Forno v Inghams Enterprises Pty Ltd [2010] NSWIRComm 189 (17 December 2010)

Last Updated: 3 March 2011

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION :
Forno v Inghams Enterprises Pty Ltd [2010] NSWIRComm 189



FILE NUMBER(S):
IRC 1545
1546
1547

HEARING DATE(S):
6 & 8 December 2010

DATE OF JUDGMENT:
17 December 2010

PARTIES:
Wayne Forno (on behalf of Lodala Pty Ltd) (First applicant)
Wayne Forno (on behalf of Petchy's Transport Pty Ltd) (Second applicant)
Wayne Forno (on behalf of Matmar Transport Pty Ltd) (Third applicant)
Inghams Enterprises Pty Ltd (Respondent)

CORAM:
Marks J


CATCHWORDS: APPLICATION FOR RECOVERY OF MONEY – contract of carriage – claim for redundancy payments due under Redundancy Contract Determination – whether Redundancy Contact Determination intended to cover contracts of carriage not regulated by contract determination – schedule indicating redundancy provided for in items of remuneration under contract of carriage – items held to be part of an aggregate list unable to be ‘unbundled’ – whether previous deed of release precludes applicant from seeking monies – findings made as to redundancy entitlement – proceedings stood over to allow parties to agree on quantum of claim – costs – interest reserved

LEGAL REPRESENTATIVES
Mr S Bull (solicitor) (Applicant)
Solicitor:
Transport Workers' Union NSW
Mr A Moses SC and Mr D Mahindra of counsel (Respondent)
Solicitor:
Thomson Playford Cutlers

CASES CITED:
Australia and New Zealand Banking Group Limited v Finance Sector Union of Australia [2001] FCA 1785; (2001) 111 IR 227
Ray v Radano [1967] AR(NSW) 471
Re John Ubaldo Poletti v Ernest Ecob (No 2) [1989] 492; (1989) 31 IR 321
Transport Industry – Redundancy (State) Contract Determination [2007] NSWIRComm 183

LEGISLATION CITED:
Industrial Relations Act 1996 – s 365


TEXTS CITED:




JUDGMENT:

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: MARKS J

Friday 17 December 2010

Matter No IRC 1545 of 2009

WAYNE FORNO (ON BEHALF OF LODALA PTY LTD) v INGHAMS ENTERPRISES PTY LTD

Application under section 365 of the Industrial Relations Act 1996

Matter No IRC 1546 of 2009

WAYNE FORNO (ON BEHALF OF PETCHY’S TRANSPORT PTY LTD) v INGHAMS ENTERPRISES PTY LTD

Application under section 365 of the Industrial Relations Act 1996

Matter No IRC 1547 of 2009

WAYNE FORNO (ON BEHALF OF MATMAR TRANSPORT PTY LTD) v INGHAMS ENTERPRISES PTY LTD

Application under section 365 of the Industrial Relations Act 1996

JUDGMENT

[2010] NSWIRComm 189

1 These proceedings concern applications for recovery of money brought by Wayne Forno, the secretary of the Transport Workers’ Union of New South Wales (“TWU”) on behalf of three corporations, namely Lodalo Pty Ltd (“Lodalo”), Petchy’s Transport Pty Ltd (“Petchy’s) and Matmar Transport Pty Ltd (“Matmar”). In each of the applications, an order is sought for the recovery of money said to be due and owing by the respondent, Inghams Enterprises Pty Ltd, under the provisions of the Transport Industry – Redundancy (State) Contract Determination. Each of the companies had a contract of carriage with the respondent that was terminated with effect on 6 September 2008. Each claimed the payment of redundancy payments due under the Redundancy Determination.

2 The applications were filed under s 365 of the Industrial Relations Act 1996 (“the Act”). Section 365 is in the following terms:

365 Order for recovery of remuneration and other amounts payable under industrial instrument

An industrial court may, on application, order an employer to pay any amount payable under an industrial instrument that remains unpaid to the person to whom it is payable.

3 The respondent resisted the applications on a number of grounds, which I shall shortly deal with.

The factual background

4 The facts were largely not in dispute.

5 Each of the contract carriers in question was engaged under a contract of carriage to transport chilled poultry products in refrigerated vehicles on behalf of the respondent. Each of the contract carriers had done so for several years.

6 In about 2001, several contract carriers including Matmar initiated certain proceedings against the respondent under s 106 of the Act claiming, in effect, that their contracts of carriage were unfair in that they had paid money for goodwill to acquire their contracts of carriage, which was not recognised by the respondent. These proceedings were resolved between the parties. Matmar executed a deed of release on 27 May 2003, the provisions of which I shall turn to later in these reasons for judgment. The deed of release anticipated that Matmar would enter into a revised contract of carriage with the respondent from 2 June 2003 with a fixed term of three years. Matmar did so. Petchy’s entered into a three year fixed term contract of carriage with the respondent on 18 June 2004, as did Ladalo on 25 June 2004.

7 Woolworths Limited is one of the respondent’s major customers. In about 2006, Woolworths signalled that it was intending to move to a “cross-docking” system in the metropolitan area, which would have the effect that the respondent would deliver its product to a Woolworths refrigerated warehouse and Woolworths would undertake distribution to its individual stores. When this occurred, it would reduce the amount of work available to contract carriers engaged by the respondent.

8 The respondent wrote to each of the contract carriers alerting them about the progress of the negotiations with Woolworths and dealing also with the status of their contracts of carriage. I shall refer to the correspondence with Matmar, which is indicative also of the correspondence with Ladalo and Petchy’s.

9 The respondent wrote to Matmar on 22 June 2006 advising that the three year fixed term agreement had expired on 2 June 2006. The letter referred to the fact that Woolworths had not made a final decision on distribution and stated that “we will continue to offer your company distribution work on a month to month basis (based on the terms and condition of the expired June 2006 contract). That work will be offered on the same terms and conditions as applied under that agreement ... .”

10 Matmar confirmed in writing that it was prepared to agree with these terms until further notice.

11 Similar letters were written to Matmar on 2 April 2007 and 29 May 2007 in each case referring to the progress of negotiations with Woolworths and continuing to offer distribution work “on a month to month basis until February 2008 ... .”

12 By letter dated 17 July 2008, the respondent advised all distribution contractors that Woolworths intended converting its then existing transportation arrangements with the last delivery to Woolworths’ stores being 6 September 2008. All contract carriers were invited to a meeting.

13 By letter dated 31 July 2008, Matmar was advised that the arrangements under which it had operated for some time “ie on a month to month basis” would continue until 6 September 2008. If Woolworths proceeded to convert the arrangements on that date, then “our arrangements with your company will cease on 6 September 2008 ... .” The letter offered to assist in endeavouring to secure alternative contract work.

14 All of the contract arrangements between each of the contract carriers and the respondent that are the subject of these proceedings came to an end on 6 September 2008.

15 It is also necessary to refer to the form of the contract of carriage entered into between each of the contract carriers and the respondent. As I have said, each of them provided for a fixed term of three years.

16 Payment was to be made calculated in accordance with Schedule 2.

17 Schedule 2 made provision for the payment of a base rate of a weekly figure together with “$0.02 per kilo for all tonnage carried in excess of 16,200 kg each week” which was called the “weekly excess tonnage calculation”. There was provision for a second trip rate and bulk work.

18 The Schedule under a heading “Rates of Remuneration” provided that the rates of remuneration referred to “have accounted, and include payment, for the following factors ....” There is then set out 21 items; they are:

1. Wages – based on appropriate GVM as per the Transport Industry (State) Award.

2. Overtime – hours worked in excess of 40 hours each week.

3. Annual Leave

4. Long Service Leave.

5. Public Holidays.

6. Picnic Day.

7. Sick Leave.

8. Bereavement, paternal, adoptive leave

8. Return on capital invested.

9. Depreciation.

9. Lease Costs.

10. Running and standing costs

11. Registration and compulsory third party insurance.

12. Comprehensive insurance.

13. Public liability insurance.

14. Personal accident insurance.

15. Administrative overheads.

16. Fuel.

17. Oil.

18. Tyres.

19. Repairs and maintenance.

20. Mobile telephone.

21. Redundancy.

19 Each of the principals of each of the contract carriers gave evidence and in particular evidence about the rates of remuneration. Evidence about this matter was also given by Peter van Vliet, the General Manager, Operations of the respondent. Overall, the evidence was to the effect that the rates schedule was designed to take into account the individual circumstances of each contract carrier so as to ensure that the base rate covered all of the drivers’ costs. The excess kilo rate was paid in order to provide some incentive and to ensure that there was some profitability in each contract. Mr van Vliet was adamant that the reference to redundancy as one of the 21 items expressed to have been taken into account in the calculation of the overall remuneration package was a matter that was definitively included because there were concerns at the time that the contracts were entered into about a number of impending changes, including the possibility that Woolworths might introduce its cross-docking system.

The Redundancy Contract Determination

20 The Contract Determination was made on 2 August 2007 before Deputy President Sams of the Industrial Relations Commission of New South Wales pursuant to a decision published by him the same day.

21 By cl 3, the Contract Determination is expressed to apply “to all contracts of carriage and shall bind all carriers and principal contractors party to such contracts of carriage ... .” There are some exceptions, but they are not relevant for present purposes.

22 Clause 3(3) provides that the Determination is to operate “as a variation to any other Contract Determination that otherwise would apply ... .”

23 There was no dispute in the proceedings that each of the contract carriers was made redundant as provided for in the Contract Determination.

24 Clause 6 provided for the payment of severance pay calculated by reference to “years of engagement” and the age of the driver. Depending upon these matters, there was expressed to be a severance pay calculated by reference to a number of “weeks’ pay”. That term is defined by cl 6(c) to mean “the weekly average gross remuneration the carrier received from the principal contractor for the previous 12 months for work performed by the carrier on behalf of the principal contractor, less the percentage amount set out in schedule A to this Contract Determination on account of running costs.”

25 Schedule A consisted of a “running costs component” that set out a percentage of costs by reference to the tonnage rating of the vehicle. It was common ground that the relevant percentage for the vehicles, the subject of these proceedings, was 28 per cent.

26 Clause 9 is entitled “Savings Clause”. It is in the following terms:

9. Savings Clause

(i) Nothing in this contract determination shall be construed so as to require the reduction or alteration of more advantageous benefits or conditions which a carrier may be entitled to under any existing redundancy arrangement.

(ii) Nothing in this contract determination shall be construed as abrogating, detracting or diminishing any claim which a carrier may have against a principal contractor with respect to:

(a) any sum of money (however described) paid by the carrier as a premium or fee paid in connection with the entry by the carrier into the contract(s) of carriage with the principal contractor or a predecessor to the principal contractor; or

(b) the loss of utility and/or diminution of value of the vehicle previously used by the carrier in connection with the contract(s) of carriage with the principal contractor as a consequence of the carrier's termination by the principal contractor. Providing that the fixed costs component of any severance payment under this contract determination may be offset against such a claim.

(iii) Nothing in this contract determination, including these provisions relating to severance pay, shall be construed as replacing, diminishing or in any way affecting any existing rights which carriers have, whether under a contract determination, contract agreement, or any collective or individual agreement, contract or arrangement, to a payment upon termination of engagement where that payment is not in the nature of severance or redundancy pay.

(iv) Notwithstanding subclause (iii), where a contract carrier engaged under a relevant contract determination has received a termination payment from a principal contractor the amount payable under this Determination shall be reduced by the same amount. Where a termination payment has been made which is greater than the amount payable under this Determination then no further amount shall be payable to the carrier.

For the purposes of this subclause:

(a) “relevant contract determination” shall mean the Boral Country – Concrete and Quarries Contract Determination [357 IG 214], Boral Resources (NSW) Sydney Metropolitan Concrete Contract Determination [354 IG 301], Hanson Construction Material Pty Ltd Concrete Carriers Contract Determination [354 IG 272], Transport Industry – Readymix Holdings Pty Ltd Concrete Cartage Contract Determination [348 IG 1028], or the Transport Industry – Metromix Concrete Haulage Contract Determination [349 IG 1025].

(b) “termination payment” shall mean any payment made by the principal contractor to the contract carrier on termination of the carrier’s engagement and shall include any redundancy or severance payment, any truck purchase payment, truck lease payout payment, and any company dissolution payment made by the principal contractor in connection with the termination.

Does the Redundancy Contract Determination apply?

27 The respondent submitted for the purpose of these proceedings that the Redundancy Contract Determination did not apply to it. Essentially, it was said that the Redundancy Contract Determination only applied to circumstances where contracts of carriage were regulated by a contract determination made by the Commission, no such determination applied to the drivers of refrigerated vehicles, and therefore the Contract Determination was inapplicable.

28 Although the respondent relied on some provisions of the Redundancy Contract Determination in aid of this submission, it principally relied upon some parts of the decision of Sams DP in Transport Industry - Redundancy (State) Contract Determination [2007] NSWIRComm 183

29 I should immediately observe that when the proceedings were before Sams DP, none of the respondents made any submission concerning the manner in which the contract determination should be framed, concentrating instead on equity arguments in which the making of any such contract determination was resisted.

30 It is obvious from a reading of the decision that the attention of Sams DP was directed by the parties to the circumstances of principal contractors who were bound by the provisions of contract determinations that governed their relationship with contract carriers. No one seems to have directed the Deputy President’s attention to the circumstances of contract carriers whose contracts of carriage were not the subject of a contract determination, as is the case in these proceedings. Because of this, it was said by the respondent in these proceedings that Sams DP had not intended the Redundancy Contract Determination to cover the circumstances of contracts of carriage that were not in turn regulated by a contract determination. The respondent directed attention in particular to [310] and [311] of the decision, which are in the following terms:

[310] There was some debate about the definition of a weeks pay for the purposes of calculating redundancy pay. This arose from the complex and unique way that remuneration is calculated having regard for the particular relationship between a principal contractor and a carrier. The calculation has three components: labour, fixed costs and running costs of the vehicle. These components are identified in Schedule 1 to the General Carriers Contract Determination and include wages; overtime – in excess of 40 hours each week; annual leave; long service leave; public holidays; picnic day; sick leave; return on capital invested; depreciation; lease costs; registration and compulsory third party insurance; comprehensive insurance; public liability insurance; personal accident insurance; administrative overheads; fuel; oil; tyres; repairs and maintenance and industry-specific allowances. The labour component includes factors such as wages, sick leave, annual leave, public holiday and long service leave. Fixed costs are the costs of whether work is performed or not and running costs are those costs that are incurred in performance of the work.

[311] The Union proposed to average the annual gross remuneration received by the carrier less the percentage amounts for running costs which are found in the General Carriers Contract Determination. These percentages range from 21% to 28.52% depending on the type of vehicle. The result represented fixed costs, less running costs. There was a suggestion by one employer witness, that the labour component in the general carriers’ remuneration was in fact a running cost. This suggestion was contradicted by other employer witnesses and later withdrawn. I am satisfied that it is appropriate to regard a weeks pay for the purposes of calculating redundancy pay as all those components of the carriers’ rate, including labour, except for the running costs. It seems to me that the Union’s proposed definition appropriately recognises, for the purposes of redundancy, the concept of a weeks pay as generally understood by the industry.

31 It was submitted by the respondent that the reference to the components of the labour, fixed costs and running costs was a reference to the inclusion of those components in the General Carriers’ Contract Determination, and in doing so Sams DP was confining his attention to the circumstances of contracts of carriage regulated by a contract determination.

32 I reject this submission. I would read the reference in these paragraphs to the General Carriers’ Contract Determination as one that is illustrative of the manner in which the three components of remuneration are described and what is comprehended within each of them. There is no suggestion that these three components would not operate in the case of any contract of carriage, whether regulated by contract determination or not. Indeed, the evidence in these proceedings, and particularly that of Mr van Vliet, recognises these three component parts.

33 Deputy President Sams had also considered an earlier decision in the Commission involving proceedings before a Full Bench in which redundancy pay was sought for lorry owner-drivers who were engaged by the Roads and Traffic Authority. At [317], Sams SP said:

[317] The Full Bench in the RTA Case rejected the claim on discretionary grounds, in circumstances where, firstly, an award was being sought in respect of an industry whose entire history had been one of non-award coverage, specifically sanctioned by the parties. In the present case, by way of contrast, a contract determination is being sought in respect to an industry which is heavily regulated by a general industry contract determination and numerous company or enterprise specific contract determinations.

34 The respondent submitted that this indicated that Sams DP was considering only the circumstances of contracts of carriage regulated by contract determinations. Again, I reject this submission because there is a reference to a “heavily regulated” industry rather than a reference to an industry exclusively regulated by contract determinations. I should also make brief reference, when dealing with the decision of Sams DP, to what was said by him about the provisions of what eventually became cl 9 dealing with the Savings Clause. At [270] Sams DP said:

[270] Mr Hatcher addressed further respondent criticism of the claim which was said to allow ‘double dipping’. The Union had properly accepted that where a principal contractor makes a redundancy payment, pursuant to an agreement or a policy, it would be entitled to offset such payment against any redundancy determination made by the Commission.

35 I observe that this is clearly a reference to an offset against a redundancy determination made by the Commission, within the provisions of a contract determination or other industrial instrument. This became an issue in these proceedings because the respondent submitted that by reason of the second Schedule, which made provision for redundancy payments as one of the 21 items, that the respondent would be entitled to offset any such payments under cl 9. I can deal with this submission briefly. The provisions of cl 9(iv) clearly only apply to a contract carrier engaged under a contract determination. The contract carriers, the subject of these proceedings, were not engaged under any contract determination so that the offset, which would otherwise be applicable under cl 9, cannot apply. The respondent’s submission is rejected accordingly.

Any other set off

36 The respondent submitted that in any event it would be entitled to set off payments made by it to each of the contract carriers under each of the contracts of carriage because the payments included, as one of the 21 items, redundancy.

37 I have already found that there is no entitlement to set off any such payments against the obligation to make redundancy payments under the Contract Determination because the provisions of cl 9 are restricted to circumstances where any redundancy payment is made pursuant to a contract determination. This does not apply under the circumstances of these proceedings. Accordingly, it would be necessary for the respondent to demonstrate that there was some other basis that would allow some form of set off or credit to be given.

38 The respondent relied on a number of authorities in support of its claim for credit or set off. The first is a decision of the Full Bench of the Federal Court of Australia in Re John Ubaldo Poletti v Ernest Ecob (No 2) [1989] 492; (1989) 31 IR 321. The proceedings involved in part a question of whether an employer could allocate certain moneys paid to an employee over and above Award payments in satisfaction of obligations under the Award. The Full Bench adopted the reasoning of Sheldon J in the Industrial Commission of New South Wales in Ray v Radano [1967] AR(NSW) 471. The Court summarised the reasoning of Sheldon J in the following manner.

[42] It is to be noted that there are two separate situations dealt with in the passage from the judgment of Sheldon J which has been quoted and in the reasoning of the Commission in Pacific Publications. The first situation is that in which the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award entitlements. In that situation, the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments. The second situation is that in which there are outstanding award entitlements, and a sum of money is paid by the employer to the employee. If that sum is designated by the employer as being for a purpose other than the satisfaction of the award entitlements, the employer cannot afterwards claim to have satisfied the award entitlements by means of the payment. The former situation is a question of contract. The latter situation is an application of the common law rules governing payments by a debtor to a creditor. In the absence of a contractual obligation to pay and apply moneys to a particular obligation, where a debtor has more than one obligation to a creditor, it is open to the debtor, either before or at the time of making a payment, to appropriate it to a particular obligation. If no such appropriation is made, then the creditor may apply the payment to whichever obligation or obligations he or she wishes. See Halsbury's Laws of England, 4th ed., vol. 9, paras. 505 and 506.

[43] The principles discussed by Sheldon J in Ray v Radano and by the Industrial Commission in Pacific Publications do not appear to have been considered in terms in this Court. In Lynch v Buckley Sawmills Pty Ltd [1984] FCA 306; (1984) 3 FCR 503, the Court considered whether amounts paid by an employer to employees in some pay periods, which were in excess of the amounts prescribed by the relevant award, could be treated as satisfying the obligations of the employer in respect of pay periods in which the amounts paid had been below those required by that award. At p 509, Keely J. said:

“...none of those payments which were in fact above the award rate were paid as amounts due under the award; they were paid as amounts due under an agreement which patently was not intended to fulfil the respondent’s obligations to pay wages under the award. Mr Strahan (counsel for the respondent in that

case) conceded – correctly in my opinion – that an employer who has paid, by agreement with an employee, an over-award payment cannot later use that over-award payment to offset a subsequent payment of an amount less than that prescribed by the award. In my opinion the present cases, where the payments were made pursuant to an agreement, are in the same position.”

39 The situation that is summarised in the above passage does not strictly apply to the circumstances of these proceedings. Here, the respondent made payments of an overall amount that included within 21 items a reference to redundancy. Leaving aside for the moment the fact that each contract of carriage was entered into some years before the obligation to make redundancy payments under the Contract Determination arose, the situation is that there is agreement that a sum or sums of money will be paid and received within the terms of a contract determination entitlement, albeit one that arose later. Strictly, therefore, the second situation referred to in the above extract does not apply either. What the respondent is seeking to achieve in the context of these proceedings is some credit for the payment made to each of the contract carriers under the contracts of carriage by reference to the item “redundancy”, being one of the 21 items said to be covered by the remuneration payable to them. I can see no reason in principle why such an approach might not be adopted, provided that it is appropriate to do so.

40 The second decision is that of Australia and New Zealand Banking Group Limited v Finance Sector Union of Australia [2001] FCA 1785; (2001) 111 IR 227.

41 In essence, six employees of the ANZ Bank had become employed under a total employment cost remuneration package for managers. The effect of this was that the provisions of an industrial award would not apply to them, save for certain limited exceptions including an award provision which provided for long service leave. Under the new package, these employees were entitled to participate in a special Retirement/Severance Allowance Scheme, which provided for benefits in the nature of long service leave. They would be entitled to receive either those benefits or long service leave under the Award, whichever was more advantageous to them. One of the matters in contention was whether ANZ Bank could offset the payment made under the salary package against long service leave which would otherwise be payable under the Award. The package constituted an over Award payment. The Union argued that ANZ could not set off the over Award payment against the long service leave award entitlement relying on the decision in Poletti v Ecob.

42 In rejecting the Union’s approach, the Full Court first reviewed the decision in Poletti v Ecob and the judgment of Sheldon J in Ray v Radano, which was discussed at length and adopted in Poletti v Ecob.

43 In referring to the judgment of Sheldon J In Ray v Radano, the Full Court said:

[48] The first situation noted in the passage is one where “the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award requirements”. In that situation, the Full Court said, “the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments.” [Emphasis added]. So the critical question is whether the relevant award entitlements arose outside the contractually agreed purpose.

[49] It will usually be easy to determine whether there is a coincidence between particular award entitlements and the contractually agreed purpose. Take the case of an agreement for payment of wages of $1,000 per week to an employee who has an award entitlement to receive wages of $800 per week. Discharge of the contractual obligation will clearly also discharge the obligation to pay wages imposed by the award. On the other hand, take the first example offered by Sheldon J, where an employer agrees to pay a clothing allowance. It is no answer to a claim for underpayment of wages to say there was no award obligation to pay a clothing allowance. Similarly with Sheldon J’s second example: it is no answer to an overtime claim to say the employee has received an over-award payment in respect of ordinary time.

44 The Full Court concluded that the amount of the Retirement/Severance Allowance Scheme payment was “directly related to the long service leave taken by the employee.” Accordingly, “both the award entitlement and the contractual payment arose out of the same agreed purpose.” (At [51]). The Full Court concluded “it is inherent in this approach that there must be a close correlation between the nature of the contractual obligation and the nature of the award obligations. But it is not necessary that the same label be used.” (At [52]).

45 The Full Court then considered the second situation that was discussed in Poletti v Ecob that required it to determine whether the Retirement/Severance Allowance payment was designated by the employer as being for the purpose other than the satisfaction of the award entitlements. Having regard to the circumstances in which the scheme was created, the Full Court concluded: “It is evident that it was intended that any payment of a Retirement/Severance Allowance would subsume any lesser obligation to make payment under the award in respect of untaken long service leave.” (At [54]). The Full Court agreed that it was necessary to focus on the “designation and appropriation” of the payments made “by reference to the whole of the evidence.” (At [56]). Because the payments made were made by reference to the scheme only, the principle established in Poletti v Ecob could not apply and ANZ was entitled to take into account all of the moneys paid to each of the employees in determining whether they had received appropriate long service leave payments.

46 If payments had been made by the respondent to each of the contract carriers by specific reference to redundancy payments or in circumstances where it would be appropriate to designate payments having been made by reference to any entitlements to redundancy pay, it is arguable that the position contended for by the respondent is correct.

47 However, it is necessary to have regard to “the whole of the evidence”. It will be remembered that the rates of remuneration payable to the contract drivers under the agreement were expressed to have “accounted, and include payment, for” 21 designated items. There is no clue given in the Schedule as to the allocation of any particular part of the remuneration to any particular item out of the 21 that are listed. This is not surprising given that matters such as hours worked in excess of 40 hours each week, sick leave, bereavement, paternal and adoptive leave, running and standing costs, administrative overheads, repairs and maintenance and the like are not capable of being accurately predicted and arise as and when the circumstances occur or the expense is incurred. No doubt some of the items are included in the list so as to overcome any suggestion that in some way the principal drivers, who actually are engaged to drive the vehicles through the corporate structures, are not seen to be unduly disadvantaged because he or she is not entitled to a number of benefits that would normally flow if the driver was a direct employee of the respondent. These include wages, overtime, annual and other leave, public holidays, picnic day and redundancy. Furthermore, the listing of all of these 21 items will make it clear both to the respondent and to the contract carrier drivers those of the items that are compensated by way of remuneration. Certainty about these items will preclude any misunderstanding about what is or is not included within the remuneration.

48 The underlying approach adopted in Schedule 2 consists of the payment of a base rate of a nominated amount per week together with a per kilo rate for all tonnage carried in excess of 16,200 kilograms each week. In these circumstances, it cannot be said that there is any attempt to designate any particular item within the 21 items listed as attracting any particular value or as representing any particular portion of the remuneration payable to contract drivers. All of the 21 items in the aggregate are part of a bundled and comprehensive list and, on the evidence, it is impossible to unbundle them in any particular way.

49 Nevertheless, the respondent endeavoured to unbundle the remuneration paid to the contract drivers by allocating to each of the first 20 items amounts that are reflected in the financial records of each of the corporations and by deducing that any amounts left over could be designated as amounts referrable to redundancy. In this way it was said that there had emerged an amount that, in accordance with the principles established in Poletti v Ecob, could be credited to the respondent as against any entitlement to redundancy pay under the Redundancy Contract Determination. The applicants objected to the tender of any such documentation without having the benefit of scrutinising it as to its accuracy. The documentation has not been admitted into evidence. However, I should indicate, for the purpose of general discussion about it, that the documentation demonstrated, on the respondent’s submissions, that after taking into account the first 20 items in the Schedule, there was a substantial amount by way of surplus which in general terms equated with or even exceeded the amount of the claims brought by each of the applicants in these proceedings.

50 I have concluded that I should reject the tender of this documentation. This is because I conclude that, given the circumstances in which each of the 21 items is listed and the failure to allocate any particular amount or proportion to any individual item, it is inappropriate to designate any particular part or portion of the remuneration provided for in the agreements as being referrable to redundancy. Consistent with the approach of the Federal Court of Australia in each of the authorities to which I have referred, it follows that it would be inappropriate and impermissible to allow the respondent credit for any part of the remuneration that it has paid to each of the contract carriers as against any liability to pay redundancy payments under the Redundancy Contract Determination.

51 The applicants submitted that in any event the redundancy payments created by the Redundancy Contract Determination arose after the making of each of the contract carrier agreements and this would militate against adopting the argument advanced by the respondent. I do not agree with this submission. If it could be demonstrated that item no 21, redundancy, had any work to do, this would include any later liability on the part of the respondent to make redundancy payments by reason of the Redundancy Contract Determination or otherwise.

The Matmar deed of release

52 Matmar had entered into a deed of release with the respondent on 26 May 2003 in consequence of the settlement of the s 106 proceedings, to which I have earlier referred. It was said by the respondent that the terms of the deed of release precluded Matmar from maintaining its claim for redundancy payments under the Redundancy Contract Determination.

53 I set out cl 2.1 of the deed of release, because it contains the operative clause.

2.1 Release in favour of Inghams

In consideration of the obligations of Inghams under this deed, the Contractor and the Principals unconditionally and irrevocably covenant not to sue and release Inghams and any of its Related Body Corporates and each of their current and former respective officers, employees, contractors and agents (collectively referred to as the “Released Parties”) from all actions, suits, causes of action, claims, complaints, demands, damages, claims for costs or expenses (collectively “Claims”) whatsoever which the Contractor and/or the Principals now have or may at any time hereafter have against the Released Parties or any one or more of them arising from or relating in any way to:

(a) the terms, operation or termination of the Contract and/or the provision of Services both with respect to work performed by the Contractor and/or the Principals for Inghams to date and any and all future rights and obligations under the Contract; or

(b) the Proceedings and any and all claims made by or on behalf of the Contractor and/or the Principals in the Proceedings including but not limited t the claims for goodwill.

For the avoidance of doubt, this release covers any Claim that may be contemplated by the Contractor regarding Inghams’ alleged failure to pass on rate review increases to the Contractor and all claims for goodwill that have been, or may in the future be, made by the Contractor or an Associate of the Contractor. The Contractor acknowledges that they accept their entitlements under clause 1.3 in full and final settlement of all such Claims.

54 The “Contract” which is referred to in cl 2.1 is clearly a reference to an oral contract between the respondent and Matmar to provide driver services that had been in existence since 1984 and that is specifically referred to in one of the recitals to the deed.

55 A further recital stated that the parties had agreed to enter into a revised contract, a copy of which was annexed to the deed of release and which became the contract, which is the subject of these proceedings.

56 I need also refer to the provisions of cl 2.3 of the deed of release, which is in the following terms:

2.3 Acknowledgment in regard to potential claims

Inghams is not in a position to seek a release from the Contractor and the Principals in respect of presently unknown Claims that could potentially arise in the course of the performance of the Revised Contract. However, the Contractor and the Principals acknowledge and agree that Inghams has provided the Contractor with the opportunity to enter into the Revised Contract in good faith and on the understanding and expectation that the Contractor and the Principals will not seek to agitate any further Claims against Inghams at least to the extent that the Contractor and the Principals could reasonably be expected to have been aware of the facts giving rise to such a claim as at the Settlement Date.

57 The respondent submitted that at the time of entering the drivers’ distribution agreement in 2003, it was clear that the parties contemplated that Matmar would be engaged for a period of at least three years. It was argued that the reference to the contractor not seeking to agitate “any further Claims against Inghams” was a reference to claims that might arise under the revised contract. Even if it could be asserted that the reference to “further Claims” is a reference to claims arising out of the revised contract, it could not be said, in my opinion, that the claim which is the subject of these proceedings is one of which Matmar could reasonably be expected to have been aware in terms of the underlying facts as at 26 May 2003. This is because the application made to the Industrial Relations Commission by the TWU, which led to the making of the Redundancy Contract Determination, was not filed until 12 December 2003, as is revealed in the decision of Sams DP and the first hearing date of the arbitrated proceedings was 11 December 2006. There is no evidence that any person involved in the management or operations of Matmar had any knowledge of the possibility of any Redundancy Contract Determination being made by the Commission as at the date of the deed of release. Accordingly, the provisions of cl 2.3 do not apply.

58 Furthermore, the release that is granted by cl 2.1 is limited to claims arising under the original contract and not the revised contract. Clause 2.1 cannot be utilised to defeat the current claim made by Matmar.

59 Finally, I note in this context that the statutory entitlement created by the Redundancy Contract Determination cannot be the subject of any attempt to contract out of its provisions.

60 I conclude therefore that the submissions made by the respondent in connection with the deed of release should be rejected.

Interest and costs

61 The applicant sought orders for the payment of interest and, belatedly, for the payment of costs. The respondent did not oppose an order for costs. It submitted, however, that interest should run from the date of the filing of the applications.

62 In terms of interest, I note that in ordinary circumstances interest would run from the date of accrual of the cause of action, namely the date of termination, being September 2008. However, the application in each case was not filed until 1 October 2009, a considerable time after each of the causes of action arose. This may be a persuasive factor in deferring the date from which interest runs; however, there may be an explanation for the delay in initiating proceedings, such as negotiations between the parties and the like. I shall defer dealing with interest and will give the parties an opportunity of making written submissions so that any decision is based on an appropriate factual foundation.

63 In terms of costs, I shall make an appropriate order for costs in the applicant’s favour in each case, noting that the matter was handled within the office of the Transport Workers’ Union of New South Wales, albeit handled, at least in part by a person or persons, who is or are an Australian legal practitioner.

Quantum of the claim

64 The Court has not heard argument about whether or not the respondent concedes that the amount of the claim in each case is agreed. I shall defer making final orders until the respondent has had an opportunity of advising the Court as to whether there is any controversy concerning the amount of each claim as calculated by the applicant.

Further disposition of the proceedings

65 It follows from my reasons set out above that I conclude that the applicants are prima facie entitled to the benefit of redundancy payments under the Redundancy Contract Determination, and I reject each of the submissions made by the respondent seeking to resist the application of the Redundancy Contract Determination to the circumstances of each of the applicants. The respondent conceded that in all other respects the Contract Determination did apply to the circumstances of these proceedings.

66 The proceedings are stood over to enable the applicants in each case to prepare short minutes of order and seek the consent of the respondent. If any difficulties arise in settling any final orders, these may be agitated before the Court under the liberty to apply, which I hereby grant.

67 The Court asks that short minutes of order and any submissions as to the effective date upon which interest runs should be received by my associate no later than 1 February 2011.

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LAST UPDATED:
17 December 2010