Reasoning on the Appeal
25 Before considering how s 149(1)(d) might operate in the present case it is desirable to identify the legislative purpose of the provision. It has, for present purposes, been conveniently summarised in the judgment of R D Nicholson J (Spender and Madgwick JJ agreeing) in North Western Health Care. As to the purpose of the Act generally, his Honour said at 485 [27]:
"I therefore accept the submissions for the respondent that the purpose of the [Workplace Relations] Act is to facilitate the resolution of disputes between employers and employees and that the intention of the [Workplace Relations] Act is that a disputation in the area of industrial activity is settled by the making of an award."
His Honour then addressed the purpose of the provision itself at 485 [28]:
"The purpose of s 149 as appears from its terms is to extend the binding nature of awards beyond the parties who appeared or were represented before the Commission in relation to the industrial dispute. The policy objective of this provision is to make the power to settle industrial disputes effective by extending the instrument of settlement to 'the ever changing body of persons within the area of such disturbances': George Hudson v Australian Timber Workers' Union (1933) 32 CLR 413 at 455 per Starke J."
26 To similar general effect were the observations of Madgwick J at 502 [97]-[98], though they were cast a little more widely:
"Finally, I would say that, although it has been convenient to segregate arguments and questions about 'business', the successor terminology and (to a lesser but still appreciable extent) what is necessary to constitute an overriding order of the Commission, they are in truth but aspects of a single, overriding conception. That is 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.
As Starke J said in George Hudson Ltd v Australian Timber Workers Union (1923) 32 CLR 413 at 455, over 75 years ago, of the constitutional power to enact legislation like s 149(1)(d),
'the constitutional power is not so weak, in my opinion, that it is limited to the settlement of an industrial disturbance between the actual participators therein. If so limited, the power would be practically ineffective: if industrial disturbances are to be settled or prevented, then the power must extend to the ever changing body of persons within the area of such disturbances'
(Emphasis added.)"
We accept R D Nicholson J's description of the purpose of the section. That purpose bears upon how it might operate in a particular factual context. It also serves to distinguish the section from other similarly framed provisions found, for example, in State long service leave legislation which have tended to be construed more narrowly and with a greater focus on the precise legal relationship between the parties to the transaction pursuant to which succession, transmission, or assignment is alleged to have occurred.
27 Gribbles submitted that s 149(1)(d) did not operate to make the Award binding upon it for two reasons. The first was that the activities that MDIG undertook at the Moorabbin clinic were not part of its business nor part of Gribbles' business when undertaken by that company. The second was that Gribbles was not the successor, assignee or transmittee of any business activities that MDIG had undertaken. The latter submission was, in substance, that MDIG effectively left the Moorabbin clinic and ceased is activities at the clinic and that thereafter Gribbles arrived and commenced its own activities at the clinic. It was argued, with some force that there was, at best, extremely limited contact between Gribbles and MDIG and certainly no dealings between them that could constitute succession, assignment or transmission. During the course of our consideration of the issues raised in this appeal, we will not separately refer to submissions made by the Minister for Employment and Workplace Relations who intervened pursuant to s 471 of the Act. While different matters were emphasised, the submissions of the Minister were also directed to demonstrating the primary judge had erred and that Gribbles was not bound by the Award by reason of s 149(1)(d).
28 The first submission of Gribbles was based, in substantial part, on the judgment of the High Court in PP Consultants. The High Court said at 655 [14]-[15]:
"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."
29 The High Court was discussing how the activities of two employers in the private sector might be considered to ascertain whether one had succeeded to a business or part of the business of the other so as to enliven s 149(1)(d). This passage was preceded by an observation that in the private sector notions of profit and commercial enterprise will ordinarily be significant in determining whether the activities of an employer in the private sector constitute a business. This is to be contrasted to the position in relation to government agencies where the word "business" might fairly describe only the activities undertaken by the agency.
30 The task proposed by the High Court involves identification or characterisation of the business or the relevant part of the business of the first employer and of the transferred business activities in the hands of the new employer, and a comparison between the two. In the present case, Gribbles submitted that, approached this way, a conclusion is not open that Gribbles succeeded to any part of the business of MDIG. It was put in various ways. The approach of Gribbles was as follows. The business of MDIG was an integrated business involving the provision of radiological services in which an aspect (but not part) of the business involved radiography. Radiography resulted in the creation of images. However, those images had to be assessed by radiologists and reports prepared for patients and referring medical practitioners. The activities of the radiographers in taking the images was not a discrete business activity generating income but an integral part of the overall business of MDIG which culminated in the diagnosis provided to referring medical practitioners and their patients. The financial and administrative support for the activities of the radiographers was provided by others located elsewhere. In addition radiography was undertaken as part of MDIG's business, not only at the Moorabbin clinic but elsewhere. It was not possible to isolate the provision of radiography services at one location and treat that as part of the business of MDIG. Similarly, Gribbles' business was an integrated one with the same characteristics as MDIG's business. The provision of radiography services at the Moorabbin clinic was not, so it was argued, a part of either business.
31 This approach, in our opinion, is too narrow. While the provision of radiography services at the Moorabbin clinic could be viewed as an activity it was a discrete activity of the business of both MDIG and Gribbles undertaken for the purpose of enabling both to carry on their entire business. It was undertaken for the purpose of enabling the entire business to generate both income and profit as a commercial activity. Both that part of the business and the business as a whole were directed towards generating profit as a commercial enterprise. Indeed, it is to be recalled that both MDIG and Gribbles ceased providing radiography services at the Clinic because it was not profitable. To suggest that a "part of a business" must itself generate a net income or profit (typically aspects, as the High Court noted in PP Consultants, of business) does not allow for the possibility that s 149(1)(d) can, having regard to its terms, operate not only on a business but on part of a business. We do not see any basis for confining the expression "part of a business" for the purposes of the section to a discrete profit earning part or unit of a business. The High Court in PP Consultants was, in the passages just discussed, not concerned with identifying what might be the characteristics of part of a business simpliciter, but the characteristics of entire businesses or their parts for the purposes of comparison.
32 It can be accepted that, in general, the mere transfer of machinery or of some other assets used in a business may not constitute a transfer of part of a business. However, each case must turn on its own facts. In the present case a discrete part of MDIG's and Gribbles' businesses and of their income earning activities was the provision of radiography services at the Moorabbin clinic pursuant to the agreement each made with Region Dell. The services provided by those businesses at the clinic contributed to generating part of the income earned by the businesses and we see no reason why the business activities of MDIG and Gribbles at the Moorabbin clinic should not be described as part of their respective businesses for the purposes of s 149(1)(d).
33 Further, in the present matter the Award, having regard to its terms, was made to settle a dispute between the Union and specified private sector employers providing radiological services at various locations in Victoria. In so doing it has specified minimum rates of pay and other conditions of employment for, amongst others, radiographers. As the primary judge observed, it was common ground that MDIG was a named respondent to the Award. Southern Radiology (which, as noted earlier, provided radiography services at the Clinic before MDIG) was also a named respondent. It is quite consistent with the purpose of s 149(1)(d) discussed earlier, for it to operate so as to render applicable the Award on a private sector employer operating a similar business in the same industry, who employs radiographers performing the same functions as those performed by employees of named respondents at the same location. The terms on which the dispute was settled (namely those embodied in the Award) would continue to apply to the class of employee to whom the Award generally applied. This would tend to preserve the settlement by preventing an employer offering inferior terms and conditions of employment or, from a different perspective, requiring the employer (Gribbles) to provide the same terms and conditions. Moreover, by rendering the Award applicable to Gribbles (at least in relation to the radiographers working at the Moorabbin clinic) s 149(1)(d) would, by its operation, have the effect of lessening the prospects of a further dispute arising between the Union and Gribbles in which the Union would seek to establish, by the making of another award, similar terms and conditions of employment (to the extent to which that is now permitted under the Act). The above factors reinforce our view that a narrow approach to s 149(1)(d) is not appropriate and that, in that context, it is appropriate to characterise the radiography services provided by Gribbles at the Moorabbin clinic as part of its business.
34 We should refer briefly to the judgment of the Full Court in Stellar Call Centres Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union (2001) 106 FCR 302 ("Stellar Call Centres") which Gribbles relied on to illustrate how activities carried on within a business of an employer might not, if conducted by another employer, attract the operation of s 149(1)(d). We accept that the Full Court correctly identified what emerges from the PP Consultants, namely that one cannot simply focus on the activities undertaken by the employer bound by the award (or certified agreement) and then compare them with the activities undertaken by the new employer. It is necessary to undertake the process of characterisation and comparison discussed by the High Court. In Stellar Call Centres the characterisation and comparison pointed to the conclusion that there had been no succession, assignment or transmission of a business or part of a business. The transmittor and the transmittee conducted quite different businesses. That, however, is not the case in the present matter.
35 In our opinion the potentially wide reach of s 149(1)(d) is limited, in a case such as the present, in its operation in relation to businesses or parts of businesses in the private sector by the requirement that a new employer has succeeded to, has been assigned or has had transmitted to it the business or the part of the business. Thus, as was pointed out in PP Consultants careful consideration must be given to "the transferred business activities in the hands of the new employer". However, the expression "successor, assignee or transmittee" is not to be construed narrowly. As was noted by Ryan and Madgwick JJ in Employment National at 352-353 [169]-[170]:
"The issue of succession, transmission or assignment, as distinct from the issue concerning 'part of a business' received little express attention in PP Consultants. However, it is apparent from the primacy accorded (at 655 [15]; 209[15]) to the 'before and after' comparison and from the use of the lay terms 'taken over' (at 655 [14]; 209 [14]) and 'disposed of' (at656[19]; 210[19]) in considering whether anything had passed from the first employer, that the joint judgment implies an aversion from any narrow or technical reading of the phrase 'successor, assignee or transmittee'. Neither did Callinan J appear attracted to a technical approach: se e663 [29], 215 [29]; 665-666 [39]-[43]; 217-218 [39]-[43].
At one end of the spectrum of circumstances to which ss 149(1) and 170MB can arguably apply is the case where the former employer who was a party to the industrial dispute, simply vacates the field of, or ceases to participate in, the activities to which that dispute related. The mere fact that one or more new employers adventitiously enter the area or begin to engage in the same or substantially similar activities would not, it seems reasonably clear, constitute the new employers as successors, assignees or transmittees of the former employer. What is required is some conduct or connection touching employment in the relevant activity from which can be imputed a sufficient relationship between the former employer and the new employer or employers."
36 Gribbles pointed to observations of Ryan and Madgwick JJ in Employment National at 352-353 [170] and of Mansfield J in Australian Rail Tram and Bus Industry Union v Torrens Transit Services Pty Ltd (2000) 105 FCR 88 at 100-101 [54] that s 149(1)(d) (and the equivalent provision concerning certified agreements) does not operate in circumstances where one employer simply vacates a business (perhaps conducted out of particular premises) and another employer enters the same field of business activity (perhaps also at the same premises). Some greater or closer connection between the earlier and later businesses is necessary. We do not disagree with these observations. However, in the present case there is a sufficient connection between the earlier part of the business of MDIG at the Moorabbin clinic and the part of the business subsequently conducted at the clinic by Gribbles to enliven the operation of s 149(1)(d). The connection arises by reason of Gribbles' assumption of the business activities conducted at the clinic by MDIG as a result of Region Dell conferring on Gribbles all of the rights and facilities it required to operate the radiology services previously provided by MDIG
37 In the present case MDIG provided the radiography services at the Moorabbin clinic under its contract with Region Dell, which provided the premises, equipment and services to enable that to be done. Region Dell was to encourage patients at the clinic to use the radiography services provided by MDIG (as part of the radiological services MDIG provided) and the majority of patients were those referred by doctors at the clinic. Gribbles, which operated under essentially the same contractual arrangements, can be fairly described as having taken over or succeeded to that part of MDIG's business which it had previously conducted at the clinic. The services provided, first by MDIG and then by Gribbles, were part of the radiological facility established by Region Dell at the Moorabbin clinic. It was in Region Dell's interest to ensure someone took up where MDIG left off. Heritage could and did provide, apart from the staff, the entire means by which this could be achieved. In these circumstances it is apt to say that Region Dell procured the transfer of the business activities (being part of the business) undertaken by MDIG at the Moorabbin clinic to Gribbles. It is not an essential element in our analysis that the transfer also included taking steps to facilitate the transfer of the four radiographers. Further, it is not to the point that the transfer was effected by a third party: cf Australasian Meat Industry Employees Union v MT Schank Meat Processing (1998) 81 IR 157 at 162-163. The succession was effected by Region Dell so as to perpetuate a facility or service which was an important element of its own business at the Moorabbin clinic.
38 It may well be, as submitted by Gribbles that, for there to be an assignment or transmission for the purposes of s 149(1)(d), there must be a direct dealing between the old employer and the new employer. Such an approach would be consistent with the ordinary meaning of the words "assignee" or "transmittee" as descriptive of a party to a transaction even if the words were broadly construed in a non-technical way as discussed earlier. But the entire expression "successor, assignee or transmittee" may be viewed as dispersive in which the "or" is a kind of hybrid of disjunctive and conjunctive: see Minister for Immigration and Ethnic Affairs v Baker (1997) 73 FCR 187 at 195. It is unnecessary to resolve the question of whether there needs to be a direct dealing in an assignment or transmission because, in our opinion, a person can be a "successor" as a result of a transaction involving a succession to a business or part of a business by reason of the conduct of a third party who is not the operator of the business or part of the business. Such a conclusion would be consistent with the ordinary relevant meaning of "successor" and "succeed".
39 While there is some force in the criticism made by Gribbles that the primary judge placed considerable emphasis on comparing the business activities of MDIG and Gribbles before and after the change over, his Honour was nonetheless cognisant of the role of Region Dell in establishing a sufficient nexus between the two businesses to constitute a succession for the purposes of s 149(1)(d).
40 In the terms of three steps stipulated in PP Consultants at 655:
- the relevant part of the business of MDIG was the provision of radiography services at the Moorabbin clinic pursuant to its contract with Region Dell;
- the "transferred" business activities were the provision of radiography services at the Moorabbin clinic pursuant to essentially the same contractual arrangements with Region Dell;
- MDIG's and Gribbles' business activities at the clinic are essentially the same activities.
As we are satisfied that the business activities of MDIG constitute a "part" of its business and a "transfer" of those activities has been effected by Region Dell it must follow that s 149(1)(d) has been enlivened as a result of Gribbles' succession to part of MDIG's business. Thus, the primary judge's conclusion that Gribbles was bound by s 149(1)(d) to pay the severance pay claimed by the four radiographers at the Moorabbin clinic was correct.
41 For the above reasons the appeal is to be dismissed.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moore, Marshall & Merkel.