Gribbles Radiology Pty Ltd v Health Services Union of Australia [2003] FCAFC 56 (28 March 2003)

Last Updated: 28 March 2003

FEDERAL COURT OF AUSTRALIA

Gribbles Radiology Pty Ltd v Health Services Union of Australia

[2003] FCAFC 56

INDUSTRIAL LAW - Award - licence granted to an employer to provide radiology services at a medical clinic - whether the new licensee is a successor to part of the business of the previous licensee - whether there has been a transfer of part of a business where there has been no direct dealing between the successive employers.

Workplace Relations Act 1996 (Cth) s 149(1)(d)

North Western Health Care Network v Health Services Union of Australia [1999] FCA 897; (1999) 92 FCR 477 - considered

PP Consultants Pty Limited v Finance Sector Union of Australia [2000] HCA 59; (2000) 201 CLR 648 - applied

Minister of State for Employment Workplace Relations and Small Business v Community & Public Sector Union [2001] FCA 316; (2001) 109 FCR 303 - considered

Australian Rail Tram and Bus Industry Union v Torrens Transit Services Pty Ltd [2000] FCA 1683; (2000) 105 FCR 88 - cited

Stellar Call Centres Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union [2001] FCA 106; (2001) 106 FCR 302 - considered

Australasian Meat Industry Employees Union v MT Schank Meat Processing (1998) 81 IR 157 - cited

Minister for Immigration and Ethnic Affairs v Baker (1997) 73 FCR 187 - cited

GRIBBLES RADIOLOGY PTY LTD v HEALTH SERVICES UNION OF AUSTRALIA; MINISTER FOR EMPLOYMENT & WORKPLACE RELATIONS AS INTERVENOR

V483 of 2002

MOORE, MARSHALL & MERKEL JJ

MELBOURNE

28 MARCH 2003

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 483 OF 2002

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	GRIBBLES RADIOLOGY PTY LTD (ACN 081 552 089) APPELLANT
AND:	HEALTH SERVICES UNION OF AUSTRALIA RESPONDENT
AND:	MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS INTERVENOR
JUDGES:	MOORE, MARSHALL & MERKEL JJ
DATE OF ORDER:	28 MARCH 2003
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT the appeal be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 483 OF 2002

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	GRIBBLES RADIOLOGY PTY LTD (ACN 081 552 089) APPELLANT
AND:	HEALTH SERVICES UNION OF AUSTRALIA RESPONDENT
AND:	MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS INTERVENOR
JUDGES:	MOORE, MARSHALL & MERKEL JJ
DATE:	28 MARCH 2003
WHERE MADE:	MELBOURNE

REASONS FOR JUDGMENT

THE COURT:

Introduction

1 This is an appeal from a judgment of 5 July 2002 in which the primary judge determined that Gribbles Radiology Pty Ltd ("Gribbles") had breached the Health Services Union of Australia (Private Radiology - Victoria) Award 1993 ("the Award") by failing to pay several former employees severance pay. His Honour ordered Gribbles to pay a penalty to the Health Services Union of Australia ("the Union") for breaching the Award and to pay the former employees amounts of severance pay and interest on those amounts.

Background

2 The background is not controversial. It involved Gribbles commencing to provide radiography services at the Heritage Clinic in Moorabbin ("the Moorabbin clinic") where similar services had previously been provided by Medical Diagnostic Imagining Group ("MDIG"). The employees claiming severance pay had worked at the Moorabbin clinic as employees of MDIG prior to being employed by Gribbles. The position was summarised in the reasons for judgment of the primary judge as follows at [18] - [19]:

"This proceeding concerns the provision of radiography services, also described as medical imaging services, at premises known as the Heritage Clinic in Moorabbin (`the Clinic'). The Clinic was part of a chain of such establishments, each bearing the name Heritage Clinic. It was set up to provide, under the one roof, a variety of medical and related services. It had a reception area, from which patients could have access to parts of the premises occupied by medical and other practitioners. One part of the premises was devoted to the provision of radiography services. It was equipped with the machinery and other furniture necessary for the provision of such services. For the services to be provided, it was necessary that there be at any one time a qualified radiographer, otherwise described as a medical imaging technologist, to operate the machinery and to produce an image in accordance with the written instructions of a medical or other health practitioner. The fact that the service was offered on the premises of the Clinic enabled the other practitioners in the Clinic to send their patients for immediate imaging. Practitioners outside the Clinic could also refer patients for imaging and patients of other practitioners could also elect to come to the Clinic for that purpose.

The proprietor or manager of the Clinic did not at any relevant time employ the radiographers who worked on the premises of the Clinic. From time to time, the proprietor or manager entered into contracts with business entities that provided medical imaging services for the provision of those services at the Clinic. Over the years, a series of such business entities was engaged. It appears that each of those entities found it difficult to make a profit from the provision of the services at the Clinic. The unprofitability of the operation seems to have been the reason for the engagement of a series of entities, although there is evidence suggesting that one of the changes was initiated by the proprietor or manager of the Clinic. Lack of sufficient return was certainly the reason for the cessation of the provision of the service."

3 For a number of years prior to 31 August 1997, radiography services at the Moorabbin clinic had been provided by a business styled Southern Radiology. Southern Radiology employed a number of medical imaging technologists or radiographers, including Susan Padey, Suzanne Williams, Margaret Fowler and Louise Pollard ("the four radiographers"). None of the four radiographers worked full time at the Moorabbin clinic, and they all performed radiography work at other locations in addition to the work they carried out at the Moorabbin clinic. They viewed their work at the Moorabbin clinic as permanent part-time work, because they each worked regular rostered shifts. The four radiographers were paid 25 per cent above the ordinary time rate under cl 6 of the Award.

4 Southern Radiology ceased to provide radiography services at the Moorabbin clinic on 31 August 1997. From 1 September 1997 to 1 September 1999, radiography services at the Moorabbin clinic were provided by MDIG, which conducted medical imaging services at around 50 locations including the Moorabbin clinic and other Heritage clinics located at Dandenong and Frankston. The activities undertaken at the Moorabbin clinic were integrated with MDIG's activities undertaken elsewhere. Specifically, x-rays taken at the Moorabbin clinic were forwarded to offsite radiologists for analysis and diagnosis, accounts and salaries were processed at MDIG's office in Surrey Hills and administrative work associated with rosters and timesheets was also undertaken away from the Moorabbin clinic.

5 Before commencing operations at the Moorabbin clinic MDIG wrote to the radiographers working at that site offering them the opportunity to join MDIG and "continue your existing roster at the Heritage clinic". The letter stated that employment would be on a casual basis, and that there would be no entitlement to leave. With a few minor changes to shifts the four radiographers continued working the roster that had been in place with Southern Radiology prior to MDIG taking over. MDIG's commercial arrangements with Heritage, including the arrangement concerning the Moorabbin clinic, were terminated because they were unprofitable. The radiographers who provided the services for MDIG at the Moorabbin clinic (and the other Heritage clinics) were offered redeployment to other MDIG locations or, if that offer was refused, were requested to resign.

6 Gribbles is in direct competition with MDIG in the provision of radiology services. On 11 August 1999 Gribbles entered into a written commercial agreement to provide radiology services at the Moorabbin clinic, and two other Heritage Clinics at Frankston and Dandenong ("the Gribbles agreement"). The agreement was made with Region Dell Pty Ltd ("Region Dell") trading as Heritage Clinics. The provision of services under the Gribbles agreement commenced on 1 September 1999, which was immediately after MDIG ceased providing its services at the Moorabbin clinic. The equipment used by Gribbles in the provision of services at the Moorabbin clinic was provided by Region Dell, and services were offered to patients referred from doctors at the Moorabbin clinic as well as to patients referred from other practices. Under the Gribbles agreement Region Dell granted a licence to Gribbles to provide radiology services from specified areas at the Heritage Clinics at Moorabbin, Frankston and Dandenong. In consideration of the payment by Gribbles of a monthly fee Region Dell provided radiology equipment, non exclusive use of reception facilities, provision of all the necessary services and reasonable access to medical professionals engaged by it at the clinics. It also agreed to use its best endeavours to encourage patients at two other Heritage Clinics to use the services of Gribbles. Gribbles was required to make available a qualified radiographer for the radiology sessions specified in an annexure and all radiology consumables and supplies. There was no restriction on the practitioners that may refer services to Gribbles.

7 The evidence concerning MDIG's contractual arrangements with Region Dell was scant. It was to the effect that MDIG had a "contractual arrangement" to provide radiology services at the same three clinics. Under the contract MDIG had "the right to occupy space" at the three clinics and Region Dell "would" encourage their general practitioners to use "the radiology services" of MDIG. MDIG was also entitled to service "non-Heritage" referrals.

8 In the circumstances set out above it is reasonable to infer that the contractual arrangements between Region Dell and Gribbles and Region Dell and MDIG were substantially to the same effect. Under those arrangements MDIG and Gribbles agreed to provide radiology services at the three clinics pursuant to their agreements with Region Dell primarily for patients referred to them by medical practitioners at the clinics, but also for patients of other practitioners. In fact MDIG and Gribbles provided radiography services at the Moorabbin clinic. However, we do not regard anything as turning on that distinction as the provision of radiography services is a discrete aspect of the provision of radiology services.

9 From 1 September 1999 the Moorabbin clinic advertised that there was a new provider of radiography services by altering signage in some public areas of the clinic. The way Gribbles operated was similar to MDIG in that the provision of services at the clinic was integrated with activities undertaken elsewhere, including x-ray analysis and personnel related administration.

10 On 20 August 1999 Gribbles wrote to the four radiographers offering them permanent part time positions and indicated that the rostered shifts would remain the same (although there were some very minor changes). On 3 July 2000, Gribbles scaled back the services at the Moorabbin clinic, and subsequently ceased providing services altogether because it was unprofitable.

11 The four radiographers were sent letters on 25 May 2000, advising them that the amount of hours in which radiography services were offered at the clinic was to be reduced. A further letter was sent to them on 5 June 2000 effectively advising them the facility at the Moorabbin clinic would close and their employment was terminated.

12 Gribbles did not pay the severance pay provided for in the Award to any of the four radiographers.

Relevant legislation and the Award

13 The proceedings were brought pursuant to s 178 of the Workplace Relations Act 1996 (Cth) ("the Act"), which provides for the imposition of penalties on persons bound by an award who have breached that award. Section 178(5)(b) provides that a party to the award is able to sue for the penalty. Section 179A enables interest on that penalty, and s 356(b) gives the Court power to order that the penalty be paid to a particular organisation or person. Section 178(6) enables to the Court to order employers to pay employees any underpayment under an award.

14 Section 149(1) of the Act, which is of central importance to these proceedings, provides:

"Subject to any order of the Commission, an award determining an industrial dispute is binding on:

(a) all parties to the industrial dispute who appeared or were represented before the Commission;

(b) all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared);

(c) all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute;

(d) any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer;

(e) all organisations and persons on whom the award is binding as a common rule; and

(f) all members of organisations bound by the award."

15 The Award was made by the Australian Industrial Relations Commission on 14 December 1993, and continues in force pursuant to provisions of the Act. MDIG is a named party to the Award (as is Southern Radiology) but Gribbles is not. The provision in the Award central to this appeal is cl 37 which deals with redundancy. It applies to all employees under the Award. The subclause, which creates an entitlement to severance pay reads:

"(c) (i) In addition to the period of notice prescribed for ordinary

termination in PART ONE (d) and PART TWO (d) of clause 34,

an employee whose employment is terminated for reasons set

out in paragraph (a)(i) hereof shall be entitled to the following

amount of severance pay in respect of a continuous period of

service:

Period of continuous service Severance pay

Less than one year nil

1 year but less than two years 4 weeks' pay

2 years but less than three years 6 weeks' pay

3 years but less than four years 7 weeks' pay

4 years and over 8 weeks' pay

(ii) Provided that the severance payments shall not exceed the

amount which the employee would have earned if employment

with the employer had proceeded to the employee's normal

retirement date.

(iii) `Weeks' pay' means the ordinary time rate of pay for the

employee concerned.

(iv) For the purpose of this clause, continuity of service shall be

calculated in the following manner:

For the purposes of this clause a year of employment shall be

deemed to be unbroken notwithstanding:

(1) any annual leave or long service leave taken therein;

(2) any interruption or ending of the employment by the

employer if such interruption or ending is made with

the intention of avoiding obligations in respect of

annual leave or long service leave;

(3) any absence from work of not more than fourteen days

in the year of employment on account of sickness or

accident;

(4) any absence on account of leave (other than annual

leave or long service leave granted), imposed or agreed

by the employer;

(5) any absence on any account not involving termination

of employment.

(v) and in calculating a year of employment any absence of a kind

mentioned in subparagraphs (c)(iv)(1), (2) and (3) of this

subclause shall be counted as part of the year of employment

but in respect of absences of a kind mentioned in

subparagraphs (c)(iv)(4) and (5) of this subclause it will be

necessary for the worker as part of their qualification for

redundancy to serve such additional period as equals the

period of such absences."

16 The clause contains a provision designed to enable an employee to carry forward the benefit of service with a prior employer for the purposes of severance pay. The provision appears under the heading "Transmission of Business" in cl 37(l) and reads:

"(i) Where a business is before, on or after the date of this Award,

transmitted from an employer (in this subclause called `the

transmittor') to another employer (in this subclause called

`the transmittee') and an employee who at the time of such

transmission was an employee of the transmittor in that

business becomes an employee of the transmittee:

(1) service shall be deemed not to have been broken by

reasons of such transmissions; and

(2) the period of employment which the employee has had

with the transmittor or any prior transmittor shall be

deemed to be service of the employee with the

transmittee.

(ii) In this subclause `business' includes trade, process, business

or occupation and includes part of any such business and

`transmission' includes transfer, conveyance, assignment or

succession whether by agreement or by operation of law

and `transmitted' has a corresponding meaning."

It is convenient to note at this stage that in this appeal Gribbles only challenges two legal conclusions of the primary judge. No primary findings of fact are challenged. The first legal conclusion challenged is that Gribbles was a successor, assignee or transmittee with the consequence that, pursuant to s 149(1)(d), Gribbles was bound by the Award. The second legal conclusion challenged is that Gribbles is a transmittee for the purposes of cl 37(l). However, the appeal was conducted on the footing that the resolution of the issue concerning s 149(1)(d) would resolve the issue concerning cl 37(l). Counsel for Gribbles indicated it was unnecessary for us to consider separately cl 37(l). No issue was raised on the appeal as to the manner in which cl 37(l) sought to bind a transmittee.

Issues before the primary Judge

17 As Gribbles is not a party to the Award, a central issue before the primary judge was whether Gribbles was a "successor, assignee or transmittee" of all or part of MDIG's business, within the meaning of s 149(1)(d). If so, then Gribbles accepted it would be bound by the Award, and be liable to pay the four radiographers severance pay, calculated from the time they commenced with Southern Radiology, in accordance with cl 37(l).

18 His Honour commenced by examining the purpose of s 149(1)(d), noting that it was intended to secure the rights of employees by substituting one employer for another and, accordingly, it should be interpreted broadly: North Western Health Care Network v Health Services Union of Australia [1999] FCA 897; (1999) 92 FCR 477 ("North Western Health Care").

19 The primary judge turned to consider the process by which Gribbles came to provide the radiography services at the Clinic. His Honour outlined the arrangements between Region Dell and Gribbles regarding equipment and the provision of facilities before noting that, on the evidence, the only dealings Gribbles had with MDIG was the possible communication of names and other information about the employees engaged to conduct work at the Moorabbin clinic (including the four radiographers). These dealings resulted in job offers being made to the four radiographers by Gribbles, with the effect that acceptance would result in a cessation of employment with MDIG (unless they were employed by MDIG at other locations). Gribbles sought to establish at the hearing before the primary judge that, as there was no direct dealings between Gribbles and MDIG, no succession, assignment or transmission had occurred.

20 The primary judge commenced his discussion of the legal issues by examining a range of relevant authorities including PP Consultants Pty Limited v Finance Sector Union of Australia [2000] HCA 59; (2000) 201 CLR 648 ("PP Consultants"); North Western Health Care and Minister of State for Employment, Workplace Relations and Small Business v Community & Public Sector Union [2001] FCA 316; (2001) 109 FCR 303 ("Employment National"). His Honour concluded that the authorities did not establish that a direct transaction between two employers was necessary for there to have been a transmission, assignment or succession of a business. His Honour viewed the primary focus of these authorities as having been on the characterisation of a "business", or part of a "business", and on whether the activities conducted by the new employer have a sufficient nexus with those conducted by the former employer. In this matter, a comparison of the activities and operations of MDIG and Gribbles (and previously, of the activities of Southern Radiology and MDIG) indicated they were identical for all relevant purposes.

21 His Honour then turned to consider the purpose of s 149(1)(d) noting that, if the section was restricted to circumstances in which a direct transaction between the two employers occurred, the provision would be relatively simple to circumvent. He said, at [52]:

"If the Court were to take a technical approach, and to hold that some direct transaction between the two employers were necessary to satisfy s 149(1)(d), the object of the provision would be evaded easily. For instance, it would be a simple matter for the first employer to transfer the right to conduct the business to a third party, not an employer, who could then transfer it to the new employer. There would be no direct transaction between the two employers, but the result would be precisely the same as if there had been. The presence of a third party cannot of itself exclude a factual situation from amounting to a succession, assignment or transmission. The use of the word `successor' in s 149(1)(d) suggests that there is not a need for a direct transaction. It is possible, even in the technical sense of the word, for one person to be the `successor' of another without any direct transaction between them."

The reasoning was criticised by Gribbles in this appeal. The primary judge concluded that the inclusion of the word "successor" in s 149(1)(d) indicated that no direct transaction was necessary.

22 His Honour concluded that, although Region Dell was effectively the controlling party in arranging the provision of radiology services at the Moorabbin clinic its decision to enter into a contract with Gribbles, instead of MDIG, had the practical effect of transferring the business from one to the other. The primary judge noted that the phrase "taken over" was frequently used in evidence to describe the transition between Southern Radiology and MDIG and, subsequently, between MDIG and Gribbles. His Honour found that Gribbles (and MDIG before it) was a "transmittee" of that part of the business that provided radiology services at the Moorabbin clinic. Accordingly, Gribbles was bound by the Award.

23 In considering whether it was unfair to make Gribbles liable to pay severance pay to the four radiographers, the primary judge emphasised that Gribbles was under no obligation to employ the four radiographers and that it received significant benefits by doing so.

24 Other findings made by his Honour, specifically regarding the interpretation of the Award in relation to whether the four radiographers were casual employees, were not put in issue in this appeal.

Reasoning on the Appeal

25 Before considering how s 149(1)(d) might operate in the present case it is desirable to identify the legislative purpose of the provision. It has, for present purposes, been conveniently summarised in the judgment of R D Nicholson J (Spender and Madgwick JJ agreeing) in North Western Health Care. As to the purpose of the Act generally, his Honour said at 485 [27]:

"I therefore accept the submissions for the respondent that the purpose of the [Workplace Relations] Act is to facilitate the resolution of disputes between employers and employees and that the intention of the [Workplace Relations] Act is that a disputation in the area of industrial activity is settled by the making of an award."

His Honour then addressed the purpose of the provision itself at 485 [28]:

"The purpose of s 149 as appears from its terms is to extend the binding nature of awards beyond the parties who appeared or were represented before the Commission in relation to the industrial dispute. The policy objective of this provision is to make the power to settle industrial disputes effective by extending the instrument of settlement to `the ever changing body of persons within the area of such disturbances':  George Hudson v Australian Timber Workers' Union [1923] HCA 38; (1933) 32 CLR 413 at 455 per Starke J."

26 To similar general effect were the observations of Madgwick J at 502 [97]-[98], though they were cast a little more widely:

"Finally, I would say that, although it has been convenient to segregate arguments and questions about `business', the successor terminology and (to a lesser but still appreciable extent) what is necessary to constitute an overriding order of the Commission, they are in truth but aspects of a single, overriding conception. That is that settlements by award-making, aimed at quelling present industrial disputes and the prevention of future disputes, should be kept effective, pending conscious variation or replacement of the award, regardless of mere changes in arrangements as to which legal entity might be the employer of an unchanged industrial class of employees, regardless of such matters as whether the original employer had other classes of employees as well and may have remained their employer, and regardless of whether the legal ownership of all of the plant and equipment used by the employees for their work and the other resources of the employer utilised in the undertaking should have likewise changed.

As Starke J said in George Hudson Ltd v Australian Timber Workers Union [1923] HCA 38; (1923) 32 CLR 413 at 455, over 75 years ago, of the constitutional power to enact legislation like s 149(1)(d),

`the constitutional power is not so weak, in my opinion, that it is limited to the settlement of an industrial disturbance between the actual participators therein. If so limited, the power would be practically ineffective: if industrial disturbances are to be settled or prevented, then the power must extend to the ever changing body of persons within the area of such disturbances'

(Emphasis added.)"

We accept R D Nicholson J's description of the purpose of the section. That purpose bears upon how it might operate in a particular factual context. It also serves to distinguish the section from other similarly framed provisions found, for example, in State long service leave legislation which have tended to be construed more narrowly and with a greater focus on the precise legal relationship between the parties to the transaction pursuant to which succession, transmission, or assignment is alleged to have occurred.

27 Gribbles submitted that s 149(1)(d) did not operate to make the Award binding upon it for two reasons. The first was that the activities that MDIG undertook at the Moorabbin clinic were not part of its business nor part of Gribbles' business when undertaken by that company. The second was that Gribbles was not the successor, assignee or transmittee of any business activities that MDIG had undertaken. The latter submission was, in substance, that MDIG effectively left the Moorabbin clinic and ceased is activities at the clinic and that thereafter Gribbles arrived and commenced its own activities at the clinic. It was argued, with some force that there was, at best, extremely limited contact between Gribbles and MDIG and certainly no dealings between them that could constitute succession, assignment or transmission. During the course of our consideration of the issues raised in this appeal, we will not separately refer to submissions made by the Minister for Employment and Workplace Relations who intervened pursuant to s 471 of the Act. While different matters were emphasised, the submissions of the Minister were also directed to demonstrating the primary judge had erred and that Gribbles was not bound by the Award by reason of s 149(1)(d).

28 The first submission of Gribbles was based, in substantial part, on the judgment of the High Court in PP Consultants. The High Court said at 655 [14]-[15]:

"The question whether one person has taken over or succeeded to the business or part of the business of another is a mixed question of fact and law. For this reason and, also, because `business' is a chameleon-like word, it is not possible to formulate any general test to ascertain whether, for the purposes of s 149(1)(d) of the Act, one employer has succeeded to the business or part of the business of another. Even so it is possible to indicate the manner in which that question should generally be approached, at least when a non-government employer succeeds to the commercial activities of another non-government employer. As already indicated, special considerations apply when one government agency succeeds to the activities of another. And there may well be other considerations where a government contracts with a non-government body for the performance of functions previously carried out by a government authority.

As a general rule, the question whether a non-government employer who has taken over the commercial activities of another non-government employer has succeeded to the business or part of the business of that other employer will require the identification or characterisation of the business or the relevant part of the business of the first employer, as a first step. The second step is the identification of the character of the transferred business activities in the hands of the new employer. The final step is to compare the two. If, in substance, they bear the same character, then it will usually be the case that the new employer has succeeded to the business or part of the business of the previous employer."

29 The High Court was discussing how the activities of two employers in the private sector might be considered to ascertain whether one had succeeded to a business or part of the business of the other so as to enliven s 149(1)(d). This passage was preceded by an observation that in the private sector notions of profit and commercial enterprise will ordinarily be significant in determining whether the activities of an employer in the private sector constitute a business. This is to be contrasted to the position in relation to government agencies where the word "business" might fairly describe only the activities undertaken by the agency.

30 The task proposed by the High Court involves identification or characterisation of the business or the relevant part of the business of the first employer and of the transferred business activities in the hands of the new employer, and a comparison between the two. In the present case, Gribbles submitted that, approached this way, a conclusion is not open that Gribbles succeeded to any part of the business of MDIG. It was put in various ways. The approach of Gribbles was as follows. The business of MDIG was an integrated business involving the provision of radiological services in which an aspect (but not part) of the business involved radiography. Radiography resulted in the creation of images. However, those images had to be assessed by radiologists and reports prepared for patients and referring medical practitioners. The activities of the radiographers in taking the images was not a discrete business activity generating income but an integral part of the overall business of MDIG which culminated in the diagnosis provided to referring medical practitioners and their patients. The financial and administrative support for the activities of the radiographers was provided by others located elsewhere. In addition radiography was undertaken as part of MDIG's business, not only at the Moorabbin clinic but elsewhere. It was not possible to isolate the provision of radiography services at one location and treat that as part of the business of MDIG. Similarly, Gribbles' business was an integrated one with the same characteristics as MDIG's business. The provision of radiography services at the Moorabbin clinic was not, so it was argued, a part of either business.

31 This approach, in our opinion, is too narrow. While the provision of radiography services at the Moorabbin clinic could be viewed as an activity it was a discrete activity of the business of both MDIG and Gribbles undertaken for the purpose of enabling both to carry on their entire business. It was undertaken for the purpose of enabling the entire business to generate both income and profit as a commercial activity. Both that part of the business and the business as a whole were directed towards generating profit as a commercial enterprise. Indeed, it is to be recalled that both MDIG and Gribbles ceased providing radiography services at the Clinic because it was not profitable. To suggest that a "part of a business" must itself generate a net income or profit (typically aspects, as the High Court noted in PP Consultants, of business) does not allow for the possibility that s 149(1)(d) can, having regard to its terms, operate not only on a business but on part of a business. We do not see any basis for confining the expression "part of a business" for the purposes of the section to a discrete profit earning part or unit of a business. The High Court in PP Consultants was, in the passages just discussed, not concerned with identifying what might be the characteristics of part of a business simpliciter, but the characteristics of entire businesses or their parts for the purposes of comparison.

32 It can be accepted that, in general, the mere transfer of machinery or of some other assets used in a business may not constitute a transfer of part of a business. However, each case must turn on its own facts. In the present case a discrete part of MDIG's and Gribbles' businesses and of their income earning activities was the provision of radiography services at the Moorabbin clinic pursuant to the agreement each made with Region Dell. The services provided by those businesses at the clinic contributed to generating part of the income earned by the businesses and we see no reason why the business activities of MDIG and Gribbles at the Moorabbin clinic should not be described as part of their respective businesses for the purposes of s 149(1)(d).

33 Further, in the present matter the Award, having regard to its terms, was made to settle a dispute between the Union and specified private sector employers providing radiological services at various locations in Victoria. In so doing it has specified minimum rates of pay and other conditions of employment for, amongst others, radiographers. As the primary judge observed, it was common ground that MDIG was a named respondent to the Award. Southern Radiology (which, as noted earlier, provided radiography services at the Clinic before MDIG) was also a named respondent. It is quite consistent with the purpose of s 149(1)(d) discussed earlier, for it to operate so as to render applicable the Award on a private sector employer operating a similar business in the same industry, who employs radiographers performing the same functions as those performed by employees of named respondents at the same location. The terms on which the dispute was settled (namely those embodied in the Award) would continue to apply to the class of employee to whom the Award generally applied. This would tend to preserve the settlement by preventing an employer offering inferior terms and conditions of employment or, from a different perspective, requiring the employer (Gribbles) to provide the same terms and conditions. Moreover, by rendering the Award applicable to Gribbles (at least in relation to the radiographers working at the Moorabbin clinic) s 149(1)(d) would, by its operation, have the effect of lessening the prospects of a further dispute arising between the Union and Gribbles in which the Union would seek to establish, by the making of another award, similar terms and conditions of employment (to the extent to which that is now permitted under the Act). The above factors reinforce our view that a narrow approach to s 149(1)(d) is not appropriate and that, in that context, it is appropriate to characterise the radiography services provided by Gribbles at the Moorabbin clinic as part of its business.

34 We should refer briefly to the judgment of the Full Court in Stellar Call Centres Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union [2001] FCA 106; (2001) 106 FCR 302 ("Stellar Call Centres") which Gribbles relied on to illustrate how activities carried on within a business of an employer might not, if conducted by another employer, attract the operation of s 149(1)(d). We accept that the Full Court correctly identified what emerges from the PP Consultants, namely that one cannot simply focus on the activities undertaken by the employer bound by the award (or certified agreement) and then compare them with the activities undertaken by the new employer. It is necessary to undertake the process of characterisation and comparison discussed by the High Court. In Stellar Call Centres the characterisation and comparison pointed to the conclusion that there had been no succession, assignment or transmission of a business or part of a business. The transmittor and the transmittee conducted quite different businesses. That, however, is not the case in the present matter.

35 In our opinion the potentially wide reach of s 149(1)(d) is limited, in a case such as the present, in its operation in relation to businesses or parts of businesses in the private sector by the requirement that a new employer has succeeded to, has been assigned or has had transmitted to it the business or the part of the business. Thus, as was pointed out in PP Consultants careful consideration must be given to "the transferred business activities in the hands of the new employer". However, the expression "successor, assignee or transmittee" is not to be construed narrowly. As was noted by Ryan and Madgwick JJ in Employment National at 352-353 [169]-[170]:

"The issue of succession, transmission or assignment, as distinct from the issue concerning `part of a business' received little express attention in PP Consultants. However, it is apparent from the primacy accorded (at 655 [15]; 209[15]) to the `before and after' comparison and from the use of the lay terms `taken over' (at 655 [14]; 209 [14]) and `disposed of' (at656[19]; 210[19]) in considering whether anything had passed from the first employer, that the joint judgment implies an aversion from any narrow or technical reading of the phrase `successor, assignee or transmittee'. Neither did Callinan J appear attracted to a technical approach: se e663 [29], 215 [29]; 665-666 [39]-[43]; 217-218 [39]-[43].

At one end of the spectrum of circumstances to which ss 149(1) and 170MB can arguably apply is the case where the former employer who was a party to the industrial dispute, simply vacates the field of, or ceases to participate in, the activities to which that dispute related. The mere fact that one or more new employers adventitiously enter the area or begin to engage in the same or substantially similar activities would not, it seems reasonably clear, constitute the new employers as successors, assignees or transmittees of the former employer. What is required is some conduct or connection touching employment in the relevant activity from which can be imputed a sufficient relationship between the former employer and the new employer or employers."

36 Gribbles pointed to observations of Ryan and Madgwick JJ in Employment National at 352-353 [170] and of Mansfield J in Australian Rail Tram and Bus Industry Union v Torrens Transit Services Pty Ltd [2000] FCA 1683; (2000) 105 FCR 88 at 100-101 [54] that s 149(1)(d) (and the equivalent provision concerning certified agreements) does not operate in circumstances where one employer simply vacates a business (perhaps conducted out of particular premises) and another employer enters the same field of business activity (perhaps also at the same premises). Some greater or closer connection between the earlier and later businesses is necessary. We do not disagree with these observations. However, in the present case there is a sufficient connection between the earlier part of the business of MDIG at the Moorabbin clinic and the part of the business subsequently conducted at the clinic by Gribbles to enliven the operation of s 149(1)(d). The connection arises by reason of Gribbles' assumption of the business activities conducted at the clinic by MDIG as a result of Region Dell conferring on Gribbles all of the rights and facilities it required to operate the radiology services previously provided by MDIG

37 In the present case MDIG provided the radiography services at the Moorabbin clinic under its contract with Region Dell, which provided the premises, equipment and services to enable that to be done. Region Dell was to encourage patients at the clinic to use the radiography services provided by MDIG (as part of the radiological services MDIG provided) and the majority of patients were those referred by doctors at the clinic. Gribbles, which operated under essentially the same contractual arrangements, can be fairly described as having taken over or succeeded to that part of MDIG's business which it had previously conducted at the clinic. The services provided, first by MDIG and then by Gribbles, were part of the radiological facility established by Region Dell at the Moorabbin clinic. It was in Region Dell's interest to ensure someone took up where MDIG left off. Heritage could and did provide, apart from the staff, the entire means by which this could be achieved. In these circumstances it is apt to say that Region Dell procured the transfer of the business activities (being part of the business) undertaken by MDIG at the Moorabbin clinic to Gribbles. It is not an essential element in our analysis that the transfer also included taking steps to facilitate the transfer of the four radiographers. Further, it is not to the point that the transfer was effected by a third party: cf Australasian Meat Industry Employees Union v MT Schank Meat Processing (1998) 81 IR 157 at 162-163. The succession was effected by Region Dell so as to perpetuate a facility or service which was an important element of its own business at the Moorabbin clinic.

38 It may well be, as submitted by Gribbles that, for there to be an assignment or transmission for the purposes of s 149(1)(d), there must be a direct dealing between the old employer and the new employer. Such an approach would be consistent with the ordinary meaning of the words "assignee" or "transmittee" as descriptive of a party to a transaction even if the words were broadly construed in a non-technical way as discussed earlier. But the entire expression "successor, assignee or transmittee" may be viewed as dispersive in which the "or" is a kind of hybrid of disjunctive and conjunctive: see Minister for Immigration and Ethnic Affairs v Baker (1997) 73 FCR 187 at 195. It is unnecessary to resolve the question of whether there needs to be a direct dealing in an assignment or transmission because, in our opinion, a person can be a "successor" as a result of a transaction involving a succession to a business or part of a business by reason of the conduct of a third party who is not the operator of the business or part of the business. Such a conclusion would be consistent with the ordinary relevant meaning of "successor" and "succeed".

39 While there is some force in the criticism made by Gribbles that the primary judge placed considerable emphasis on comparing the business activities of MDIG and Gribbles before and after the change over, his Honour was nonetheless cognisant of the role of Region Dell in establishing a sufficient nexus between the two businesses to constitute a succession for the purposes of s 149(1)(d).

40 In the terms of three steps stipulated in PP Consultants at 655:

* the relevant part of the business of MDIG was the provision of radiography services at the Moorabbin clinic pursuant to its contract with Region Dell;

* the "transferred" business activities were the provision of radiography services at the Moorabbin clinic pursuant to essentially the same contractual arrangements with Region Dell;

* MDIG's and Gribbles' business activities at the clinic are essentially the same activities.

As we are satisfied that the business activities of MDIG constitute a "part" of its business and a "transfer" of those activities has been effected by Region Dell it must follow that s 149(1)(d) has been enlivened as a result of Gribbles' succession to part of MDIG's business. Thus, the primary judge's conclusion that Gribbles was bound by s 149(1)(d) to pay the severance pay claimed by the four radiographers at the Moorabbin clinic was correct.

41 For the above reasons the appeal is to be dismissed.

I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moore, Marshall & Merkel.

Associate:

Dated: 27 March 2003

Counsel for the Appellant:	Mr J Bourke
Solicitor for the Appellant:	Clayton Utz
Counsel for the Respondent:	Mr R W Hinkley with Mr D Langmead
Solicitor for the Respondent:	Health Services Union of Australia
Counsel for the Intervenor:	Mr P P Dalton
Solicitor for the Intervenor:	Freehills
Date of Hearing:	25 and 26 February 2003
Date of Judgment:	28 March 2003