PP Consultants Pty Limited v Finance Sector Union

PP Consultants Pty Limited v Finance Sector Union - [2000] HCA 59 - HCA 2000 case summary — Zoe

[13]

Until 12 September 1997, the Bank conducted its banking business in Shop 4B in the Byron Bay Shopping Plaza. The Bank was bound by and its employees, including, presumably, those employed at the Byron Bay branch, were entitled to the benefit of the Banking Industry - St George Bank Employees - Award 1995 ("the Award").
On the day on which the Bank closed its Byron Bay branch, the appellant, which then conducted its pharmacy business in Shop 5, took an assignment of the Bank's lease of Shop 4B. Building work was carried out over the following days to combine Shops 4B and 5 into a single shop. On Monday, 15 September 1997, the appellant commenced to conduct the branch agency for the Bank in conjunction with its pharmacy in the newly combined premises.
Earlier, on 10 September 1997, the appellant had entered into an agreement with the Bank to conduct the branch agency "for and on [its] behalf" ("the agreement"). Pursuant to the agreement, the appellant was required, amongst other things, to collect deposits, transact withdrawals and to open deposit accounts for the Bank's customers and those wishing to become its customers. Initially, the appellant was not entitled to conduct loan interviews or accept loan applications but was required to refer loan applications to the Controlling Branch Manager of the Bank at Ballina. However, the agreement was later varied to enable the appellant to process applications for personal loans.
The agreement obliged the appellant not to enter into any similar type of branch agency with any other bank or financial institution during the term of the agreement or for three months after its termination. By contrast, the Bank retained the right to establish and conduct a full branch operation in the area at any time during or after the termination of the agreement. The agreement was terminable by one month's written notice by either party. Subject to immaterial exceptions, the Bank was to pay the appellant $1,000 per month from the date of termination until March 1999 if the Bank terminated the agreement before that date. On termination, the appellant was required to hand over to the Bank "all moneys, brochures, forms and documents ... relating to the conduct of the [branch agency] and the business of [the Bank]".
Pursuant to cl 8.1 of the agreement, the appellant was to nominate at least one of its employees to work in the branch agency. In fact, the appellant offered employment to two former employees of the Bank, Mrs Moffatt and Mrs Mort, at the same rate of pay as they had received from the Bank. Both accepted that offer and became "Nominated Employee[s]" for the purposes of the agreement. Thereafter, both did substantially the same work that they had previously performed for the Bank, although they were not involved in processing loan applications until the agreement was varied. Mrs Moffatt also performed some work in the pharmacy business.

[22]

As was pointed out in Australian Transport Officers Federation, "the word 'business' is notorious for taking its colour and its content from its surroundings"[7]. Thus, for example, the expression "the business of government" signifies something quite different from the expression "the business of grazing" which was considered in Hope v Bathurst City Council[8]. In the latter case, it was held that the expression "carrying on the business of grazing" meant "grazing activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis"[9].
Whilst the notions of "profit" and "commercial enterprise" will ordinarily be significant in determining whether the activities of a private individual or corporation constitute a business[10], they play little, if any, role in identifying whether one government agency is engaged in the business of government previously undertaken by another government agency. In that situation, it is sufficient to ascertain whether or not the activities of the former are substantially identical to the activities or some part of the activities previously undertaken by the latter. That is because the word "business" takes on a special or particular meaning in the expression "the business of government". It is not because, as a matter of ordinary language, "business" means or includes activities undertaken in the course of business.
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.

[85]

Section 29(ba) was amended by Act No 29 of 1921 to insert after the words "of the business", the words "of a party to the dispute or". Similar amendments were made to s 24(1) of the Conciliation and Arbitration Act dealing with the binding effect of agreements[20].
These provisions remained unchanged in the Conciliation and Arbitration Act until its repeal by the Industrial Relations Act 1988 (Cth). That Act reproduced the provisions with the following changes in s 149(1)(d)[21]: the binding nature of an award was made "[s]ubject to any order of the Commission"; there was added after the words "successor, assignee or transmittee" the words "(whether immediate or not)"; a succession or transmission of part of the business of an employer would suffice to attract the operation of the paragraph; and, there was deleted a reference to a party bound by an award (leaving only transmission or succession in respect of a party to the industrial dispute).
The effect of the last-mentioned amendment was that awards would no longer be binding, by reason of the transmission provisions on an employer bound by an award, but not a party to the industrial dispute underpinning the award (as would be the case where the award was binding, by operation of s 149(1)(f), on members of an organisation a party to a dispute). Although the Industrial Relations Act was repealed by the Workplace Relations Act, s 149 was re-enacted in an unaltered form.
The appellant submits that the important considerations are these. The business formerly carried on was an unqualified business of full-scale banking. It was carried on by the bank itself. The bank disposed of no part of its business to anyone. The appellant carried on its own, an agency business, and a business therefore of a quite different kind from that formerly carried on by the bank. That the appellant did so at the same premises as the bank was merely fortuitous, and in this case without legal significance. No power to deal with or dispose of, a part of the "business" to which the appellant is said to have succeeded, has accrued to it. The terms of the agreement which evidence the relationship between, and the different identities, roles, activities and business of the bank, and the appellant, must be given effect.
The matter may also be tested, in my opinion, by asking this question: what "business", to which the appellant is said by the respondent to have succeeded, could the appellant sell or otherwise pass on to someone else? The answer is, "no business", for cl 7.3 of the agreement makes plain that the agreement is a strictly personal one.

[87]

I would accept the submissions to which I have referred. Furthermore, the Full Court was in error in holding that after the agreement the bank did not have "the right to conduct its business, including the part now conducted by the respondent, at the subject premises"[22]. Clause 12.2 of the agreement gave the bank the right to conduct an agency anywhere it chose however proximate or otherwise it might be to the appellant's premises. Nor did the appellant have the right which the Full Court attributed to it, "to conduct … part of the business only as the agent of the bank", because as the Full Court said, "that right … had passed notwithstanding that it might be reclaimed"[23]. The business of the bank had not "passed". A new form of business was created (by the agreement) and was to be carried on by a new operator as an agent.
The Full Court purported to apply Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation[24], a case concerned with the construction of a union eligibility rule, and North Western Health Care Network v Health Services Union of Australia[25]. But those cases were concerned with the transfer of governmental activities from (in ATOF) one branch of government to another or (in North Western Health Care) from government to the private sector. The courts were not therefore required to identify or analyse the nature and components of a "business" in the orthodox sense of the word and in the context of a conventional business environment[26].
In George Hudson Ltd v Australian Timber Workers' Union[27] there was no detailed analysis of the phrase "any successor, or any assignee or transmittee of the business". That case was a clear one and quite distinguishable from this one. The only difference between George Hudson Ltd, which by assignment, had become the owner of the business formerly carried on by George Hudson & Son Ltd some weeks after an industrial agreement was entered into by it, and the latter, was a "mere change in name"[28].
The respondent submits that to interpret the section otherwise than in the way that the Full Court did, would allow employers to avoid their legal obligations under awards, and so frustrate the settlement of industrial disputes. But such a submission obscures the task of the Court, which is to identify to what part, if any, of the business of the bank the appellant succeeded. Whilst it may be accepted that a purpose of the provision is to prevent evasion of obligations by employers who do succeed to a business or part thereof, there is another policy consideration which bears on this case. The legislation, it may be inferred requires a common identity of a business or part thereof, into whosever hands it falls, on the assumption that a successor will have the same and continuing capacity to meet the obligations arising under an award as the former operator of the business. No such assumption may safely be made about a different business. How, it may be asked, could it safely be assumed here that the "bragency", the business of the appellant, had the same capacity to meet its obligations as the bank carrying on a banking business on its own account as a principal.
The respondent contended that five factual matters justified the conclusion of the Full Court. The appellant took an assignment of the lease of the banking premises of the bank[29]. The appellant was remunerated by the bank on an incentive basis and on the basis of services provided. The appellant was paid by the bank a "Total calculated fee" in 1998/99 of $86,656. The appellant made a profit on the arrangement with the bank. In undertaking to provide the activities previously provided by the bank at those premises the appellant carried the risk arising from the costs of providing the premises and the employees needed to provide those services.
But some of these factors highlight the differences between the business of the bank and the appellant rather than associate the business of the bank with the business of the agency. The appellant became solely responsible for the lessee's obligations under the lease. There was no profit sharing. The appellant was paid a "fee" for services provided. Any profit that was made by the appellant fell to be calculated after the appellant discharged its financial obligations, for wages, for rent and other overheads. These were its overheads and the profits were its profits and not those of the bank.
In my opinion the appellant was not therefore a successor, assignee or transmittee of the business or part of the business of the bank within the meaning of s 149(1)(d) of the Act.
I would allow the appeal with costs and order that the respondent pay the appellant's costs in the Federal Court and the Full Court of the Federal Court.

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