North Western Health Care Network v Health Services Union of Australia [1999] FCA 897 | Case summary

Federal Court of Australia|1997-03-07|Before: Spender J, Nicholson J, Madgwick JJ

REASONS FOR JUDGMENT SPENDER J: 1 I agree with the reasons for judgment of R D Nicholson J. 2 The provision of adult psychiatric health services in parts of the Metropolitan region had been provided by the State of Victoria in specialist psychiatric hospitals. As part of a policy of "mainstreaming" psychiatric services into general hospital services, the Western Health Care Network and the North Eastern Health Care Network entered into health service agreements (pursuant to the Health Services Act 1988 Vic), with the State of Victoria. The agreement between the Preston and Northcote Community Hospital ('PANCH'), the predecessor of the North Eastern Care Network, and the Secretary of the Department of Health on 24 July 1995 provided for the assumption of the obligations of managing and providing the mental health services listed in that agreement by PANCH. Funding would be provided to the agency for that purpose. In my opinion, the Conditions of Funding applying to the agreements make it plain that there was a transfer of the management and provision of mental health services from the Department of Health in the State of Victoria to the hospital/agency, the "date of transfer" referring specifically to the date at which the activity of providing adult mental services in the relevant area ceased to be carried on by the State of Victoria and commenced to be carried on by the respective Network. 3 It is helpful to ask: "What was transferred?" 4 The primary judge found that the same patients became the responsibility of the Network; the medical records and stock were transferred; leased assets were assigned and staff were transferred. The retention by the State of Victoria of control over funding and audit meant that the State of Victoria continued to meet the cost of the provision of adult psychiatric services, but the industrial activity constituted by the management and provision of those services, previously part of the business of the State of Victoria, was now the business, or part of the business, of the Networks. 5 For the reasons given by R D Nicholson J, I agree that that activity was formerly "part of the business" of the State of Victoria and the "transfer" of that activity to the Networks brought the Networks within the phrase "successor, assignee or transmittee of part of the business of an employer" in s 149(1)(d) of the Workplace Relations Act 1996.

6 While I accept that the resolution of the question of whether there has been a "transmission" of "part of the business" of the State may be of some general interest or importance, I note that the real question in the application before Marshall J was which award or awards applied to Mr Rule and Ms Carson, members of the respondent Health Services Union of Australia. The union sought the imposition of penalties upon North Eastern for its alleged failure to pay certain benefits to Ms Carson, being the correct shift penalty and commuted allowance under the Health & Community Service (Nursing, Health Care and Associated Groups) Interim Award 1994 ('the 1994 Award'), and the union also sought the imposition of penalties upon Western for its alleged failure to provide substituted leave days to Mr Rule pursuant to the Victorian Health & Community Services (Psychiatric, Disability and Alcohol and Drug Services) Award 1995 ('the 1995 Award'). Entitlements under either of those awards would apply only if s 149(1)(d) of the Workplace Relations Act had application in the circumstances of the "mainstreaming" of psychiatric services. The appellant and the intervener contended that the entitlements of Ms Carson and Mr Rule were governed by the Nurses (Victorian Health Services) Award 1992 ('the Nurses Award'). This award, inter alia, bound PANCH in respect of employment by it of nursing staff.

7 While at the date of judgment and declarations made by Marshall J and the filing of the appeal, there was no certified agreement in existence which might be said to have displaced the operation of any awards binding on North Western Health Care Network, the position now is that on 28 October 1998, Commissioner Holmes certified the Northwestern Health Care Network Psychiatric Services Certified Agreement 1997 as an agreement under Division 2 of Part VIB of the Workplace Relations Act 1996. Clause 1.2.5 of that agreement provides that the Agreement is to: "…apply to the employment of employees engaged in the provision of psychiatric and/or mental health services with the employer to the exclusion of all other awards and certified agreements, including the Nurses (Victorian Health Services) Award 1992 and the Health and Allied Services - Public Sector Victorian Consolidated Award 1992 and any associated certified agreements." The Agreement came into force on 28 October 1998 and has a nominal expiry date of 30 September 2000. 8 It seems then that the issues on the appeal have a relevance to the parties and to perhaps other employees between the date of transfer and the date of certification of the Certified Agreement. The position, however, is that ongoing industrial relations are now governed by the Certified Agreement and the matters in issue are of essentially historical significance. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

On appeal from a judge of the Federal Court of Australia

(formerly the North Eastern Health Care Network and

REASONS FOR JUDGMENT 9 R D NICHOLSON J: This is an appeal against the judgment of a primary judge delivered on 22 October 1997 and declarations subsequently made by him on 17 March 1998. The issue in the matter before him was whether when the appellant assumed the management of the provision of certain adult mental health services previously provided by the State of Victoria it thereafter became bound by certain awards to which the State of Victoria had been bound in respect of the provision by it of those services. In simplistic terms, the issue is whether the "outsourcing" or "mainstreaming" of such services has the effect that the body assuming the obligation to deliver the services is not bound by the awards to which the State was bound when it delivered the services. 10 The primary judge made declarations that, prior to 1 July 1995, the activities of the State of Victoria comprising the provision of adult mental health services in the Western Metropolitan Region for the South-West and Mid-West areas and in the Central East area of the Eastern Metropolitan Region constituted a 'part of the business' of the State within the meaning of section 149(1)(d) of the Workplace Relations Act 1996 ("the WR Act"). He declared that, on or after 1 July 1995, the appellant became a successor, assignee or transmittee of those parts of the business of the State of Victoria. He therefore declared that the appellant became bound by the Health and Community Services (Nursing, Health Care and Associated Groups) Interim Award 1994 ("the 1994 Award") and the Victorian Health and Community Services (Psychiatric Disability and Alcohol and Drug Services) Award 1995 ("the 1995 Award") in respect of those services and that those awards applied to its employees engaged in the provision of those services. At the date of the orders the Western Health Care Network and the North Eastern Health Care Network ("the Networks") were separate entities. They have subsequently been amalgamated into the legal entity which is now the appellant. 11 The grounds of appeal challenge these conclusions and components of them. Additionally the appellant challenges the conclusion of the primary judge that in making the awards in question the Australian Industrial Relations Commission ("the Commission") did not make an order of the kind contemplated by the opening words of s 149(1) and so the operation of that subsection was not displaced. 12 The facts as found are otherwise set out in the published reasons of the primary judge. As they are not relevantly in dispute I rely on them and repeat them only so far as is necessary.

RELEVANT STATUTORY PROVISION 13 The persons bound by awards is provided for in s 149(1) of the WR Act as follows: "149 (1) Subject to any order of the Commission, an award determining an industrial dispute is binding on: (a) all parties to the industrial dispute who appeared or were represented before the Commission; (b) all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared); (c) all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute; (d) any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer; (e) all organisations and persons on whom the award is binding as a common rule; and (f) all members of organisations bound by the award." (Emphasis added)

CONSTITUTED "THE BUSINESS" OR "PART OF THE BUSINESS"

Reasoning of Primary Judge 14 The essence of the reasoning of the primary judge on this issue was as follows: "The submission that the exercise of a public function cannot constitute a business is reminiscent of the submission rejected by the High Court in R v Commonwealth Conciliation & Arbitration Commission; Professional Engineers', Australia, Ex p (1959) 107 CLR 208 that what is governmental cannot be industrial. At 236, Dixon CJ noted that the phrase "industrial dispute" was "very wide and flexible". Similarly, in my view, "business" is also a word of wide import. In [Re Australian Industrial Relations Commission; ex parte Australian Transport Officers Federation (the ATOF case) (1990) 171 CLR 216] the High Court said that at 226: "Of all words, the word 'business' is notorious for taking its colour and its content from its surroundings... Its meaning depends upon its context." In the context of s 149 of the Act I see no basis for the restrictive interpretation of "business" contended for by the respondents and the intervener. Activities of a State constituted by the employment of persons and the provision of services to the public do not cease to be "business" merely because they are not generally conducted for profit. The Act provides for the making of awards and agreements which apply to business conducted by States. There is no reason to suggest that s 149(1)(d) or s 149(2)(c) of the Act should be interpreted in some different or special way when a State transmits certain of its functions to another entity in circumstances where award application consequences arise for affected employees. I find that the provision of mental health services in the relevant area by the State did constitute "part of the business" within the meaning of s 149(1)(d) of the Act."

Appellant's Contentions 15 The contentions for the appellant run as follows. 16 Everything that the State did or does through its relevant Department of Health and Community Services (formerly Health) derive their significance from the functions that the Department performs as the State. See State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 297‑298. They do not have any of the characteristics of the business as that expression is ordinarily understood, albeit that sometimes businesses carry out similar activities in the course of their business. The activities of the Department cannot be described as any form of commercial enterprise. They are conducted for governmental purposes. At all material times the activities of the Department have been carried out in accordance with the legislative provisions by public servants employed in the public administration of the State. The funds of the Department come out of Consolidated Revenue in the performance of governmental functions. See State Authorities Superannuation Board v Commissioner of Taxation (1988) 21 FCR 535 at 548ff , 553, see also 541-542. See also R v Holmes Ex parte Public Service Association (NSW) (1978) 140 CLR 63 at 70, 77. 17 Whilst the provision of mental health services might be a business for private hospitals, it is unlikely that it is a business for public hospitals and was certainly not a business for the Department. It was a recognisable governmental activity but not a business. See Expro Services Limited v Smith [1991] ICR 577 at 582 and Re Crown Employees Roads & Traffic Authority (NSW) (Officers Salaries & Conditions) Award (1989) 29 IR 120. 18 The WR Act does not give "business" a defined meaning. Where it is used in the transmission provisions, s 149(1)(d), it is to be understood in its ordinary sense as referring to a commercial enterprise carried on for profit and in respect of income resulting from its activities: State Authorities Superannuation Board, supra. There is nothing in the context in which the expression is used that indicates that it should have any other or extended meaning. No authority can be relied upon to the contrary.

Respondent's Contentions 19 The respondent identifies "the business" as the economic activity of the actual provision of mental health services. The respondent therefore supports the reasoning of the primary judge. It does so by reliance on the ATOF case at 226 and 230-231. It considers the primary judge was correct to follow the approach he had taken in Australian Federation of Air Pilots v Skywest Airlines Pty Ltd [1996] 67 IR 347 and to reject the contention that the approach taken by the High Court in ATOF was not applicable.

Intervenor's Contentions 20 The intervenor submits that, as was stated in the ATOF case at 226, the word "business" takes its colour and context from its surroundings. The intervenor distinguishes the context in the ATOF case from that of s 149. It is submitted: "The context of s 149 is quite different. The context is: (a) the use of the word "business" in conjunction with "successor, assignee or transmittee"; (b) the reference to taking over or acquisition by a corporation; (c) that the provision does not go as far as the award making power itself, but applies only to circumstances in which a business is succeeded to, assigned or transmitted; (d) the application of awards to non parties is an extension to the principle that awards only bind the parties to it: Lane's Commentary on the Australian Constitution, p 236-7, and the extension is made for a particular purpose, namely to stop the avoidance of an award by the simple transfer of the entity, the subject of the award to a third party. There is no reason to consider that the provision was intended to apply in complex circumstances." It is submitted that this context provides a basis for a more restrictive interpretation than the primary judge gave the word. It is said that: "On its proper construction, the reference in s 149(1)(d) to "business" is to things which may be succeeded to, assigned or transmitted in the usual sense of those words, i.e. to a business as an asset or property (see for example the discussions in Commissioner of Taxation v Murray (1998) 72 ALJR 1065) and to cases where such an asset or property becomes the property of or in the ownership of a person, by agreement with its previous owner or by operation of law. . . . The context of s 149 is quite different. It identifies persons who are to be bound by a Federal award. The purpose of s 149(1)(d) is to stop the avoidance of the award by the transfer of the entity bound by the award to a third party. That purpose has no place in the present circumstances. Here the Government is engaging a non-Government entity to provide a service to the Victorian public." These submissions are supported by reference to the history of the health services in Victoria and to what is said to be significant features of the health service agreements between the Department and the Networks which it is said put the cases outside the concepts of succession, assignment or transmission. The error in the conclusion of the primary judge is said to be that the business is described as the provision of mental health services when that is not a business but a function of government.

Reasoning 21 The resolution of this ground of appeal depends primarily on the interpretation of the word "business" as it appears in s 149(1)(d) of the WR Act. A number of considerations arise in relation to that. They are as follows: 22 (1) The relevant enactment: The matter proceeded before the primary judge on the basis that the WR Act was the relevant enactment. 23 The applications by the present respondent to the Industrial Relations Court were dated 9 and 14 May 1997 respectively. The former application in respect of the North Eastern Health Care Network related to the employment of Ms Carson. It alleged that between 14 and 27 August 1995 that Network failed in breach of clauses in the 1994 and 1995 awards to pay her correct shift penalties and a commuted allowance. The latter application which related to the Western Health Care Network concerned the employment of Mr Rule who was said to be employed in or about December 1995. His claim is for eleven days substituted leave in respect of public holidays between December 1995 and December 1996. Thus while the date of the alleged breaches preceded the coming into operation of the WR Act on 25 November 1996 (subject to certain application, saving and transitional provisions) I proceed on the basis that it is common ground that the WR Act is the relevant legislation. That is, the parties have accepted that the relevant law is that in force as at the date of the applications rather than as of the date of the alleged breaches. 24 (2) The principal objective: The principal object of the WR Act is "to provide a framework for co-operative workplace relations which promotes the economic prosperity and welfare of the people of Australia": WR Act, s 3, then follow a series of sub-objects which emphasise the importance of agreement between employers and employees. Included among these is (e) which emphasises the desire to provide a framework of rights and responsibilities for employers and employees and their organisations which "ensures that they abide by awards and agreements applying to them". Also there appears (h) providing for the Act to enable the Commission to "prevent and settle industrial disputes as far as possible by conciliation and, where appropriate and within specified limits, by arbitration". 25 (3) The Divisional context: Section 149 appears in Division 6 of Part VI. That Division addresses Awards of the Commission." An "award" is defined in s 4(1), subject to the appearance of contrary intention, to mean "an award or order that has been reduced to writing under subs 143(1)" but it does not include an order made by the Commission in a proceeding for termination of employment under Sub Div B of Div 3 of Pt V1A (ss 170CA‑170KC). Section 143(1) appears in Div 6. 26 Other sections in that Division appearing prior to s 149 address the form, date, commencement term and continuity of awards: ss 144‑148. Sections following s 149 address the finality of awards, the operation of awards, the prevailing of awards over State laws and State awards and reprints of awards: ss 150-144. Section 155 provides that "unless the contrary intention appears in an award, an expression used in the award has the same meaning as it has in an Act by virtue of the Acts Interpretation Act 1901 (Cth) or as it has in this Act". 27 I therefore accept the submissions for the respondent that the purpose of the W R Act is to facilitate the resolution of disputes between employers and employees and that the intention of the WR Act is that a disputation in the area of industrial activity is settled by the making of an award. 28 (4) Purpose of s 149: 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. It does not therefore seem to be to the point that "outsourcing" or "mainstreaming" may not have been in contemplation at the time the section was enacted. 29 (5) Features of s 149(1): Relevant features of s 149 to the interpretation of the word "business" in s 149(1)(d) are the following: (a) The section will only operate where there is "an award determining an industrial dispute". The 1994 Award and the 1995 Award satisfy this pre‑condition. (b) Sub-paras (a), (b) and (c) all focus on the existence of an "industrial dispute" as determining the relevance of the ambit of interest of persons who are to be bound by the awards. (c) In par (d) the focus is on "the business or part of the business of an employer who was a party to the industrial dispute". Again it is the existence of "the industrial dispute" and the presence of an employer in it which identifies "the business or part of the business". This supports a construction of the reference to "the business or part of the business" to whatever it is an employer who is a party to the industrial dispute has been conducting in order to fulfil the role of employer. The word "employer" is defined in s 4(1) of the WR Act to include a person who is usually an employer and "an unincorporated Club". This latter reference adds support to the view that the words "the business" take their colour and context from the reference to the "industrial dispute" in relation to which the employer is involved. An unincorporated club is not a commercial enterprise in the way that the appellant contends. It has not been argued that the word "employer" should be read down contrary to the definition by the context of s 149(1)(d). (d) It is contended for the appellant that the words "the business", understood particularly with reference to the definite article, considered in the context of succession, assignment and transmission requires an asset or property capable of such disposition and not an activity. A succession occurs when there is at law a devolution of property on a person's death. An assignment occurs when there is a transfer of property, particularly personal property. A transmission involves the transfer of a right from one person to another, generally involuntarily, as on death or bankruptcy. See Wolfson v Registrar General (NSW) (1934) 51 CLR 300 at 311-312 per Starke J. See generally Woodbridge v Yarralumla Automatically Accessories Pty Ltd (1984) 67 FLR 357, 361 and Hayman v Neill (1960) AR (NSW) 363. See also David M Walker, The Oxford Companion to Law (1980) p 86, 119 and 123. Strictly speaking there cannot be a succession, assignment or transmission of a business or part of a business. For something to occur to that effect it is necessary that it occur in relation to the component parts of the business such as the leasehold or other realty interests; the plant and equipment; or the goodwill. In my view this points to the language in the paragraph being used broadly, not strictly: cf The Theatre Manager's Award 1953 [1953] 77 CAR 291 at 295. 30 The reference to "a corporation that has acquired or taken over the business or part of the business of the employer" further expands the notion of circumstances in which the business ownership may have changed. 31 (6) Section 149(1A): Section 149(1A) was originally inserted into the Industrial Relations Act 1988 by Act No 92 of 1994 as amending Act No 109 of 1988. Although specific in character, the subsection addresses "the business" of an entity of government; namely the Australian Capital Territory,without any apparent necessity to specifically define it as "a business". 32 (7) Former Subsection (2): In the Industrial Relations Act subs (2) provided for a succession clause in respect of certified or consent agreements in the same terms as s 149(1)(d). Its repeal by Act 60 of 1996 is explicable by reference to Pt V1B of the WR Act and to s 170 MB. 33 (8) Later Sections in Act: Section 170MB reads: "170MB (1) If: (a) an employer is bound by a certified agreement; and (b) at a later time: (i) if the application for certification of the agreement stated that it was made under Division 2 a new employer that is a constitutional corporation or the Commonwealth; or (ii) if the application stated that it was made under Division 3-a new employer; becomes the successor, transmittee or assignee (whether immediate or not) of the whole or a part of the business concerned, then, from the later time: (c) the new employer is bound by the certified agreement, to the extent that it relates to the whole or the part of the business; (d) the previous employer ceases to be bound by the certified agreement, to the extent that it relates to the whole or the part of the business; and (e) a reference in this Part to the employer includes a reference to the new employer, and ceases to refer to the previous employer, to the extent that the context relates to the whole or the part of the business. (2) Subsection (1) does not affect the rights and obligations of the previous employer that arose before the later time." Again the notions of succession, transmission or assignment are not used as terms of art because they relate to a business. Furthermore, the notion of "business" is there addressed in terms involving devolution to a government entity, namely the Commonwealth. 34 (9) Definition of single business: However, Pt V1B contains a provision which distinguishes between a business and activities carried on by a government entity. Section 170LB provides: "170LB (1) For the purposes of this Part, a single business is: (a) a business, project or undertaking that is carried on by an employer; or (b) the activities carried on by: (i) the Commonwealth, a State or a Territory; or (ii) a body, association, office or other entity established for a public purpose by or under a law of the Commonwealth, a State or a Territory; or (iii) any other body in which the Commonwealth, a State or a Territory has a controlling interest." 35 Prima facie the appearance of this section supports the appellant's contention that references to "the business" in the Act outside Pt V1B cannot extend to governmental activities. However, the provisions in Pt V1B are specific to that Part. Section 170LB is specific to the notion of single business. Section 170MB, for example, draws no such distinction and refers to a business transferred to the Commonwealth as a business. The case law has long recognized a wider interpretation of the reference to "the business" in s 149(1)(d). I consider s 170LB is confined to the particular issue of a single business and does not manifest a Parliamentary intention to confine other references to business in the WR Act so as to exclude activities of government. 36 (10) Prior history: The provision in s 149(1)(d) of the WR Act has a long prior history: see generally B Creighton, "Transmission of All or Part of a Business: A Neglected Issue in Australian Industrial and Employment Law (1998) 26 Australian Business Law Review 162 at 172‑173. 37 The initiating section was s 29(ba) of the Conciliation and Arbitration Act 1904 (Cth). This was numbered as s 50(d) in 1947 and became s 61(d) in 1956. It remained unaltered in substance until the repeal of the 1904 Act in 1988 when it was replaced with s 149(1)(d) of the Industrial Relations Act 1988 (Cth). It is in the same form in the WR Act. 38 (11) Prior decisions: In Hillman v Commonwealth (1924) 35 CLR 260 the High Court considered the application of s 29(ba) to an award made in June 1921 binding the Naval Board, the Minister for the Navy and the Minister for Defence in respect of the Cockatoo dockyard. The dockyard was subsequently transferred to the Prime Minister's Department and placed under a Board of Control so that it could be a commercial undertaking. Starke J at first instance saw "no reason to doubt the identity of the business". In the Full Court no issue arose concerning the characterisation of "the business". A broad interpretation of 'business' was supported in Rory McDowell v Spotless Catering Services Ltd, (Spender J, Federal Court of Australia, 7 March 1997 unreported) where it was said: "The policy behind s 149(1)(d) of the Act was referred to by a Full Bench of the Australian Industrial Relations Commission in Meat and Allied Trade Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR at 93-4, where the Commission (Munro J, Maher DP and Hodder C) said: 'The High Court has given consideration to the predecessors of s 149(1)(d) on a number of occasions (Hillman v Commonwealth (1924) 35 CLR 260; Daily News (Proprietors) v Aust Journalists Association (1920) 27 CLR 532; Shaw v United Felt Hats (1927) 39 CLR 533; George Hudson v Australian Timber Workers Union (1923) 32 CLR 413). The essence of the various forms of provision under consideration is the statutory transference of the binding effect of the agreement, or arbitrated obligation reflected in an award from its operation in application to the original parties to it to an employer not directly party to the agreement or obligation. As Isaacs J pointed out in George Hudson Ltd v Timber Workers Union the provision had its rationale as an attempt to ensure that some employers 'within the area of the dispute' should not escape from the adjusted obligations imposed on other employers and: 'Parliament knew, moreover, that a successor to a business could not become so without knowing the statutory obligations of his predecessor to his employees' (32 CLR 435, 455 per Starke J who referred to 'the ever changing body of persons within the area of the disturbance')." In the ATOF case relied upon by the primary judge, the Court said: "The reference to the departmental activities standing outside the world of 'productive industry and organized business' …should not be understood as a statement that the departmental activities did not constitute a business within the meaning of the eligibility rule. Of all words, the word 'business' is notorious for taking its colour and its content from its surroundings: see Federal Commissioner of Taxation v. Whitfords Beach Pty. Ltd. (1982) 150 C.L.R. 355, at p. 378-379. Its meaning depends upon its context. It is common and apt to speak of 'the business of government': see, for example, Conway v Rimmer [1968] A.C. 910, at p.952." The Court also related the word business to the word "activities": "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 Court then reached a view dependent upon the context. 39 The Court in ATOF distinguished Hillman on a ground not applicable here: see ATOF at 227‑228. 40 In my view the reasoning of the High Court in ATOF, although based on a different context, is persuasive to the approach to be taken in relation to s 149(1)(d). 41 (12) Conclusion: In my opinion the focus in s 149(1)(d) on the business or part of a business in the context "of an employer who was a party to the industrial dispute" results in the reference to "the business or part of a business" taking its colour from the activity in which the employer was involved and in relation to which the industrial dispute arose. The inability of succession, assignment or transmission to occur in respect of a business (although possible in respect of part of a business) suggests the paragraph intends a general and not legally specific characterisation. This is supported by reference to the definition of "employer" and the terms of s 149(1A). There is a long history of understanding of the paragraph in this way. Section 170LB is a definition for the specific purpose of a single business and should be confined to that circumstance. It is an inadequate change to set aside the prior understandings. There is no reason why "outsourcing" or "mainstreaming" from government to private enterprise should attract a different application of the section in itself. 42 I therefore conclude the primary judge was correct to conclude the words "the business" in s 149(1)(d) encompassed conduct by the State of Victoria and so encompassed the provision of the State's mental health services in the relevant areas. It follows it is not necessary to seek to characterise the activities of the State further.

WAS THERE A TRANSMISSION? 43 This ground raises the question whether on the facts a transmission of the type contemplated by s 149(1)(d) occurred.

Reasoning of Primary Judge 44 The primary judge found no difficulty in finding that there had been a transmission of the business of the State to the appellant. In doing so he relied on what was said in ATOF where the High Court considered the meaning of the words "a successor or assignee or transmittee of the business of" and said at p 230 that the ultimate issue was whether there was a substantial identity between the old activities and those now carried on. He followed his own decision in Australian Federation of Air Pilots v Skywest at 8 to the effect that ATOF did not lack relevance because it had dealt with the interpretation of an eligibility rule. He considered it was beyond dispute that there was a substantial identity between the old activities carried on by the State in the provision of adult mental health services for the Central East area immediately prior to 18 April 1995 and the provision of those services by the Preston and Northcote Community Hospital ("PANCH") on 18 April 1995. 45 In relation to the Western areahe accepted the evidence that the provision of acute adult in-patient services at the Gordon Street premises did not alter in any significant way after 1 July 1995. He found that the occurrence after that date, being the date of transmission, of some managerial changes and the relocation of some services did not affect the fact that there was a substantial identity between the old activities and the new activities.

Appellant's Contentions 46 The responsibility for the provision of health services still rests with the State. If anything it has "licensed" an operator or contractor to carry on a certain aspect of the service for a specific limited time. 47 Both before and after the relevant change the State continued to provide for health services. The only difference is that the State has reorganised the method providing these services in certain circumstances. 48 It has not been shown that the function of providing health services has been transferred, in whole or in part, to any person. In fact, the continued existence of the relevant function of government still continues so as to allow for the re-organised way of delivering the health services. See generally Crosilla v Challenge Property Services (1982) 2 IR 448 at 456-7; Expro Services, supra. 49 Given that the test is whether or not there has been a transmission of a business, it does not assist the Court to examine whether the activities of the employees before and after the relevant event are the same or similar. Nurses involved in providing psychiatric services will perform essentially the same activities wherever they work and whether or not there has been a transmission of business.

Respondent's Contentions 50 The respondent noted that the primary judge's findings of substantial identity in respect of each of the respective areas were not challenged. This, it was submitted, satisfied the test as enunciated by the High Court in ATOF at 230. 51 Furthermore the respondent relied on a number of English and European decisions which have interpreted a Directive of the EEC and English regulations dealing with the transference of employee rights in the event of the transfer of an undertaking from one employer to the next. It is submitted those decisions take an approach very similar to that taken by the Court in the ATOF decision. It is said they acknowledged that the transfer of a recognisable economic entity can include the provision of services, including medical services to the public, whether or not the ultimate obligation to provide those services remained with the State. It is submitted that the correct position is that the State is not required under the Mental Health Act to provide the services but instead has an obligation to facilitate the provision of them and the primary judge so held. Furthermore it is submitted that the fact that in facilitating the provision of those services the State has maintained some control over the provision of them does not deny the fact of transmission. 52 With reference to the use of European and United Kingdom decisions the primary judge had found that they were of no assistance in that they dealt with different statutory contexts and that the appropriate test was that referred to in ATOF and adopted in Skywest at first instance.

Intervenor's Contentions 53 The words "successor, assignee or transmittee of the business or part of the business of an employer" signify the necessity for a legal transaction whereby the business carried on by the employer becomes, by one of the ways mentioned, the property of a new entity.

The nature of the "transmission": 54 (1) Mental Health Act 1989: The starting point is the Mental Health Act 1986 (Vic). The objects of the Act are to provide care, treatment and protection for persons who are mentally ill and related matters: s 4. The objectives of the Department are to establish development and promote a system to encourage mental health standards which support the patient in the community and co‑ordinate with other community services and related matters: s 5. The Chief General Manager is given certain functions including those of ensuring that provision is made for the care, protection, treatment and rehabilitation of a person suffering from mental illness and its effects and the rationalisation and co-ordination of mental health services to facilitate the development of them at the regional and local area in co-operation with other health and welfare services: s 6. 55 By s 94 the Governor in Council may proclaim the psychiatric unit of a general hospital to be an approved psychiatric unit. Section 97(1) provides: "97(1) With the approval of the Public Sector Management Board, the chief general manager may, have in regard to the objectives and functions of the Department under this Act make available to a person, association or organisation providing mental health services, the services of any person or class of persons employed in the Department under the Public Sector Management Act 1992." Subsection (2) provides: "97(2) A person or class of persons whose services are made available under sub-section (1) to a person, association or organization remains subject to the Public Service Act 1974but may be subject to the direction and control of the person, association or organization for the purposes of duty in the assigned role to the extent and subject to any conditions determined and agreed to by the Public Service Board and the Chief General Manager which cannot be less favourable than under the Public Service Act 1974." The effect of s 97 is therefore that it provides for the making available for persons to the relevant people staff services and with a degree of control and direction. Neither Ms Carson nor Mr Rule were s 97 persons. The respondent contends that the relevance of the s 97 employees is that they provide one of the indicia that the transmission which they assert and which was found by the primary judge was indeed intended to be permanent, in that the majority of employees were transferred across pursuant to s 97 from the State of Victoria. It manifested a final intention in substance and form. 56 I accept the submission that examination of these provisions shows that there is not a specific provision directed to "outsourcing" or "mainstreaming" so that the exercise of power in entering into the arrangements here in question falls within the general provisions of the Mental Health Act. 57 (2) Health Services Act 1988 (Vic) The Health Services Act 1988 (Vic) s 26 provides for health service agreements of the type which are in issue here. That section relevantly reads: "(1) A registered funded agency may enter into a health service agreement in respect of each financial year with the Chief General Manager. (2) The terms of a health service agreement shall be in accordance with this Division and as agreed between the registered funded agency and the Chief General Manager. (3) An agreement shall be in respect of one year or such other period as is specified in the agreement. (4) An agreement may specify - (a) particulars of services to be provided by the agency, including particulars of the volume, scope and standard of services; and (b) particulars of changes proposed in the provision of services by the agency, including particulars of building work to be undertaken or equipment to be acquired; and (c) particulars of the organisation and management of the agency; and (d) proposals of the agency for - (i) ensuring the quality of services provided; and (ii) handling complaints; and (iii) enabling users of services to make informed decisions about the services; and (iv) enabling its employees to participate in decisions about their work environment; and (v) promoting industrial rights and the welfare of its employees; and (vi) staff arrangements; and (vii) keeping records and making reports; and (viii) ensuring appropriate services are provided having regard to special needs of any ethnic or other minority groups; and (e) limits or controls on expenditure or the entering into of contracts or agreements by the agency; and (f) the provision of grants, subsidies or other assistance to the agency from money administered by the Chief General Manager for the purposes of health care; and (g) any other relevant matters." A "registered funded agency" is defined to include a public hospital. For the appellant it is submitted that when such management is entered into the function of government remains constant and all that changes is the means of performance. 58 (3) Expressions of interest: The Director of Psychiatric Services of the Department called for expressions of interest from non‑government organisations in "the future management of disability support services that are currently managed directly by the Department". The primary judge found that although this document referred only to "management" of services it clearly envisaged the actual provision and operation of services by interested organisations. For the appellant it is submitted that that cannot have been determinative of whether the successful tenderers would or would not manage those components for and on behalf of the State of Victoria and I accept that is the case. 59 The conditions which accompanied the expressions of interest provided for the term of the service agreements to be for a period of up to five years with funding and performance level being established annually in line with the Government Budget cycle. Ongoing funding was expressed to be conditional on the achievement of agreed output targets. 60 (4) Interim agreement: Following an interim transition agreement made on 6 June 1995 an agreement was entered into between PANCH as predecessor to the North Eastern Network and the Secretary of the Department on 24 July 1995 which had the following features. · PANCH assumed the obligation of managing and providing the listed mental health services, for the purpose of which it assumed all of the obligations and liabilities of the Secretary to the Department in relation to the provision of the services by the named persons. Funding would be provided to the agency for this purpose. · The Department undertook to make available to the hospital under s 97 of the Mental Health Act the services of the persons named. They would be subject to the direction and control of the hospital but would remained employed by the Department and subject to the terms and conditions of the employment of officers so employed. · Motor vehicles were to be provided on loan to the hospital as required on the basis the hospital operated them and was responsible for all running costs including registration and insurance. · Certain equipment and stock was to be transferred to the hospital but to be returned on termination of the agreement. · Land and buildings were to be leased by the hospital from the Department or to take over an existing lease or re-negotiate a lease. All new leases were to be in the hospital's name and it was to be responsible for all costs. · The hospital agreed to meet the Department's Occupational Health and Safety requirements in relation to the s 97 staff. · The hospital agreed all records, including material on medical records and patient files, created before 1 July 1995 were to remain the property of the department. · It was agreed that the parties would work towards finalising a health services agreement. · An interim agreement in similar terms was entered into with a predecessor of Western Network. 61 (5) Health Services Agreement: A health services agreement was entered into for the Western Network on 25 March 1996. It stated the pro forma [interim] agreement was to be the basis of the agreement. Conditions of funding were said to be part of the agreements and to apply unless varied. These established Departmental control over funding and audit. 62 The conditions of funding were amended as follows in relation to indemnities: "3.2.4 Indemnities: Subject to Clause 3.2.4-A, the hospital/agency indemnifies the Secretary or the State of Victoria against all actions, suits, proceedings, claims, demands, costs or losses whatsoever which may be brought, commenced or made against the Secretary or the State regarding the provision of the mental health services which the hospital/agency is funded to provide, or the failure to provide those services. 3.2.4-A Where the hospital/agency is assuming management of mental health services operated by the Department in 1995-96, the Secretary and the State of Victoria indemnify the hospital/agency in respect of the following liabilities of the Department which have accrued prior to the date of transfer, being the date of mainstreaming: 3.2.4-A.1 In accordance with clause 3.6.3, accrued leave in relation to staff employed by the Department as at the date of transfer, being recreational leave, sick leave and long service leave; 3.2.4-A.2 Debts existing as at the date of transfer; and 3.2.4-A3 Any claim for damages at common law brought by an employee of the Department in respect of injuries arising out of or in the course of his or her employment where the cause of action arose prior to the date of transfer. The hospital/agency must incur expense or make payment with the prior approval of the Secretary before enforcing a right of indemnity in clause 3.2.4-A." It is apparent from the terms of these provisions that the State regarded itself as divested of the activity for the duration of the agreement. The reference as to "the date of transfer" is a characterisation which was open in the circumstances, which was accepted by the State in those circumstances and which is supportive of the finding made by the primary judge.

Reasoning 63 I do not accept the primary argument for the appellant that nothing has changed because the function of providing mental health services remains with the State of Victoria and all that has changed are the "means of performance". Once it is accepted that the object of the transmission must be "the business or part of the business of an employer who was a party to the industrial dispute" attention is directed to what it is that the employer who is party to the dispute is doing. It is that which identifies the object of the transmission. The fact that government as an employer may have continuing functions in relation to the provision of mental health services is not a determinative factor in relation to whether there has been a transmission of the relevant business of the employer. Specifically, transmission of part of the business is expressly made possible by the section in determining the extended application of an award. 64 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. 65 It follows that I do not accept the appellant's argument that the "substantial identity test" utilised in the ATOF case is wrong in the context of the WR Act. 66 I agree with the submission for the respondent that the High Court in the ATOF case was determining whether there was a transmission and the court there developed a concept or a criterion for identifying whether or not a transmission had occurred. The formulation of that concept was not dependent upon the particular nature of the rule in that case. 67 I do not consider the appellant's contentions in relation to transmission receive any support from reference to Crosilla v Challenge Property Services (1982) 2 IR 448 at 456-7. 68 The findings established that the same patients become the responsibility of the networks; the medical records and stock were transferred; leased assets were assigned; and staff were transferred. While the State retained control over funding and audit that was but the consequence of it having transferred the responsibility for the provision of the relevant mental health services so that it was now required to pay for the delivery of such services. What was involved was a transmission of the core of the relevant services not, as in Crosilla or Kelman v Care Contract Services (1995) ICR 260, a peripheral activity. 69 In my opinion the primary judge was correct to find there was a transmission. The High Court in the ATOF case at 230 relied on the natural reading of the language of a successor clause in the terms of s 149(1)(d). The Court did not take the approach now urged by the intervenor. Taking that approach of the Court it could not be contended there had been no transmission because there are continuing functions of government in the subject matter of the business. It is unnecessary to have to resort to the English and European decisions to reach this point.

Reasoning of Primary Judge 70 The primary judge did not accept the submission made to him that in the making of an employer specific award the Commission should be considered to have made an order ousting the effect of s 149(1)(d) of the Act. He said: "It will not often be known with any certainty when an award is made whether an employer bound by it will transmit part of its business to another entity. If the other entity finds the provisions of the award unsuitable to its business, it is open to it to apply to the Commission to have the award varied or set aside in so far as it applies to it. If it was the intention of the Commission in making the 1994 Award it would have been an easy task for it to provide that s 149(1)(d) of the Act did not apply by adding a provision which had that effect. No such clause found its way into the 1994 Award." 71 In relation to the 1995 Award he found that there was no relevant basis, apart from one aspect, to treat the argument that it was not intended to attract the operation of s 149(1)(d) of the Act any differently to the same argument raised in the context of the 1994 Award. After considering the transcript he rejected the view that the parties intended to oust the operation of that paragraph. He found that the Commission had therefore not ordered that the paragraph had no application to the 1995 Award.

Appellant's Contentions 72 It is submitted that the form and structure of the 1994 and 1995 Awards, particularly their application and parties bound clauses constitute an order of the Commission to the effect that the awards are not to bind any successor to the business or part of the business of the State. 73 Further, or in the alternative, each of the appellants is bound as a party in its own right to the Nurses (Victorian Health Services) Award 1992 (the Nurses Award). By s 4 of the WR Act "Award" means an award order that has been reduced to writing under sub-section 143(1). The Nurses Award is, accordingly, an order of the Commission. It is an order that binds each of the networks in its own right, albeit under its former name. It is an order that binds each of the networks in respect of staff in respect of whom it is also said that the 1994 and 1995 Awards bind the appellants by virtue of the operation of s 149 of the WR Act. 74 Having regard to the purpose of s 149, as expounded in George Hudson Limited v The Australian Timber Workers' Union (1923) 32 CLR 413 it is submitted that by virtue of the existence of an order of the Commission specifically binding the appellants the operation of s 149 has been displaced. There is nothing in s 149 to suggest that the order of the Commission need be made at the time of or after the transmission of business. 75 Further, by the very nature of the awards it can be seen that they are public sector specific. The awards are different in kind to industry awards the terms of which are easily translated from employer to employer. They are different from employer specific awards that merely provide terms and conditions of employment that are able to be observed by any employer that might at a given time be the owner of the business or part of the business. Even if there has been a transmission of business within the meaning of the WR Act, and even if there has been no order of the Commission to the contrary, given that the awards are directed to bind the Crown in respect of its employees, and given the terms of the awards, it is submitted that they do not, and cannot, apply to the appellant's employees. See generally R v Hamilton Knight Ex parte; The Commonwealth Steamship Owners Association (1952) 86 CLR 283 at 320 and Hillman v The Commonwealth (1924) 35 CLR 260 at 264.5, 26.3 and 273.4.

Respondent's Contentions 76 It is said the opening words of s 149(1) contemplate that a specific order might be made by the Commission having the displacing effect. There is no such specific order. The Court is asked to infer from certain aspects of the Awards, namely that they are transferor specific, that they had the displacing effect. It is submitted the policy behind the provision in s 149(1)(d) and its beneficial character serves to deny that any expression by the Commission short of a clear and unambiguous order could suffice to displace that paragraph. Furthermore it is submitted that the appellant's submission fails to appreciate that the obligations upon the transferee emanate from s 149(1)(d), not directly from the award.

Intervenor's Contentions 77 It is submitted that the making of the 1994 and 1995 Awards was an order of the Commission indicating in itself that s 149(1)(d) was not to apply to employment governed by those awards. 78 Alternatively reference is made to a constitutional argument. It is submitted that s 149(1)(d) is not within the powers of the Commonwealth Parliament to enact, for the reasons given by Knox CJ in George Hudson Ltd v Australian Timber Workers Union (1932) 32 CLR 413 at 420-24. However, as the actual decision of the High Court in that that case was to the contrary and the Court is bound by that decision, the State of Victoria will not present argument on the point, but nonetheless maintains its contention in that regard.

Reasoning 79 Again I consider the primary judge was correct. The opening words of s 149(1) require an order having the displacing effect. The order making the Awards did not have that effect. It determined the application of the Award. It did not seek to displace the effect of s 149. In my view the displacement of that section could not be left to an implication from an order having a different objective.

CONCLUSION 80 For these reasons I consider the appeal should be dismissed. I certify that the preceding seventy‑two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice R D Nicholson.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT MADGWICK J: 81 I am grateful to have been able to read the judgment of RD Nicholson J in draft. I agree with his Honour's conclusions and reasons. I would however add some remarks of my own. Some quite minor differences of emphasis and interpretation may be apparent. 82 At first sight, it may seem strange that expressions such as "successor, assignee or transmittee" and "business", common in commercial and revenue law contexts, should be held to have the broad meaning that RD Nicholson J considers they have. Nevertheless, it seems to me that such a conclusion is supported, in addition to the reasons given by RD Nicholson J, by the following. The Social Welfare Case 83 The landmark decision in R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 277 ("the Social Welfare Case") held that the constitutional underpinning of the award system, established by the predecessors of the Workplace Relations Act (Cth) 1996 ("the WR Act"), and, in a considerably modified form, continued by it, extended to "industrial disputes" between all employers and all employees (with exceptions, immaterial to this case, as to senior functionaries of government). Unless the term "business" in s 149(1)(d) be given a broad meaning, many award conditions and prescriptions would not survive a change of employer, until any conscious change to or abrogation of them, notwithstanding that the body of employees and their work remained substantially the same upon that change, despite the fact that the provisions of similar awards governing employer and employee relations in a "business", giving that term the more limited connotation of a commercial enterprise that it may attract in other contexts, would so survive. This would be a strange and, in a high degree, an inconvenient result, which Parliament is unlikely to have intended. Similarly, if "successor, assignee or transmittee" be given a narrow meaning, award coverage would be continued without injustice to the new employer in some situations in which the identity of the employer changed but not in others. There is no satisfactory rationale as to why Parliament would have intended that such a result should follow. 84 This approach is further supported by considering s 149(1)(d) in relation to various other industrial situations. In the case of an award binding tradespeople employed in a government printing office, the result that the award would continue to operate, until variation or replacement, even if the government should divest itself of the printing office more or less entirely and "privatise" its operations and the workforce, is by no means strange. And such a result seems quite acceptable regardless of whether that printing office printed for anyone other than organs of the government concerned, regardless of the means by which it was funded, and regardless of the content of any policies of charging those other organs for its work that the office might have had. Next, consider the example of a hospice for the dying conducted along charitable lines by a charitable body. Award coverage of the hospice's staff might extend to tradespeople, trades assistants, clerical and administrative personnel, nurses and doctors. After the Social Welfare Case,a conclusion that the operations of the hospice should be considered to be a "business" for the purposes of s 149(1)(d) would be unremarkable. Suppose further, that by arrangement between a State government and the charitable body, the government took over the running of the establishment and the employment and payment of the hospice employees as part of a re-arrangement of responsibilities for a "public" hospitals system, in which there were, so to speak, swings and roundabouts affecting the charitable body. In such a case, a finding that pre-existing award coverage should be held to continue, pending any consensual or arbitral change to that position, despite the fact that there were statutory or administrative arrangements that did not fit neatly within concepts of "succession", "assignment", or "transmission" as they might narrowly be understood elsewhere in the law, would excite no surprise. That such arrangements might be held to fall within those concepts in the context of s 149(1)(d) would only indicate the influence of that context. 85 If so much be granted, and it seems to me that so much should be, then the conclusion reached by RD Nicholson J seems both logical and unsurprising, having regard to the general subject matter, namely the legal regulation of industrial relations, as to which Australia has unique constitutional and historical features. After the Social Welfare Case, it would seem odd and unfortunate to have to attribute a differential effect to awards depending on whether they were or were not made in relation to "businesses" as that term might have been read down, or appropriately conceived, for constitutional reasons, before that case. 86 Such considerations of likely legislative policy would of course have to give way to any intractable language used in the statute that indicated a contrary intention. But, of "business", the High Court said in Re Australian Industrial Relations Commission: Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 ("the ATOF Case") at 226: "Of all words, the word 'business' is notorious for taking its colour and its content from its surroundings: see Federal Commissioner of Taxation v. Whitfords Beach Pty. Ltd. Its meaning depends upon its context." Although these remarks were, in my view, inessential to the Court's conclusions in that case (see the analysis below) their authority and, with respect, their cogency are beyond question. Likewise, for reasons developed below, in the context of an eligibility rule of a registered organisation (the content of which has, of course, a special significance for the ability of the organisation to obtain award coverage of an industrial class of employees), the ATOF Case stands 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. RD Nicholson J's observation to the effect that the lawyerly phrase "successor, assignee or transmittee" used in s 149(1)(d) is technically inappropriate for use in conjunction with the non-technical word "business" is, with respect, apt. Further, the very reason for the popularity of that phrase in commercial documents is that it was conceived as describing, in a catch-all way, every change in dominion over some asset or chose in action. Thus, there is no statutory language which compels a conclusion that Parliament has followed a seemingly irrational policy. In a word, this case is but another instance of the truism that, in statutory interpretation, context may be all. Section 149(1A) 87 The implications of s 149(1A) are matters of considerable significance, in my opinion. The text of s 149, although it had appeared in earlier statutes, was, albeit with some variation, re-enacted in the WR Act in 1996. In my view, the phrase "is taken to be" in s 149(1A) relates, and always did, only to the notion that the Australian Capital Territory Government Service should be regarded as the successor, to what was, quite naturally and without strain referred to as "the business of the Australian Capital Territory". An examination of the Australian Capital Territory Self-Government (Consequential Provisions) Act (Cth) 1988, referred to in s 149(1A) makes this clear. Within the meaning of that Act, under s 3, "transitional staff" are principally: "the persons required for the conduct of the public administration of the Government of the Territory other than members of the [Australian Capital Territory Government Service] referred to in s 54 of the [Australian Capital Territory (Self-Government) Act (Cth) 1988] This section also conferred power on the Australian Capital Territory Legislative Assembly to constitute such service. Section 21 provided that: "(1) Until an enactment provides that this subsection is to cease to have effect, transitional staff shall be persons appointed or employed under the Public Service Act 1922… (2) The Head of Administration has all the powers of a Secretary under the Act, so far as they relate to the branch of the Australian Public Service comprising the transitional staff as if that branch were a separate Department" 88 As there was no change in the identity of the employer of these employees, in order to have existing awards bind the ACT Government Service as though it were their employer, it was evidently thought necessary to deem that body to be the successor to the "business of the Australian Capital Territory" which had, of course, previously been in the hands of the Commonwealth.

89 "[T]he business of the Australian Capital Territory", in relation to the employment of the staff who had performed the actual work of the services of government in and for the Territory, was evidently taken as an apt and plain way, and one which did not require statutory extension of the meaning of the word "business", to describe such governmental services. The reference to the Australian Capital Territory Government Service was enacted after the Social Welfare Case. There never was scope, in my view, to say that the phrase "is taken to be" in s 149(1A) somehow deemed "the business of the Australian Capital Territory", in one sense of the word business, to be "business" in some other sense when the same term was used in s 149(1)(d). It seems more likely that, after the Social Welfare Case, those who drafted what is now s 149(1A) assumed that "business" in what is now s 149(1)(d) would be understood as having a broad meaning in order to give full efficacy to awards made on the wider understanding of the constitutional and statutory award-making power that was revealed by that case, as well as to other awards. It might, however, be said that there was scope, after the initial enactment, by means of a statutory amendment of what is now s 149(1A), for an argument that, although the "business" of the Australian Capital Territory was assumed by Parliament to be within the concept of the "business" as that expression is used in s 149(1)(d), that assumption did not necessarily have the effect that, in s 149(1)(d), the expression should be given the meaning which it was thus assumed by Parliament to have. In my opinion, any such scope disappeared, however, when in 1996 the two subsections were contemporaneously re-enacted as a single section of the WR Act. Thus, to my mind, the text of s 149 itself makes it clear that "the business of an employer" may very well refer to governmental services in which employees are employed. The definition of "single business" in s 170LB 90 The definition of "single business" in s 170LB of the WR Act must be understood in the entire context of Part VIB of the Act dealing with "certified agreements". Section 170L proclaims that the object of the part is 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". Without extension or further explanation, the term "single business" might have been thought to have merely a meaning consonant with the emphasis the WR Act places on "workplace" relations between employer and employees, on "ensuring that the primary responsibility for determining matters affecting the relationship between employers and employees rests with the employer and employees at the workplace or enterprise level", and on employers and employees being able "to choose the most appropriate form of agreement for their particular circumstances" (see s 3, preamble and subs (b) and (c); s 3 sets out the "principal object" of the WR Act; the emphasis has been supplied). 91 The definition of "single business" in s 170LB accomplishes a number of things. One of its evident purposes is to make it clear that a single agreement may be made to regulate conditions at many workplaces, provided they are comprised within one "business" of a single employer. However, agreements may also be made at the level of a particular project which forms part of what might be thought to be a single business of an employer, for example, at one mine or construction site carried on by an employer whose business is, respectively, mining generally or construction generally. Likewise, the term "undertaking" is in aid of the same idea (see s 170LB(1)(a)). The work of the definition is the exegesis of the concept "single" rather than the expansion of the term "business". 92 Consistently with this view, the reference in s 170LB(1)(b) to the activities carried on by government entities has the effect and likely design of making it clear that, for example, every activity of the Commonwealth could be regarded as a "single" business of the Commonwealth. There is a particular reason for that provision about governments. Sections 170LY and 170LZ of the WR Act give a far-reaching effect to a certified agreement once it comes into operation. In particular, under s 170LZ, such an agreement prevails, except as to a few subject matters dealt with in subs (2), over terms and conditions of employment specified in any State law, award or employment agreement, where they are inconsistent. Likewise, to the extent of any inconsistency, subs (4) provides that a certified agreement displaces prescribed conditions of employment specified in a prescribed Commonwealth law. Thus, if they were prescribed, all conditions of employment specified in or under the Commonwealth Public Service Act (Cth) 1922 and Regulations could be displaced by a certified agreement. In fact, very nearly all such conditions of employment have been so prescribed (see Reg 30ZE and Sch 5 of the Workplace Relations Regulations). Thus a single agreement might be made with Commonwealth officers and employees as diverse as, say, solicitors and lighthouse cleaners, for the abolition or supersession of a term of employment common to them. Absent some extension of the notion of single business such as is effected by s 170LB(1)(b), the notion of "a" or "a single" business carried on by the Commonwealth might well, especially in the light of other indications in the WR Act of the kind to which I have referred, have been thought not to extend so far as to enable the wholesale displacement of Commonwealth legislation by a single agreement affecting persons employed in so many disparate activities carried on by the Commonwealth. But there is no reason to think that the necessity to include a reference to "the activities carried on by" the governments referred to in s 170LB (1)(b) was brought about by an assumption that the use of the word "business" would not be apt to encompass in principle those kinds of activities. Subsection (1A) of s 149 would stand as a barrier against any such conclusion. The ATOF Case 93 If the decision in the ATOF Case does not control the result in this case, it is nevertheless highly confirmatory of the analysis that RD Nicholson J makes of the matter. 94 It is true that in the ATOF Case the question, whether there was "scope for the concept of succession to a business as between two statutory authorities, notwithstanding that the functions which they discharge are governmental functions performed … for the benefit of the Crown", was regarded as foreclosed by the terms of the union rule there under consideration (at p 228). Thus assuming the capability of there being such a succession, the Court went on to consider whether the statutory authority in which most of the functions of a now abolished authority had been legislatively vested, was "a successor or assignee or transmittee" (the emphasis was supplied by the High Court) of the business of the earlier authority. The argument put before the Court was that "a substantial identity between the business formerly carried on by [the earlier authority] and the business now carried on by the [new one] must be shown to exist in order to constitute [the new authority] as a successor of the business of the [earlier one]." That argument was rejected in favour of the view that "the inquiry should be directed to ascertaining whether the business or the activities formerly carried on by [the earlier body] are still carried on by [the new one], notwithstanding that the [new authority] also carries on one or more substantial activities" (at 229-230). Thus, it is true that the main point of the decision is not really apposite here. 95 However, what is noteworthy is that the Court implicitly rejected any idea that a statutory process consisting of (a) the "abolition" of one statutory corporation, (b) the "substantial amalgamation and rationalisation [of its and other statutory bodies'] functions" and (c) the "imposition" of those functions on a new corporation (see pp 222-3), could not or did not fall within the process comprehended by the succession clause in issue. Nothing in the union rule foreclosed such a conclusion: the High Court justices might, as a logical possibility, have held that, although there could in some circumstances be a "succession" as between statutory authorities, the actual statutory process in the ATOF Case was not apt to produce what could fairly be called a succession. The Court could not have acted as it did if its members had felt any attraction to such a position. Such a rejection of any such conclusion is consistent with my suggestion that a "succession clause" such as was in issue in the ATOF Case (and which is virtually identical in its wording, though not its context, to that in question here) can, in an appropriate context, properly be interpreted as having a catch-all intention as its mainspring. Although the contexts in the ATOF Case and in this case are different, for different but valid reasons in each context, it is appropriate in both cases to have imputed such an intention to those who drafted the clause. 96 The High Court justices in the ATOF Case were careful to acknowledge that the context of a rule of a union registered as an "organisation" under the predecessors of the WR Act was not the same as that of a predecessor to s 149 itself of the WR Act. Nevertheless, it is possible to overstate the difference between the contexts. Both have as a central feature the adjustment of rights in relation to an industrial class of employees for the constitutional purposes of the prevention and settlement of interstate (and some other) industrial disputes. It is for organisations' aptitudes and capacities in relation to such a purpose that the elaborate statutory process of recognition and regulation of such organisations (which are otherwise merely private, consensual associations of persons) is and was undertaken by the WR Act and its predecessors. As noted above, an organisation's membership eligibility clause determines its capacity to obtain award coverage for or otherwise to represent the interests of an industrial class of employees: R v Dunlop Rubber Australia Limited Ex parte Federated Miscellaneous Workers' Union (1957) 97 CLR 71. The ATOF Case itself concerned whether an organisation might obtain an award in relation to a certain industrial class. Section 149(1)(d) concerns whether an award which has been obtained in relation to such a class may be set at nought by events put in train by their employer and/or external events or persons. Section 149(1)(d) - a single, large conception 97 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. 98 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) 99 In the same case, Isaacs J (with whom Starke J "entirely" agreed, at 453), explaining why he considered the then Conciliation and Arbitration Act's forerunner of s 149(1)(d) should be given a liberal and purposive interpretation, said at 435-6: "Parliament knew … that a successor to a business could not become so without knowing the statutory obligations of his predecessor to his employees. Parliament does not act in such a case without a comprehensive view of the situation. Let us suppose the settled rights of those employees, and the rights of competing employers under the same or a corresponding statutory obligation, and also the general rights of the public to a maintenance of industrial peace, to be placed by Parliament in one scale of justice, and the claims of the successor of the business to disregard individually the declared right of the employees to settled remuneration and other industrial conditions in the other scale: which can we suppose to weigh the heavier? In other words, applying the test as stated in Maxwell, on which side is justice? 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, … it is, I apprehend, the function of this Court to construe it in the spirit of its manifest purpose." 100 In the present instance, there are, of course, unlikely to be "competing employers under the same or a corresponding statutory [ie statutorily authorised award] obligation". But the general need for interpretation of the statute in the way suggested by Isaacs and Starke JJ remains unaffected by that accidental circumstance. So much was recently re-affirmed by a Full Court of this Court in Construction, Forestry, Mining & Energy Union v Australian Industrial Relations Commission & Ors [1999] FCA 847. Wilcox J and I adopted the words of Moore J in ACTEW Corporation Ltd v Media Entertainment and Arts Alliance (Industrial Relations Court, unreported, 7 August 1997) at 7: "The first point to be made about the operation of s 149 is that it should be beneficially construed so that employers do not 'avoid the settled rights of employees': see George Hudson Ltd v Australian Timber Workers' Union (1923) 32 CLR 413 at 435-436, per Isaacs J. Thus, in my opinion, whether there has been succession, transmission or assignment of a business should not be approached on some narrow basis." The Court added (Moore J in this respect agreed): "Only in compelling circumstances should the Court construe an award in such a way as to allow its frustration by transmission of the business." 101 The reference to possible "avoidance" should not, of course, be taken to exclude the equally important work of the provision in the manifold cases of changes made in the ordinary course of affairs of private persons and corporations and, as those affairs develop over time in accordance with prevailing political opinion, of governments and governmental entities. I certify that the preceding twenty one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate: Dated: 2 July 1999 Counsel for the Appellant: JE Middleton QC with L Kaufman

Solicitor for the Appellant: Mallesons Stephen Jaques

Solicitor for the Respondent: Maurice Blackburn & Co

Counsel for the Intervenor: AG Uren QC with T Ginnane

Solicitor for the Intervenor: Victorian Government Solicitor

Date of Hearing: 23 and 24 November 1998

Mental Health Act 1989(Vic)s 97

Conciliation and Arbitration Act 1904(Cth)

Industrial Relations Act 1988(Cth)

Mental Health Act 1986(Vic)

North Western Health Care Network v Health Services Union of Australia

At a glance

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Judgment (35 paragraphs)

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Legislation Cited (6)

Cases Cited (20)

Cited By (3)