Australian Rail Tram & Bus Industry Union v Torrens Transit Services Pty Ltd

background 13 Many of the facts upon which the question is to be resolved have been agreed. 14 The State Transport Authority Act 1974 (SA) established State Transport Authority. The State Transport Authority was retitled as TransAdelaide in the circumstances set out below. 15 The Passenger Transport Act 1994 (SA) ("the PTB Act") created the Passenger Transport Board ("PTB") as a body corporate. It is an instrumentality of the Crown. It holds its property on behalf of the Crown: s 6(3). It is subject to the control and direction of the Minister, except in relation to the grant and refusal of services: s 7. It must provide an Annual Report to the Minister, who is then obliged to present that report to the Parliament: s 19. The PTB is directed to exercise its functions in the public interest. Relevantly, those functions include the overseeing of the creation and maintenance of an integrated network of passenger transport services, involving all modes of passenger transport by passenger vehicles within South Australia. It must monitor the services so provided, and the fares charged in the provision of those services. Its functions also include the fostering and promotion of an efficient and effective passenger transport service, and the establishment and maintenance of facilities and various forms of infrastructure for the purposes of the passenger transport network. It is itself explicitly prohibited from operating a passenger transport service: s 20(2). There is a definition of "passenger transport service" as a service consisting of the carriage of passengers for a fare or other consideration by motor vehicle, train or tram or by other means. 16 The PTB Act provides for the PTB, in the fulfilment of its functions, to contract with others for the provision of regular passenger services to be operated in accordance with a service contract. It is empowered to invite contracts by tender. In awarding service contracts, it is directed to apply specified principles: s 39. Those principles included that until 1 May 1997, TransAdelaide should be given a reasonable opportunity to provide, or to control the provision of, a level of services within the metropolitan area of Adelaide that did not fall below 50 per cent of the total number of passenger journeys undertaken on passenger services provided by TransAdelaide in 1993. Section 40 contains details of what a service contract should contain. It must deal with the period of the contract, the standards of provision of services, the scales of service levels, and of course the remuneration of the service provider. The service contract dealing with standards for provision of passenger services is contemplated as flowing from standards to be set by the PTB, and which are to apply to all service contracts at the same time, so as to ensure that standards relating to the provision of services are, so far as is reasonably practicable or appropriate, maintained at the highest possible levels: s 40. Section 41 requires a service contract to specify a region or route of the particular service provider. Section 42 restricts the holder of a service contract from transferring, assigning, sub-contracting or otherwise dealing with its rights under the service contract except with the consent of the PTB. 17 Schedule 2 of the PTB Act preserved in existence the former State Transport Authority under the name TransAdelaide. TransAdelaide was maintained as a body corporate, and is itself an instrumentality of the Crown holding its property on behalf of the Crown. It too is subject to the control and direction of the Minister. As contemplated in that Act, it is empowered to operate and provide passenger transport services, and for that purpose to enter into service contracts with the PTB. 18 The existence of TransAdelaide was further dealt with by the TransAdelaide (Corporate Structure) Act 1998 (SA) ("the TransAdelaide Act"). It confirms TransAdelaide as a statutory corporation under the Public Corporations Act 1993 (SA). It also repealed Sch 2 of the PTB Act. TransAdelaide remains an instrumentality of the Crown subject to the control and direction of the Minister: s 6 of the Public Corporations Act 1993, and s 6 of the TransAdelaide Act. TransAdelaide's function under the TransAdelaide Act is to provide and operate passenger transport services. It is a constitutional corporation as defined in the Act, and so was able to be party to an agreement for which certification is sought under Div 2 of Pt VIB of the Act. 19 In the period following the commencement of the PTB Act, there have been three rounds of contracting by the PTB of service contracts. It is not necessary to go into the history. It is agreed between the parties that, relevantly to these proceedings, the PTB had service contracts current until about 23 April 2000. Eleven of those contracts were with TransAdelaide, of which three were long standing in nature and eight were relatively recent, each being dated 8 September 1997 but having operated from 12 January 1997. Those eight service contracts were in respect of the geographical areas known as Le Fevre, South West, Coastal Cross Suburban Route (340), City Free Service Corridor, Circle Line Route, Inner South, North West, and East. 20 At that time, the PTB had divided the Adelaide metropolitan area into a number of separate contract areas. In addition to the service contracts granted to TransAdelaide, the PTB had awarded two service contracts to Serco Australia Pty Ltd ("Serco") for geographical areas known as the Outer North area and the Inner North area, and had awarded one service contract to a company known as Hills Transit in respect of a geographical area known as the Hills Area. Under the terms of all those service contracts, they each came to an end on or about 23 April 2000. 21 In 1998, TransAdelaide entered into certain agreements certified under s 170LT of the Act with the Rail, Tram and Bus Industry Union ("the RTBIU") which covered some of the passenger transport services which it provided pursuant to service contracts with the PTB. Those agreements included the Port Adelaide Agreement and the Mile End Agreement. They were certified under the Act on 24 July 1998. 22 On 30 January 1999, the Minister for Transport in South Australia announced that the metropolitan bus services would be put out to competitive tendering. Seven new and different contract areas were proposed instead of the existing contract areas. In early 2000, the PTB entered into service contracts for the seven new contract areas. They were areas known as:

· East West (incorporating the Le Fevre Peninsula area and the East area, and parts of the North West area, the South West area, the Inner North area, the Hills area and the Inner South area which previously existed under the earlier service contracts),

· North-South (incorporating parts of the South West area, Inner North area, South West area and Inner South area, which previously existed under the earlier service contracts),

· Outer North (covering much the same area as the previous Outer North area),

· Outer North East (covering much the same area as the previous Outer North East),

· Hills (covering much the same area as the previous Hills Area, but also including part of the East and Inner South area which previously existed under the earlier service contracts),

· Outer South (closely resembling the Outer South area which previously existed but also with part of the Inner South area which previously existed under the earlier service contracts), and

· City Free (covering the same area as the previous City Free area).

23 The contract areas previously known as North East, North East Cross Suburban, Coast Cross Suburban, and Circle Line appear to have been absorbed into the seven new areas. That description of the geographical changes effected is not intended to be precise. The answer to the question presently being addressed does not depend upon such precision. 24 Pursuant to that decision, the PTB issued proposals for tenders and a number of entities submitted tenders, including TransAdelaide, Serco, Torrens Transit Pty Ltd ("TT") and Australian Transit Enterprises Pty Ltd ("ATE"). As noted in more detail below, TTS is a wholly owned subsidiary of TT. 25 On 27 January 2000, the Minister announced the successful tenderers for the provision of passenger transport services by bus in those seven areas of the metropolitan area. They were:

· Hills - Transit Plus (ATE and TransAdelaide joint venture)

Service contracts for the provision of passenger transport services by bus were subsequently entered into between the PTB and the successful tenderers. 26 On 27 January 2000 the Minister also issued a statement to all employees of TransAdelaide notifying them of the successful tenders, the date of the changeover to the new operators, the options available to employees, and a guarantee that no existing employee would be made compulsorily redundant. 27 It is clear that the areas in respect of which TransAdelaide previously provided passenger transport services by bus include areas now serviced by TT under its service contracts with the PTB, although there is no precise overlap of the geographical areas between the East West area now operated by TT and the North West, East and Le Fevre Peninsula areas previously operated by TransAdelaide. To an extent the services provided by TT in respect of the East West area also include part of the area for which Serco previously provided contract services to PTB, and will also include to a small degree part of the area for which Hill Transit previously provided contract services to the PTB for the Hills area. 28 The fact of those slightly different geographical areas, and of the different terms and conditions which did or may have applied to the employment of employees of TransAdelaide within the different areas, either under the Port Adelaide Agreement or under the Mile End Agreement or otherwise, or to employees of Serco or Hills Transit gives rise to the possible need later in these proceedings to consider the individual circumstances of each employee. It also gives rise to the need to consider the applicability either of the Port Adelaide Agreement or the Mile End Agreement or some other terms of employment to them in comparison to the terms of employment now offered to them by TTS. The parties are agreed, however, that those matters of 'detail' (not to underscore their significance in any way) are all subject to the issue of principle which I have separately decided to hear and determine before addressing those other issues. It is agreed that, if that issue of principle is decided in the affirmative, TTS will be bound by both the Mile End Agreement and by the Port Adelaide Agreement to some extent (that is, to some degree, s 170MB(2)(c) will operate). It is also acknowledged that there are, in some respects, differences between the Port Adelaide Agreement and the Mile End Agreement, and that by virtue of the way in which TTS and TT now operate to provide contract services for the East West area and the City Free area, questions may arise about the individual circumstances of each employee. It is not now necessary, for the purposes of answering the question now before the Court, to address those differences. It is clear that the services to be provided by TT under the service contracts with PTB are services in areas which wholly encompass areas in which TransAdelaide previously provided such services: the Le Fevre Peninsula contract, the City Free service corridor contract area, and the East contract area, as well as in an area which partly encompasses areas which TransAdelaide previously services pursuant to service contracts concerning the North West area, the South West area, the Inner South area as well as the Inner North area (Serco contract), and the Hills area (Hills Transit contract). 29 It is sufficient for present purposes to find that the service contract between TT and the PTB to a significant degree provides for the provision of passenger transport services by bus which were previously provided by TransAdelaide, (and to a lesser degree provided by Serco, and by Hills Transit) under previous service contracts, including to a significant degree services which certain employees of TransAdelaide carried out under the terms of the Port Adelaide Agreement or the Mile End Agreement. 30 TT has subcontracted the operations of the services to Torrens Transit Operations Pty Ltd ("TTO") with the approval of the PTB. TTO has in turn subcontracted to TTS the employment of all staff involved in the provision of those operations, again with the approval of the PTB. 31 TT started operations pursuant to its service contract on 23 April 2000. TTS commenced supplying labour to TTO for the provision of those services from that same date. TTS made offers to 294 persons to be employed in the provision of those services, and as at the date of hearing 207 of those offers had been accepted. There are Australian Workplace Agreements ("AWAs") between TTS and its employees.

the submissions 32 The applicants' contention is a straightforward one. It is that TTS is a new employer which has become the "successor, transmittee or assignee" indirectly of part of the business of TransAdelaide under s 170 MB (2)(c) of the Act, so that TTS is bound, to the relevant degree, by the Port Adelaide Agreement and by the TransAdelaide Mile End Agreement: s 170MB (2)(d). They submit that the fact that there is no direct relationship or nexus between TransAdelaide and TTS is of no significance, because the relevant legal test to determine succession of a business is whether there is a substantial identity of activities with those of the earlier business. They further contend that there is in fact a substantial identity of activities between the activities carried on by TransAdelaide and those carried on by TTS. 33 TTS joins issue on those matters. It contends that there must be some legal nexus between TransAdelaide and TTS for TTS to be the successor, transmittee or assignee of part of the business of TransAdelaide. To the extent to which decisions on other legislative provisions might suggest to the contrary, TTS submits that they are distinguishable. That is in part because in each of those decisions a relevant legal nexus existed in fact and so was not an aspect which required particular focus. Secondly, TTS argues that those cases do not apply because the context and purpose of s 170MB(2) requires some legal nexus between the former employer and the new employer. In that regard, TTS drew a sharp line between the content and purpose of s 170MB and s 149 of the Act. TTS also contends that there is in fact no substantial identity of activities between TransAdelaide (which it describes as a service provider) and TTS (which it describes as a labour hire company). 34 TTS also contends that the answer to the question posed must be qualified, even if it is generally in the affirmative, by limiting the extent to which TTS is bound by the Port Adelaide Agreement and the Mile End Agreement to the extent to which they respectively relate to the part of the business of TransAdelaide which has in fact been transmitted to TTS. The applicants accepted that that is an appropriate qualification. As noted, if the answer to the issue identified is in the affirmative, the parties are hopeful that the issue as to the extent to which TTS is bound by the Port Adelaide Agreement or the Mile End Agreement may be resolved by negotiation in the light of the determination which I am asked to make.

the authorities 35 The starting point for addressing the respective contentions must be the authorities. The applicants contend that that should also be the end point as I am bound by those authorities to reject TTS' submission. I do not consider that it has been decided, in the context of s 149 of the Act or its ancestors, that the 'substantial identity of activities' test is itself a sufficient reason to regard a later employer as the successor transmittee or assignee of an earlier employer. It is necessary to refer to the cases in a little detail to explain my reasons for that view. 36 George Hudson Ltd v The Australian Timber Workers Union (1923) 32 CLR 413 ("the Hudson case") concerned s 24(1) of the Conciliation and Arbitration Act 1904 (Cth) as then in force. It provided for a memorandum of agreement between the parties to an industrial dispute to be certified by the President of the Conciliation and Arbitration Commission and filed. Such an agreement would then have the same force and effect as, and be deemed to be, an award under the Act as between the parties to the agreement. Section 24(1) was amended, effective from 16 December 1921, to extend that binding effect to

"… any successor, or any assignee or transmittee of the business of a party bound by the agreement, including any corporation which has acquired or taken over the business of such a party." The appellant was convicted of having failed on 14 February 1922 to observe a term of an agreement certified and filed before that amendment. The appellant had taken as assignment of the business in question prior to the amendment. It was admitted that it was the "successor in business" of its former owner (see in submissions at 415-416 and per Knox CJ at 419). The issues which were decided adversely to the appellant, were whether s 24(1) as amended operated to bind the appellant "retrospectively", and whether the Commonwealth had power to have so amended that Act. In view of the admission that the appellant was a successor in business of its former owner, the Court did not need to address the circumstances in which one employer would be a successor, assignee or transmittee of the business of another. 37 Nevertheless, Isaacs J (with whom Starke J agreed at 453) forcefully pointed out at 434 that that Act is a statute embodying the public policy of encouraging and maintaining industrial peace. His Honour at 436 said:

"What case is made for restricting the application of the statute to the smallest ambit consistent with any possible construction of its words? To my mind the very opposite construction should be given to it as a remedial statute - as a statute which endeavours to replace strikes and lockouts with public examination and decision and to remove industrial discontent by abolishing industrial injustice. The effort may or may not be successful, it may or may not be attended with difficulty and error, its policy may be right or wrong - that is for the Legislature to decide; but, as long as it is the legislative will to maintain it, and, as the recent amendment shows, to confirm and to strengthen it where judicial decisions have declared it weak, it is, I apprehend, the function of this Court to construe it in the spirit of its manifest purpose." 38 The observations of Isaacs J are, of course, of great significance. They lay the foundation for the approach of the Courts to the construction of s 149 of the Act. As the fact of succession was not in issue, the case does not however deal with the nature of succession. Australian Meat Industry Employees Union v Mt Shank Meat Processing Pty Ltd (von Doussa J, 21 May 1998, unreported) ("the AMIEU case") provides another example of a clear case of succession. It concerned whether the employer Mt Shank Meat Processing Pty Ltd ("Mt Shank") was bound by a certified agreement made between the Australian Meat Industry Employees Union ("the Union") and Mount Gambier Meat Processing Pty Ltd ("MGM"). MGM operated the Mt Gambier Abattoir. It closed in July 1996, in accordance with seasonal conditions, and re-opened in October 1996 but then under the operation of Mt Shank. There were some changes in its manner of operation, but von Doussa J found that at all material times the business of conducting the operations of the abattoir was being carried on. His Honour further found that there had been a transmission of that business because, as a matter of 'commercial convenience' to the true owners of the business, the role of MGM as an employer came to an end and the conduct of the relevant part of that business was taken over by Mt Shank. He found that Mt Shank was the successor, assignee or transmittee of the whole or part of the business of MGM. As it is clear that there was in that case a legal nexus between Mt Shank and MGM, as the business of MGM was transmitted to Mt Shank by their common "proprietors", I do not consider that the decision advances the contentions of either party before me. 39 Re Australian Industrial Relations Commission; ex parte Australian Transport Officers Federation (1990) 171 CLR 216 ("the ATOF case") is often referred to in this context, although it did not relate to s 149 of the Act. It concerned the eligibility rule of the Australian Transport Officers Federation ("ATOF"). The issue relevant for present purposes was whether persons employed by the Road Traffic Authority ("the RTA") were eligible for membership of ATOF under the successor clause in its eligibility rule. Eligibility for membership was extended to persons who were employed in the transport industry by the Crown, statutory bodies representing the Crown, instrumentalities and authorities under the control of the Crown and by other companies and including the Commission for Motor Transport of New South Wales ("the CMT"), and further to "a successor or assignee or transmittee of the business of any of the foregoing." 40 The CMT was a statutory body corporate responsible for the administration of the Department of Motor Transport ("the DMT"). From 16 January 1989, both the CMT and the DMT were abolished. The major functions of the DMT and the functions of the Department of Main Roads ("the DMR") were vested in the RTA, a new statutory body, although its major functions were the former functions of the DMR. It was held that activities of the DMT amounted to a "business" for the purpose of the eligibility rule, even though it did not carry on a commercial undertaking for profit. It was also held that the successor clause in the eligibility rule was capable of applying to the succession to a business between two statutory authorities, even though their functions were governmental functions performed for the benefit of the Crown. Relevantly for present purposes, it was further held that the RTA was the successor of the business of the CMT because there was a substantial identity between the activities formerly carried on by the CMT and those carried on by the RTA, notwithstanding that the major activities of the RTA were the former functions of the DMR and that the staff of the RTA were predominantly former employees of the DMR. Thus, employees of the RTA (or certain of them) were within the eligibility rule of ATOF and RTA was properly a party to an interstate industrial dispute between the ATOF and various statutory authorities in several states. 41 It was argued for the RTA that the legislative reorganisation briefly referred to above (and described in detail in the decision of Hill J in Re Crown Employees Roads and Traffic Authority of New South Wales (Officers Salaries & Conditions) Award (1989) 29 IR 120) amounted to the abolition of the business or activities of the CMT, and the bringing into existence of the RTA with a new business or set of functions. The Court (Mason CJ, Gaudron and McHugh JJ) rejected that argument by referring to provisions in the legislative package. The Court then said (at 230):

"According to the natural reading of the language of the successor clause, the inquiry should be directed to ascertaining whether the business or the activities formerly carried on by the C.M.T. are still carried on by the R.T.A., notwithstanding that the R.T.A. also carries on one or more other substantial activities. The question then is whether the purpose of the clause viewed in this context requires a different reading for which the respondents contend. The natural reading, it is urged, could give the A.T.O.F. very wide, indeed "windfall", coverage, even a coverage unrelated to employment in the business of the kind carried on by the former employer." 42 It noted that the potential 'windfall' coverage was restricted by the provision in the successor clause that the successor be an employer within certain other eligibility limitations, and by the Commission's discretion to refuse to make an award in certain circumstances. The Court proceeded:

"Accordingly, on the reading of the clause which we favour, the ultimate issue is whether there is a substantial identity between the old activities and those now carried on by the R.T.A. which correspond with the old activities." 43 The Court found that that substantial identity had been established. 44 The approach of the High Court in the ATOF case was adopted by the Full Court of this Court (Spender, R D Nicholson and Madgwick JJ) in North Western Health Care Network v Health Services Union of Australia (1999) 164 ALR 147 ("the Health Care case"). That case concerned 'outsourcing' by a government department. The Department of Health of the State of Victoria ("the Department") provided adult mental health services through specialist psychiatric hospitals. It was a party to certain industrial awards made under the Act. It entered into health service agreements under the Health Services Act 1988 (Vic) with the predecessors in title of North Western Health Care Network ("NWHC") for those predecessors to manage and provide mental health services in certain areas of Victoria, with funding provided by the State. The issue was whether NWHC was the "successor, assignee or transmittee of part of the business" of the Department, so as to be bound by the awards by reason of s 149(1)(d) of the Act. The Court upheld the decision at first instance (Health Services Union of Australia v North Eastern Health Care Network (1997) 79 FCR 43) that NWHC was bound by those awards by operation of s 149(1)(d). 45 It was contended that, on the facts, there had been no transmission of any business because the Department retained the responsibility of providing adult mental health services; it had simply 'licensed' an operator or contractor to carry on certain aspects of those services. In addition, it was submitted that s 149(1)(d) did not apply to NWHC because there had been no legal transaction whereby the business carried on by the Department became, by succession, assignment or transmission, the property of NWHC. 46 Consistently with the approach of the High Court in the ATOF case, R D Nicholson J approached the question of "transmission" by reference to the legislative instruments. Under the Health Services Act 1988 (Vic), a registered funded agency could enter into a health service agreement with the Department to provide health care services to the Department. NWHC (by its predecessors) responded to an invitation to express interest in providing certain health care services to the Department, and then entered into an agreement to provide such services. That involved assuming responsibility for the patients, receiving the medical records and stock, and accepting the assignment of leases and the transfer of staff. The "core of the relevant services" (at 163) was transmitted. 47 His Honour further rejected the contention that there is a need for a legal transaction whereby the business carried on by the employer becomes, by succession, assignment or transmission, the property of a new entity. R D Nicholson J, at 154, noted that the technical legal meaning of the words "succession", "assignment" and "transmission" was not aptly applied to the concept of succession, assignment or transmission of "a business or part of a business", but only to the succession to or assignment or transmission of an asset or the assets of a business including its goodwill. It is clear, he said, that those words are used in a non-technical sense and pointed "to the language in the paragraph being used broadly, not strictly". 48 RD Nicholson J said, in relation to those arguments (at 162):

"I also do not agree that the primary judge fell into error because he looked at what was occurring before contracting out and contrasted it with what was occurring after contracting out without examining the nature of the nexus between the two stages. Once it is accepted that the reference to "the business" in s 149(1)(d) has the wide reference which the primary judge found, it is not necessary to search for some legal form of succession, assignment, transfer, corporate acquisition or takeover. What is necessary is to determine as a question of fact whether "the business" understood in the wide sense so found has been transmitted to other hands. That does not require a search for some legal mechanism as a nexus between the pre- and post-transmission stage." 49 I respectfully agree with his Honour (at 162), and with Marshall J in Australian Federation of Air Pilots v Skywest Airlines Pty Ltd (1996) 67 IR 347 that the ATOF decision is relevant to the matter in issue, even though it dealt with the interpretation of an eligibility clause in an award. I also respectfully adopt their Honours' reasons for that conclusion. 50 Spender J agreed with the reasons for judgment of RD Nicholson J, but added some additional comments. His Honour (at 149) put the pithy question: "What was transferred?" He noted that responsibility for the same patients was transferred, together with the medical records and stock; leased assets were assigned, and the staff were transferred. There was a direct legal nexus, by the agreement between the predecessors in title to NWHC and the Department whereby the management and provision of the health care services became part of the business of NWHC and no longer part of the business of the Department. 51 Madgwick J also agreed with the reasons for decision of RD Nicholson J. His Honour (at 166) explained the ATOF case as authority for the proposition that

"the expression 'successor or assignee or transmittee' is capable of application to a statutory rearrangement of governmental functions, among statutory authorities, that is, of a wider meaning than in many a commercial context." 52 He further described (at 170) the 'single, large conception' underlying provisions such as s 149(1)(d) in the following terms:

"… 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." 53 TTS contends that that conception is not one underlying s 170MB of the Act, and that considerations relevant to s 149(1)(d) of the Act are not applicable to determining the scope and purpose of s 170MB of the Act. It also seeks to distinguish that case because it involved the direct transfer of an outsourced government contract, rather than the grant of an outsourced government contract. 54 In my view, in relation to s 149(1)(d) of the Act, the Health Care case indicates that (1) the expression "successor transmittee or assignee … of the business" is to be interpreted in a practical and broad rather than a technical way which might require some formal instrument of succession or transmission or assignment of the assets of a business, (2) where the "business" concerned is the performance of some functions by or on behalf of government, the legislative or administrative structure under which the performance of those functions or certain of them comes to take place may indicate whether in a practical and broad sense there has been a succession transmission or assignment of that "business" or of a part of that business, and (3) in addition there will need to be a substantial identity of activities in the business or part of the business being carried out by the new employer when compared with those previously being carried out by the former employer. Those conclusions also reflect the approach in the earlier cases to which I have referred. They support the contention of TTS that the "substantial identity of activities" test is not of itself a sufficient test to determine if there has been a succession transmission or assignment of a business. I think that is plain enough in any event. For example, if the business of a local hardware store were simply to come to an end, and the premises were then some months later purchased and then operated by an entirely new and independent operator as a local hardware store in much the same way, with some one or more of the same employees, I do not think s 149(1)(d) would then have been intended to apply to the new operator of the hardware business simply because there was a substantial identity of activities being performed in the two businesses. Cp. Bransgrove v Ward & Syred [1931] AR (NSW) 272. To conclude otherwise would be to attribute to the words "successor transmittee or assignee" little or no meaning as the only focus would be upon the identity of the business activities. But I respectfully agree with the reasons given by R D Nicholson J and Madgwick J in that case for concluding that those words should be given a practical and broad meaning. 55 Those views are also, in my view, reflected in a more recent case concerning s 149(1)(d) of the Act: PP Consultants Pty Ltd v Finance Sector Union [2000] HCA 59, 16 November 2000 ("the PP Consultants case"). That decision involved an appeal from the decision of the Full Court of this Court in Finance Sector Union v PP Consultants (1999) 91 FCR 337. The Finance Section Union claimed that PP Consultants Pty Ltd ("PPC") was bound by an award made by the Australia Industrial Relations Commission as the "successor, assignee or transmittee" of part of the business of the St George Bank Limited ("St George"). St George proposed to close one of its branches in a shopping centre. PPC had a pharmacy business in the same shopping centre. St George arranged with PPC to conduct from its pharmacy business a branch agency with automatic teller machine facilities. The pharmacy business, together with the branch agency banking business, relocated to the premises previously occupied by St George. The direct contractual arrangement between St George and PPC meant that the legal nexus, which TTS contends is necessary to establish succession, assignment or transmission, existed. 56 The real contest was whether PPC had taken over any part of the business of St George so as to be bound by the industrial award applicable to its employees. St George contended that it had disposed of nothing. The High Court held that PPC was not bound by the award by the operation of s 149(1)(d) of the Act. In the joint judgment of Gleeson CJ, Gaudron, McHugh and Gummow JJ, their Honours pointed out that the word "business" takes its colour and its content from its surroundings [12]. They added at [13]:

"Whilst the notions of "profit" and "commercial enterprise" will ordinarily be significant in determining whether the activities of a private individual or corporation constitute a business, they play little, if any, role in identifying whether one government agency is engaged in the business of government previously undertaken by another government agency. In that situation, it is sufficient to ascertain whether or not the activities of the former are substantially identical to the activities or some part of the activities previously undertaken by the latter. That is because the word "business" takes on a special or particular meaning in the expression "the business of government". It is not because, as a matter of ordinary language, "business" means or includes activities undertaken in the course of business." 57 A little later in their reasons [14], their Honours added that, in addition to special considerations applying when one government agency succeeds to the activities of another, there may well be other considerations where a government contracts with a non-government body for the performance of functions previously carried on by a government authority. Callinan J at [38] made comments to the same general effect. 58 In that matter, the High Court concluded that PPC had not acquired any part of the business of St George, whether or not as successor, assignee or transmittee of St George. 59 In the Stellar case, Wilcox J regarded the question of transmission as governed by the Health Care case. His Honour said (at 236) that the critical question was whether

"… there was a substantial identity of work between that performed by the employees of the new employer and that previously performed on behalf of their old employer. … Once attention is paid to the matter of substantial identity of work, as distinct from the nature of any legal transaction between the old employer and the new employer, it is apparent that an 'outsourcing' arrangement may fall within s 149(d) or s 170MB(1)." 60 His Honour also considered whether anything had been transferred by Telstra to Stellar. Stellar had taken on part of the burden of customer contact. In relation to that assumption of burden, it was the "successor" of Telstra. Telstra had appointed Stellar as its agent to provide part of the service Telstra offered to its customers. Consequently, his Honour concluded that Stellar was the successor transmittee or assignee of part of the business of Telstra. 61 In the EN case also, the approach of Einfeld J was consistent with that which I have discerned from the Health Care case set out in pars 44-48 above. His Honour addressed the "substantial identity of activities" test [41 ff], and also accepted that there was a sufficient nexus or legal dealing between the Department and EN and ENA to characterise the transaction as a succession of the business of the Department, and at 218-219 [69] his Honour explicitly referred with approval to the comments of R D Nicholson J in the Health Care case which are set out above at [46-48]. 62 As noted, in neither the Stellar case nor the EN case was any submission made that the policy and context of s 170MB require its construction and scope of operation to be treated differently from that of s 149(1)(d) of the Act. Subject to that consideration, I consider that I am bound by the decision of the Full Court in the Health Care case to apply the principles which I have discerned from that case. Moreover, with respect, I agree with those views. 63 In my judgment, there is nothing in the policy and context of s 170MB which requires a different view to be taken of the meaning of the words in s 170MB(1)(c) and (2)(c) from the meaning ascribed to substantially similar words in s 149(1)(d) of the Act. I think that all indications are to the contrary, namely that the common words should be given the same meaning. My reasons for that conclusion are as follows. 64 Section 170L of the Act introduces Pt VIB concerning certified agreements. It sets out the object of Pt VIB as being

"… to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business or part of a single business." 65 Section 170LT prescribes the requirements which must exist for an agreement to be satisfied. They contemplate that the Commission be satisfied that employees who are parties to the agreement or are to be bound by it have been given a proper and adequate opportunity to understand it, and that a valid majority of those persons genuinely approve it: s 170LT(5)-(7). The agreement must include procedures for preventing and settling disputes about matters arising under the agreement: s 170LT(8). And the agreement must specify a nominal expiry date (which must be not more than three years after its commencement): s 170LT(10). The agreement must not discriminate against any employee: s 170LU(5). Section 170LX provides that a certified agreement remains in operation except in certain specified circumstances; those circumstances do not include those where the business of the employer has been passed to a successor transmittee or assignee of that business. Division 6 (which includes s 170MB) deals with persons bound by certified agreements. It is plain that a certified agreement binds employees whose employment is subject to the agreement whilst it is in operation, even if that employment commenced only after the certification of the agreement: ss 170M(1)(b). The significance of a certified agreement is also reflected in the detailed provisions in Div 7 dealing with its extension, variation or termination. All of those provisions, in my view, indicate a legislative intention that a certified agreement should continue to operate for its term in relation to the employment conditions to which it relates. It is to prevail over any award or order of the Commission to the extent of any inconsistency whilst it is in operation: s 170LY. Once an agreement has been certified, in my view, the legislative intent is to ensure that in the interests of both the employer and the employees affected, and in the public interest, it should operate to replace industrial action with the industrial peace which the consensual process of reaching the agreement was intended to provide. To construe s 170MB so as to permit the "settled rights of employees" (the Hudson case at 435-6 per Isaacs J) to be lost when in a practical and real sense, although perhaps not in a technical legal sense, the business is being run by an employer who has taken it over from the earlier employer is not, in my view, consistent with that legislative intent. The intention of provisions such as s 149(1)(d) with respect to awards is, I think, also applicable to s 170MB of the Act with respect to certified agreements. To conclude otherwise would be to lose the emphasis on stability which Pt VIB provides for, at least whilst a certified agreement is in operation and before its nominal expiry date: s 170MN. Division 7 of Pt VIB contemplates then a structure for negotiations, including in certain circumstances industrial action, after that time. But I consider s 170MN reinforces the view that certified agreements are intended to provide a period of stability in industrial relations during their currency. 66 I have also had regard to the general rule that words used in one part of an enactment should be taken to be used consistently in another part of the enactment: Registrar of Titles (WA) v Franzon (1975) 50 ALJR 4 per Mason J at 6. I do not discern any sound reason to depart from that approach. That is the more so when the critical words in s 170MB(1) and (2) when enacted had already been the subject of judicial determination in s 149(1)(d) or its predecessors as far back as the Hudson case. It would have been relatively easy for the legislature to have adopted some different wording to encompass only legal transmission of the assets of a business from one employer to another if it intended so to restrict the operation of s 170MB. 67 The fact that the Act grants that primacy to enterprise bargaining to which I have referred does not, in my judgment, diminish the conclusion I have reached. Section 3(b) and (c) set out certain of the principal objects of the Act and s 170L introducing Pt VIB of the Act indicate that agreement upon terms of employment through enterprise bargaining, particularly at the level of a single business or part of a single business is sought to be achieved. There may well be industrial cut and thrust in that process, or when the nominal expiry date of a certified agreement has occurred. But those provisions do not tend to indicate that the intention of the legislature is other than to maintain industrial relations within the framework of the processes provided by a certified agreement during its operation. I reject the submission that the legislative intention is to the contrary, and that therefore the approach to the interpretation of the scope of operation of s 170MB should be radically different to that concerning the scope of operation of s 149(1)(d) of the Act. 68 I note, finally, on this part of my reasons, that TTS disputes that the provision of passenger transport services by bus may constitute a "business" for the purposes of s 170MB (and s 149(1)(d)) of the Act. It acknowledges, however, that the decision of the Full Court in the Health Care case is to the contrary of that contention, and it accepts that I am bound to follow that decision.

findings 69 It is accepted that TTS is a constitutional corporation. 70 TTS contends that in fact it has received nothing from TransAdelaide. As the PTB Act makes clear, TransAdelaide could not transmit or assign its business to TT or to TTS, at least without the consent of the PTB: s 42, and it has not done so. In fact, TransAdelaide did not wish to cease operating its business of providing passenger transport services by bus in the areas which it serviced prior to 23 April 2000. Moreover, TTS points out that the PTB could not itself succeed to, or be the transmittee or assignee of TransAdelaide's business because the PTB Act precludes it from operating any such business: s 20. 71 Moreover, it is true, as TTS submitted, that none of the decided cases on s 149(1)(d) or s 170MB concerned circumstances such as the present. That is, it submitted, none concerned a statutory authority or government department which itself was expressly not empowered to conduct the "business" which granted to other entities the right to conduct the "business" for a period upon certain terms and conditions. In this case, they contend, there is no relevant nexus between TransAdelaide and TT whereas some form of nexus did exist in those other cases. 72 I do not consider that those matters preclude TT (or TTS) from being the successor assignee or transmittee of the business or part of the business of TransAdelaide. As noted earlier, I consider it necessary for there to be a practical and real connection between the business operated by TransAdelaide or part of that business, and the business now operated by TT (or TTS) as well as a substantial identity of activities between the two businesses. I shall separately address the implications of the arrangements between TT, TTO and TTS. The context in which that connection is to be found, if it exists, is the legislative framework by which TT came to operate its business (or, more accurately, to contract with the PTB to operate its business and then, with the PTB's consent, to subcontract that function to TTO). This is not a case where a non-government employer is alleged to have taken over the business of another non-government employer in the open market. It is a case where a government has contracted with a non-government employer for the provision of services to the public under terms fixed and controlled by that government, and at the expiration of that contract has contracted with a different non-government employer for the provision of similar services to much the same section of the public still under terms fixed and controlled by that government. The PTB Act, as noted, prevents the PTB itself from operating a passenger transport service. 73 The circumstances in which TT (or TTS) came to operate the business of providing passenger transport services by bus in certain areas of the metropolitan area of Adelaide are set out above. The overriding circumstance is that the right to operate that business was and remains within the statutory power of the PTB to grant under the PTB Act. 74 Section 39(4) of the PTB Act makes it unlawful for a person to operate a regular passenger service otherwise than under the authority of a service contract under that Act. A regular passenger service is defined to include (subject to services exempted by regulation) any passenger transport service conducted according to regular routes and timetables, that is any service involving the carriage of passengers for a fare or other consideration: s 4. Consequently the relevant business of TransAdelaide was conducted only under the statutory regime created by the Act. So too is the business now conducted by TT (or TTO). The right to conduct those businesses was within the power of the PTB to grant. It is an instrumentality of the Crown: s 6(3). Moreover, the grant of such a right by the PTB is necessary for the conduct of such a business. In my view, it is that statutory structure which provides the relevant nexus between the business of TransAdelaide on the one hand and TT (or TTO) on the other to expose TT (or TTO, and TTS as a subcontractor which is a subsidiary of TTO subject to considering its particular circumstances) to vulnerability as a successor assignee or transmittee of the business of TransAdelaide. It is also, of course, necessary to determine whether the character of the two businesses is substantially the same. 75 As the evidence shows, the PTB owns or controls the buses and the depots. They are significant assets used in the business, and were significant assets used in TransAdelaide's business. The PTB controls who provides passenger transport services by bus in the metropolitan area of Adelaide. In the circumstances outlined above, it removed from TransAdelaide the right to provide such services in respect of certain areas which are now largely serviced by TT (or TTS) after the PTB granted to it the right to provide such services in respect of similar but not entirely overlapping areas. In those circumstances, in my judgment, TT may properly be described as being a successor transmittee or assignee of the whole or part of the business of TransAdelaide. The right which TransAdelaide had to provide the services which reflected or represented its business has been removed from TransAdelaide and granted to TT by the PTB in the exercise of its statutory functions and powers. 76 Putting aside for the moment the fact that TT has subcontracted the operation of the services it has contracted to provide to TTO, and that TTO has in turn subcontracted the employment of staff involved in the provision of those operations to TTS, in my view there is a clear "identity of activities" between the activities carried on by TransAdelaide in the operation of its business or part of its business and the activities carried on by TT through TTO and TTS. The relevant part of TransAdelaide's business is the operation of the services of passenger transport by bus in at least the North West, East and LeFevre Peninsula areas up to 22 April 2000. Those areas are areas over which, it is agreed, there is now a substantial overlap with the operation of the services by TT in the East West area. (I use those descriptions of area as they are used in the service contracts referred to in pars 22 and 28 above.) On the evidence, TransAdelaide has retained the business of operating passenger transport services by rail (train and tram) in the Adelaide metropolitan area, and as noted it also operates passenger transport services by bus in the area known as Hills-Transit Plus. TTS acknowledged that, in that circumstance, I am bound to follow the Full Court decision in the PP Consultants case and to hold that that "particular bundle of activities" of TransAdelaide, being an identifiable portion of the total activities that constituted its business at 22 April 2000, do constitute part of the business of TransAdelaide within the meaning of s 170MB. I agree that that acknowledgment is properly made. I would in any event have reached such a conclusion on the particular facts in this matter in any event. 77 I am also satisfied, subject to considering the particular position of TTS as a supplier of labour to TTO that there is a substantial identity of activities between that part of the business of TransAdelaide providing passenger transport services by bus in certain areas of the metropolitan area of Adelaide and the business of TT, subcontracted to TTO, of providing passenger transport services by much in areas of the metropolitan area of Adelaide which significantly overlap with areas previously serviced by TransAdelaide. The business provides essentially the same service to members of the public as did the relevant part of the business of TransAdelaide. It does so upon similar general terms to those which applied to TransAdelaide, that is the PTB service contracts are not shown to involve relevantly different functions or responsibilities. The depots made available by the PTB, and the buses made available, are much the same. 78 There are, as the evidence shows, some differences. TT or TTO has leased a separate depot privately, and has also acquired motor vehicles plant and equipment for use in its business from sources other than the PTB. It may not continue to operate from both the Port Adelaide Depot and the Mile End Depot. It provides the contracted services as sixty-three separate routes grouped into twenty service corridors, and on only two of those corridors is the service provided unaltered. In the other eighteen corridors, to various degrees, there have been timetable changes, or route changes, or both. Up to 90 per cent of the bus trips operated by TT or TTO are on an altered timetable or route from the timetables or routes followed by TransAdelaide. In addition, the allocation of work to bus drivers employed by TTS is not done in the same manner and with the employees having the same administrative or home depot as applied whilst they were employed by TransAdelaide. 79 I have had regard to those various matters. Ultimately, however, as Einfeld J stressed in the EN case at [77], the question of substantial identity of activities is one of fact. Having regard to the nature of the activities carried out by TT or TTO, the areas in which those activities are carried out, the nature of the tasks carried out by the bus drivers employed by TTS and provided by TTO to carry out its business, and the terms of the service contract with the PTB, I find that there is a substantial identity of activities between those carried out by TTO on behalf of TT in its business and those previously carried out by TransAdelaide in that part of its business to which I have referred. 80 That finding, together with my conclusion that TT by virtue of its service contract with the PTB in the circumstances has in a practical sense "taken over" part of the business of TransAdelaide so as to qualify as a successor assignee or transmittee of part of TransAdelaide's business, leads me to the conclusion that TT is a successor transmittee or assignee of that part of TransAdelaide's business. 81 TT, however, is not the employer of the bus drivers. By the arrangement referred to, TTS is the employer. It is, therefore, necessary to determine whether TTS falls within the scope of operation of s 170MB(2) in the light of my conclusions thus far. TTS puts the contention that it is a labour hire company, whereas TransAdelaide was and is a service provider, and that as a labour hire company TTS does not in the circumstances fall within the shadow of s 170MB(2). 82 Mere remoteness of any relationship between the former employer and the new employer is not itself a reason to so conclude. Section 170MB(2) clearly contemplates that the new employer may not be the immediate successor transmittee or assignee of the former employer. It would also be surprising if, by the simple device of sub-contracting to a subsidiary company that part of the functions of the former employer as involved the provision of labour, an entity could void what I have found to be the intended operation of s 170MB. If TTS' contention is correct, it would be equally correct if TT directly contracted with TransAdelaide to acquire from it the right to operate passenger transport services by bus in certain areas. The Court should be slow to permit any such processes to avoid the proper application of s 170MB. Einfeld J in the EN case made similar observations at 219 [70]. 83 I do not consider that the consequence of the subcontracting to TTS is that for which it contends. Section 170MB(2) must be applied according to its terms. In my judgment, part of the business of TransAdelaide (in effect a subpart of that to which I have previously referred) is the engagement and provision of employees as bus drivers for the purpose of providing passenger transport services by bus under service contract with the PTB in certain areas of the metropolitan area of Adelaide. The findings I have already made indicate that I am of the view that TTS now is engaged in the business of the engagement and provision of employees as bus drivers for the purpose of TT by its subcontractor TTO providing such services also under service contract with the PTB in significantly overlapping areas of the metropolitan area of Adelaide. That activity carried out by TransAdelaide as part of its business was far from an activity peripheral to its business: cp Crosilla v Challenge Property Services [1982] 2 IR 448. In my view it is an activity or bundle of activities which readily falls into the expression "core activities" as explained by R D Nicholson in the Health Care case at 163 [68]. Accordingly, TTS is, in my judgment, a successor transmittee or assignee, although not immediate, of a part of the business of TransAdelaide.

conclusion 84 For those reasons, I am of the view that TTS is bound by the Mile End Agreement and/or the Port Adelaide Agreement by operation of s 170MB(2) of the Act. However, it is clear that it is so bound only to the extent that those agreements respectively relate to the part of the business of TransAdelaide which has in fact been transmitted to TTS. 85 Having given that answer to the question identified by the parties, I will now hear them as to the terms of any orders or declarations which ought now to be made and I will then adjourn the proceeding to enable the parties to undertake the negotiations to which reference is made in pars 3 and 28 above. I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.

Solicitors for the Applicants: Steve Masselos & Co by their agents Duncan Basheer and Hannon