Is HWE bound by the Agreement?
23 In supplementary written submissions, the Union submitted that:
"The words 'part of the business concerned' in section 170MB(2)(c) are … plainly a reference back to the expression 'single business' as defined in 170LB. The 'business concerned' is the business regulated by the certified agreement since the entire part (except for multi employer agreements in 170LC - additional Operation of Part) is concerned with single business agreements as defined."
By contrast HWE in its supplementary written submissions, argued that:
"there is no significance to be attached to the words used in section 170LI(1)(b) to the proper construction of the phrase 'the successor, transmittee or assignee … of the whole or a part of the business concerned" in section 170MB(2)(c)."
In my view, the phrase "the whole or a part of the business concerned" in par 170MB(2)(c) is intended to refer to the whole or a part of the "single business, or a part of a single business" referred to in par 170LI(1)(b). That is, in the circumstances of this case, the "business concerned" within the meaning of par 170MB(2)(c) of the Act is the operation of the CHPP.
24 The Union contended that it was sufficient for its purposes to demonstrate that, in a practical sense, the operations of the first employer (ie relevantly, the operation of the CHPP) had been delivered into the hands of the successor employer and had retained their same character.
25 HWE argued first, that the submissions of the Union wrongly conflated "industry" with "business" and that while the work of HWE at the Mine placed it in the coal mining industry, it was not in the same business as Ebenezer. It submitted that an analogy could be drawn between its operation of the CHPP and the provision by others of maintenance services for machinery used in coal mines or of clerical and accounting services to the owners of coal mines.
26 Secondly, HWE contended that, in any event, it was not the successor, transmittee or assignee of any part of the business of Ebenezer within the meaning of par 170MB(2)(c) of the Act. It acknowledged that it had taken over part of the activities of Ebenezer but argued that, in doing so, it had not taken over all or any of the business of Ebenezer and Ebenezer had not disposed of any part of its business. It drew attention to the fact that potential coal purchasers continue to deal with Ebenezer and not HWE and that HWE has no rights with respect to the coal or the contracts for the sale of the coal. It emphasised that it is Ebenezer, which continues to own the CHPP, that determines the extent to which the CHPP is actually used because Ebenezer is entitled to direct HWE as to the amount of coal that is to be prepared for sale and when it is to be ready for sale.
27 Both parties contended that the appropriate test to be applied is that found in PP Consultants Pty Ltd v Finance Sector Union of Australia [2000] HCA 59; 176 ALR 205 ("PP Consultants"). In PP Consultants the High Court gave consideration to whether, for the purposes of par 149(1)(d) of the Act, which is concerned to identify persons bound by an award, the operator of a pharmacy business in Byron Bay was the successor, assignee or transmittee of the business or part of the business of St. George Bank Limited. The relevant award, the Banking Industry - St. George Bank Employees - Award 1995, was one which apparently reached to all employees of the St. George Bank. Following the closure of the St. George Bank branch at Byron Bay, a branch agency of the bank had been conducted by the operator of the pharmacy from the pharmacy.
28 It seems to me that the use of the phrase "the business concerned" in par 170MB(2)(c) may have an impact on the significance to be attached in the case of a certified agreement to the consideration by the High Court of the nature of a "business" for the purposes of par 149(1)(d) (see [23] above). However, in view of the approach adopted by the parties, I have considered it appropriate to proceed on the basis that the relevant test is that found in PP Consultants.
29 In PP Consultants, Gleeson CJ, Gaudron, McHugh and Gummow JJ in a joint judgment at [14]-[19] said:
"The question whether one person has taken over or succeeded to the business or part of the business of another is a mixed question of fact and law. For this reason and, also, because "business" is a chameleon-like word, it is not possible to formulate any general test to ascertain whether, for the purposes of s 149(1)(d) of the Act, one employer has succeeded to the business or part of the business of another. Even so it is possible to indicate the manner in which that question should generally be approached, at least when a non-government employer succeeds to the commercial activities of another non-government employer. As already indicated, special considerations apply when one government agency succeeds to the activities of another. And there may well be other considerations where a government contracts with a non-government body for the performance of functions previously carried out by a government authority.
As a general rule, the question whether a non-government employer who has taken over the commercial activities of another non-government employer has succeeded to the business or part of the business of that other employer will require the identification or characterisation of the business or the relevant part of the business of the first employer, as a first step. The second step is the identification of the character of the transferred business activities in the hands of the new employer. The final step is to compare the two. If, in substance, they bear the same character, then it will usually be the case that the new employer has succeeded to the business or part of the business of the previous employer.
The business of banking
It is not in issue that, through its branch in Byron Bay, the Bank carried on the business of banking and that the activities in which it there engaged were part of its banking business.
The essential characteristics of the business of banking are "the collection of money by receiving deposits upon loan, repayable when and as expressly or impliedly agreed upon, and the utilization of the money so collected by lending it again in such sums as are required". It involves the creation of distinct debtor and creditor relationships between the bank and those who deposit money with it and, also, between the bank and those who borrow from it.
Although the appellant has taken over the activities, or at least, a large part of the activities in which the Bank previously engaged in Byron Bay, it has not thereby engaged, for itself, in the business of banking. It does not, in accepting deposits, receive money on loan but instead, it receives, on behalf of the Bank, moneys lent to the Bank. Nor does it, in processing withdrawals, repay money lent to it. Rather, it repays, on behalf of the Bank, money lent to the Bank. And so far as it is involved in processing loans, it is not, itself, lending money, but is handing over money lent by the Bank.
It is correct to say that, in conducting the branch agency, the appellant is involved in banking activities. It is not, however, correct to say that it is carrying on banking business. It is carrying on the business of a bank agent. Moreover, the Bank has not disposed of any part of its business. All that has happened is that the Bank has changed the method by which it carried on its banking business in Byron Bay. Thus, no part of the Bank's business has been acquired by the appellant, whether as successor, assignee or transmittee."
30 In Stellar Call Centres Pty Ltd v CEPU [2001] FCA 106; 103 IR 220 the Full Court of this Court gave consideration to the decision of the High Court in PP Consultants. At [29] and [30] the Full Court observed:
"In the light of the observations in the joint judgment in the High Court … it is no longer sufficient to ask whether the putative transmittor, the first employer, has 'disposed of an important aspect of operating' its business. Rather, one must characterise the business or the relevant part of the business of the first employer, and see whether, so characterised, it substantially corresponds with the character attributable to 'the transferred business activities in the hands of the new employer'.
The High Court must be taken impliedly to have rejected the suggestion of the Full Court in Finance Sector Union v PP Consultants … that 'it is logical to focus on the nature of the activities undertaken by the two employers and the question whether there is any material change in the nature of the employees' duties or working conditions'. As we understand it, even if there be complete identity between the duties and working conditions of the relevant employees of both employers, that will not attract the operation of s 149(1) unless the business in which those duties are performed for the new employer is in substance identical in character with the business, or a distinct part of the business, of the presumptive transmittor."
31 Limited evidence was placed before the Court as to the business of either Ebenezer or HWE. However, Robert James Mathieson, the Managing Director of Ebenezer, gave unchallenged evidence that, since Ebenezer purchased the Mine, Ebenezer has, by itself or by contractors, mined, processed, washed, transported and sold coal produced at the Mine. No evidence was given of Ebenezer being involved in any other business or businesses. I conclude that the overall business of Ebenezer is, broadly speaking, that of causing coal to be extracted from the Mine and rendered fit for sale, and selling that coal either for export or domestic consumption.
32 As to HWE, the evidence reveals that it operates the Mine, the ROM Loader and the CHPP as a contractor to Ebenezer. Additionally evidence was given that it "has work in the metalliferous industries throughout Australia, New Zealand, Indonesia, South America and Africa …" and that it has a "civil branch as well and it, basically, does construction work across Australia". I conclude on the basis of this limited evidence that the overall business of HWE is that of contractor to the mining and construction industries.
33 The joint judgment of the High Court in PP Consultants suggests that it is necessary to identify or characterise the operation of the CHPP by Ebenezer as a first step. As mentioned above, I conclude that the overall business of Ebenezer is comprised, broadly speaking, of three aspects: the causing of coal to be extracted from the Mine, the rendering of that coal fit for sale, and the selling of that coal either for export or domestic consumption. In my view, in operating the CHPP Ebenezer was itself carrying on the second aspect of its overall business. The operation of the CHPP was in this sense, from the time that the CHPP became operational until approximately February 2000, a distinct part of the business of Ebenezer in the sense of a project or undertaking forming part of its overall business or a distinct operational unit within its overall business. In my view, the operation of the CHPP was not an activity ancillary to that business. I note, incidentally that, having regard to the terms of s 170LI of the Act, this may be presumed to have been the view taken by Commissioner Hodder when he certified the Agreement.
34 The second and third steps which the joint judgment of the High Court in PP Consultants indicates must be taken are the characterisation of the transferred business activity in the hands of HWE and the comparison of the character of the business in the hands of Ebenezer with its character in the hands of HWE. The transferred business activity (ie the operation of the CHPP) is now an aspect of HWE's total contracting business. Ebenezer now relies on HWE to operate the CHPP in the same way and to achieve the same results as were achieved when Ebenezer itself operated it. In the hands of HWE, the business activity which is the operation of the CHPP retains, in my view, the same character as it had when it was in the hands of Ebenezer. It continues to be the means whereby coal extracted from the Mine is rendered fit for sale by Ebenezer. By operating the CHPP, HWE is engaging in the second aspect of the overall business of Ebenezer as a contractor to Ebenezer.
35 This case is in this regard different from PP Consultants. In that case PP Consultants took over certain banking related activities previously undertaken by St. George Bank but it did not itself commence to engage in the business of banking in Byron Bay. St. George Bank did not, as a result of its agreement with PP Consultants, cease to engage in the business of banking in Byron Bay; it continued to engage in that aspect of its business using PP Consultants to undertake certain ancillary activities for it. By contrast in this case, when Ebenezer engaged HWE to operate the CHPP, it ceased itself to undertake the second aspect of its overall business, relying instead on HWE to process the coal so as to render it fit for sale.
36 Counsel for HWE, in identifying the business of Ebenezer, placed reliance on the asserted fact that "[t]he income received by Ebenezer is a function of the demand for coal, the price for particular types of coal and its ability to meet the market". Counsel sought to contrast this position with that of HWE. HWE's income from the operation of the CHPP is calculated by reference to an agreed rate per tonne of processed coal delivered to designated delivery points. The differences in the way in which Ebenezer and HWE respectively derive income are, in my view, of limited assistance in determining whether the business of operating the CHPP has the same character in the hands of HWE as it had in the hands of Ebenezer. Were it otherwise, the intended operation of par 170MB(2)(c) could be avoided by the simple device of an employer subcontracting the conduct of parts of its business to a wholly owned subsidiary company and agreeing a method of remuneration which did not involve the subsidiary in profit sharing with the parent company. For the same reasons, in my view, little if any weight is to be attributed to the fact that HWE may not, without the approval of Ebenezer, pass on to another entity the business of conducting the CHPP. It would be surprising if the intended operation of par 170MB(2)(c) could be avoided by the making by the employer of a subcontract, say with a subsidiary company, pursuant to which the subcontractor was obliged to perform its obligations itself unless it obtained the consent of the employer to do otherwise. Nothing in the majority judgment in PP Consultants leads me to conclude that their Honours took the view that the operation of par 149(1)(d) of the Act (and by analogy of par 170MB(2)(c)) can be so readily avoided. To the extent that support for this approach may be gleaned from the separate judgment of Callinan J, his Honour's views, while persuasive, are obiter only. They cannot prevail over what I understand to be the approach adopted in the majority judgment.
37 I conclude that upon commencing to operate the CHPP in approximately February 2000, HWE became bound by the Agreement as "the successor, transmittee or assignee … of the whole or a part of the business concerned" within the meaning of par 170MB(2)(c) of the Act.