65 To characterise the Business Agreement as an agreement "whereby a person performs work" is to "understate its nature to the point of misdescription" to apply Kitto J's apt phrase from Ready Mixed Concrete (Victoria) Pty Limited v Federal Commissioner of Taxatio n (1969) 118 CLR 117 at 185, as did Handley JA in McDonald's Australia Holdings Limited v Industrial Relations Commission (NSW) (2005) 144 IR 219; [2005] NSWCCA 286 at [98]."
41 It will be observed that the approach of the New South Wales Court of Appeal in Sin Yong Yim was to identify the contract pursuant to which the actual work was performed, in that case the contract of employment between the company and Mr Choi. Furthermore, the approach involved the characterisation of the agreement as a whole with specific reference to what was envisaged would be the contractual vehicle by which work was performed. Again, this led to the identification of the contract of employment between the company and Mr Choi.
42 Guided by this approach, it is then necessary to have regard to the performance of work in connection with the dealer agreements as relied upon by the applicants to resist the strike-out motion.
43 In my opinion, the strongest case that may be mounted in favour of characterising the dealer agreements as falling within s 106 applies to the work of Mr Anthony Altomonte, to which he deposed in his affidavit and which I have earlier described. It was work said to be performed by him pursuant to his role of Dealer Principal. As I have previously observed, there is a named person as Dealer Principal in the first schedule to the agreement. Relevantly, clause 7.2.1 provides that "BMW AU enters into this Agreement in reliance upon the fact that the Key Personnel specified in the first schedule shall ensure that the obligations of the Dealer under this Agreement are properly fulfilled."
44 It is not necessary for the determination of these proceedings to construe closely the provisions of 7.2.1 as to whether or not "ensure" is intended to mean guarantee or warrant or whether it is intended to apply on a "best endeavours" basis. I observe that in the context of the Dealer Principal, of whom I cannot find any other mention in the agreements, there is an obligation to see that the Dealer carries out all its duties and responsibilities under the agreement in a proper manner. There is no suggestion of the manner in which the Dealer Principal is to carry out these obligations and in what circumstances. Neither the Dealer Principal nor the other persons specified in the first schedule are made parties to the dealer agreements. Indeed, one may speculate whether, as a matter of fact or law, the Dealer Principal is under any contractual obligation to BMW Australia Limited by reason of the provisions of clause 7.2.1 of the Dealer Agreement. Any contractual obligation would appear to be created only between the Dealer and each of the Key Personnel as specified in the first schedule. In the case of Mr Anthony Altomonte, the work which he performs is, in my opinion, taking the evidence at its highest in favour of the applicants, undertaken in his capacity as managing director of the applicants, rather than according to or in consequence of or in fulfilment of the Dealer Agreement.
45 The applicants' submissions, in addition to focusing on the work carried out by Mr Altomonte as Dealer Principal, referred to the incorporated status of the applicants and the fact that work must be performed by a natural person. The submissions said in part:
"Clearly, Alto as an incorporated entity cannot undertake the work that is to be performed under the contract and so Alto, as the party to the dealer agreements, must employ people to perform the work in the motor trade industry in New South Wales. There are a number of relevant clauses in the dealer agreements which point to work being performed in accordance with the terms of the agreement, that is, the work being performed can be directly linked to the dealer agreements and is not an indirect consequence of the terms of the contract."
46 Of course, almost every business relationship will envisage the performance of work in order to discharge the obligations that are created. However, it does not follow that the performance of work as envisaged comes within the approach to construction of s 106 as formulated by the High Court of Australia in Solution 6 and the other cases to which I have referred. In circumstances where there is no specification of the actual work to be performed by any particular individual or group of persons and where there is no attendant specification of the conditions under which such work is to be performed, it cannot be said, in my opinion, that the work undertaken by employees or directors of the applicants was done according to, in fulfilment of or in consequence of the dealer agreements. The work was done according to, in fulfilment of, or in consequence of individual contracts of employment between the persons carrying out the work and the applicants. The applicants were compelled to cause the work to be carried out by reason of their obligations created by the dealer agreements.
47 This leads to a consideration of the second aspect of the approach developed by the New South Wales Court of Appeal in Sin Yong Yim. The dealer agreements by name reflect the manner in which they should be characterised. Looked at objectively, they are agreements by which the applicants as dealers acquire motor vehicles from BMW for resale to their customers. They are also obliged to sell BMW parts and to provide servicing of vehicles manufactured by BMW. It is an essential feature of the dealer agreements that the applicants as dealers make available and provide suitable premises for the display and storage and to facilitate the sale of vehicles and parts and to enable vehicles to be serviced. I am conscious that in attempting to characterise in some way the relationship between the parties I may describe that relationship erroneously or deflect attention from the matters requiring consideration for the purpose of resolving these proceedings. It is nevertheless useful to characterise the dealer agreements as creating motor vehicle distributorships as that expression is commonly understood in the community. That is clearly the purpose, intention and effect of the dealer agreements. The applicants complained that BMW Australia Limited exercised a great deal of control over every facet of the dealers' operations and their organisations. This is so, no doubt for good commercial reasons. However, the high degree of control, which I accept, does not necessarily result in any of the work being undertaken by individuals in fulfilment of the applicants' obligations under the agreements as being work which satisfies s 106 for the reasons earlier given. It is work that is necessary to be carried out so that the applicants may satisfy their obligations as distributors of BMW products and as entities authorised to service motor vehicles. The work necessarily performed by individuals which I have described must stand beside and be considered along with the provision of premises and the acquisition of vehicles and parts in the context of the conduct by the dealers of their own businesses, in their own names, on their own account and at their own risk as specifically referred to in clause 1.4 of the dealer agreement.
48 During the course of submissions, I was referred to a number of decided cases that dealt with franchise operations. A consideration of these cases must be undertaken with some caution since the High Court decisions in Solution 6, Batterham and Old UGC (handed down on 18 May 2006) in that cases decided prior to that date may have applied a different approach to construction from that now espoused by the High Court of Australia. I again refer to the judgment of Spigelman CJ in Sin Yong Yim at [55]. Nevertheless, there are some features of these cases that confirm the manner in which I have determined to apply the relevant principles to the circumstances of these proceedings.
49 The principles formulated by the High Court of Australia had previously been utilised by the Privy Council in Caltex Oil (Australia) Pty Ltd v Feenan (1981) 1 NSWLR 168. Those proceedings involved a licence given by Caltex Oil to Mr and Mrs Feenan to operate a service station business conducted on premises owned by Caltex. Caltex granted a non-exclusive licence to use the premises and a lease of the goodwill of the business, which it had previously operated itself. Lord Diplock, whose speech constituted the decision of the Privy Council, described the obligations imposed on the operators of the business in these terms:
"The Feenans undertook to conduct the business on the premises during all lawful hours and to use their best endeavours to secure any necessary authority or permission to secure that those lawful hours should be as long as possible. If they should fail to carry it on for any period during lawful trading hours, Caltex could terminate the licence immediately without notice. In fact while the Feenans were running it, the service station was open from 7am to 10.30pm each day and from 8am to 10.30pm on Sundays, or one hundred and seven and a half hours a week. Needless to say, the Feenans were required to purchase all petroleum products sold at the service station from Caltex only although no price was specified. They also undertook not to be concerned in the sale of petroleum products from any other place within a 5 mile radius of the service station." (At 172)
50 The Privy Council held that the work performed by Mr and Mrs Feenan was work in an industry and that "….The remaining question of construction is whether the Solus Contract was a contract 'whereby' they did so. In their Lordships' view this provision in the context of contract or arrangement bears its ordinary meaning of 'in consequence of which' or 'in fulfilment of which'. Either meaning is sufficient to bring the Solus Contract within the description of contracts to which s 88F applies. The Feenans were required to carry on the task of supplying petroleum products to motorists throughout all lawful working hours. In doing so they were fulfilling their contractual obligations to Caltex…." In that Mr and Mrs Feenan had "bound themselves" to perform work which paid employees would otherwise be doing "the Solus Contract falls fairly and squarely within the ambit of s 88F." (At 173 - 4) (s 88F is a predecessor to s 106).
51 Majik Markets v Brake and Service Centre (1991) 28 NSWLR 443 is a decision of the New South Wales Court of Appeal dealing with a franchise arrangement between Majik Markets Pty Ltd and a number of franchisees which allowed them to conduct and operate, at premises leased by Majik, a convenience store which sold among other things Caltex brand motor fuel and other petroleum products. In these proceedings, the franchisee was a corporation. A provision of the franchise agreement was to the effect that a person or persons named in the schedule "shall devote his or their full-time personal attention and effort to the conduct, operation and management of the Business and at all times whilst the premises are open for business, he will maintain adequate personnel to facilitate the checking-out and handling of orders, including the dispensing of motor fuel, and other needs of customers so as to avoid any unnecessary delay to and on the part of customers." There was a requirement also that the franchisee would staff premises with uniformed competent and adequately trained personnel.
52 It was held by Handley JA (Kirby P agreeing) that the franchise contract was a contract whereby work was performed in an industry and that the facts were indistinguishable from those in Caltex Oil v Feenan. Mahoney JA came to the same conclusion. His Honour said:
"I am conscious that the franchise agreements contemplate and intend that the franchisees will become the proprietors of businesses, that they may acquire assets, and that they will, as proprietors or otherwise, be involved with the operation of those businesses. But the work to be done in the industry in which the business is to operate was, in my opinion, to be done not merely as a means of carrying out another purpose, viz, the setting up and conduct of a business by the franchisees but was, in the relevant sense, the purpose which the agreement sought to achieve: it was, in my opinion, the purpose of Majik that that work should be done and accordingly the petroleum and other products should be sold and it was the purpose of the franchisee that they would do or cause to be done such things." (At 459)
53 McDonald's Australia Holdings Limited and anor v Industrial Relations Commission of New South Wales and 2 ors [2005] NSWCA 286 is a decision of the New South Wales Court of Appeal. It concerned applications brought under s 106 of the Act on behalf of a licensee/lessee of four McDonalds outlets. The licensee/lessee was a company of which Mr McLaughlin was the sole director and shareholder. Handley JA, with whose reasons for judgment Mason P agreed, concluded that the four lease and licence agreements either collectively or separately were not contracts for the purpose of s 106. His Honour's reasons for judgment were put succinctly and it is appropriate, in the circumstances, to set them out in full:
"93 However I am unable to agree that these four transactions, comprising leases and licence agreements, collectively or separately are contracts, agreements or arrangements (contract) whereby Mr McLaughlin performs work in an industry within the meaning of s 106(1). In his affidavit of 4 April 2005 filed in this Court Mr McLaughlin said (para 98) that his company "currently employs in excess of 350 employees of which about 20 to 25 employees are full time".