a total of $75,000 (the second purchase) with $67,000 paid for "the position." From these figures it will be seen that no owner/driver paid less than 50 per cent of the purchase price for "goodwill" or the work. Two drivers paid a premium of between 53 per cent and 55 per cent of the total price. Two drivers paid a premium of approximately 63 per cent of the total price. One driver paid a premium of 74 per cent of the total price and three drivers paid a premium between 85 per cent - 92 per cent of the total price. 28Applications for employment were regularly filled out after such sales, setting out educational history, academic and trade qualifications, licenses, previous employment, health, previous workers compensation claims, traffic accidents and convictions, preparedness to work shift work and at other locations and also providing references. Mr O'Brien's evidence was that these matters were considered as the criteria for approval for offering the work to an in-coming owner/driver under cl 11 of the agreement. One manager had reiterated a statement made to others that he did not want to know how much was paid for the truck with work and that the transaction was between the previous driver and the incoming driver but they wanted to interview the incoming driver to see if he was "suitable" for the job. Some were told that, not only did they have a job for life if they did the right thing but if they did the wrong thing, they would lose a lot of money. 29His Honour noted that Mr Tim O'Brien became Operations Manager at the Revesby deport in mid-1993 and subsequently became the Branch Manager in mid-1995. At [46] his Honour summarised Mr O'Brien's understanding of the system of being able to sell a truck with work: 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 guarantee of continuity of work over 48 weeks per year, and from about 1995-6 a specific guarantee of 50 hours 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. 30Having regard to these matters, Staff J, at [96] made the following finding as to the operation of the agreement whereby Brambles permitted owner/drivers to sell their trucks with work: ... 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. 31The Full Bench accepted that particular finding of Staff J. At [4], Boland J, stated that it would appear from the evidence that 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. At [118], in dealing with the pleadings issue, Kavanagh J referred to the benefit enjoyed by the owners/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 ... being the capacity to sell their truck with work. Her Honour's whole analysis of the case against Toll was predicated upon an acceptance that, under the 1989 agreement with Brambles and thereafter and up until the sale to Toll, the owner/drivers were able to sell their truck in work at a premium without any opposition from Brambles but perhaps subject to either submitting an application for work demonstrating the new driver's capacity to perform the work and/or, undergoing a period of probation. There was no evidence that Brambles had ever refused a request for the sale of a truck with work and certainly no suggestion that, in those cases where the new owner/driver's capacity had been favourably assessed, had Brambles, nevertheless, withheld permission for the sale to proceed, 32From the finding of facts made by Staff J and accepted by the Full Court on appeal and from its own consideration of the evidence, the Court concludes that prior to and after entering the 1989 agreement, Brambles' owner/drivers were permitted to sell their truck with work at a premium price. There is no evidence that Brambles ever withheld consent although Brambles, from time-to-time, placed conditions on the sale such as requiring an application for employment form be completed and a period of probation to be entered into by the new owner/driver. From time-to-time, Brambles assessed the capacity of the new owner/driver to perform the work by reference to the details contained in the application for employment but did not look beyond those matters in considering whether or not to approve the sale. That practice may be appropriately described as Brambles, "as a matter of course", allowing their owner/drivers to sell their trucks with work at a premium beyond the value of the truck alone. It appears that, at all times, Brambles did not become involved in the valuation of the work and insisted that those arrangements were solely for the consideration of the parties to the sale agreement, emphasising that Brambles was not a party to the sale agreement. Overall, the Court is satisfied that was the practice that led to the 1989 agreement and in particular, cl 11 of that agreement. That practice existed prior to the 1989 agreement and continued after the 1989 agreement, firstly by statutory force and finally by force of contract. 33The next significant development concerning the conditions under which the owner/drivers worked arose from communications with the drivers by both Brambles and Toll leading up to Toll's ultimate purchase of the business. Two aspects are of some importance. Firstly, provisions made in the sale agreement and secondly, correspondence passing between Toll and the drivers as to their working conditions following the sale. These matters were considered by Staff J from [52] and following and were dealt with in detail by Kavanagh J on appeal at [40] and following. 34Clause 10 of the sale agreement dealt with employees and sub-contractors and in cl 10.1, before the completion date, the purchaser was obliged to make an offer of employment, conditional on completion, to each employee "on terms of employment no less favourable than the terms of the employee with the vendor at the completion date." Under cl 11.4 the vendor agreed to use its best endeavours to co-operate with the purchaser to induce "the employees" to accept the offers of employment that would be made to them by the purchaser pursuant to cl 10.1. 35Kavanagh J noted that, prior to the signing of the sale agreement, a due diligence process was undertaken by Toll. On review of the documents relating to Brambles' engagement of owner/drivers, Toll was not satisfied as to assurances received from Brambles' management that there was no practice regarding the payment of goodwill that was in place with the owner/drivers. Toll therefore required a warranty from Brambles, such warranty being attached to the sale agreement and stating that "there were no arrangements" in place at Brambles for the payment of goodwill. Evidence of the due diligence process was given before Staff J and it was accepted by a Toll witness that a reading of the sale of vehicle clause in the 1989 agreement would give rise to concern about liability for goodwill. Enquiries were made of Brambles' general manager who was "on loan" to Toll for a period after the sale occurred. The general manager informed Toll that he was not aware of any goodwill arrangements in the businesses being sold but when pressed for a categoric assurance, the general manager refused to give it saying words to the effect that, in the industry, things could happen that he may not be aware of. That response led to a concern by Toll and it was not treated as a sufficient answer. 36Ultimately, the sale agreement contained a clause dealing with warranties to the effect that cl 11.11 stated that, to the best of Brambles' knowledge and having made due and proper enquiries, it was not a party to any contract with sub-contractors that provided for goodwill payments upon termination whether on grounds for redundancy or otherwise. Clause 11.12 stated that, to the best of Brambles' knowledge and belief, it was not party to any written yard agreements. Clause 18 then provided Toll with an indemnity from Brambles for a breach of this and other warranties. The limited nature of these warranties is to be noted: in terms, Brambles did not warrant that owner/drivers did not sell their trucks with work at a premium. Toll cold hardly have missed the significance of the limited nature of the warranties. 37At [52] Staff J noted that, in June 1996, Toll purchased Brambles. Prior to the sale the owner/drivers were told by Brambles that upon the sale taking effect "nothing would change and business would carry on as usual." This is an agreed fact in the remitter proceedings. On 25 June 1996 each owner/driver received a letter from Mr Mark Rowsthorn, the group general manager for Toll. This letter was dated three days prior to the sale of the business being concluded between Brambles and Toll. Clause 10.6 of the sale agreement stated that, following completion, the parties would notify the sub-contractors of the sale of the business to Toll and Toll "would forthwith" offer the sub-contractors' engagement with Toll on the same basis as they had with Brambles. 38The letter of 25 June 1996 from Toll to owner/drivers contained the following: Toll Holdings have signed an agreement with Brambles Australasia Ltd to acquire the Brambles Transport Services business effective from 29 June 1996. The Brambles forwarding businesses have been very successful historically and there is industry-wide recognition that their success is due to not only 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. Your service with Brambles will be recognised by Toll and any benefits you have acquired will be transferred. We look forward to welcoming you as a sub-contractor to Toll. 39A further letter was sent to the owner/drivers on 26 June 1996 requesting them to fill out new PPS Payee Declaration forms in view of the change of the legal entity owning the business. That letter was signed by a Mr Peter O'Brien, Financial Controller for Toll and in part stated: We look forward to continuing the relationship which has been developed between Brambles Transport Services and yourselves to our mutual benefit. 40All the drivers duly signed the appropriate documentation and joined Toll. The owner/drivers assumed that the terms of the 1989 agreement would continue to apply as they had under their engagement with Brambles - nothing to the contrary was said by Toll. It was accepted by Staff J and Kavanagh J on appeal that, at the time of concluding the sale agreement with Brambles, Toll, nevertheless, had a policy that it would not approve the passing of its work to a new carrier at a premium following a sale of a truck in work by an existing owner/driver. The policy was not revealed to the Brambles' sub-contractors before completion of the sale agreement and the transfer of their engagement nor was the policy in writing. Toll's policy did not recognise goodwill or permit the sale of trucks with goodwill. Before Staff J, Toll conceded that it did not inform owner/drivers of the policy at the time the letters of 25 and 26 June 1996 were sent and that the Brambles' owner/drivers would not have known of that policy at the time they accepted engagement with Toll. CLAUSE 11 AND THE 'ABSOLUTE DISCRETION' OF THE OPERATOR. 41Against the background referred to above, it is now appropriate to consider the terms of cl 11 of the 1989 agreement and to establish its meaning and the way it was to operate. This task requires the Court to firstly establish the terms of the contract and then to consider that contract as to its fairness given the extensive history of the sale of trucks and work at a premium price. Clause 11 was in the following terms: 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. 42On appeal, the Full Court noted that the alternative case pursued by the TWU required consideration to be given to the words "at its absolute discretion" appearing in cl 11.1 of the 1989 agreement. The first point to note about cl 11 is that it deals with the sale of vehicles. The clause then deals with the consequences of the sale of a truck leading to the guarantee of continuity of work, the application of the last on first off principle regarding retrenchments, obtaining permanency after three months' probation, limitations on re-selling within a period of three years and a limitation on the seller being permitted to buy back within three years of the sale. All of these provisions speak of a considered scheme for administering the sale of trucks with work, a scheme in which Brambles was intimately involved. It was of undoubted benefit to the owner/driver attempting to sell a truck with work at a premium that the purchaser, after probation and satisfactory service, would have permanent employment and other benefits. 43While these provisions operated to provide some protection to Brambles, they also operated to facilitate the sale of the truck with work by existing owner/drivers engaged by Brambles. Importantly, cl 11.3 emphasised that the company was not a party to any of the arrangement entered into between the owner/drivers on the sale of their vehicles: this provision appears to reflect what managers told drivers when these arrangements were being entered into, namely, that the company was not playing a role in the valuation of the work or the valuation of the truck and that all of those financial arrangements were strictly a matter between the seller and the purchaser. Brambles were, however, intimately involved in the scheme of selling trucks with work at a premium - it did not simply facilitate that scheme, it formalised it and administered it. 44Staff J and at least two members of the Full Court regarded this arrangement as operating with approval being given as a matter of course. That approval, clearly, was for the sale of the truck with work (likely to be at a premium) and it was the incoming driver who had to satisfactorily perform during the probational period in order to be made permanent. The only matter that appeared to be of any significance to Brambles was that the application for employment provided sufficient details for an assessment to be made of a driver's suitability. As noted earlier neither prior to nor after the making of the 1989 agreement did Brambles exercise some separate, over-arching discretion to refuse approval of a sale where a person was otherwise found to be suitable to perform the work. The proviso in cl 11.1, nevertheless, reads that, whether or not the new driver was "acceptable to the company" was to be a matter "within the absolute discretion" of the company and therefore beyond challenge by the selling owner/driver. A further possibility as to the scope of the proviso is that, after the new owner/driver was found to be acceptable by the company, it, retained an "absolute discretion" whether to offer any work to that new driver. Availability of work or other commercial considerations might be relevant at that point. 45In relation to contact law, generally speaking, once the terms of the contract are established (and here the relevant terms were in writing) then by application of the parol evidence rule, the Court is not permitted to hear evidence of the parties' actual intention in entering the contract; nor can evidence be called of the negotiations of the parties that led to the agreement; and finally, subsequent conduct is not admissible when construing or interpreting the contract (see eg J W Carter and D J Harland, Contract Law in Australia, 4th ed (2000) Butterworths at [709] - [712]; J W Carter, Carter's Guide to Australian Contract Law (2006) Butterworths at [10-18] to [10-20]). 46The parol evidence rule is dealt with in the well-known passages of the judgment of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales(1981-1982) 149 CLR 337 commencing at 347. In dealing with the circumstances in which a term may be implied in a contract, his Honour stated: The broad purpose of the parol evidence rule is to exclude extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations, to subtract from, add to, vary or contradict the language of a written instrument ... . Later at p 352 his Honour stated: The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed. It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract. 47There is no suggestion in the present case that the terms of the written agreement and particularly cl 11.1, are to be read with reference to some other document. Further, it has not been argued that a term needs to be implied in this part of the contract to give it business efficacy. 48As to the contract concerning the sale of a truck with work, cl 11 of the contract generally permits the sale of a truck with work and makes consequential provisions when approval is given for such a sale to take place. The entitlements of the new driver in relation to their status and tenure are dealt with. However, the parties have agreed that, whether or not a new driver is accepted, it is to be subject to "the absolute discretion" of the operator, now Toll. The evidence shows that when these sale arrangements were no more than a practice, even at that point, Brambles as the operator would, from time-to-time, assess the suitability of a proposed new driver but was not bound to accept that driver. The terms of the contract laid down that a driver "may introduce" a new driver to the company and provided the new driver was "acceptable" to the company, then the company, at its absolute discretion, may offer work to the proposed new owner/driver. Under the ownership of Brambles that "absolute discretion" was exercised so that, as a matter of course, new drivers were accepted and the sale permitted - no sale was refused. But Brambles was not obliged to do so under the "absolute discretion" provision in cl 11.1. 49The words "absolute discretion" in cl 11 cannot be read out of the contract - they are to be given work to perform. Clause 11.1, containing that term, is not ambiguous or susceptible of more than one meaning: the sub-clause has a plain meaning that cannot be contradicted. Whatever was intended by the TWU and/or Brambles has been superseded and has merged in the contract itself. Indeed, no party argued that cl 11.1 was ambiguous or that extrinsic evidence (as contemplated in Codelfa) was required to reach a proper understanding of its operation. 50For so long as Brambles exercised its discretion under cl 11.1 to allow sales, as a matter of course, the previous practice continued and the drivers could organise their financial affairs on the basis that, having purchased a vehicle with work and paying a premium well beyond the value of the truck alone, the investment, by and large, could be recovered. But Brambles always possessed a wide discretion (especially from 1989) to refuse approval for a sale. WAS THE EXERCISE OF THE CL 11.1 DISCRETION BY TOLL UNFAIR? 51The established and stable position regarding the operation of cl 11.1 obtained under Brambles' ownership was not continued by Toll. Toll had a policy of not permitting the sale of a truck with work in its other operations and that policy was in operation prior to its purchase of Brambles. It did not become clear to the ex-Brambles drivers that Toll would exercise its discretion differently under cl 11.1 until approximately three years after Toll's purchase: the drivers appear to have taken the view that, as Toll was a new owner they were obliged to continue working for three years under Toll ownership before being permitted under the terms of cl 11 to sell their truck with work, a proposition that is not necessary to determine as to its validity for the purposes of these proceedings. The point is that, for that length of time, Toll, knowing that it had a policy whereby no approval would be given for the sale of a truck with work under cl 11, did not inform its drivers that was its policy approach and that there would be no deviation from that policy. Toll should have informed the drivers that this was its established policy approach which it would bring to the newly acquired Brambles business before the drivers responded to Toll's letter stating that their terms of engagement under Brambles would be maintained in their engagement by Toll. 52If Toll had made its policy clear to the drivers prior to the sale, at least the drivers would have then been placed in the position of being able to decide whether they would accept engagement by Toll under these changed conditions. Toll of course was anxious to have continuity of drivers familiar with the runs and the customers - an understandable commercial consideration but Toll should not have allowed the attainment of that commercial goal to impede a full disclosure of its no-sale policy to the drivers before they agreed to be engaged by Toll. The drivers may have taken a number of approaches if this had occurred. They may have pressed Brambles to buy out their investment in a truck with work prior to the sale or may have put that proposition to Toll. If Toll wanted to introduce a no-sale approach then, in fairness, it should have frankly and openly confronted the problem in discussions with the drivers. Instead, Toll, knowing the existence of cl 11 of the agreement and that cl 11.1 permitted the sale of a truck with work, chose to ignore the problem that they must have known would follow once it became known to the drivers that they could no longer and under no circumstances retrieve their substantial investments. 53Toll could not have been under any illusion that trucks with work could be sold because of the existence of cl 11 - a provision directed solely to the consequence of the availability of such a sale. Toll was obviously aware of the practice of the sale of a truck with work in the transport industry generally because it had framed a policy against permitting such transactions. As a large operator in this field, it could hardly have been unaware of cases going back as far as 1973 such as In Re Ostoja and anor v Reeve and anor (1973) AR 414 and In Re Guion v Hutchinson [1973] AR 454 that such practices had complications where relief might be sought under the unfair contract provisions of s 106 and Ch 2, Pt 9 and its predecessors going back to s 88F of the Industrial Arbitration Act as well as relief available under the Contracts of Carriage provisions. Indeed, the evidence before the Court demonstrates that the sale of a truck with work continues to be a widespread practice. 54As noted earlier, Toll made enquiries during the due diligence process whether such a practice of the sale of a truck with "goodwill" existed in the Brambles' operation they were about to purchase. They did not receive any such assurance and so sought a warranty and indemnity provision in terms that suited its purpose and was otherwise acceptable to Toll. Of course, when that enquiry was made it knew the provisions of cl 11.1. It chose not to make enquiries of the drivers or their representatives, the TWU, nor did it seek any details as to the value of the so-called "goodwill" that might be sold with a truck. It seems clear on all of the evidence that Toll was attempting to finesse the situation regarding the sale of trucks with work at a premium price and furthered that objective by leaving the drivers with the impression that their terms and conditions would not change when engaged by Toll. They could not have made that representation in good conscience when they knew that they had a policy against the sale of a truck with work yet cl 11.1 directly permitted that to take place and Brambles had not given it any guarantee that such a practice was not in existence. That conduct by Toll was unconscionable. When Toll changed its approach to cl 11.1 of the contract, the contract, in its operation, became unfair, harsh and unconscionable. The changed approach was in direct conflict with the representations made by Toll to the owner/drivers that the terms of their engagement would be no less favourable than enjoyed with Brambles. The owner/drivers clearly relied on those representations in deciding to "transfer" to Toll. By this deception, Toll secured for itself a most valuable commercial advantage. SPECIFIC ISSUES RAISED BY TOLL 55One issue that excited attention on appeal concerned the characterisation of the letter of 25 June 1996 stating that the terms of engagement with Toll would be no less favourable than those applying under Brambles' ownership. On appeal, Kavanagh J was of the opinion that the representation as to no less favourable terms of engagement was contractual in nature; Boland J was inclined to the view that the letter was no more than a pre-contractual representation but ultimately agreed with Walton J that it was not necessary to decide the issue on appeal. Walton J pointed out that, whether the contents of the letter were to be regarded as promissory or merely representational would involve, in part, a consideration of the industrial context in which the letter was sent and whether it met the legal tests for contractual terms as considered in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 and in J.J. Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435. His Honour also stated that resolution of these questions may involve issues of fact, including fresh evidence called on the remitter hearing. 56As the case on remitter unfolded, no party sought to call further evidence in order to elucidate this point, nor was the issue the subject of the type of detailed submissions expected to attend a matter of some controversy arising between the parties. Submissions for Toll asserted that the representations were contractual and faced the problem drawn to attention in Sydney Water. As noted in J W Carter and D J Harland, Contract Law in Australia at [604]: (Representations) ... are factual statements which induce the representee to enter into the contract which are not guaranteed by their maker. Frequently, such a statement is described as a "mere" representation, reflecting the absence of contractual intent. Because a representation has no contractual force, its falsity does not give rise to a claim for damages for breach of contract. 57In the absence of further evidence (or specific reliance on evidence already before the Court) and detailed submissions, this issue is not easily resolved. Doing the best it can in such circumstances, the Court is of the view that the representation in the letter of 25 June 1996 was no more than a statement of Toll's agreement with Brambles - an agreement to which the TWU and the owner/drivers were not party. At the time it was written, Toll also had a policy against approving the sale of a truck with work, a sale specifically allowed (with conditions) by cl 11 of the 1989 agreement. It appears, therefore, that Toll did not intend to be bound by this representation made to the owner/drivers: further, the terms of the letter were misleading. It is to be observed that, before the Full Court, the alleged contractual nature of the representation was aimed at demonstrating that cl 11 of the agreement was incorporated into the terms of each owner/driver's contract. The Full Court on appeal, however, reached this view on other grounds. This fact highlights the problem of treating the representation as contractual: essentially, that approach tries to bind Toll contractually to exercising the "absolute discretion" in the same as way as Brambles. 58Another issue raised by Toll was the alleged lack of evidence that Toll knew or should have been aware of the arrangement for the sale of trucks with work. At [15] of the Full Court decision, Boland J postulated circumstances in which the contract, on the alternative case put forward by the TWU, might be unfair. That passage commenced with the possibility that Toll was "aware of the practice of selling trucks with work" prior to entering into the contracts. In its written submissions, Toll challenged that proposition and argued that there was no evidence to support it. That submission, however, smacks of the disingenuous having regard to the following matters: (a)during due diligence, Toll had access to the 1989 agreement. Before Staff J a Toll witness accepted that a reading of cl 11 "would give rise to concern about goodwill."; (b)cl 11 was all about selling a truck with work and the arrangements that would apply in such circumstances - it could not have been plainer to Toll that trucks in work were being sold under these provisions; (c)cl 11.3 stated that under no circumstances would the company be a party to any arrangements that may be entered into between owner/drivers upon the sale of the vehicles. Given the long history of the sale of trucks in work at a premium in the transport industry (as referred to in the many cases cited in these proceedings), an experienced transport company such as Toll would have acted wilfully if it turned a blind eye to this provision and did not understand that it referred to goodwill as well as the price of the truck. As noted in (a) above, Toll did not do so; (d)Toll then required assurances from Brambles that there was no goodwill arrangements but failed to receive such an assurance. Toll could not have been in any doubt by this stage that there were sales of trucks in work at a premium. This realisation undoubtedly led Toll to seek warranties and an indemnity concerning such sales. (e)During this time, including at the time of the purchase of the Brambles business, Toll had an undisclosed and unwritten policy against approving sales of truck with work. Toll could only have such a policy because it recognised that widespread practice and did not wish to be part of it. If it was not aware of that practice in the transport industry, it is difficult to see what was the purpose of the policy. In many respects, given the history of disputation over such sales, the policy speaks for itself about Toll's industry knowledge. (f)Staff J found that Toll had knowledge of the arrangements for the sale of a truck with work at a premium through Mr O'Brien. He had been Operations Manager for Brambles in 1993 and in mid-1995 became Branch Manager. He familiarised himself with the terms of the 1989 agreement and knew that drivers would sell their truck with work at a premium. Kavanagh J, on appeal, noted that Mr O'Brien moved employment from Brambles to Toll (as did other senior Brambles management) - her Honour concluded that their knowledge of the practice "went with them" to Toll. (g) Significantly, Kavanagh J, at [64] stated: The appellants did not challenge his Honour's findings as to the knowledge of Toll at the time the contracts were entered into. 59To the extent necessary, the Court makes the same series of findings in regard to the practice as made by Staff J and by Kavanagh J on appeal (noting that the other members of the Full Court accepted her Honour's findings of fact). In all the circumstances, this submission for Toll is untenable. 60Another issue raised in submissions for Toll was that the 1989 Agreement arose under the provision of s 91H of the Industrial Arbitration Act. It was asserted that the Agreement was certified by the Industrial Commission and that there were strong policy reasons why the fairness of such an agreement should not be open to challenge under s106 proceedings. It was noted that s 105 defined "contract" to exclude an "industrial instrument". 61The first matters to be noted in regard to this submission it that it was common ground (at least before the Full Court) that Toll was not a party to the 1989 Agreement and the Agreement did not "transfer" to Toll upon the purchase of the business from Brambles. Secondly, the 1989 Agreement had no statutory basis on the passing of the Industrial Relations Act 1991 and thereafter operated as a common law Agreement. Thirdly, in any event at the time the Agreement was entered into, s 88F(4) of the Industrial Arbitration Act permitted proceedings to be commenced in respect of a contract of carriage to which Pt VIIIA applied. That Pt allowed Agreements to be registered but they were not certified by the Commission or examined for their fairness. Under s 91H such an agreement was simply registered by the Industrial Registrar when filed by the parties in the Registry. Once registered the Agreement could be varied or rescinded by the parties filing in the Registry a notification of variation or recision. No arbitral role was played by the Commission. Significantly, the Full Bench in Myer Stores Ltd v Stowart (1994) 55 IR 21 rejected discretionary arguments that the work was covered by a s 91H agreement freely entered. 62It was the role played by the Commission in examining awards and providing just and reasonable rates that raised the policy issue of awards so made not being properly amenable to unfair contract provisions. As already indicated, the 1989 Agreement was not subject to that same level of supervision that would otherwise apply to an award. Of some significance for this submission for Toll is the decision of Hill J in Newton v Goodman Fielder Mills (1997) 81 IR 227, where his Honour pointed out that after the Court of Appeal judgment in Incitec v Industrial Court of NSW (1992) 29 NSWLR 83, the relevant question was not whether the award was unfair but whether the contract of employment was unfair. This case involving Toll deals with the contracts of employment. UNFAIRNESS FOUND 63The amended summons for relief is fully reproduced in [3] as set out in the judgment of Staff J. On appeal, Kavanagh J at [108] noted that the TWU case before Staff J was opened on a wider basis in recognition that the existing pleadings had not addressed an elementary issue, namely, what was the contract? The TWU pursued two alternative submissions before Staff J, one based on cl 11 not being in the contract and in the alternative, if cl 11 was found to be in the contract it was submitted that Toll had used the discretion contained in the clause arbitrarily and unfairly in applying the terms of the contract. Thus, it was submitted that if cl 11 was a term of the contract, the contract was or became unfair because the discretion conferred on Toll under that clause was exercised arbitrarily, capriciously and unfairly such as to make the contract unfair. Staff J had acknowledged the alternative submission at [95]. 64Having regard to the judgment of the Full Court that cl 11 was indeed part of the contract of employment of each owner/driver, on the remitter hearing the TWU filed Contentions as to Fact and Law. In that document the TWU characterised the unfairness of the contracts in the following way: (1)The Contracts permitted Toll to deny the owner-drivers the capacity to sell their assets, being trucks with their positions or "with 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 positions or "with work." In particular, the absolute discretion contained in Clause 11.1 of the Sale of Vehicle clause permitted Toll to do this. (2)The Contracts fail to give effect to, and permit Toll to depart from, the Representations. In particular, the Contracts contain no provisions permitting sales of trucks "with work" to proceed on the same basis they were allowed to proceed under Brambles, namely reasonable satisfaction of the criteria for approval contained in the Brambles standard "Application for Employment" form and the absolute discretion in Clause 11.1 meant that Toll could depart from these arrangements. This meant that the owner-drivers had less favourable terms of engagement than they had at Brambles and that the relationship the owner-drivers had developed with Brambles did not continue with Toll. (3)The Contracts denied the owner-drivers 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. In particular, the absolute discretion in Clause 11.1 facilitated and permitted this to occur. (4)The Contracts have allowed Toll to obtain the benefit of the required 3 year minimum engagement of the owner-drivers without allowing the owner-drivers in return to have the benefit of being able to sell their vehicles together with their positions or with "introduction to work" at a time of their choosing. (5)The Contracts invest in Toll discretionary powers with respect to the sale of vehicles which the respondent is able to exercise and has exercised arbitrarily, capriciously, unfairly and without regard to the legitimate interests of the owner-drivers and in accordance with a strict anti-goodwill policy which was not disclosed to the owner-drivers prior to their engagement. Clause 11.1 invests this discretion. (6)The Contracts allow Toll to terminate the owner-drivers 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. Clause 12 in particular allows this to occur. (7)The Contracts allow Toll to act without any regard to the value of the investments which the owner-drivers have made in their trucks and positions or for loss of their legitimate expectation of being able to sell their trucks with their positions or "with work" in the future. Clauses 11.1 and Clause 12 in particular allow this to occur. (8)The Contracts allow Toll to act without any proper regard for the health or personal or financial circumstances of the owner-drivers. Clauses 11.1 and Clause 12 in particular allow this to occur. (9)The owner-drivers were at all relevant times in a position or unequal and inferior bargaining power in respect of their dealings with Toll and were specifically so at times when they sought permission to proceed with sales of vehicles which they had negotiated. (10)The Contracts permitted Toll to reject unfairly the disposition of trucks in work. In particular Clause 11.1 allowed this to occur. (11)The Contracts permitted Toll to exercise its discretion under Clause 11.1 of the Sale of Vehicles clause in such a way as to render the contracts unfair in circumstances where Toll was actually aware or should reasonably have been 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." 65It was suggested in closing submissions for Toll that the alternative case propounded in the Contentions of Fact and Law ought properly to become part of the formal pleadings by way of amendment. By that submission, the Court understands that no objection was taken to such a course although there was no formal response by the TWU to the proposal. It is clear that the Full Court accepted that there was an alternative case of unfairness formulated by the TWU based on the proposition that cl 11 might be part of the contract of employment and thus the matter proceeded before Staff J in recognition of that development. In the case management of the application heard on remitter, it was agreed by the parties that, inter alia, Contentions of Fact and Law would be filed. Each party was thereby placed on notice of alternative Contentions arising from the decision of the Full Court that cl 11 was part of the contract of employment. While the Court is prepared to proceed on the basis of the Contentions filed by the TWU in outlining its alternative case, it is appropriate to treat the amended application for relief set out in [3] to be taken as amended by pleading in the alternative the matters set out in the Contentions of Fact and Law filed by the TWU. 66The 11 grounds of unfairness appearing in the Contentions of Fact and Law filed by the TWU in effect gave further particulars of the general proposition put forward in the alternative before Staff J, namely, that Toll used its discretionary powers under cl 11 in a way which was arbitrary, capricious, unfair and without regard to the legitimate interests of the owner/drivers. A comparison of the amended application for summons and the grounds argued in the alternative in the Contentions of Fact and Law, nevertheless, covers substantially the same matters but with added emphasis arising from the new focus on the operation of cl 11 and that clause being part of the contracts of employment of each owner/driver. 67 Having regard to the analysis of the evidence conducted by the Court and as referred to in the preceding paras, the Court accepts that the substance of the allegations of unfairness so pleaded has been established. The essence of the unfairness is the combination of the following factors: Toll being aware of the existence of cl 11 and its clear terms that permitted the sale of a truck with work and at a premium price; the fact that Toll knew or ought to have known that there was a practice of selling trucks with work at a premium; the failure to secure undertakings from Brambles that no such sales occurred involving "goodwill" led to Toll obtaining a warranty and indemnity from Brambles against any claims from the owner drivers arising from what Toll clearly proposed to do and that was prohibit such sales with a premium; the representation made to the drivers that their previous conditions would remain unchanged thus inducing the owner/drivers to take up appointments with Toll without informing them that, indeed, there would be a significant change in those conditions, namely, the sale of a truck with work and a premium would no longer be allowed; the fact that Toll obtained a significant commercial benefit from so inducing the owner/drivers to transfer from Brambles to Toll and ensured continuity of service with existing clients carried out by known and trusted owner/drivers; the failure of Toll to disclose to the owner/drivers their unwritten policy. Those elements of the unfairness are reflected in various ways in the 11 grounds appearing in the TWU's Contentions of Fact and Law. 68Two matters, however, require further mention. Firstly, para (8) of the Contentions refers to the contracts allowing Toll to act without proper regard to the health, personal or financial circumstances of the owner/drivers. The Court's attention was not directed to any general evidence as to the health or personal circumstances of owner/drivers that was adversely affected but clearly there was an abundance of evidence as to the obvious financial detriment that the drivers would suffer once the no-sale policy was pursued by Toll. There was some evidence of health and individual problems arising with a small number of drivers. Secondly, in para (4) concerning the three-year minimum engagement, it is not clear to the Court that on the owner/drivers taking up engagement with Toll after its purchase from Brambles that the three-year period would commence again having regard to Toll's representation assuring continuity of benefits. Ultimately, that is of no consequence because the drivers abided by that provision and within the first three years Toll was not called upon to fully expose their no-sale policy. 69Having regard to all the circumstances leading to cl 11 becoming a formal agreement and having regard to the way in which it operated prior to Toll's ownership, the Court concludes that the contract operated fairly when the discretion in cl 11.1 was exercised in a manner that provided drivers with a full opportunity of selling their truck with work at a premium. In terms, the contract, however, permitted Toll to exercise its discretion against allowing such sales: it was unfair, harsh and unconscionable that this absolute discretion was exercised in such a manner. In this way the contract became unfair in its operation under the ownership of Toll. COMPENSATION 70The parties have made varying submissions as to compensation, including a submission from the applicants that suggests what is essentially an averaging approach. The appropriate money order that might be made in these proceedings that represents an amount that is "just in the circumstances of the case" raises a number of difficulties because the financial arrangements reached by each of the drivers is different and most of the relevant events occurred many years ago. If an approach is adopted that seeks to return the parties to their position prior to entering the arrangement by way of restitution another problem arises because the original arrangements were made many years ago (ranging between 1987 and 1995). Staff J recognised the difficulties, including the absence of expert accountancy evidence but, as his Honour stated, doing the best he could, he proposed to adopt amounts that, in his view, represented a proper assessment of compensation. His Honour determined that each of the owner/drivers should receive, by way of compensation for "goodwill", the amount they initially paid for the goodwill and where that figure was unavailable, the average of what was paid by all the owner/drivers. The owner/drivers were to be compensated by the amounts they paid for goodwill bearing in mind the value of money had changed since the 1990s. 71The determination of the appropriate amount by Staff J sought to take into account the fact that owner/drivers had received reasonable earnings over a significant period of time and some would continue such earnings as long as they wished to remain with Toll. His Honour therefore declined to follow the averaging approach sought by the applicant (see [112] and the amounts set out therein). The final amounts ordered by his Honour did not specify by how much the amounts were reduced because of higher earnings nor how those who would continue in work with higher earnings might have a higher level of reduction. Also, there was no specification as to how the value of money had changed since these arrangements were entered into. Although his Honour does not say so in terms, it appears clear that this approach was taken because his Honour was not taking an arithmetic approach nor was he guided by expert accountancy evidence but was arriving at an amount by taking into account, in a general rather than a specific way, the various elements he had identified. 72On remitter, the parties reiterated their position as stated before Staff J and the respondents relied on expert evidence to propose a different approach based upon the fact that there was no actual damage nor actual loss incurred by the drivers. There appear to be difficulties with all these approaches. These matters will be considered in the following paragraphs. 73It is convenient to firstly deal with the proposition (accepted by Staff J), whereby amounts paid for goodwill had been discounted in some unfair contract cases in circumstances where the owner/driver enjoyed the benefit of above award wages. The approach appears to have originated in a decision of Macken J in Bradib Pty Ltd v Jilly Bean Pty Ltd and anor (No 1) (1987) 21 IR 90. In that case the respondent company knew of the system of selling work together with a premium for goodwill. His Honour found that the respondent company probably encouraged that approach but officially did not approve of the premium. The applicant in that case had paid $45,000 for goodwill although a company representative gave evidence that a more accurate or appropriate figure was $30,000. This case involved a beer carting contract where the contract was lost and the applicant lost his work with no other suitable work being available. The applicant claimed the loss of the entire $45,000 paid for goodwill. 74At pp 95-96 his Honour seems to make a finding, presumably based on the evidence, that the $45,000 was paid because the applicant "expected to receive higher than award wages" for the performance of the work. The applicant expected this to continue for at least some reasonable period and expected to recover the goodwill payment by selling the run to someone else at a later date. The applicant had received the benefit of above award wages for 18 months but there does not appear to be any calculation performed in the judgment as to by how much the applicant was paid over the award. His Honour took into account that the applicant had taken a calculated risk that the work might be lost and therefore bore some responsibility for the failure of the arrangement thus reducing the liability of the respondent company. His Honour then used the figure of $30,000 for goodwill (apparently being the evidence of the respondent) and reduced the goodwill by half. A reading of the judgment discloses no calculation of what level of over-award payment was achieved having regard to the overall costs of the business. 75It is difficult to accept that this decision laid down some type of general principle for cases involving a truck with work and the payment of a premium by way of what was referred to as "goodwill." The case is not persuasive as representing some general principle and it appears to have been based entirely on the evidence of the expectation of the applicant in that case. Thus, his Honour was able to say that the applicant was aware that the contract could be lost and took a risk and that he paid the $45,000 goodwill because he expected to receive higher than award wages for the work performed. There is no such evidence in combination in the present case. There is no evidence that the payment of goodwill by the Toll owner/drivers was excessive or excessive by reference to some other standard operating within the industry or within the respondent companies. 76Thomas Nationwide Transport Ltd (t/as "All Trans Bulk") v Thomas and anor (1990) 34 IR 378 was an appeal involving the sale of a truck with work. In that case, $60,000 had been paid as a premium and eight months after purchase, the truck had been sold for $5,000. There was an estimate that $70,000 had been paid for the work when account was taken of the depreciated value of the truck. At first instance, the money order was reduced by just over $8,000 in recognition of the benefit of the net profits above "average adult male earnings." On appeal the total money order of $117,000 was reduced to $75,000. At p 382, Bauer J stated: There is no place in s 88F cases as I see them, for a concept of "damages" or "solatium" or "loss of expectations" of profits or similar notions. Restitution seems to be the maximum that might be ordered to be paid and that only provided such a discretion is exercised having regard to the circumstances as is required by s 88F(2). Furthermore, the orders which might be made under s 88F(2) are not at large and must be supported by evidence and principle, a matter which frequently escapes litigants in the presentation of their cases. His Honour concluded that the first instance orders reflecting the notion of restitution had been mathematically exceeded, particularly in relation to deductions for the value of the truck and profits for a 14 week period being made only after the calculation of all interest was made and not before. In terms, there were no details as to why the figure of $75,000 was an appropriate sum. Further, his Honour's observations as to the limitation of the approach to restitution must now be read in light of the wider approach adopted by the Full Bench in Westfield Holdings v Adams (2002) 114 IR 241. 77In a separate judgment Hungerford J noted that the purchase price paid by the respondent for the business was $80,000 apportioned as $60,000 for goodwill and $20,000 for the truck. Having regard to the prior sale, his Honour was of the view that a very high and an unjustifiably high price had been paid for the business. His Honour continued at 384-385: On any view of it, the respondents paid a relatively high price for the business in December 1985 by comparison with the price paid in April 1981, the major factor being the so-called "goodwill" component. I say so-called because the word "goodwill" is somewhat of a misnomer. On the evidence, there was no "goodwill" as that term is ordinarily understood in business, it being really an amount of money paid for the "opportunity" or "right" to be offered regular carrying work from the appellant's yard or depot at Gosford - "key" money, would, perhaps, be a more accurate description - and in respect of which the other LOD's had vested interests in maintaining and promoting the value of their businesses. Nevertheless, in the view I take and as will be apparent later, the true description of such monies and the amounts involved have relevance in determining the present issues. His Honour went on to note that, during the course of the operation of the sub-contract, the drivers' earnings were better than had been expected but at a certain point the earnings in other jobs were significantly reduced after the sub-contract came to an end. 78At p 386 Hungerford J referred to the judgment of the High Court in Brown v Rezitis (1971) 127 CLR 157 at 164-165: Consequently the nature of the orders which may be made under subs (2) will of necessity cover a wide field. But underlying subs (2) is I think a broad concept of a restitution of the parties to a situation which existed before the making of the contractual arrangement as well as in an appropriate case to make remedial provision for what has taken place or been done under the contract in the meantime. ... Whilst it can be said that the expression "in connection with" is of wide import, it does emphasize the need for a close connexion between the order made and the contract or arrangement varied or avoided. In my opinion, the power to make an order for the payment of money is at best no more than a power to make such an order as can reasonably be thought to have a real connexion with the making, variation or avoidance of the contract or arrangement which has been varied or avoided. It may in truth be limited to a power to make an order for payment of money which has in fact a real connexion with the making, variation or avoidance of the contract or arrangement. However, in either case it will, of course, include power to make an order for payment of money which has been paid or which was payable under the contract arrangements themselves. But, in my opinion, the power will not be limited to the making of such orders. It will extend to ordering the payment of money where the order on the larger view of the jurisdiction given by the sub-section could be considered to be appropriate to effect wholly or partially the restitution of the parties to their former position upon the variation or avoidance of the contract or arrangement. 79At p 387 Hungerford J then considered the decision in A & M Thompson Pty Ltd v Total Australia Ltd [1980] 2 NSWLR 1 whereby the amount of goodwill was reduced by one-third in the orders made by the Commission in Court Session. That case was relied upon to support a submission that the orders under appeal provided the driver with a windfall bonus in that the truck was kept and used, that higher than expected profits were obtained during the period of the operation of the contract, and, that commercial rates of interest were awarded. 80Dealing with those submissions, Hungerford J found that the first instance orders effectively returned to the respondents the full purchase price of the truck and the goodwill together with interest at commercial rates from the date the work commenced under the contract, plus interest at commercial rates on the repayments of principle and interest made by the respondents to the bank on the money borrowed. That approach was said to overlook a fundamental aspect of the case, namely, although the appellant company was held liable, nevertheless, that company received no part of the purchase monies paid by the respondents and it provided the benefits of the carrying contract for a period of 17 weeks during which the respondents earned more than was originally expected. In addition, there was no suggestion in the evidence that the appellant company was responsible in any way for the loss of the brewery contract nor had it played a role in the fixation of the price to be paid from time-to-time by the lorry/owner drivers for "goodwill" and for a suitable truck. 81His Honour then considered the judgment of Macken J in Bradib at p 389. His Honour noted that there was no account taken of the inordinate increase in the goodwill component to the vendor and adopted the approach of Macken J in Bradib saying that they were similar cases and that the "goodwill in the present case was quite excessive." 82Again, there are distinguishing features arising in the TNT case. Importantly, the Full Bench held that the original amount ordered was mathematically incorrect and double counted or over-compensated for the same elements. The evidence allowed a finding that the goodwill was "excessive" although no account was taken of the fact that the amount asked for "goodwill" was actually paid by the owner/driver. Some reduction was also brought about by the fact that better than expected profits were earned for a considerable period but there is no such evidence in relation to the Toll drivers, quite apart from whether that is an appropriate basis to reduce a restitution order involving the repayment of "goodwill." Importantly, weight was attached to the fact that the loss of the contract that caused the owner/drivers a loss for which they sought compensation occurred in the ordinary course of business and it was known to the owner/driver when purchasing the truck and the work that, from time-to-time, those carrying contracts could be lost. The appellant company was not responsible for the loss of this contract by its conduct and it was found that the owner/drivers had purchased the truck and work knowing the existence of this risk. This factor is not present in relation to the Toll drivers. Indeed, those drivers lost their investment directly as a result of the actions and decisions of the respondents when they introduced their no-sale of truck with work policy. The TNT case provides no assistance, therefore, for present purposes. 83As already indicated, the TNT case referred to the Full Bench decision in the A & M Thompson case. In that case, the Court allowed one-third of goodwill to be recovered by the applicants. It was noted that the goodwill under those arrangements always belonged to Total and the applicant had accepted that arrangement but had paid a licence fee to enjoy the goodwill but had maintained and developed the goodwill. The Thompsons had not paid the goodwill and having accepted the arrangements, they were, nevertheless, granted compensation containing a component of one-third of the value of the goodwill as calculated. While this is a case dealing with goodwill in the unfair contract jurisdiction, the particular facts bear no resemblance to the situation faced by the Toll drivers and provides no assistance as to what compensation order might properly be made in relation to the goodwill component of the purchase price of their truck with work. Indeed, this was a case where the applicant received one-third of the goodwill although never paying for the goodwill. In terms, it adopts a contrary approach. 84Hungerford J again came to consider this territory in the matter of Darren John Palmer v TNT Australia Pty Ltd (t/as TNT Express) [1995] NSWIRComm 243; [1995] NSWIRComm 24. In this case the applicant, having purchased a truck from another driver, transported for TNT at its Enfield premises. The purchase price was $60,000 for the truck in work made up of $19,000 for the truck and a component for either goodwill or as a premium for work of $41,000. Mr Palmer was told that he had a position in the yard and that he was guaranteed 45 hours per week at that yard for a minimum of five years. Approximately two years or so into this arrangement, Mr Palmer was transferred to another yard where he found he no longer had the regularity of work that had been available to him at Enfield and he no longer had the rate of earnings on an hourly basis that had been available at Enfield. There was no longer a guarantee of work that he had been promised to him. The work continued to fall away to the point where, in recognition of his deteriorating financial position, Mr Palmer sought work elsewhere and thereby lost the opportunity of being able to sell his truck in work. He claimed he thereby lost "goodwill" or a premium in the sum of $41,000. 85The respondent, amongst other submissions, pointed out that while Mr Palmer was with TNT he earned $174,000, an amount described as "a very, very large amount of money, well in excess of what he would have earned." His Honour noted that the aspect of "goodwill" formed a major part of the case and that connection had been recognised in earlier cases involving a "truck in work" with his Honour citing as examples: TNT Management Pty Ltd v White (1984) AR (NSW) 232 at 242; [1984] 7 IR 331 at 337; Bradib; and TNT Ltd (t/as "Altrans Bulk") v Thomas [1990] 34 IR 378 86Evidence was accepted by his Honour that TNT was aware of the sale of trucks with goodwill although they did not condone the practice. His Honour concluded that the applicant was induced to make the contract by reason of the representations made and that, after the Enfield yard closed down after two years because of a downturn in the economy, the applicant thereby lost the value of the remaining three years of the contract period and lost his investment in the goodwill as a lorry owner/driver at that yard. 87In approaching what money order might be made in relation to the goodwill claimed by the applicant, Hungerford J stated: The details of the applicant's money claim was set out earlier in this judgment; they comprehended components for goodwill plus interest, loss of the guaranteed earnings during the unexpired contract period of three years less actual earnings, and the cost of removing the respondent's logo from the truck. In Thomas Nationwide Transport by reliance upon the decision of Macken J. in Bradib I examined in not dissimilar circumstances to the present the question of goodwill paid for a truck-in-work. A review of the reasoning in those cases and in light of the facts of this case leads me to conclude that the position here is relevantly indistinguishable. In the result, my view is that a reasonable amount to restore to the applicant for goodwill would be one-half, that is, $20,500.00. 88Very different circumstances appearing from the Bradib case and the TNT v Thomas case have already been referred to and provide no assistance in the present case. When Hungerford J applied those decisions in Palmer, he appears to have accepted that the same evidentiary basis was laid in that case although that is not at all clear from the judgment. For the same reasons that would distinguish the cases upon which his Honour relied, Palmer adds nothing to the conceptual basis for an approach that, somehow, it is appropriate to reduce the amount of goodwill because of other earnings when making a compensation order. 89A case not directly referred to during the course of the proceedings but referred to by Hungerford J in TNT v Thomas was an appeal decision of TNT Management Pty Ltd v White (1984) AR (NSW) 235; [1984] 7 IR 331. That was an appeal against a judgment of Macken J delivered in August 1983. As was the custom in the Industrial Arbitration Reports at the time, the first instance judgment appeared at the commencement of the report dealing with the Full Bench judgment. Justice Macken's judgment is found in (1984) AR (NSW) 232 at 233 and following. 90The case before Macken J involved an owner/driver under contract with TNT Management Pty Ltd. TNT was the head contractor with whom Norman Ross Discounts Pty Ltd had negotiated its trucking arrangements and Mr White was assured that it was a secure position and at worst he would, at least, have employment for one year. He was assured that if Norman Ross or TNT wished to bring the contract to an end there would be no problem in Norman Ross or TNT paying $22,000 to buy out his business or find other work for him. Based on these representations, Mr White bought the truck in work for $22,000 representing approximately $3,000 for a Pantechnicon and $19,000 for the goodwill of the carrying business. 91Unfortunately, the contract lasted only five weeks and was terminated by Norman Ross. Macken J had no hesitation in finding the contract unfair, harsh and unconscionable within s 88F of the Industrial Arbitration Act and voided the contract ab initio. His Honour then ordered that the goodwill, "appropriately adjusted", be returned to the applicant. His Honour recorded that there was "quite a considerable amount of discussion" as to the amounts that should be deducted from goodwill in the event that an order would be made restoring the parties to their original position. His Honour found that some of the amounts sought to be deducted from goodwill were inappropriate. Noting that Mr White had paid $19,000 for at least twelve months' work but had only worked for two months (being employed for five weeks and receiving one months' severance pay), his Honour calculated that represented one-sixth of the goodwill paid for twelve months' work. He assessed that value at approximately $3,000, so leaving $16,000 goodwill paid "for nothing." A further deduction was made "representing work obtained by the original vendor to be performed by Mr White during the twelve months." That amount was estimated at $3,000 and deducting that from $16,000 left a balance of $13,000. That sum was ordered to be repaid to the applicant jointly by the vendor and TNT. 92In the first instance judgment there was no discussion of the rationale for reducing the amount of goodwill by the amount of work actually performed under the contract and other work obtained outside of the contract. No amount appears to have been taken into the balance by way of calculating what salary had in fact been lost and calculated by reference to at least twelve months' work under the contract with Norman Ross. Indeed, the approach later adopted in Bradib, in terms, was not applied. Without any basis for these deductions being spelt out in the judgment, they appear to be based on an assumption that such deductions were appropriate. 93The Full Bench on appeal rejected jurisdictional challenges and refused leave on other aspects of the appeal. The Full Bench confirmed the money order made by Macken J but there does not appear to have been any appeal pursued by the respondent driver seeking a higher amount or challenging the method of calculation of the $13,000 awarded by Macken J. In terms, the Full Bench did not consider the component parts of the money order made at first instance nor did it directly approve of the approach taken below. The most significant issue was the question of jurisdiction and whether there was sufficient connection between the payment of goodwill and TNT. The Full Bench concluded that, on the whole of the evidence, they were in no doubt that TNT had a very close connection with the contract declared void by Macken J. TNT had the right to accept or not accept the prospective purchaser into the organisation and without signification of such approval, the contract could never have come into being. It was open to infer that TNT recognised that a substantial purchase price, largely of goodwill, was involved. TNT undoubtedly recognised that a reasonable period of work was important if not vital to the purchaser and after specific enquiry, informed the purchaser that the contract between TNT and Norman Ross had recently been re-executed for a further period of twelve months. Upon execution of the contract, TNT had the benefit of Mr White's services as lorry owner/driver and was able to assume a reasonable degree of supervision and control over his work in order to ensure that work was performed satisfactorily and so as not to impair the existing obligations resting under its contract with Normal Ross. That connection was sufficient for TNT, although not receiving any proceeds of the contractual sum of $22,000, to be jointly liable for the money order made at first instance. In so concluding, the Court stated that the Commission's jurisdiction was not limited, in ordering restitution, to the amount actually received by those entities, the subject of its orders. 94In the course of its judgment in TNT Management v White the Full Bench made the following observations: The contract the subject of the proceedings was a contract for the sale of truck "with work." The vendor asked for and received $22,000 which sum included a truck the undisputed value of which was $3,000. The work for which the purchaser paid $19,000 for the right to perform was work the subject of a contract between TNT and Norman Ross. The contract bears out that the enterprise regulated by White was indeed substantial. It was clear that TNT had the right to approve or not approve the reception into its business of prospective purchasers of trucks in work operated by existing lorry owner/drivers. The Full Bench saw that as a real benefit or advantage which TNT possessed. It approved Mr White in that regard and Mr White then purchased the business. By this method of approval of purchasers, TNT was able, within reason, to ensure that the standard of lorry owner/drivers were such that the contract between it and Norman Ross would not be impaired through inefficiency or customer dissatisfaction. While there was no direct evidence that TNT was told of the amount of the consideration in Mr White's case, it was clear that there had been a number of sales in which substantial consideration had been requested and paid for goodwill and it was a clearly available inference that TNT knew of such purchases and that it was probable that a substantial amount of money was involved in any transaction between Mr White and the vendor. There are many aspects of the case that are reflected in the arrangement Toll made with its owner/drivers, however, the approach to the calculation of an appropriate money order has little relevance to the present cases. 95Reference was also made to cases dealt with by the Contract of Carriage Tribunal dealing with the termination of lorry owner/drivers in the context of an application that such termination was unfair, harsh or unconscionable. In the course of the cases cited, some consideration was given to how a compensation order may be framed having regard to the premium or "goodwill" paid by the driver. In TWU (o/b Steve Cincotta t/as S & M Cincotta Pty Ltd) and ors v Visy Board Pty Ltd [2005] NSWIRComm 178, seven drivers contracted by Visy Board claimed compensation pursuant to s 346 of the Act. All had their contracts terminated after the company decided to put the work of the owner/drivers out to tender. The applications claimed the loss of "goodwill" arising from their termination. A schedule indicated that, separately to the price of the truck, premiums had been paid for purchasing the truck with work ranging between $62,500 and $120,000. Section 346(1) provided that a carrier whose head contract of carriage was terminated by a principal contractor may claim "compensation" from the principal contractor in certain specified circumstances, including (b) under the terms of the arrangement between the previous carrier and the carrier, a sum of money as paid by the carrier to the previous carrier as a premium or fee in connection with the entry into the head contract or carriage by the carrier. Under s 349 of the Act, dealing with arbitration of the claim, sub-section 4 provided: In determining whether or not compensation is payable and if so the amount of the compensation, the Tribunal is to have regard to the following matters: the amount of the premium or fee paid by the carrier as referred to in s 346. 96In the Visy Board case each of the carriers gave evidence that a premium was paid in connection with the carrier's entry into the head contract of carriage. The Tribunal concluded that there was no doubt that there was a firmly established practice in Visy's yards that a premium or goodwill had to be paid for a carrier to enter into the yard to perform work. Visy did not "recognise" goodwill and preferred that no premiums were paid but the evidence was that they did not take sufficiently convincing steps to advise the carriers that the payment of goodwill was not a requirement of Visy. Indeed, the evidence suggested that Visy suspected that the payments were being made and turned a blind eye to the practice which they could have stopped at the point of engagement of each carrier had they so wished. 97In determining what compensation might be ordered, the Tribunal noted that there was contradictory evidence to explain the difference between the truck price and the premium paid with many taxation returns showing large discrepancies between the amounts claimed as premium and the amounts disclosed in the company taxation returns. The Tribunal therefore had great difficulty in determining actual premiums paid. One owner/driver, through his company, showed that the company had amortised goodwill paid over seven years of the contract and at the date of termination stood at the sum of $36,000. Goodwill had been amortised to $12,000 per year and this amount was taken up as an operating expense of the business. That driver had claimed approximately $98,000 as the premium. Other claims were different because of difficulties with the evidence and took into account the varying durations of the head contract of carriage. The amounts claimed were reduced by significant amounts by reference to the length of service, with the Tribunal stating: After allowing for the termination payments already made, and taking into account the contract duration period, we have arrived at compensation figures we consider appropriate as follows. ... It is to be noted that the claims (based on premiums/goodwill paid) were not reduced by reference to notions of exceptional returns made in the business over and above award rates but by reference to the length of service provided by the drivers. The rationale for that approach, in any event, was not explained. Importantly, the statutory provision required the Tribunal to have regard to any premium or fee paid to obtain the work - there was no statutory discretion or guidance requiring that amount of goodwill to be reduced in identified circumstances. 98The next case to which attention was drawn was the Transport Workers' Union (o/b Cruickshank Transport Pty Ltd v Stegbar Pty Ltd [2007] NSWIRComm 244. Again, this was a claim that the termination of the carriage contract was unfair, harsh and unconscionable within the mean of s 349(1) of the Act. Compensation was sought, inter alia, for the loss of the goodwill paid for the truck pursuant to s 349(4). The contract for the business disclosed a price apportionment of $50,000 for goodwill and $100,000 for the truck and equipment. The driver had spoken to the transport manager to discuss the takeover of the business and had told her that he was paying $150,000 for the truck and goodwill and she had replied that someone in head office would draw up the new contract for him to sign. At no time did the transport manager or anyone else from the company state that the payment of goodwill was not a requirement of being an owner/driver for Stegbar or that the payment of goodwill or a premium was prohibited by Stegbar. If at that stage he had known that fact he would probably not have paid $50,000 for goodwill. 99In relation to the calculation of compensation, the Tribunal referred to the matters set out in s 349(4) of the Act. The Tribunal was satisfied that the driver, on entering the yard at Stegbar, paid a premium and that the amount paid was $50,000. The premium payment ensured the applicant the possibility of earning a reasonable income for the term of the contract. The Tribunal expressed the opinion that the premium figure should be "amortised over a reasonable period of time" with the amortised amount taken up annually as an expense against the business thereby gaining the subsequent taxation concessions available for the business. In that way the premium paid gradually decreased over the years of expected engagement and ideally would be zero when the contract ended. It was recognised that, while that may be the case in an ideal world, it did not mean that at the end of the contract there should be no premium warranted or sought as the ongoing value would be zero. The Tribunal then stated that, in the present case, the applicant was afforded a reasonable income over two years and "accordingly" they decided to order $40,000 compensation under this head of claim. No explanation was given for this approach. 100In written submissions Toll also drew attention to the decision in Monier Roofing Pty Ltd v Quintrell and anor (1997) 78 IR 38. The Full Bench was dealing with an appeal from a determination of the Contracts of Carriage Tribunal concerning a claim for unfair dismissal. The claim arose in circumstances where there was a closure of plant by giving three months' notice and the company paying 2.5 years per year of service as compensation. One of the respondents had purchased a truck in work for $130,000 and although the contract for sale made no apportionment of that sum, the owner/driver estimated the value of the truck at $30,000 with a premium of $100,000 being paid. The vendor valued the truck at $40,000. In a second sale, the contract apportioned $23,000 for the truck and $57,000 for goodwill. There was a site agreement covering a sale of vehicles that was not unlike cl 11 applying in the Toll case. In the course of the decision, the Tribunal spoke of its experience with many cases arising under unfair contract provisions as well in dispute proceedings, where the principal contractor often claimed to have taken some step to advise incoming carriers that there was no requirement for a premium where it was, nevertheless clearly understood by the principal contractor that premiums were payable and, in fact, in large sums. The Tribunal also commented that under the practice at that yard whereby the owner/drivers were able to purchase in the knowledge that should they wish to sell in the future (providing they could find the person acceptable to Monier), they could do so. The Tribunal stated (at 45): Their goodwill was regarded by them, on reasonable grounds, as secure. 101In dealing with the statutory scheme for compensation, the Full Bench made the following observations: (a)It is obvious too, from the terms of the various paragraphs, that the essentials to enable a claim to be made against a principal contractor are based upon the payment by the carrier of a premium to the previous carrier who had been replaced. The circumstances in which such a compensable payment is made must be in connection with the entry into the contract of carriage by the carrier where it was a custom and practice for such a premium to be paid and where the principal contractor knew, or ought reasonably to have known, that such a payment had been made. Thus far, therefore, the pre-conditions for a claim concerned knowledge in the principal contractor of an arrangement between the carrier and previous carrier, consistent with the custom and practice in the industry or business of the principal contractor, that a premium was paid in connection with the carrier entering into the contract of carriage with the principal contractor. (at 47). (b)The termination of contracts of carriage held by carriers in favour of the work henceforth being performed by a single corporate carrier (in the present case TNT) as making out relevant unfairness against existing carriers was the subject of consideration by the former Industrial Court of New South Wales sitting as a Full Court (Fisher CJ, Hungerford and Peterson JJ) in Myer Stores Ltd t/as Grace Bros v Stowart (1994) 55 IR 21. It seems to us that the same approach may be followed in the present case and makes more poignant the expression of unfairness stated in evidence by Mr Elloy, the principal of the second respondent, to the effect that he "paid out a lot of money to be in this business and you expect me to walk out without any compensation." (at 51-52). 102The Toll submissions drew attention to the fact that the Tribunal had awarded only 53 per cent and 73 per cent of "goodwill" as compensation and that the Full Bench held that the Tribunal's exercise of its discretion had not miscarried. The Toll submission does not give recognition to the fact that one of the important factors for discounting the level of goodwill was to give credit for monies already paid as compensation by the company. As can been seen, the Full Bench saw parallels with the Myer case, a case that will be dealt with in the following paras of this judgment. 103The circumstances of the Toll drivers might be distinguished from these various cases where the amount of goodwill was reduced because of the income earned or earned over a number of years. In the case of the Toll drivers, they had a legitimate expectation based upon past practice and the operation of cl 11 of the agreement as an industrial instrument and as incorporated in the contract of employment, that the premiums paid would at least be capable of being recouped on the sale of the truck with work because there was no prohibition against selling the truck with work at a premium, and, that the work was stable and continuing. In other circumstances the drivers may have taken another approach such as amortising the amount of goodwill over a number of years and receiving the taxation benefits of that approach or may have bargained for a lower premium if there was a risk that the work would not last for a long time but those circumstances did not apply at Brambles or Toll. The long history had been that the truck with work was available to be sold at a premium and invariably the newly introduced purchaser would be approved. There was no need for the drivers to take any other view of the premium and there was no evidence they in fact attempted to amortise the amount of premium through their companies. They were therefore caught completely unaware and off-guard when Toll changed the policy approach to cl 11. The present case then becomes closer to the arrangements considered by the Full Bench in Myer Stores Ltd t/as Grace Bros v Stowart and ors (1994) 55 IR 21. In that case a decision was made to do away with the premiums. 104In Myer Stores, owner/drivers were led to believe that they had permanent contracts and paid substantial premiums as "goodwill" to secure the work. Myer proposed to terminate the contract of some 32 owner/drivers and grant the work to another principal contractor that offered substantially inferior terms of engagement for the same work but only to 20 of the 32 owner/drivers. The drivers refused this offer and commenced proceedings under s 275 of the 1991 Act seeking to recover their lost "goodwill." At first instance and on appeal it was held that the contracts were unfair, harsh and unconscionable because of the loss of the right to goodwill. In these arrangements goodwill was not expressly valued but Myer approved of the overall sale price. At first instance the lost goodwill was assessed at $75,000 (less the value of the truck). Three months' notice was also paid as compensation. 105The judgment of Fisher CJ and Peterson J referred to the commercial benefits Myer received from this arrangement and how it engendered stability in the fleet. The rates of remuneration after costs were deducted were found to be only marginally higher than the employed offsider. No distinction was made between owner/drivers who paid no premium for the work and those who had paid a substantial premium - they all lost the right to sell at a premium. No mention was made of the approach in Bradib. In a separate judgment Hungerford J concurred in the final orders after finding that the conduct of the business affairs of the new principal contract was "repugnant and wholly harsh and unconscionable." Again, no mention was made of Bradib. Ultimately, no reduction was made in the "goodwill" assessed nor was there a reduction in or because of the notice payments made. All members of the Full Bench recognised that security of tenure, continuity of work and exclusive access to part of the principal's work induced owner/drivers to pay substantial capital sums for the work. The same analysis is available in relation to the Toll owner/driver. 106On analysis, these judgments (whereby deductions were made from the total amount of goodwill such that owner/drivers often received a much-reduced money order in relation to so-called "goodwill") demonstrate that there is an unsatisfactory basis for making such a deduction. Earlier cases seemed to have proceeded on the basis of particular understandings at the workplace that might support a reduction in the amount of goodwill to be repaid to the owner/driver but there is no such evidentiary basis for that approach in the present proceedings. There does not appear to have been any similar approach taken to other arrangements, such as franchise arrangements, where amounts were paid for goodwill in a business that was undoubtedly designed to make a profitable return: none were drawn to the attention of the Court during these proceedings. 107In the course of submissions senior counsel for the respondents was unable to identify the rationale for this approach to lorry owner/drivers apart from stating that, because of their higher earnings, there should be some deduction in goodwill actually paid: that approach was not adopted by the Full Bench in Myer . In a case where either restitution is sought or the Court settles upon that approach as the most appropriate way in which to remedy the unfairness, it seems incongruous to say the least that the party to be restored to its pre-contractual position would somehow have an amount deducted from the goodwill actually paid. Under the contract Toll owner/drivers performed work at the rate agreed and the respondent obtained the benefit of that work. The position might be also tested by reference to the circumstances of Mr Whitton who did not pay a premium or an amount for "goodwill" (although claiming that he lost the opportunity to sell his truck with work at a premium price under Toll's no-sale policy and having significantly upgraded his truck at his expense to perform the work) yet there was no suggestion in the submissions that the evidence disclosed that he was paid some lesser amount for the contracted work because he did not pay goodwill or a premium for the work. Ultimately, the deductions made in these earlier cases might be attributed to their particular circumstances (most notably being the loss of the head contract) but there appears to be no basis to treat those cases as laying down a general rule that should apply in different circumstances. The present case is clearly quite different to those earlier cases in that Toll became directly involved in withholding its consent for the sale of trucks with goodwill or a premium attached. The drivers thereby lost the opportunity to recover a substantial component of their investment. 108Another issue of significance arose from the expert evidence called by the respondents concluding that there was no loss made by the drivers and therefore no compensation by way of money order would be warranted. Leave was given to the respondents to file, for the first time on remitter, expert evidence concerning an analysis of the loss claimed by the owner/drivers. That evidence was provided by Mr Wayne Lonergan a director of Lonergan, Edwards and Associates, a company said to specialise in the provision of the valuation of services and related advice to clients. He was asked to prepare a report as to: whether the assessment of loss provided by the owner/drivers was correct or supportable by reference to "acceptable valuation methods"; advise the Court as to the most appropriate method to assess the loss, if any, suffered by each of the owner/drivers as a result of the Toll policy; and, to assess the loss suffered by any of the drivers as a result of the Toll policy using the most appropriate loss assessment methods. 109Mr Lonergan commenced by examining the notion of "goodwill" as claimed by the drivers. Mr Lonergan noted that Brambles and later Toll were never a party to the sale and purchase transactions for goodwill nor benefited from the goodwill paid by the owner/drivers. In his view there was no goodwill in the accepted meaning of that term, namely, "an attractive force that brings in custom." In Mr Lonergan's view there was no evidence of an attractive force bringing in custom. Indeed, the owner/drivers simply delivered and picked up goods as required by Brambles or Toll and did not have customers of their own but relied on the customers of Brambles or Toll. They did not attract any independent customers or brought any customers to Brambles or Toll. Where goodwill was capable of being sold, it was "business goodwill" attached to a business only and was not personal goodwill of an individual. The owner/drivers did not have a business to sell and accordingly, no business goodwill could exist. 110The difficulty with this approach is that it has never been claimed that, in a technical sense, the premium paid by the drivers was "goodwill." As noted in judgments dealing with similar arrangements that description was a misnomer and was more appropriately described as either the equivalent of "key-money" or the cost of buying the work. Nevertheless, even the cases relied upon by the respondents have recognised this premium element of the arrangement as one that is capable of being recognised in unfair contract cases and capable of being quantified in compensation orders, especially those that seek to achieve restitution by placing the parties back into the positions they had prior to entering the unfair arrangement or contract. It appears that Mr Lonergan's attention was not drawn to cases relied upon by the respondents themselves in relation to these matters, especially those referred to above commencing with the decision in Bradib. 111Mr Lonergan next categorised the arrangement whereby a premium was paid as being in substance an "introduction to work" fee similar to fees that recruitment agencies may charge businesses for recruitment services. He pointed out, however, that fee appeared to be "very excessive" compared to recruitment agencies that usually charged somewhere between ten and fifteen per cent of the annual remuneration package. Again, this analysis is of little assistance. The Court is unable to accept the proposition that the premium was akin to a recruitment agency fee. None of the owner/drivers had such a business. When they paid the premium they not only purchased the truck but, when approved, were accepted for the work usually performed by the previous driver on an established run with established customers. Once accepted the owner/driver had conferred upon him a valuable status with a guarantee of a specified number of hours of work and a certain range of payments as already referred to in the 1989 agreement. 112Next, Mr Lonergan analysed this premium payment as a "right to earn income" which he viewed as having little value. If the premium was a payment for the right to earn income in the future, his view was that it would only have material value of anything like the magnitude claimed by the owner drivers if it automatically allowed the purchaser to receive, with certainty, a stream of "super profits." Super profits were defined to mean earnings over and above what the purchaser would earn working as an employee. On the information analysed by Mr Lonergan, however, that was not the case. The earnings for owner/drivers that allowed for all expenses other than labour costs varied significantly. Some owner/drivers earned more than they would have earned working as an employee driver but some owner/drivers over some years earned less than they would have earned working as employee drivers and therefore suffered losses. There was no guarantee that an incoming driver would automatically earn similar super profits if, indeed, these had been earned by a previous driver. The incoming driver might lack relevant business skills or might not be willing or, due to personal circumstances, be unable to work sufficient hours to make those profits and might suffer a loss. In summary, the ability to earn extra income was a function of the individual driver's ability and capacity to work but was not a characteristic of the right to work with Toll or the business with Toll that the owner/drivers wished to sell. Mr Lonergan's view was the personal ability to earn super profits was not capable of being sold with the business or the position with Toll. It therefore had no material value in exchange. 113This is a curious proposition urged by the respondents in view of the way in which they conducted their case, especially insofar as they relied upon the earnings of large amounts of money over and above that being capable of being earned by an employee to reduce the amount of premium that might be the subject of a restitutionary order. This part of Mr Lonergan's evidence might amount to an accurate critique of the sale of a truck with work and the flaws in that system but evidence before the Court and the many cases dealt with over the years under the unfair contracts provisions dealing with the sale of a truck in work strongly suggests that, despite the criticisms that can be levelled at the arrangement, they have, for a very long time, been offered and taken up with incoming owner/drivers paying significant premiums to become involved in such work. There appears now to be a well-established market for the sale of a truck with work despite evidence of the precarious nature of the financial returns. This is not a market that always operates rationally. 114The claim based on the current value of goodwill established by reference to three relatively recent offers of purchase that were not allowed by Toll was attacked by Mr Lonergan for its inadequacy as reflecting real value. As the Court is not disposed to approach the task of compensation by reference to that evidence but rather by restoring the parties to the position prior to the time that they bought the truck with work, it is unnecessary to comment further on this element of Mr Lonergan's analysis. The same may be said in relation to Mr Lonergan's loss assessment method which involved assessing the net loss, if any, that may have been incurred by the owner/driver by determining the net return on their initial capital investment. On that approach Mr Lonergan was of the opinion that five drivers who had left Toll had not suffered any loss. In relation to the four owner/drivers who continue to work for Toll, Mr Lonergan noted that they currently continued to work for Toll, that Toll did not have any plans to terminate the arrangement with the owner/drivers and they continued to benefit from any super profits that may arise from their initial investment in the goodwill/premium and would do so in the foreseeable future. Approached this way, three of the continuing drivers had received profits exceeding their initial investment in goodwill but one of the drivers appeared to have suffered losses. 115The evidence of Mr Lonergan was attacked by the applicant on a number of bases, including that it was not proper expert evidence, that it was argumentative and that essentially it constructed unreal scenarios in order to bolster the respondent's case. It is unnecessary to rule on any of these objections in view of the fact that the Court proposes to recognise the premium in the context of restoring the parties to their position immediately prior to entering the arrangement. In terms, Mr Lonergan did not conduct an exercise in relation to restitution of money originally paid as "goodwill" and he may not have been asked to do so. The incontrovertible fact is that, except for Mr Whitton, all the other drivers paid various sums for a truck with work where a very significant proportion of the total purchase price was attributed to "goodwill" or a premium payable for buying a truck with work. If the Brambles' systems had continued under Toll of allowing the sale of a truck with work, the owner/drivers had an opportunity, at least, of recovering their investment or even making a profit on their investment. Once Toll took the policy approach of refusing to permit the sale of a truck with work, together with a payment of a premium, it is clear that, in common parlance, the drivers had lost that part of their investment and were not permitted by Toll to attempt to recoup that investment. 116There may well be cases where the principles of valuation are matters of significance in the Court reaching an assessment as to an appropriate money order that is just in all the circumstances of the case but consistently the Court has rejected the notion that, in this exercise, it is awarding damages and thereby attracting approaches and principles that are appropriate for that exercise. In exercising the unfair contracts jurisdiction, it is often appropriate to set aside those formalities that are appropriate to other jurisdictions and in a commonsense way, make an assessment of what is appropriate to form the elements of a money order as available under s 106(5). Although there have been changes to the jurisdiction over the years, in substance, it essentially remains as the provisions that began as s 88F. There is nothing in the legislative changes made over the years that detracts in any way from the classic statement of Sheldon J in Davies v General Transport Development Pty Ltd [1968] AR (NSW) 371 at 374 that proceedings in this unfair contracts jurisdiction "is a plain matter of morals not law." 117The significance of that approach in the present case is the fact that Toll was aware, at least in a general sense (or should have been aware) that there was a practice of selling trucks in work at a premium and they induced the drivers to stay after the purchase was completed on the representation that essentially nothing would change. Toll did that at a time when they also had an unwritten policy against the sale of trucks with work sold at a premium. As earlier observed, if Toll wished to start with a clean slate it had to address this problem. Toll must now bear the cost of the consequences of its harsh and unconscionable conduct in this regard. It might be said at this point that the approach of returning to the initial sums paid by way of premium and restoring that payment to the drivers has the advantage for Toll that it will then have a workforce where no one has a claim to be able to sell their truck with work at a premium. This was one of the issues raised by Toll of the importance of not making an order based on present valuation of the premium that would have the effect of perpetuating that scheme amongst its owner/drivers. 118Mr Lonergan's approach essentially looks for actual loss but that approach was rejected by the Full Bench in Westfield Holdings. The Full Bench also made relevant observations regarding the width of orders for restitution, as noted by Staff J at [108]: Restitution may be an appropriate approach where a franchisee has paid money for a franchise and the contract has been found to be unfair. But restitution, as a basis for compensation, is rarely relevant to contracts of employment found to have operated unfairly. We do not think that Brown v Rezitis mandates an approach to the assessment of compensation under s 106(5) on the basis that restitution in the sense referred to, is to be the fundamental guiding principle. Restitution so understood may be appropriate in particular cases, but the fundamental guiding principle is that which is stated in the statute itself, namely, what is just in the circumstances of the case. In any event, the term restitution is at once ambiguous and a word of wide meaning. As Mason and Carter observe in their now standard text, Restitution Law in Australia, Butterworths, 1995 at 7: Where a legal order is made, there must not only be a point of reference for the order, there must be an objective. This is also a relative concept. The theme common to bases for legal liability is a process of adjustment. Here the ordinary senses of restitution are somewhat ambiguous, since restitution may refer to compensation for loss, or payment for a benefit, or restoration to a prior position or status. ... thus providing confirmation, if any were necessary, of the importance of adhering to the actual words of the statute. As for the proposition propounded by the appellant that it is only "actual loss" that is to be compensated under s 106(5), we fail to see how that can be derived from Brown v Rezitis. There were two elements in the formulation laid down by the Chief Justice in Brown v Rezitis. The first was restitution and the second was to "make remedial provision for what has taken place or been done under the contract in the meantime". It seems to us that this is a broader test than one that requires compensation for actual loss. We note the phrase used by Menzies J in Brown v Rezitis (at 170) where he referred to the requirement to "... recompense the worker for what he has lost". There is nothing, however, in the judgment of Menzies J to indicate that he regarded the power to make money orders under s 88F(2) as limited to compensation for actual loss. PROPOSED ORDERS 119Having concluded that the contracts of the owner/drivers were unfair, harsh and unconscionable, there should be a declaration to that effect. Although it seems to have been accepted in all the proceedings, the Court is satisfied that these contracts meet the requirements of s 106(1) in that they are or were contracts whereby a person performed work in the transport industry. It is probably both desirable and convenient that the contracts of those owner/drivers who have left Toll be declared void ab initio save as to the earnings made thereunder. The remaining owner/drivers continue to work for Toll and their contracts should be varied to specify a right to sell a truck with work subject only to Toll's satisfaction that the new driver is capable of performing the work. The order to be made for the payment of money to compensate for the unfairness of the contract is designed to return the owners/driver to the position they were in immediately before the original relevant purchase in relation to that element frequently referred to as "goodwill" (or more appropriately described as a premium). The Court is satisfied that such orders are sufficiently connected to the contracts as to comply with s 106(5) and the approach adopted in Brown v Rezitis. When those orders are finalised, Toll should no longer have a yard where an owner/driver has not been compensated in relation to "goodwill", all claims in that regard having been determined 120As to the precise amounts that should be contained in the final orders of the Court, the original assessment and payments of goodwill have been set out in the first judgment of Staff J. The Court proposes to base its final orders on those figures. It is not a criticism of the parties to note, however, that the details of an appropriate money order in each case was not the focus of submissions on remitter. There remains room for consideration of how the original amount paid as a premium is to be adjusted to compensate for the change in the value of money over the many years since it was paid and the extent to which Mr Whitton should receive monetary compensation when he did not pay a premium when commencing with Brambles. 121The first issue might be addressed in a variety of ways, including the application of the CPI for each year since purchase or the application of interest rates available on judgments given in the Supreme Court. The second issue, regarding Mr Whitton, might be approached in a similar way to the decision in Myer Stores Ltd, namely, that recognition be given to the fact that immediately after purchase, Mr Whitton significantly upgraded the standard of the truck used and secondly, once within the scheme he had an ongoing opportunity to sell his truck in work at a premium but Toll denied him that advantage. The Court, in those circumstances, can see no reason why Mr Whitton should not receive a monetary order because of his participation in that scheme although there might be numerous ways in which it can be calculated. It is in this context that the last offer he received may be relevant in such a calculation. There may also be room to consider an average figure based on the orders made in relation to the other drives or alternatively, averaging the orders of those drives who operated a truck of similar size. 122The variety of possibilities discussed above leads the Court to conclude that the most appropriate way forward would be to call upon the parties to discuss these issues (to the extent possible) and for the applicant TWU to then frame draft orders that reflect the determination of the Court as to the unfairness of the contract. Those draft orders should address the specific money orders to be made in each case. Should there be a need for further brief argument on the specific appropriate money orders to be made in each case, arrangements for that debate to occur may be made with my Associate. It should be made clear to the parties, however, that discussions as to appropriate money orders (given the Court's conclusion as to unfairness) should not compromise either party in relation to their appeal rights. The Court has laid down broad parameters for the framing of the compensation orders and against that background seeks the assistance of the parties to determine the final orders in relation to each owner/driver. It is the desire of the Court that any response from the parties be received within fourteen days of delivery of this judgment. ANNEXURE AGREED STATEMENT OF FACTS Background 1.The TWU represents nine owner-drivers each of whom either personally or through a family company entered into contracts with Toll for the provision of transport services ("the Contracts"). Those owner drivers are: Victor D'Angelo Leonard "Len" Felice (t/as L & N Felice) Francis Whitton Wayne Kennett (t/as WL & LM Kennett) Bela "Bill" Marcinasko (R & B Marcinasko Pty Ltd) Dominic Lamacchia (t/as D&E Lamacchia) James Novack (from 2002 Transco Holdings Pty Ltd) Nick Kouverianos (t/as N & N Kouverianos) Carlos Ferreira (t/as C & D Ferreira) Facts 2.All the facts set out below up to the time of the hearing before Staff J in December 2008 may be found on the basis of the record of proceedings before Staff J. Brambles and Sales of "Trucks in Work" 3.The owner driver arrangements began at Brambles' yards (then at Marrickville and Waterloo) in 1981/2 when Brambles sold a number of trucks to its employees on the basis that they became owner drivers. 4.In or around 1981/1982 Francis Whitton purchased a truck from Brambles for the price of $5,000. He was promised a guaranteed hourly rate and three years work. Having purchased the truck, Mr Whitton immediately resold it for $10,000 and purchased an updated truck costing $28,000. Mr Whitton did not pay any sum on account of "goodwill" or any other premium upon the acquisition of the truck from Brambles. 5.Brambles was subsequently located at Moore Park, and then moved to Revesby in about 1987. 6.Len Felice purchased a truck with work for the first time in 1986. He paid $10,000 in total to a then owner driver Brian Hall for his truck and "run"; the truck itself was worth about $5,000. 7.Dominic Lamacchia purchased a truck with work from then owner driver Bruce Waghorn in 1987. He paid a total of $33,000, split up into $15,000 for the truck and $18,000 for the work or "goodwill". He filled out a Brambles "Application for Employment" form and completed a probationary period of three months. 8.James Novak purchased his truck with work from then owner driver Bob Haig in 1988. He paid a total of $40,000, comprised of $15,000 for the truck and $25,000 for the "goodwill". 9.On 3 February 1989, an agreement pursuant to s 91H of the Industrial Arbitration Act 1940 was executed by Brambles - Bankstown and the Applicant ("1989 Agreement"). The 1989 Agreement was registered on February 1989, Agreement No CT2 of 1989. The term of the 1989 Agreement was from 6 February 1989 until 5 February 1990. A copy of the 1989 Agreement is located in a number of exhibits, but can be most conveniently located within Exhibit 1 (Annexure C to the Affidavit of Mr Lamacchia) dated 16 January 2007. 10.In 1989, Bela Marcinasko purchased a truck with work at United Transport (a transport business purchased by Brambles) at Enfield from then owner driver Phillip Adam for a total of $54,000, with the truck being estimated by him to be worth about no more than $14,000. 11.Wayne Kennett purchased his truck with work from then owner driver Joe Sposari in May 1990. He paid a total of $80,000, apportioned as $38,000 for the truck and $42,000 for the "business". 12.Mr Kennett was required to fill out a Brambles "Application for Employment" form. The application form required information on standard matters such as educational history, academic and trade qualifications, licenses, previous employment, health, previous workers compensation claims, traffic accidents and convictions, preparedness to work shift work and at other locations, and referees. 13.Nick Kouverianos purchased his truck with work in early 1991 from then owner driver Ross Pappagorgiou. He paid a total of $65,000 for a truck which he estimated was worth only about $5,000-$10,000 at the time (it was 11 years old with timber floors and the gates were not in good condition). He was required to fill out the standard "Application for Employment" form, which was approved by Phil Duncan, a Brambles manager. 14.Victor D'Angelo purchased his truck with work from Len Felice in 1992. The total agreed price was $65,000, agreed to be broken down as $25,000 for the truck and $45,000 for "goodwill"; there was a later discount of $1,000 in respect of certain truck repairs that needed to be carried. 15.Mr D'Angelo was required to fill out the standard Brambles "Application for Employment" form, which was approved by Mr Hilton. 16.In mid-1993 Mr Tim O'Brien became Operations Manager at Brambles' Revesby depot, and subsequently became Branch Manager in mid-1995. After he became Branch Manager, he familiarised himself with the 1989 Agreement. 17.Carlos Ferreira purchased his truck with work from Charlie Hanly in about July 1995. Mr Ferreira paid Mr Hanly a total of $60,000, apportioned at $5,000 for the truck and $55,000 for "goodwill". 18.Mr Ferreira filled out the standard "Application for Employment" form, which was approved by Mr O'Brien 19.Len Felice bought a truck with work at Brambles for the second time in September-October 1995. He paid a total of $75,000 to Bill Pearson, which was broken up into $8,000 for the truck and $67,000 for "the position". Mr Felice was required to sign the standard Brambles "Application for Employment" form, which was approved by Mr Hilton. Engagement of the Owner Drivers by Toll after Purchase of the Brambles Transport Business. 20.In June 1996, Toll purchased the Brambles transport business. 21.Upon the completion of purchase of the Brambles transport businesses in June 1996, Toll engaged the owner drivers. 22.Prior to Toll's acquisition, and the engagement of the owner drivers there was a meeting of employees and owner drivers at the Brambles Revesby Depot at which they were told by Brambles (Larry O'Regan) that upon the sale taking effect, nothing would change and business would carry on as usual. 23.Toll conducted a due diligence process before the Sale Agreement was executed. Toll was given access to a "data room" by Brambles which contained documents relating to the sale including industrial agreements and contracts between Brambles and its workforce. Mr Rodney Walters, Toll's General Manager Human Resources, was involved in the due diligence process on behalf of Toll and reviewed contract carrier documents disclosed in the data room. 24.Mr Walters made further inquiries about "goodwill" of Mr Jim Reardon, the General Manager of Brambles. Mr Walters asked Mr Reardon for an assurance that "goodwill" had not been a feature of the Brambles business and Mr Reardon replied by saying words to the effect that "Rod, you know the industry. I couldn't do that. Things happen that I may not be aware of". 25.Each of the owner drivers was sent a letter dated 25 June 1996 from Mr Mark Rowsthorn, the Toll's Group General Manager. A copy of this letter is most conveniently located in Exhibit 30 (Annexure A to the Affidavit of Mr Walters dated 30 August 2007. 26.The Respondents also sent a letter to each of the owner drivers dated 26 June 1996 and signed by Peter O'Brien, Toll's Financial Controller. A copy of this letter is most conveniently located at Exhibit 28. 27.At the time of its purchase of the Brambles transport businesses, Toll had an unwritten policy that it did not recognise "goodwill" or permit the sale of "trucks with goodwill". Toll did not inform the owner drivers of this policy at the time the above representations were made, and the owner drivers did not otherwise have any knowledge of this policy at the time they chose to accept engagement with Toll. 28.A number of Brambles personnel working at or with responsibility for the Revesby yard went over to employment with Toll after the takeover, including Mark Hilton, Tim O'Brien, Larry O'Regan and Joe Loulach. 29.In 1999, the operation at the Revesby yard was moved to Smithfield (and was combined with another previous Toll yard). 30.In July 2001, Mr Whitton was transferred to Toll Tasmania (a different business division of Toll). 31.In about March 2003, Mr Felice's wife was diagnosed with cancer, requiring him to take time off work. She died in January 2004, leaving Mr Felice responsible for the care of his three sons. Mr Felice sold the truck to an acquaintance in August 2004 for $30,000 (having updated his truck in 1998). 32.In 2004, Mr Novak determined that his engagement with Toll had become economically unviable because his truck was costing too much to maintain and keep on the road. He did not try to sell his truck with work. He sought and was appointed to a position as a Toll company driver. Mr Novak ceased to be an owner driver in August 2004 and thereafter commenced work as an employed driver. 33.In December 2005, Mr Whitto retired from work due to his wife's ill health. He sold his truck for $15,000. 34.In March 2006, Mr Kouverianos fell off his truck and injured his back. He returned to light duties, but his contract was eventually terminated by Toll in February 2007 because of his incapacity to work. 35.In about 2007, Toll transferred its depot from Smithfield to Eastern Creek. 36.Carlos Ferreira ceased working for Toll in January 2009. He obtained an alternative position closer to home with better hours of work and remuneration. 37.Victor D'Angelo, Bela Marcinasko, Wayne Kennett and Dominic Lamacchia continue to work for Toll as owner drivers. 38.The owner drivers whilst engaged by Toll received substantial and regular income. 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. Decision last updated: 30 March 2012