L & D Lowe Transport Pty Ltd and Ors v Riteway Transport Pty Ltd t-as Riteway Express [2009] NSWIRComm 22

Industrial Court of New South Wales

CITATION: L & D Lowe Transport Pty Ltd and Ors v Riteway Transport Pty Ltd t-as Riteway Express [2009] NSWIRComm 22

APPLICANTS: L & D Lowe Transport Pty Ltd Keldote Pty Ltd PARTIES: Tambo Waters Pty Ltd

RESPONDENT: Riteway Transport Pty Ltd t/as Riteway Express

FILE NUMBER(S): IRC 1384, 1383 and 1386 of 2008

CORAM: Backman J

CATCHWORDS: Applications for recovery of money under s 365 of the Industrial Relations Act 1996 - applications by respondent by way of Notices of Motion seeking orders that proceedings brought under s 365 of the Act be stayed pending the determination of proceedings in the Federal Magistrates Court of Australia brought under the Independent Contractors Act 2006 (Cth) - legal principles governing temporary grant of stay of proceedings pending determination of related proceedings in another jurisdiction considered - application of legal principles to present proceedings - Held: present proceedings should be temporarily stayed - orders - costs reserved

LEGISLATION CITED: Independent Contractors Act 2006 (Cth) Industrial Relations Act 1996

Environmental Group Ltd and Anor v Croudace and Anor (unreported, Supreme Court, NSW, Santow J, No. 1468/98, 7 August 1998) Idameneo (No 123) v Ko Ko Swe [2003] NSWSC 384 CASES CITED: L & W Developments Pty Ltd v Della (2003) 135 IR 118 Software Engineers Australia (NSW) Pty Ltd v Bonket Pty Ltd (2002) 140 IR 112 Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited (1992) 34 FCR 287

HEARING DATES: 23 February 09

DATE OF JUDGMENT: 5 March 2009

APPLICANTS: Mr I Latham of counsel Solicitors: Turner Freeman Lawyers (Mr D Taylor) LEGAL REPRESENTATIVES: RESPONDENT: Mr A Moses of senior counsel Solicitors: Blake Dawson Lawyers (Mr S Woodbury)

JUDGMENT:

- 10 - INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: BACKMAN J

5 March 2009

Matter No IRC 1383 of 2008

L & D LOWE TRANSPORT PTY LTD v RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

Application for recovery of money under s 365 of the Industrial Relations Act 1996

Matter No IRC 1384 of 2008

KELDOTE PTY LTD v RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

Application for recovery of money under s 365 of the Industrial Relations Act 1996

Matter No IRC 1386 of 2008

TAMBO WATERS PTY LTD v RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

Application for recovery of money under s 365 of the Industrial Relations Act 1996

JUDGMENT

[2009] NSWIRComm 22

1 The respondent moves the Court by way of Notices of Motion for orders that the hearing dates currently set down on 17, 18 and 19 March 2009 for applications brought under s 365 of the Industrial Relations Act 1996 be vacated, and that the proceedings be stayed pending the determination of proceedings in the Federal Magistrates Court of Australia (FMC).

Proceedings in the Federal Magistrates Court

2 The FMC proceedings were commenced on 31 January 2007 with amended applications being filed on 28 September 2007. Those proceedings came on for hearing on 7 May 2008 and continued until 9 May 2008. On 22 August 2008, Cameron FM, the presiding Federal Court magistrate, issued a decision which included an order varying the contracts, the subject of those proceedings between the applicants and the respondent, consequent upon findings of unfairness made by his Honour under the Independent Contractors Act 2006 (Cth). 3 On 25 September 2008, the respondent filed an application in a case in the FMC registry seeking that the orders made on 22 August 2008 varying the contracts, be revoked. On 25 November 2008, a hearing of that application took place before the learned Federal Court Magistrate and on 16 December 2008, his Honour upheld the application and issued a decision revoking the orders varying the contracts.

4 On 18 December 2008, Cameron FM made orders for the filing and service of submissions regarding the form of orders, if any, that the Court should make and listed the matters for hearing on 31 March 2009.

Factual background to FMC proceedings

5 The applicants provided transport services to the respondent in the form of a truck and a driver. The contracts, the subject of the FMC proceedings, were entered into between each applicant and the respondent for the provision of linehaul trucking services. The terms and conditions of the contractual relationships were set out in an agreement between the respondent and the Transport Workers Union dated 1 April 1998 (the Riteway - TWU Agreement) together with other unwritten terms, which bear no immediate relevance to the present applications before this Court. Clause 5 of the Riteway - TWU Agreement provided: 5. VEHICLE SELECTION The Contract Driver shall supply and keep fully maintained and serviceable a vehicle approved by the Company, and subject to the requirements of the Company from time to time. The Company shall approve the type and classification of vehicles proposed to be operated prior to their being bought into service, and the Company may make directions as to the condition and presentation of vehicles. Approval shall not be withheld unreasonably and should any dispute arise regarding the suitability of any vehicle, it shall be dealt with pursuant to the provisions of Clause 16 - Settlement of Disputes, hereof. Initially, all vehicles when supplied shall be painted white. The Company will provide identification decals which will be fitted to the vehicles of the Company identification at the Company's expense. All contract drivers shall be required to replace their vehicle with a new vehicle once the vehicle age has reached 5 years, providing however, that if the vehicle is kept well and fully maintained and its appearance is in a condition acceptable to Management then the company may extend this replacement period of 5 years at one year at a time, on not more than 3 occasion's [sic], so that the maximum vehicle life may be 8 years ... 6 In February 2007, the respondent wrote to each applicant informing it of its decision to change its linehaul operations between Sydney and Melbourne, from three single trailer units each way to two b/double combinations each way. Each applicant was further informed: You need to be advised, formally in accordance with our commercial arrangements that this change will come into effect from Monday, 13 August 2007 and from this date you are required to provide a 12 pallet roll-back tautliner lead / 22 pallet drop deck mezzanine tautliner rear combination b/double. Alternatively, if you elect to cease supplying services to Riteway, please advise me as soon as possible and no later than Monday, 16 July 2007. In this case, the last journey that you would be required to undertake for Riteway would depart on Thursday, 23 August 2007. 7 Neither applicant arranged for the purchase of the new equipment, nor made the required upgrade to their respective vehicles, by the due date.

8 The amended applications before the FMC sought orders for the variation of their contracts with the respondent, and damages for breach of those contracts. The relevant orders sought in those amended applications were: · the contractual term limiting to $20,000 the value of each of the applicants' goodwill (in its relationship with Riteway) be declared void; · each contract be varied by the inclusion in the following term: (a) in the event that the contract is terminated in such a way as to so as to substantially reduce or negate the value of the goodwill in the applicant's business, the respondent shall pay to the applicant either: (i) Where the respondent takes possession and ownership of the applicant's prime mover and trailer, an amount equal to the applicant's income received from the respondent in the preceding year, or (ii) Where the respondent does not take possession or ownership of the applicant's prime mover and trailer, an amount equal to the applicants [sic] income received from the respondent in the preceding year less an amount determined to be the market value of the prime mover and trailer at the time of termination. · the terms of the contracts allowing Riteway to compel the applicants to purchase new equipment be varied to require Riteway to pay to the applicants the net cost of such new equipment; · the contracts be varied to require Riteway to pay the applicants sufficient amounts to permit them to make adequate provision for the payment of ordinary wages, allowances, overtime, paid sick leave, rostered days off, public holidays, annual leave and superannuation to those persons providing labour to the applicants; · Riteway pay damages for breach of contract and, in the Keldote matter, damages under the Trade Practices Act 1974. 9 Before Cameron FM, the applicants had contended that Clause 5 of the Riteway - TWU Agreement was unfair on the basis that, "although it gave Riteway the power to require the upgrading of its contractors' vehicles, it was not similarly obligated to compensate them for expenses associated with such an upgrade": Decision at [102]. His Honour made a number of findings and concluded that Clause 5 of the Riteway - TWU Agreement was unfair: Decision at [137] [138]. Proceedings in the Industrial Court

10 The applications for recovery of money before this Court were filed on 20 August 2008. They are currently set down for hearing for three days commencing on 17 March 2009. Each application appears to rely on the same background facts as those before the FMC. They each claim a severance payment for a period on and from 23 August 2007 under the Transport Industry Redundancy (State) Contract Determination. Clause 6(i) of that Contract Determination provides for severance payments by a "principal contractor" to a carrier in circumstances where the carrier, "is to be terminated for reasons arising from changes in production, program, organisation, structure or technology, subject to further order of the Commission ...". Sub-clauses 6(iii) and (iv) provide: (iii) Alternative work - Subject to an application by the principal contractor and further order of the Commission, a principal contractor may pay a lesser amount (or no amount) of severance pay than that contained in subclause (i) of this clause if the principal contractor obtains acceptable alternative work for the carrier. (iv) Severance pay not to be construed as pay in lieu of reasonable notice - The severance pay in subclause (i) of this clause shall not be construed as satisfying, either in whole or in part, the principal contractor's obligation to provide reasonable notice of termination or pay in lieu thereof. Submissions of parties

11 In written submissions, the respondent identified as a critical issue in these proceedings, whether the applicants were made redundant when the respondent required them to replace their vehicles in reliance on Clause 5 of the Riteway - TWU Agreement. On 31 March 2009, before the FMC, the applicants will seek to vary Clause 5 and, at this stage, it is not known what form the variation will take. The respondent contends that there was no redundancy as the Agreement permitted it to require the applicants to obtain new vehicles. In order, therefore, for this Court to determine whether there has been a redundancy, it will need to examine the Agreement as well as the contract determination to determine the rights and obligations of the parties. Accordingly, the FMC proceedings will have a material effect on the proceedings before this Court. 12 The applicants submitted that the FMC proceedings and the proceedings in this Court involve consideration of different contracts, and, therefore, different contractual claims. They submit that proceedings in this Court do not involve claims seeking enforcement of contractual terms or damages for breach of contract. It was conceded by the applicants that there were overlapping factual issues, but it was contended that the causes of action in each case are conceptually and legally distinct. According to the applicants, the determination of the FMC proceedings will not affect the issues before this Court and it is difficult to see how a variation of contractual rights by the FMC could have any impact on the applicants' entitlement to redundancy payments under the Contract Determination. The applicants also contended that a stay of proceedings in this Court would result in substantial delay and resulting costs, which have been features they say of the FMC proceedings. Legal Principles

13 In Environmental Group Ltd and Anor v Croudace and Anor (unreported, Supreme Court, NSW, Santow J, No. 1468/98, 7 August 1998), Santow J considered a number of factors to be weighed in the balance, relevant to the granting of a stay of Supreme Court proceedings pending determination of related Industrial Relations Commission proceedings. These included: · The impact of the Supreme Court and Commisssion proceedings on each other. · The relative progress of each proceedings. · Conduct of the parties with respect to the relative progress of each proceedings. · The fact that the Supreme Court proceedings were commenced first in time. · Not all parties to the Supreme Court proceedings were parties to the Commission proceedings. · Possible jurisdictional problems in relation to the Commission proceedings and how they bore on the stay application. · Financial disadvantage. 14 Lockhart J in Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited (1992) 34 FCR 287 (at 290-291) dealt with a similar application to stay proceedings in the Federal Court pending determination of related proceedings in another jurisdiction. In doing so, his Honour made a number of observations concerning the powers of the Federal Court to order a temporary stay of proceedings and proceeded to formulate a number of factors which his Honour found were relevant to the application. His Honour said (at 290-291): The court has a general power to control its own proceedings, and that power extends to enable it to order a temporary stay of proceedings in various circumstances including the case where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first. ... The court is a superior court of record and obviously may control its own proceedings including, where appropriate, the exercise of a power to grant a stay. ... In my opinion relevant considerations to be taken into account in the present case include the following: · Which proceeding was commenced first. · Whether the termination of one proceeding is likely to have a material effect on the other. · The public interest. · The undesirability of two courts competing to see which of them determines common facts first. · Consideration of circumstances relating to witnesses. · Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted. · The undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues. · How far advanced the proceedings are in each court. · The law should strive against permitting multiplicity of proceedings in relation to similar issues. · Generally balancing the advantages and disadvantages to each party. 15 The formulations derived by Santow J in Environmental Group Ltd and by Lockhart J in Sterling Pharmaceuticals were cited and approved in L & W Developments Pty Ltd v Della (2003) 135 IR 118 where the Court of Appeal considered the principles governing a temporary stay of proceedings in one jurisdiction pending the determination of proceedings in another jurisdiction. In L &W Developments, both sets of proceedings involved consideration of the same contracts at first instance. Gzell J, in the Equity Division, Commercial List of the Supreme Court had conditionally stayed proceedings in that Court for damages pending the determination of proceedings, earlier commenced, in the Industrial Relations Commission in Court Session under s 106 of the Industrial Relations Act 1996. Mason P, with whom Giles and Santow JA agreed, found that any orders made by the Commission avoiding or varying the contracts, the subject of the application under s 106 of the Act, had the capacity to affect the rights of parties seeking to litigate related claims in the Supreme Court: at [16]. There was no dispute that the two sets of proceedings arose out of the same factual matrix: at [31]. 16 In Software Engineers Australia (NSW) Pty Ltd v Bonket Pty Ltd (2002) 140 IR 112, Goldberg J considered an application to stay proceedings in the Federal Court until the Commission had made final orders in proceedings before it. His Honour granted orders seeking a stay of the Federal Court proceedings. One basis for granting the orders was that, "the determination of the proceedings before the IRC may well have a material effect on the [Federal Court] proceedings": at [30]. In Software Engineers both proceedings involved a consideration of different causes of action. In relation to that aspect, his Honour said (at [31]): The applicants submitted that the causes of action relied upon in this Court were different causes of action from those in the IRC in Court Session and the relief sought in that Court. That may be so, but I am satisfied that the avoidance and variation of the various agreements and documents to which I have referred which has been sought in the IRC, if ordered by that Court, will alter the contractual basis upon which the applicant's causes of action are based in this Court. Although those contractual causes of action are separate from the causes of action based on ss 52 and 53 of the Trade Practices Act , the representations relied upon as constituting the breaches of those sections are contained in the various agreements and contractual documents. This may well have an impact on the extent to which the representations can be relied upon if the contractual basis for them is either removed or varied in a significant respect. This matter was not canvassed in any detail in argument before me but I am satisfied that it is desirable that the contractual basis which is said to exist between the parties be finally determined before any causes of action based on representations to be found in those agreements and the documents constituting them is litigated. 17 Goldberg J found it significant that four of the agreements upon which the Federal Court proceedings were based were also the subject of relief before the Commission. In that regard, his Honour said (at [19]): Until the proceeding in the IRC in Court Session is determined and the decision of that Court is announced in relation to the claims that the agreements and documents to which I have referred are void or to be varied in the manner to which reference has been made, it is not possible to ascertain with any certainty what is the content of the agreements and documents upon which SEA and Mr Arundell rely in this proceeding and what is the content of the substantive provisions in respect of which allegations of contravention are made. 18 I propose to apply the principles formulated in the various decisions extracted above in my consideration of the respondent's applications for the grant of a temporary stay of the proceedings in this Court. 19 First, the proceedings in this Court were commenced almost 19 months after the Federal Court proceedings. They are still at a preliminary stage with the hearings of the substantive applications set down to commence later this month. In contrast, the FMC proceedings have advanced to the stage where findings of unfairness have been made with regard to the Riteway - TWU Agreement and the issues remaining are the form of the orders seeking variation of that agreement (to be heard on 31 March 2009) and any outstanding claims for relief. These matters, in my view, make it less likely, contrary to the applicants' contentions, that the Commission proceedings will be completed before the FMC proceedings. 20 Secondly, if, as the Court is presently advised, the evidence to be relied upon in these proceedings is, in large measure, the same as the evidence relied upon in the FMC proceedings, then a temporary stay of the proceedings could avoid the unnecessary duplication of some , if not all, of the evidence. 21 Thirdly, the applicants' contention that they will suffer prejudice (for other reasons associated with delay) if these proceedings are the subject of a stay is not borne out. The evidence relied upon by the applicants to make good the contention was in hearsay form led through the applicants' solicitor by way of affidavit evidence which was the subject of cross-examination during the hearing of the applications. In cross-examination, the applicants' solicitor confirmed that the assertion of prejudice on the ground of delay of these proceedings was based on what he was told by the applicants and not the subject of any independent enquiries. In oral submissions, counsel for the applicants informed the Court that underlying the contention was that the applicants would suffer prejudice if the respondent's application was granted because two of the applicants would be prevented from restructuring their finances without the benefit of compensation awarded by way of redundancy payments under the Contract Determination. There was little, if any, evidence adduced as to how the two applicants might have to restructure their finances, and if so, how an inability to accomplish this at some future stage might impact adversely on them if a temporary stay was granted. 22 Fourthly, the respondent contended that the applicants' positions were not made redundant by it because Clause 5 of the Riteway - TWU Agreement permitted it to require the applicants to obtain new vehicles without any form of additional compensation payable by the respondent. The applicants, in response, contended that Clause 6 of the Contract Determination does not require the termination to be effected by the principal contractor, but only that a termination has taken place. 23 I do not propose, at this stage of the proceedings, to undertake an inquiry into the proper construction of Clause 6 in accordance with the principles of award interpretation. I would observe, however, that a quick reading of the Clause does not, necessarily, lend support to the applicants' construction that the meaning of "termination" appearing in the clause is capable of applying to a termination of engagement either at the instigation of the principal contractor or at the instigation of the carrier. The opening words of the Clause, "Where a carrier is to be terminated ..." are suggestive of a construction consistent with a termination which is effected by the principal contractor. Clause 5 of the Contract Determination adds some force to this suggested construction. Without the benefit of further submissions, I am not prepared to consider the issue further at this stage. 24 Fifthly, according to the respondent, there has been delay in the commencement of these proceedings by the applicants who foreshadowed, in the FMC on 8 May 2008, that the proceedings would be commenced. The proceedings did not in fact commence until 20 August 2008. I consider, however, that given this relatively short period of time, namely some three months, there has been no appreciable delay. 25 Sixthly, and notwithstanding the submissions of the applicants to the contrary, in order for the Court to properly consider whether Clause 6 of the Contract Determination applies to the applications for recovery of money, it will be necessary for the Court to look at a number of issues, including whether the contractual relationships between the parties were terminated for the reasons set out in that clause. Clause 3 of the Contract Determination provides, subject to some exceptions, that it applies to "all contracts of carriage and shall bind all carriers and principal contractors party to such contracts of carriage". Based on the information supplied to the Court by the parties at this preliminary stage, the issue of termination may well require consideration of whether the applicants' positions were made redundant on 23 August 2007, which may require in turn an analysis of Clause 5 of the Riteway - TWU Agreement. It will be necessary for the Court therefore to know the final shape and form of the contractual relationships between the parties, yet to be determined by the FMC, so that it can properly consider the issues arising in the proceedings before it: see Idameneo (No 123) v Ko Ko Swe [2003] NSWSC 384 at [12] per Barrett J. 26 When all these circumstances are considered, the present proceedings in my view should be stayed until the final determination of proceedings in the FMC. Accordingly, the matters will be stood over for a directions hearing at 9.30am on 19 May 2009. Orders

27 I make the following orders: (1) Orders 1 and 2 of the respondent's Notices of Motion filed on 16 January 2009 are granted. The Notices of Motion are otherwise dismissed. (2) Costs are reserved. (3) The matters are stood over for a directions hearing at 9.30am on 19 May 2009. _____________

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