Robert Stewart v Bing Lee Electrics Pty Limited

Industrial Relations Commission (NSW)|2008-11-21|Before: Kavanagh J

CITATION: Robert Stewart v Bing Lee Electrics Pty Limited [2008] NSWIRComm 198

Applicant: PARTIES: Robert Stewart Respondent: Bing Lee Electrics Pty Limited

CATCHWORDS: s106 application - alleged unfairness in conduct of contract - yearly contracts but continuous engagement - failure to allow term of contract - assignment clause - failure to pay in accordance with a contractual term - contract unfair - varied - just compensation

Abboud v The State of New South Wales (Department of School Education) (No. 2) (2000) 99 IR 299 Bowman v Ricegrowers Ltd (2007) 167 IR 325 Brown v Rezitis (1971) 127 CLR 157 Day v Lumley Life Ltd (1999) 90 IR 70 CASES CITED: Grech t/as Grech and Son Transport v Bing Lee Electrics Pty Ltd [2005] NSWIRComm 228 Scanruby v Caltex [2001] NSWIRComm 8 Sydney Water Corporation Ltd and Another v Industrial Relations Commission of NSW and Another (2004) 61 NSWLR 661 Walker v Industrial Court of NSW (1994) 53 IR 121 Westfield Ltd v Helprin (1998) 82 IR 411 Westfield Holdings v Adams (2002)114 IR 241

Applicant: Mr R. DeMeyrick of counsel Solicitors: Mr S. Butcher Law Partners LEGAL REPRESENTATIVES:

Respondent: Ms E. Brus of counsel Solictors: Mr S. Booth Coleman & Greig

Application under s106 of the Industrial Relations Act 1996

1 By way of a summons for relief, Robert Stewart, the applicant, claims under s106 of the Industrial Relations Act 1996 that his contract of employment was unfair, harsh and unconscionable in its terms, performance and at termination.

The Facts 2 The facts can be shortly recited. In February 2002, the applicant purchased a truck and paid a goodwill component from the former owner who was the holder of a contract to perform delivery services for Bing Lee Electricals Pty Ltd (the respondent). The applicant paid $55,000 for the "truck with work". The truck, on the applicant's estimate, was worth about $10,000. The goodwill component on purchase for the delivery service (run) would therefore have been $45,000. In order for the applicant to assume the delivery service there was required an interview with the respondent, the principal contractor. The respondent had allowed the applicant and other drivers who held a contract to re-assign their delivery service runs for the balance of a one-year contract to third parties. Generally the new drivers, the assignees, were then issued with a new contract each year thereafter. The applicant then performed delivery services for the respondent for four and a half years. I accept that the delivery service contracts were sought after and there was very little assignment of them over the years. 3 The applicant commenced work on 18 February 2002 and performed the service of delivery for the respondent for its Merrylands, Parramatta and Castle Hill stores. The applicant was assigned the contract to perform these delivery services from 18 February 2002 up to June 2002, however there has been no contract produced for the period of June 2002 to June 2003 during which he continued to perform his delivery services. After that, contracts were routinely renewed at the end of each financial year (although from the contracts produced they were often not issued nor signed until as late as August of each year). The applicant continued to be issued yearly contracts up until 29 June 2006. 4 The applicant would submit weekly invoices, to charge for the deliveries he performed, to the respondent's office at the warehouse which would then refer the invoices of all the drivers, to the head office of the respondent at Fairfield. From early on in the relationship, the applicant frequently spoke to Mr Ng (whose title was Accountant, but who appears to serve as a Manager of the drivers) asking for remittance advices and an explanation as to why some of his invoices were 'short' paid. Over the years the disputes related to the asserted under-payment remained unresolved. The applicant contended he had the right, under the contract, to the full delivery charge as quoted on the delivery docket invoice issued to the customer. The respondent denied this right. The respondent asserted the applicant had only the right to the basic delivery charge for all deliveries as recited in the contract. Further, the respondent contended the applicant continued to not meet the GST responsibilities he bore on income received. 5 In December 2002, the applicant sold the old truck he had purchased in February 2002 and replaced it with a newer 2000 model Pantec truck. Shortly thereafter the respondent removed the Merrylands run from the applicant and reassigned it to another driver, leaving him with the Parramatta/Castle Hill part of the run. Within a short period of time he was, however, given the run for Eastwood/Hornsby which, from the evidence, appears to have increased his workload and income. 6 In late 2003 or early 2004, the applicant had the Parramatta/Castle Hill stores deliveries removed from him by the respondent, but he was allocated the Chatswood/Warringah Mall stores (called the Northern Beaches run). The applicant accepted these variations to his contract. The dispute between the parties as to the divergence between invoices and payment continued. 7 In March 2004, the applicant decided that his 2000 Pantec truck needed replacement. He sought the advice of Mr Ken Lee, of the Bing Lee family, and was given an assurance as to his security in relation to the "runs" he serviced. The applicant therefore, in April 2004, purchased a 2004 Pantec truck for $75,000. He received $5000 for his old Pantec. 8 In mid 2004, all drivers had the Bing Lee logo painted across their trucks by the respondent. The applicant continued working the Chatswood/Warringah Mall stores run and also the Eastwood/Hornsby run. By November 2004, with the Chatswood/Warringah Mall run, the applicant's delivery service was so successful that he purchased two further second hand Pantec trucks and employed additional staff, namely, drivers and offsiders. 9 Complaints about deliveries (for all drivers) were regular and were generally dealt with on the telephone by Mr Ng. In early June 2005, Mr Ng made an appointment to see the applicant and his wife. Mr Ken Lee was present. Mr Lee informed the applicant the company was thinking of not renewing his contract for 2005/2006. Mr Ng formally addressed the applicant as to the number of complaints that were being received about his deliveries. The complaints received were customer complaints and complaints about his drivers. Also, in mid-2005, a new Warehouse Manager, Jason Naulty, was appointed. He complained about the aggressive behaviour of two of the applicant's drivers. Many of these complaints were canvassed in the hearing. A letter of warning related to the complaints was sent to the applicant on 6 July 2005. The applicant, therefore, received both a letter and an interview addressing Bing Lee's concern as to his service delivery performance. The applicant asked for a further opportunity to prove himself which was agreed to by the respondent. Therefore, on 22 July 2005, a new one year contract was given to the applicant. He was asked to get independent legal and financial advice as to the effect of the contract. 10 The 2005/2006 contract was a new and varied contract. It was delivered to all the drivers. Under this contract a new clause related to the payment of monies for goodwill was inserted. An "Acknowledgement" clause was also included and a "Certification" was required from a solicitor giving the respondent an assurance that each driver had sought legal advice before signing the contract. The applicant signed the new contract in August 2005 and continued his delivery "runs". 11 Throughout the performance of the 2005/2006 contract, one truck from the applicant was used on the Eastwood/Hornsby run and another truck was used for the Chatswood/Warringah Mall deliveries. After the complaints continued, by midway through the 2005/2006 contract, the applicant had dismissed his two drivers. It appears then the workload was too much for the applicant and, given his difficulty in employing competent drivers, in August 2005 the applicant decided he would implement the assignment clause of his contract for the Hornsby/Eastwood runs. 12 The applicant quickly came to an in-principle agreement with a Mr Mick Gulasi, who had previously had a contract for delivery services as a driver for Bing Lee, but who had sold the delivery service he performed and had had that run reassigned by the respondent. The agreement reached with Mr Gulasi was for the purchase of one of the applicant's trucks and the Hornsby/Eastwood "run" for the sum of $140,000. 13 When an approach was made to Mr Ng to approve the assignment of the rest of the applicant's 2005/2006 contract, the reassignment was refused. The applicant was informed Mr Gulasi was working as an air conditioner repairman for Bing Lee and was considered by the respondent unsuitable to do the Hornsby/Eastwood delivery service. The applicant quickly found another buyer ("Gabrial") for the Hornsby/Eastwood run. However, when the applicant again approached Mr Ng as to the proposed reassignment of this delivery service, Mr Ng said: "You can't sell the run. You only own the truck." 14 In November 2005, one month later, Mr Ng contacted the applicant and informed him the respondent was going to reallocate half of his run and he was then told he should choose whether to relinquish the Eastwood/Hornsby run or the Chatswood/Warringah run. The applicant was informed by the respondent it had a driver to whom it wished to assign whichever run he decided to relinquish. The applicant complained but relinquished the Eastwood/Hornsby run. There was evidence that Mr Ng suggested to the applicant there could be an increase in the Chatswood/Warringah Mall run with a store possibly opening at Belrose. No Bing Lee store was opened in Belrose. Mr Ng denies this proposition but agrees there was a discussion about a possible Belrose store. I prefer the evidence of the applicant on this point and believe, in the reallocation of part of his run, he was given some hope of obtaining another store for his delivery service. 15 The Eastwood/Hornsby run was allocated by the respondent to a Mr Claudio Mussa who had been, for a time, the Bing Lee Warehouse Manager. The applicant then had to sell his new truck. Mr Mussa, who had assumed the run, was the obvious buyer (it had the name Bing Lee painted on the truck) and he paid the applicant $50,000 for the truck. The applicant therefore suffered a loss given he had purchased it for $75,000. 16 Throughout the relationship there continued to be the ongoing dispute between the applicant and Mr Ng about the under-payment of invoices. Mr Ng continued to assert the appropriate GST payments were not being met by the applicant. 17 On 29 June 2006, the applicant was called to the Warehouse Manager's office. Present at this meeting was Mr Peter Braithwaite, from the Bing Lee head office, and the Warehouse Manager, Jason Naulty, who then told the applicant: You know it is contract time and we are not renewing your contract, so unpack your truck and go.

The applicant asserts this came as a great surprise to him. The applicant asked for the decision in writing. Mr Naulty replied to that request saying: We can't give you anything in writing, you will have to go to head office if you want it in writing. 18 The applicant attended the head office of the respondent and approached Mr Ken Lee and asked for reasons for the refusal to renew his delivery service to be put in writing. This was refused. The applicant then asked for a copy of his contract, which he received. The respondent took three weeks for the name "Bing Lee" to be removed from his truck. After the refusal to renew his contract, the applicant discovered Mr Mussa, who had had the Eastwood/Hornsby part of his run allocated to him by the respondent, was assigned the remainder of the applicant's run, namely, the Chatswood/Warringah run, after the contract was not renewed. 19 The sudden notice that the applicant's contract for delivery service was not to be renewed, on the last day of service under the 2005/2006 contract caused the applicant significant financial hardship. He asserted he was now being forced to sell his family home to help pay the debts accrued. The applicant claims that he had been an insulin dependent diabetic for 20 years and had suffered considerable stress and anxiety as a result of the decision not to renew his contract. 20 The applicant has done some other work as a truck driver earning approximately $1700 gross per week until June 2007. 21 The applicant gave evidence as to the practice and conduct of the other drivers and the respondent while under the performance of their delivery service contracts. He asserted in 2004 the driver, Mr Gulasi, had sold his Bondi and Marrickville run for over $100,000 and separately the Burwood, Homebush and City run for over $100,000. Both those runs were reassigned to other drivers using the same trucks as owned by Mr Gulasi. He also asserts in late 2005 a driver named "Chris" also sold his run to a driver named "Dan" for $185,000. The respondent, in reply to this evidence, contends such claims should be proven as fact and asserts it has no knowledge of such deals which are struck between parties. The respondent contends it has only a role in approving the assignment of the remainder of each one-year delivery contract for the drivers. It did not, however, deny the claim that Mr Gulasi and "Chris" each had their delivery services assigned, nor that "Dan" was, or had been, a delivery service driver for Bing Lee.

The claims 22 The applicant asserts, in the performance of the contract and at its termination, there was an unfairness such as to make the contract unfair and that such unfairness should attract orders for just compensation. The applicant asks for the following Orders: Payment for lost goodwill unilaterally removed from the Applicant: For loss of Eastwood/Hornsby run- $140,000.00 For loss of Chatswood/ Warringah run $200,000.00

Underpayment of Invoices Total underpayment for period 23/02/02 to 29/06/06 = $52,819.00 ... Compensation for lack of Notice Six months' remuneration = $220,000.00 gross

Allowance for anxiety and distress Such amount as the Commission sees fit,

Interest At the rate prescribed Supreme Court rate, or as the Commission sees fit.

Other Such further or other amounts as the Commission sees fit upon full exposition of the facts.

The Applicant's Case 23 The applicant asserts there was an unfairness in the performance of his 2005/2006 contract with the respondent. In particular, in the re-allocation of his contract delivery services by the respondent; in the respondent's failure to allow the applicant to assign his runs in 2005; in its reallocation of his delivery routes without compensation to him when the respondent failed to renew his delivery contract in 2006/2007; and, in its failure to properly remunerate him for his delivery services in accordance with the contract there was an unfairness. The applicant further pleads, as a result of this harsh, unjust, unfair, unreasonable and unconscionable conduct, and in the circumstances of the failure to renew his contract without notice, he suffered loss, distress and anxiety. He asks for a finding that his employment contract was unfair and for compensation just in the circumstance.

The Respondent's Case 24 The respondent generally denies knowledge of the assignment of its delivery service contracts for goodwill and asserts any such arrangements were between the parties. In particular, the respondent asserts it was unaware of the practice of drivers to sell "runs" along with its reassignment of the remainder of a delivery contract, until late 2004 when the arrangement was revealed through litigation in the Industrial Relations Commission of NSW in Grech t/as Grech and Son Transport v Bing Lee Electrics Pty Ltd [2005] NSWIRComm 228. After that litigation, the respondent asserts the delivery services contracts were amended to ensure no such transactions would occur. 25 The respondent asserts the delivery drivers were engaged on 12 month fixed contracts. Therefore, it submits, the only relevant contract is that of 9 August 2005. 26 The respondent further contends it had a right under that contract to vary the geographical areas serviced by the applicant and, as the applicant failed to properly service the areas assigned to him, he thereby breached the contract and the failure to renew was justified and not unfair. The respondent contends the applicant did not perform his duties satisfactorily. 27 As to its variation to the applicant's runs, the respondent says such changes were to assist in the systematic, logical and efficient allocation and distribution of its deliveries. 28 As to the claims for unpaid monies, the respondent maintains it provided in the contract an appropriate scale for the delivery services and the applicant was paid accordingly. 29 The respondent raises a defence to the claim under s108B of the Industrial Relations Act 1996. Clause 108B relevantly states: 108B Time for making application (1) An application for an order under this Division in relation to a contract that has been terminated must be made not later than 12 months after the termination of the contract. (2) The Commission does not have jurisdiction to extend the time for making any such application or, subject to subsection (3), to accept an application made after the time prescribed by subsection (1). (3) The Commission may accept an application made within 3 months after the time prescribed by subsection (1) if the applicant satisfies the Commission that there are exceptional circumstances justifying the making of the late application.

The Contract 30 The parties agree each contract was for the period of one year. It is necessary to examine some of the terms of the contract which are relevant to the asserted unfairness and for the Court to consider the effect of those terms on the applicant in the performance of the contract. There is dispute between the parties to the contract as to the interpretation and effect of the clauses and the rights therein. As to the Right to Allocate Runs Recitals 31 In the Recitals in 2005/2006 contract two new clauses were added: A ... B ... C ... D The contractor agrees to provide the Delivery Services set in this Agreement in consideration for the Fee which the Company agrees to pay the Contractor. The Company, by this agreement, does not guarantee the Contractor any right to provide Delivery Services for the Company in any other confined geographical area, save for the one stipulated in Part 1 of the Schedule.

E The parties acknowledge that the Company has the right to direct the contractor to perform the Delivery Services to any geographical identified in Part 1 of the Schedule and may change from time to time the general routes, runs or circuits through which the Delivery Services may be conducted to suite the nature of the Company's business, subject to the Delivery Services being confined to general area stipulated in Part 1 of this Schedule. Schedule 1 The area in which the delivery services will be performed is New South Wales.

Through these clauses the defendant asserts it had the right, within the contract, to reallocate each of its delivery runs for the purpose of the good management of its business. 32 In each contract, the respondent did not particularise the delivery service run but only acknowledged they would be within New South Wales. It did change the runs of this driver, within the conduct of his contracts and until 18 December 2005, the applicant accepted those variations. He asserts, however, each variation was fair in that he was compensated with alternative runs but only up until 18 December 2005. On and after that date two of the runs worked by the applicant were reallocated by the respondent without him being given an opportunity, under the assignment clause of the 2005/2006 contract, to re-assign the run. As to the Assignment of Runs to Others The Assignment Clause 33 The applicant asserts he had rights under the assignment clause, which rights were denied to him from 18 December 2005. In the 2003/2004 contract, there was an assignment clause: 2 ASSIGNMENT 2.1 The Contractor may assign his obligations under this Agreement to another person on the following conditions: (a) The company must approve the assignment to the nominated person; (b) The term of the assignment can only be for the remaining part of the term of this Agreement; and (c) All costs associated with the assignment are to be borne by the Contractor.

There was a similar clause in the 2004/2005 contract. 34 Under these clauses of the contract, I accept that it was the practice that a driver could negotiate with a potential purchaser for his truck and the service runs performed under the contract and have the balance of his contract for that year assigned to the new driver with the agreement of the respondent. Payments for the truck and run were viewed by the respondent as a matter between those parties. Since at least late 2004 the respondent concedes it knew drivers were negotiating for goodwill on the runs. 35 The respondent asserts in the 2005/2006 contract it inserted two new clauses. The new assignment clause had the purpose of stopping the drivers gaining "goodwill" for Bing Lee's "run". The new sections added to the assignment clause were: 2 Assignment ... (a) ... (b) ... (c) ... (d) The Contractor warrants that the Contractor has not accepted any payment of a premium for the assignment of this agreement (e) The Contractor agrees to indemnify the Company, and keep the Company indemnified, any result of any actions, suits, proceedings, demands and/or claims against the Company by any persons arising directly or indirectly out of any representations, misstatements, communications made by the Contractor to the Assignee.

The Acknowledgement/Confirmation Documents 36 There was also an "Acknowledgment" document added to the Contract in 2005/2006, which relevantly reads: ACKNOWLEDGMENT I Mr Robert J Stewart acknowledge the following 1. I have not paid a Premium to Bing Lee Electrics Pty Limited or any other person as consideration for Bing Lee Bing Lee Electrics Pty Limited entering into Delivery Agreement dated .............. 2. I have entered into Delivery Agreement dated ......... with Bing Lee Electrics Pty Limited by arrangement with Bing Lee Electrics Pty Limited only and not through any arrangement with a previous carrier or other person. 3. I have not entered into Delivery agreement dated ........... with Bing Lee Electrics Pty Limited as a result of any inducements, warranties, promises or representations regarding any specific guaranteed delivery routes, runs or circuits or any warranties, promises or representations regarding a consistent workload or expected income. 4. I acknowledge that I will not be guaranteed a delivery route, run or circuit with respect to performing the Delivery Services and that any delivery route, run or circuit will vary from time to time depending on the nature and business requirements of Bing Lee Electrics Pty Limited. 5. I have sought legal advice with regards to the Delivery Agreement dated . ...... 9TH August 2005 and this acknowledgment DATED 9/8/05 ................... ............ (signed by the applicant) print name ROBERT STEWART

The dates on this acknowledgement on the applicant's 2005/2006 contract were not specified (that is, filled in) except as to the date it was signed by the applicant. The applicant was further required, for the first time under the 2005/2006 contract to confirm he had received advice from a solicitor regarding the contract. 37 I accept the above two sections to the contract were inserted in 2005/2006 because of the concerns raised in litigation as to the respondent's reallocation of runs within the performance of the contract and the practice of drivers to seek from third parties "goodwill" for their existing runs - which were able to be re-assigned for the remainder of one year contracts on approval by the respondent to another driver.

38 These new clauses were inserted in the contract after the decision in Grech. The respondent revealed it became aware, in late 2004, that the contract drivers were receiving goodwill payments on assignment of the delivery "runs" and that provoked the amended clauses. Mr Ng asserted, before the issue of the 2005/2006 contract, he met with the drivers to explain the clauses. Mr Stewart denies any such meeting. There was no documented record of such meetings. On this aspect, I prefer the evidence of the applicant. However, each driver was asked, under the contract, to sign the acknowledgement and to retain legal advice. Otherwise there is no evidence the respondent advised the drivers of the asserted intent of the new clauses in their contract for 2005/2006. 39 On a reading of the assignment clause (as amended) along with the acknowledgment document and the solicitor confirmation document, the Court accepts the amended clauses in the 2005/2006 contracts were an attempt to prevent the practice of drivers gaining a payment of valuable consideration or goodwill for the delivery service they were performing. However, cl 2.1(d) does not have that legal effect. The contractor, under the 2005/2006 contract, was only asked to warrant that he had not accepted payment of a premium for the assignment of the 2005/2006 contract. It asks for no warrant as to any future payment. Further, in the "Acknowledgment" document (as attached to the 2005/2006 contract), the applicant agreed he had not paid a premium to Bing Lee or any other person as consideration for entering into the 2005/2006 agreement. This is a truthful acknowledgment. 40 Therefore, under the terms of the assignment clause in the contract for 2005/2006, the applicant was able to seek an arrangement with another as to the delivery service he was performing under the contract and to assign the remainder of his one year contract for delivery services conditional upon the approval of the respondent, in accordance with the assignment clause of his contract. Further, the terms of each contract acknowledged the respondent agreed to an "assignment" arrangement with its drivers for the passing over of a delivery service for the remainder of the one year contract by approving the assignee. 41 I find the respondent may have wanted to ban its drivers from receiving goodwill or valuable consideration for the delivery services of its independent contracted drivers by contractual terms but it did not do so.

The Delivery Service Fee 42 The fees to be paid to the drivers is a matter also in dispute between the parties to the contract. The delivery rates for drivers are defined in each contract under Schedule 1. In Schedule 1.4 of the 2003/2004 contract it was said: The fee payable to the contractor for the delivery services will be: · flat delivery fee includes unpack, placement, installation and removal of old product $35, · additional service multiple large item $5, · difficult or complex installations and deliveries by reasonable negotiations with customer or company plus long distance charges where they apply.

Inter-store deliveries Category A stores/warehouses * $33 Category B stores/warehouses * $44 *Determination from time to time by the company.

In the 2004/2005 contract at Schedule 1.5 the fee payable to the contractor for delivery services was: · Flat Delivery Fee includes unpack, placement, installation and removal of old product $35.00, Side by Side (SBS) side by side refrigerators $70.00, · Additional Service multiple large items $5.00, Difficult or complex installations and deliveries plus long distance charges where they apply. By reasonable negotiations with customer or Company · Inter-store deliveries Category A stores/warehouses $33.00.

The 2005/2006 contract varied the charges. It stated under Schedule 1.5 as to the contractors remuneration for deliveries: · Flat Delivery Fee includes unpack, placement, installation and removal of old product $35.00, Side by Side (SBS) refrigerators $70.00, · Additional Service multiple large items $5.00, Difficult or complex installations and deliveries plus long distance charges where they apply. By reasonable negotiations with customer or Company · Inter-store deliveries Category A stores/warehouses (if applicable) $33. 43 I am satisfied under the terms of each contract of the applicant, as recited in Schedule 1, where there was agreement with a customer for a special delivery fee that the fee was to be paid to the contractor for the delivery services.

The Termination Clause 44 The Termination Clause relevantly states: 12 TERMINATION OF THIS CONTRACT 12.1 The Company may terminate this Contract immediately if one or more of the following events occur: (a) The Contractor discloses to any unauthorised party any Confidential Information of the Company; (b) The Contractor misappropriates or fails to account for cash in transit received by the Contractor on behalf of the Company in the course of providing the Delivery Services as required by this Agreement or the Company has reasonable suspicion that the Contractor may have done so; (c) The Contractor misappropriates or fails to account for goods in transit held by the Contractor on behalf of the Company in the course of providing the Delivery Services as required by this Agreement or the Company has reasonable suspicion that the Contractor may have done so; (d) The Contractor breaches any term of this Agreement.

It is of note that there is no clause as to Notice in the contract. 45 Some other aspects related to the contract require comment. Generally, the contracts as tendered and held in the respondent's records as the originals for the years 2003/2004, 2004/2005 and 2005/2006 were not contracts in the proper form. They were either not dated nor signed by both or one of the parties. However, I am satisfied that there was a contract/arrangement between the parties for the service of delivery. That contract/arrangement was acknowledged by both parties through the performance of delivery services for consideration. I accept the respondent, in amending clauses in the applicant's and other drivers 2005/2006 contracts (following the decision in Grech), intended to stop the sale of "its" delivery runs, but I have found those amendments to the contract are without effect. 46 I accept the applicant's appointment was on a continuum engagement under a series of renewed contracts. There was no cessation in the continuance of his engagement from February 2002 until there was no renewal of his contract on 29 June 2006. The contracts between the drivers and the respondent were contracts whereby work was performed in an industry in New South Wales. The working relationship required each driver (the applicant in the later period of his engagement, in partnership with his wife) to supply, maintain and repair vehicles. The applicant, as did other drivers, employed drivers and offsiders to assist in the delivery services. The applicant invoiced the respondent for those services, although the respondent directed and then re-directed the applicant as to where work was to be performed. In the circumstances, I am satisfied the applicant was an independent contractor for service. 47 As to the s108B defence to the claims raised by the respondent in opposing the jurisdiction of the Court to entertain the claim, it is relevant to note the Summons for Relief was filed on 13 November 2006. The determination not to renew the 2005/2006 contract was notified on 29 June 2006. I am satisfied that the Summons was filed within six months of the termination of the continuous service. It is therefore within time under s108B of the Act, given the termination of this continuous engagement, under a number of contracts for service, was on 29 June 2006.

Unfairness 48 The assertion of the applicant is that there was unfair conduct by the respondent in the re-assignment of his runs in the latter part of his engagement. This occurred on two occasions without giving the applicant the opportunity to gain the benefit of the assignment clause of his contract. In that context he also asserts he was not given fair notice nor paid the agreed scale for his delivery services. 49 Some of the history of the applicant's engagement needs to be considered in relation to the effect of the Assignment Clause. The particular circumstances revealed in evidence are relevant to any consideration as to the asserted unfairness of the continuous engagement for the performance of a delivery service. The applicant paid goodwill in February 2002 for a delivery service. The respondent approved the assignment of a delivery service to him. He had continuous contractual arrangements from February 2002 until June 2003 (no contract produced) and from June 2003/2004 and June 2004/2005 and June 2005/2006 until 29 June 2006. 50 In 2002/2003, the applicant had his Merrylands run reallocated but was assigned the Parramatta/Castle Hill run. Then in late 2003 early 2004, the respondent reallocated the Parramatta/Castle Hill run but assigned him the Chatswood/Warringah Mall run. On both these occasions the applicant agreed to the variations to his runs and he was reallocated other runs. The conduct of the respondent was, in each circumstance, fair. 51 I accept leading up to the 2005/2006 contract there were difficulties in the working relationship. The applicant had asked for and received an assurance as to the long term viability of his "runs" from Mr Ken Lee of the Bing Lee family and then he purchased a new truck in April 2004 costing $75,000 and carried this debt. He hired drivers and offsiders to help him as his run was busy and very financially lucrative. However, complaints about the performance of his drivers were regularly recorded. In June 2005, the applicant was advised, given the poor performance of his delivery service (as reflected by increased complaints), there was consideration being given by the respondent not to renew his delivery service contract. The applicant asked for a further opportunity. He was issued with a contract for 2005/2006. 52 The applicant then reassessed his circumstance. He had, before June 2005, been aware of an increase in complaints and had removed one driver. After the issue of his new contract he removed another driver and decided to trigger the Assignment Clause of his contract. He found a purchaser for his "truck with work". He sought the respondent's approval and it was refused. He found an alternative buyer. That reassignment was also refused. However, the respondent then approached him telling him he had to identify part of his run for reallocation. The respondent had, under each contract, always had the power to re-allocate the applicant's "runs" for the purpose of the good management of its business and that had always been the respondent's practice and contractual power. The applicant objected but nominated his Eastwood/Hornsby part of his delivery service - the same part of his service for which he had had two nominated purchases - and had tried to trigger the assignment provision of his contract. Another driver was allocated that run on 18 December 2005. 53 The respondent asserted not only did it have the power to reallocate runs but, under the 2005/2006 contract and following the decision in Grech (on discovering its delivery drivers were taking goodwill from third parties for the delivery services they were performing), it had contracted with drivers to stop the practice. However, I am persuaded the respondent in its conduct continued to turn a blind eye to transactions to which it was not a direct party and it continued, under the amended assignment clause in 2005/2006, to re-assign at least one run for one of its delivery drivers. Further, by simply giving a driver a new contract and advising him to see a solicitor, as the respondent did when it issued the new 2005/2006 contract with new clauses related to "goodwill" as per the July 2005 letter sent to the applicant, I do not believe the respondent took "reasonable care" in negotiating and explaining the proposed effect of the new terms (Westfield Holdings v Adams (2002)114 IR 241). 54 I accept that there were some complaints after 18 December 2005, but they were not continuous. I find some but not all of the complaints recorded by Jason Naulty were revealed to the applicant. I am satisfied the applicant's performance after 18 December 2005, when he operated only half of his run, was not unsatisfactory. In a consensual relationship based on contract, the respondent had a legitimate expectation the applicant would perform the delivery service satisfactorily (Day v Lumley Life Ltd (1999) 90 IR 70 (at 71)). While I accept conduct can be a ground for the termination of a contract, the respondent has not established that ground. 55 I accept, while it may have been the intention of the respondent to ban the payment of goodwill in the amended 2005/2006 assignment clause, the respondent failed to properly explain its intention and, as well, continued to approve the reassignment of the remaining part of at least one contract to a person introduced by one of its drivers to the respondent under the provisions of the 2005/2006 contract (from "Chris" to "Dan"). This conduct was different, therefore, to that accorded to the applicant under the same contract and in that different conduct the applicant suffered an unfairness. On a review of these concurrent contracts, but focussing specifically on the 2005/2006 contract, I am satisfied there was unfair conduct by the respondent in the performance of the contract in the way the respondent reassigned the delivery services for Eastwood/Hornsby on 18 December 2005. 56 The applicant, then with half his run, namely, the Chatswood/Warringah Mall run, continued to perform his delivery service. It was not until the last day of his 2005/2006 contract, 29 June 2006, that he was told the respondent was not going to renew his contract. The applicant, had he been given notice, would have tried to find a purchaser for that run with the approval of the respondent in accordance with the assignment clause of his contract. 57 The respondent then reassigned the Chatswood/Warringah Mall run to Mr Mussa to whom the respondent had reallocated the Eastwood/Hornsby part of the delivery service in December 2005. The manner in which a contract ultimately works out and operates with the parties is open for the Court to examine (Walker v Industrial Court of NSW (1994) 53 IR 121 (at 133-134)). The respondent asserts, as it did not renew the contract, there could be no use by the applicant of the assignment clause in his contract as he had completed his one year service under the contract. However, the applicant was given no notice as to the intention of the respondent to not renew and therefore no opportunity to enliven the assignment clause. Generally a fair notice provision can be inferred into each contract, even a one year contract. 58 The applicant was informed on 29 June 2006 the respondent was not going to renew his contract. He was given no reason. However, at the hearing of this s106 claim, the respondent asserts the contract was not renewed due to the applicant's poor performance of his delivery service. 59 Many of the complaints recorded by the respondent about the applicant's performance of his delivery services (through the conduct of his drivers) were complaints received in writing. No record of complaints made by telephone were kept after being dealt with. However, on examination of some records of some complaints, be they written or oral, were tendered through Mr Ng, there was no obvious increase in customer complaints received about the applicant's delivery service towards the end of his 2005/2006 contract. Clearly, from the recorded complaints, some by Jason Naulty, as Warehouse Manager, he was not satisfied with the applicant's service but his recording of complaints showed no increase towards the end of his 2005/2006 service. 60 Mr Ng agreed the ongoing dispute with the applicant related to the asserted under-payment was, at the time, causing him concern. Mr Ng did not acknowledge the applicant had made the appropriate adjustment to his delivery services when he removed two of his drivers. 61 There was no warning given to the applicant prior to the decision taken not to renew his contract in 2006/2007 as there had been during the lead up to the renewal of the 2005/2006 contract. The applicant had a reasonable expectation of the renewal of his contract, especially in a circumstance where he had been given no notice (Scanruby v Caltex [2001] NSWIRComm 8). 62 I find in the circumstance there was, in the failure to renew the contract by the respondent without reasonable notice (Westfield Ltd v Helprin (1998) 82 IR 411) and thereafter depriving the applicant an opportunity to reassign the remainder of delivery service of the Chatswood/Warringah Mall run (in accordance with the terms of the assignment clause of the contract), unfair conduct by the respondent. 63 In Bowman v Ricegrowers Ltd (2007) 167 IR 325, the Full Bench stated at [66]: . . . a contract may be found to be unfair because it permits termination that is unfair and discriminatory . . . .

The expression "permits" has been said to mean, in the context of an unfair contract, "that which the contract did not proscribe" ( Sydney Water Corporation Ltd and Another v Industrial Relations Commission of NSW and Another (2004) 61 NSWLR 661 at [32] and [33]). The termination provision of the contract did not address the termination of a contract except for misconduct. There was no notice provision.

The Delivery Charges 64 As to the ongoing dispute relating to the unpaid invoices, the applicant claims under the terms of each contract, he was under-paid, that is, not renumerated in accordance with the terms of his contracts for his delivery charges. For some deliveries special rates were agreed to by the purchaser of the goods and the amount was recorded on the delivery docket. The applicant charged the respondent the special rate. The respondent reimbursed him, however, at the flat rate it quoted in the delivery contract. This dispute ran over between the parties from 2002 to 2006 in this continuous engagement under a number of contracts. 65 I am satisfied the applicant, under the terms of each contract, should have been reimbursed the full rate charged to the customer for the delivery service and, in the failure to reimburse the applicant in accordance with the contract as detailed in Schedule 1, there was unfair conduct by the respondent. 66 The applicant was performing delivery services under one year contracts but through a continuous engagement from 2002 to June 2006. The applicant is, therefore, entitled to reimbursement for each year he claims he was underpaid. I reject the respondent's submission, the only contract the Court should consider under this claim is the one year contract of 2005/2006 and therefore any asserted loss, if established, should only be the loss for the year 2005/2006. The continuing quality of the applicant's engagement permits the Court to examine the respondent's conduct throughout the engagement. In this respect, I reject the assertion of the respondent that the claim for monies owed for the delivery services should be viewed as a claim for breach of contract. I find, in the failure to reimburse the applicant the contractual rate for his delivery service, there was unfair conduct by the respondent.

Conclusion 67 I find there was unfair conduct by the respondent in refusing: to allow the applicant to re-assign the Eastwood/Hornsby part of his run in December 2005 (in a circumstance where the applicant was required by the respondent to nominate the part of his delivery service for re-assignment); the assignment of that run by the respondent to another without the opportunity given to the applicant to negotiate under the assignment clause of his contract; in the decision not to renew the applicant's contract for 2006/2007 without notice; in the reallocation of the delivery service for the Chatswood/Warringah Mall run to another without giving the applicant the opportunity to enliven the assignment provisions of the 2005/2006 contract; in the failure to reimburse the applicant from 2002 to 2006 in accordance with the terms of the contract for his delivery charges. The cumulative effect of that conduct and those failures was such as to make the contract for delivery services unfair. I, therefore, find the contract should be varied.

Relief 68 The applicant's claims for compensation for loss of "goodwill" of the delivery services taken from him on 18 December 2005 and 29 June 2006 relate to the unfairness established and I find, therefore, compensation should be paid that is "just" in the circumstances. 69 The applicant claims $140,000 for the loss of goodwill that occurred on 18 December 2005 when the Eastwood/Hornsby run was re-assigned by the respondent. The applicant asserts he had a buyer at this sum and had given fair notice to the respondent of a reassignment application. However, the applicant also continued to earn income on that run until 18 December 2005. It is difficult, on the evidence, to determine the loss suffered by the applicant. The $140,000 would have included the value of the truck later sold for $50,000 but purchased for $75,000 (on an assurance of security to the applicant from the respondent). The remainder $90,000 on the applicant's variation would have represented almost a full year's income from that delivery service and the applicant had a five month benefit of earnings from that run. In the circumstances, I allow $40,000 for the loss of goodwill for the Eastwood/Hornsby run. 70 I accept the applicant, as a matter of fairness, should have been given an opportunity to seek a re-assignment of his Chatswood/Warringah Mall run before the contract was not renewed by the respondent. There should have been provided reasonable notice thereby giving him the opportunity to enter into an alternative arrangement allowing him to reassign the service to a suitable candidate given the respondent's decision to not renew his contract. In the circumstance, the respondent was able to reallocate the run immediately. The respondent gave evidence of reassignment rarely occurring because drivers valued their delivery services and, from the evidence, I accept they were financially lucrative delivery services and much sought after. The applicant should have been given a short period of notice within the time term of the contract to allow the applicant, under the assignment clause, to find a suitable purchaser. There is no reason why such notice should be over a period outside the term of the contract. 71 The claim for compensation for the loss of the right to reassign the delivery service for the Chatswood/Warringah Mall run has been established. The applicant assessed the value of this delivery service was $200,000 (earnings before tax). However, that was the gross amount earned on the run. I allow the goodwill component for this run at $100,000. 72 The applicant was providing his delivery service under his contract to the end of the 2005/2006 contract, he then mitigated his loss at $1,700 (gross per week) until he became ill. I do not accept the notice period should go beyond 29 June 2006, so there shall be no other monetary order as to notice except within the term of a short notice period under the contract to allow the applicant to enliven the assignment clause. 73 The applicant also established an unfairness in the failure to pay him in accordance with a term of the contract (Schedule 1). Such unfairness should attract just compensation. The applicant claimed $52,819 for the amount owed under the claim for unpaid delivery charges. The documentation, as tendered by the respondent, I accept, revealed some of this disputed sum related to outstanding GST payments. The applicant then contended that $25,000 was, in the circumstances, a fair assessment of his loss. The respondent contended, on an examination of the spread sheets tendered, the Court would be satisfied most of the payments related to GST owed and therefore, notwithstanding the concession of the applicant, any monies so ordered should be minimal. I find fair compensation in the circumstances for the under-payment of delivery charges should be in the sum of $20,000.00. 74 The claim for anxiety and distress, whilst understandable, was not developed by either the applicant in evidence nor through supporting medical opinion. I dismiss this claim. 75 In the circumstances, I order the applicant be paid, in total, the sum of $160,000.00 as just compensation for the unfairness in his contract for service.

76 As to the claim for interest by the applicant on money owed him, I refer to the discussion given to the issue by the Full Court in Abboud v The State of New South Wales (Department of School Education) (No. 2) (2000) 99 IR 299. In that case, the Court referred to the authorities including Brown v Rezitis (1971) 127 CLR 157 (at 165) before concluding: 47 It follows that the awarding of an interest component is a matter of discretion to be exercised in the particular circumstances of the case in order to discharge the statutory duty, now arising under s106(5), to make a monetary order in connection with the contract varied, 'just in the circumstances of the case'. This will not necessarily require that interest at commercial rates and for commercial reasons be awarded in every case, even those with a commercial flavour. 77 The matters for which the applicant has obtained orders have accrued at different times and under different terms of different contracts throughout the applicant's engagement. However, in accordance with this authority, I find it just in the circumstances to order interest on the monies awarded to the applicant be paid in accordance with the Supreme Court rate from the date of termination to the date of judgment. 78 There shall be an order for costs to the applicant.

I find the applicant's Contract of Service for which he performed work unfair. I order a variation to the contract to reflect the unfairness. 2. The applicant shall be paid compensation "just in the circumstance" in the sum of $160,000. 3. Interest to be paid on the above sum at Supreme Court rates from the date of termination to the date of judgment. 4. The respondent shall pay the applicant's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

At a glance

Court

Decision date

Before

Source

Judgment (39 paragraphs)

Parties

Cases Cited (9)