SW & JD Reilly & Sons Pty Limited v Australian Co-operative Foods Limited

Industrial Relations Commission (NSW)|2009-08-04|Before: Marks J, Mr P

CITATION: SW & JD Reilly & Sons Pty Limited v Australian Co-operative Foods Limited [2009] NSWIRComm 176

PARTIES: SW & JD Reilly & Sons Pty Limited (Applicant) Australian Co-operative Foods Limited (Respondent)

CATCHWORDS: UNFAIR CONTRACT PROCEEDINGS - supermarket delivery contract - strike out application - jurisdiction - held not appropriate time to determine jurisdiction - motion dismissed

LEGISLATION CITED: Industrial Relations Act 1996 - s 105, 106

Agar v Hyde (2000) 201 CLR 552 Alto Artarmon Pty Ltd v BMW Australia Limited [2007] NSWIRComm 172 Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27 CASES CITED: Caterpillar of Australia Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 83 Fish v Solution 6 Holdings Limited (2006) 225 CLR 180 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Nagle v Tilburg (1993) 51 IR 8 Sin Yong Yim and Tae Sik Kim v Industrial Relations Commission of New South Wales and anor [2007] NSWCA 77

HEARING DATES: 4 August 2009 7 September 2009

Mr A Britt of counsel Solicitors W H Parsons & Associates LEGAL REPRESENTATIVES: Mr P Kite SC with Ms S Piedade of counsel Solicitors Addisons Solicitors

SW & JD Reilly & Sons Pty Ltd v Australian Co-operative Foods Limited

Application under s 106 of the Industrial Relations Act 1996

JUDGMENT ON RESPONDENT'S MOTION FOR DISMISSAL OF PROCEEDINGS

1 These are proceedings brought under s 106 of the Industrial Relations Act 1996 ("the Act"). The applicant is SW & JD Reilly & Sons Pty Ltd and the respondent Australian Co-operative Foods Limited. In the proceedings, which are constituted by an amended summons for relief filed on 18 April 2006, the applicant seeks a finding that a Supermarket Delivery Contract between itself and the respondent is unfair. The respondent asserts that this Court has no jurisdiction or power to deal with the proceedings because the Supermarket Delivery Contract is not one that falls for consideration under s 106 of the Act. This judgment deals with a motion for dismissal brought by the respondent. The statutory background

2 Relevantly, ss 105 and 106 of the Act are in the following terms: s 105 Definitions

In this Part: "contract" means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. "unfair contract" means a contract: (a) that is unfair, harsh or unconscionable, or

(c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or

(d) that is designed to, or does, avoid the provisions of an industrial instrument.

s 106 Power of Commission to declare contracts void or varied

(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract.

(2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason.

(2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and

(b) the performance of work is a significant purpose of the contractual arrangements made by the person. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time.

(4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force.

(5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case.

(6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss. The factual matrix

3 The applicant has filed all of the affidavit evidence upon which it intends to rely for the purpose of the substantive proceedings, other than expert evidence. The respondent says, and the applicant accepts, that all of the evidence filed in the proceedings should be taken at its highest in favour of the applicant in determining whether or not this Court has jurisdiction and power to deal with the proceedings. This is an orthodox approach, which I shall adopt. 4 In addition, the respondent has read an affidavit of Karen Anne Hayne, sworn 26 June 2009, the principal purpose of which has been to annex a copy of the Supermarket Delivery Contract on which the applicant relies. 5 The Contract is made in the form of a deed dated 9 June 1998. The respondent is described therein as "Dairy Farmers" and the applicant as "the contractor". Recitals to the deed refer to the fact that the applicant as contractor currently distributes Dairy Farmers products "under a regulated arrangement pursuant to the New South Wales Dairy Industry Act and Regulations which protects the contractor and Dairy Farmers from competition." A further recital indicates that the milk industry is to become "legally deregulated on or before July 1998 …" and that as a consequence "the commercial arrangements between customers, suppliers and contractors will be subject to and determined by market forces and exclusive territories will not be possible." There is then reference to the fact that Dairy Farmers had "developed a supermarket distribution format" and that it had agreed "to appoint the contractor to distribute the Dairy Farmers Products to designated supermarkets for the Term and on the terms and conditions set out in this agreement. The Contractor will act as a reseller of the Dairy Farmers Products up to deregulation, and thereafter except where otherwise agreed between the parties will be paid a commission for delivery of the Dairy Farmers Products in accordance with each customer's requirements." 6 There is a reference in the definition section to "the elected representatives of the Contractor" to mean "any person or persons who are elected by Dairy Farmers Contractors to represent them in dealings with Dairy Farmers in accordance with any procedure determined by Dairy Farmers in consultation with the Contractors …." The following additional definitions are relevant:

"the Manual" means the manual specifying the standards and procedures which Dairy Farmers requires of Contractors, as amended from time.

"the Operator is an individual approved and accredited by Dairy Farmers who has completed the training prescribed by Dairy Farmers for Operators and who is employed by the Contractor to drive the Vehicle or otherwise assist in servicing the Designated Customers of the Business."

"the Standards means the prescribed standards of health, safety, refrigeration, delivery, storage, customer service and performance as specified by Dairy Farmers in this Agreement and the Manual." 7 Cl 2.1 is in the following terms:

2.1 Dairy Farmers and the Contractor shall have the right to deliver Dairy Farmers Products to the Designated Customers for the Term and on the terms and conditions contained in this Agreement. 8 By cl 2.2, the contractor is given "the exclusive right" to deliver the respondent's products to Designated Customers. By cl 3.5, the respondent Dairy Farmers is to

handle all dealings with customers, and any action taken by the Contractor with those customers shall (sic) on behalf of Dairy Farmers. Dairy Farmers shall be responsible for all supply, pricing, discounts, rebates, invoicing, collection and account management issues, and will handle the negotiation of the delivery format and delivery arrangements. 9 Cl 4.6 is in the following terms:

Where a Designated Customer is lost or withdrawn, Dairy Farmers will not be obliged to pay to the Contractor any compensation. However, Dairy Farmers agrees to use its reasonable best endeavours to nominate another supermarket as a Designated Customer of the contractor and/or provide bulk delivery work for the Contractor to handle. The Contractor acknowledges that after Deregulation it is likely that such other supermarket customer or bulk delivery work may be located in the geographical areas currently zoned exclusively to competitors of Dairy Farmers. 10 The term of the agreement was expressed to be two years but it would continue thereafter unless terminated. The contractor is given the right to take up renewal options, on conditions set out generally in cl 5. 11 Some greater detail concerning the manner in which the Supermarket Delivery Contract is intended to operate is provided by cl 6, the provisions of which are in the following terms:

REQUIREMENTS ON COMMENCEMENT OF THE DELIVERY CONTRACT

6.1 On the signing of this Agreement a list of the Contractor's Designated Customers will be attached to this Agreement.

6.2 Prior to the commencement Date the Contractor and all Operators shall satisfactorily complete any initial training program and obtain all necessary permits or licences required by Dairy Farmers or any law, regulation or industry code of conduct including a current certificate of registration as a Dairy Produce Merchant under the Dairy Industry Act 1979.

6.3 The Contractor shall ensure that the Vehicle is suitable for use in the Business, meets the specifications of Dairy Farmers as set out in the Manual, complies with any relevant lows or regulations, and is correctly outfitted and sign written in accordance with the Dairy Farmers Image.

6.4 Prior to the Commencement Date the Contractor shall appoint the Operator and notify Dairy Farmers of the appointment. All Operators must have an appropriate driver's licence and will otherwise be able to lawfully and competently drive the Vehicle. 12 In general terms, the Contract provides for the payment of remuneration to contractors by way of commission. 13 There are some matters contained within cl 9 that impact upon the obligations of contractors and operators. Cl 9 is in the following terms:

9.1 Both parties shall throughout the Term adhere to the System, the Image and the Standards as prescribed by this Agreement and the Manual.

9.2 The Contractor shall not act in a manner detrimental to the Image or which prejudices the goodwill or reputation of Dairy Farmers or any of the Dairy Farmers Products.

9.3 The Contractor and all Operators involved in the Business shall wear the Dairy Farmers uniforms set out in the Manual in the conduct of the Business.

9.4 All parties shall adhere to the customer service standards described in this Agreement and the Manual. In particular the Contractor shall build and maintain positive personal relations with those representatives of the Designated customers with whom the Contractor comes into contract when performing the delivery functions and cooperate in the resolution of any customer service issues or complaints.

9.5 The Contractor shall ensure all staff in the Business are aware of the contents of this Agreement and all obligations imposed upon the Contractor hereunder, and are appropriately trained and supervised at all times.

9.6 The Contractor must be able to deliver to Customers seven days a week, and at time of the day and night which meet the reasonable requirements of the Designated Customers of the Contractor. 14 By cl 10, Dairy Farmers is obliged to train contractors, to assume all financial and accounting management functions and the like. Furthermore, Dairy Farmers is obliged to provide uniforms for operators at the expense of Dairy Farmers. 15 Obligations on contractors concerning the vehicles to be used are contained within cl 11. The contractor is required to maintain the vehicle and all refrigeration units "in excellent working order and presentation through regular servicing and cleaning and performing all repairs as and when required." The vehicle is to be fitted with a refrigeration unit to operate in accordance with certain specifications. 16 Importantly, certain responsibilities of the contractor are set out in cl 13, which is in the following terms:

13.1 The Contractor agrees that the Contractor's prime responsibility shall be to deliver Dairy Farmers Products to the Designated Customers in accordance with the requirements of the Designated Customers. The Contractor shall avoid all activities which shall give rise to any conflict of interest or prejudice the ability of the Contractor to perform such prime responsibility.

13.2 The Contractor will not sell or deliver any other products without the prior written consent of Dairy Farmers, which consent will not be unreasonably withheld where the time and nature of such activities do not prejudice the ability of the Contractor to properly service the Designated Customers.

13.3 The Contractor and Dairy Farmers will work together to deliver the Dairy Farmers Products in the manner and time requested by the Designated Customers.

13.4 The Contractor shall take out all group tax, income tax, worker's compensation, payroll tax, superannuation and other registrations and remit all payments to the relevant authorities in accordance with their requirements. 17 By cl 14, the risks associated with the products of Dairy Farmers pass to the contractor upon collection from a distribution centre. 18 By cl 15, the contractor is required to

maintain on a daily basis a record of all deliveries and dealings with Customers including all Customer details … and make such information available to Dairy Farmers as and when required by reporting or direct computer access. In the same way Dairy Farmers is required to maintain a record of those products distributed by the contractor for each month. 19 By cl 16, the contractor is required to comprehensively insure the vehicle and "all drivers of the vehicle". 20 The contractor is also required to indemnify Dairy Farmers against any loss or damage arising out of the performance of its obligations under the Contract etc and in particular with respect to "any person employed, engaged, hired or authorised to act on behalf of the Contractor in the operation of the Business." 21 Cl 18 deals with transfers and assignments and is in the following terms:

18.1 Dairy Farmers may at any time transfer, assign, delegate or otherwise deal with some or all of its rights and responsibilities under this Agreement. The Contractor shall on request execute any assignment documentation requested by Dairy Farmers.

18.2 If the Contractor desires to sell all or part of the Business: (a) the Contractor must notify Dairy Farmers in writing of the proposed sale price and terms of sale;

(b) Dairy Farmers shall have the option to buy the Business or part at the Contractors requested sale price within 14 days of the notice of sale;

(c) the Contractor shall not sell the Business or part to any person at a price or on terms more favourable than those which have been offered to Dairy Farmers without giving Dairy Farmers a further option in accordance with sub-paragraph (b) above. 18.3 The Contractor may not transfer subcontract or otherwise deal with the Business without the consent of Dairy Farmers in writing. The Contractor must also obtain the consent of Dairy Farmers in writing prior to any change in the underlying beneficial ownership or control of the Business.

18.4 The Contractor may sell all or part of the Business if, and only if: (a) Dairy Farmers has declined or failed to exercise its option in cl 18.2 above;

(b) Dairy Farmers has given its written consent to the sale, which consent will not be unreasonably withheld;

(c) the proposed transferee is responsible, solvent, has sufficient financial and business capacity to properly operate the Business in accordance with this Agreement, has the necessary qualifications and licences to operate the Business, satisfactorily completes all training programs required by Dairy Farmers and otherwise conforms with the Dairy Farmers Entry Criteria and procedures for incoming Contractors;

(d) the Contractor pays the reasonable legal and other costs of the assignment;

(e) the proposed assignee executes Dairy Farmers' standard Supermarket Delivery Contract, and complies with all pre-conditions contained in the Supermarket Delivery Contract; 18.5 The parties acknowledge that cl 18 covers the situation where the Contractor desires to sell individual Designated Customers. 22 Cl 19 deals with death and permanent disability. Its provisions arguably transcend contractors who are natural persons and refer also to the death or permanent disability of an operator. Cl 19 is in the following terms:

19.1 Dairy Farmers may terminate this Agreement by written notice effective immediately where the Contractor dies or is permanently incapacitated. If Dairy Farmers decides to terminate this Agreement under this clause and the Contractor or the legal representative of the Contractor is unable to sell the Business despite making genuine and realistic endeavours, but in no other circumstance, Dairy Farmers must purchase the Business from the Contractor or the legal representative of the Contractor for Fair Value, less the net cost (if any) incurred by Dairy Farmers in operating the Business prior to termination.

19.2 Dairy Farmers may terminate this Agreement pursuant to clause 19.1 above but suspend some or all of the consequences of termination for up to 90 days to allow the Contractor or the Contractor's representative to attempt to sell the Business. Where Dairy Farmers suspends the consequences of termination but the Contractor or the Contractor's representative fails in the reasonable opinion of Dairy Farmers to make genuine efforts to sell the Business, Dairy Farmers may serve a further notice of termination cancelling all prior notices and terminating this Agreement effective immediately.

19.3 If an Operator dies or is permanently disabled, the Contractor must ensure that a replacement Operator is appointed in accordance with the procedures set out in this Agreement as soon as possible.

19.4 If Dairy Farmers considers that it would be inappropriate for the Contractor or the Contractor's representative to continue to service the Designated Customers whilst attempts are being made to sell the Business or appoint a replacement Operator, Dairy Farmers may service the Designated Customers and retain any income, commission, allowances or other entitlements which the Contractor would have received if the Contractor had serviced the Designated Customers. 23 Cl 20 deals with the circumstances in which the agreement might be terminated. Cl 20.3 is in the following terms:

20.3 Dairy Farmers may terminate this Agreement by notice in writing effective immediately if the Contractor: (a) commits any act of bankruptcy as defined in the Commonwealth Bankruptcy Act 1966, makes a scheme or arrangement with creditors, or is placed in receivership, liquidation, administration or any form of insolvency administration;

(b) is convicted of a criminal offence carrying a gaol term of six (6) months or more, or an offence involving fraud, deception, dishonesty or misleading conduct;

(d) breaches any requirement of the Health Legislation or this Agreement and such breach causes death or illness to any customer or necessitates any product recall or other action affecting the goodwill or reputation of Dairy Farmers. 24 Cl 23 specifies that the parties "are independent proprietors" and denies any relationship of partnership, agency, joint venturers or employment. 25 The principal evidence led in these interlocutory proceedings on behalf of the applicant consisted of affidavit evidence of Stephen William Reilly, who is a director of the applicant. This evidence was to the effect that the company was incorporated in 1979. The sole directors are Mr Reilly and his wife, who are also currently the sole "members" of the company. I shall assume that the reference to "members" is a reference to shareholders. 26 Mr Reilly's two sons were directors of the applicant for part of 1999, but otherwise it seems that the only directors were his wife and himself. 27 The applicant is a trustee for the Reilly Family Settlement Trust. There are a number of beneficiaries of that Trust including Reilly Family Investments Pty Ltd, which was incorporated in 1995. The directors of that company are Mr Reilly and his wife. His sons are shareholders together with Mr Reilly and his wife. There are other corporate entities referred to by Mr Reilly but their relationship with the applicant is not clear. They are all owned by and ultimately controlled by members of the Reilly family. 28 When the applicant commenced trading, it bought a "small milk wholesale and home run at Bilgola Plateau." The applicant later expanded its activities by entering into a number of agreements with Dairy Farmers for the supply of dairy products including white milk through wholesale distribution, "home runs" and supermarket deliveries. The applicant sold the home runs

in or about 1986 and started purchasing wholesale and supermarket runs in adjoining areas in the late 1980's. The applicant held the geographic area from Narrabeen to Palm Beach for wholesale and supermarket runs, with the exception of minor retail and wholesale runs bordering the major shopping centres … I believe that the applicant was one of the biggest distributors for Dairy Farmers in New South Wales prior to deregulation on 1 July 1998 …. 29 Mr Reilly also said, in his affidavit material, that in 1992 the applicant commenced delivering non-regulated milk products on behalf of Murrumbidgee Dairy Products. 30 Mr Reilly said that prior to deregulation he performed the majority of delivery work for the applicant. The applicant employed persons part-time

to assist on weekdays and also on the weekends. Usually, I employed one driver on Saturday to do the weekend delivery for the supermarkets. My wife, June, has always attended to administrative tasks including paying accounts and organising the records of the business. 31 When the applicant commenced business, it had one truck.

In the 1980's, the applicant purchased an additional truck and employed someone part-time. In the late 1980's/early 1990's, the applicant purchased another truck because of the increase in the applicant's trade. Up until 29 October 1997, the applicant had three trucks. The other employees were employed part-time. I regularly worked on average 12 to 16 hours a day. I used to do all the deliveries for the route trade. I assisted with administrative tasks and I did a lot of the ordering. The part-timers only did the supermarket deliveries and they didn't take a long time at all: no more than 2 to 3 hours a day. At the time, I believe there were two employees working part-time. 32 There is no doubt on the basis of the totality of the evidence in the proceedings that Mr Reilly did personally perform driving work and other duties associated with the discharge by the applicant of its obligations under the Contract with the respondent. 33 In his affidavit, Mr Reilly also directed attention to an extract from the Operations and Procedures Manual issued by the respondent, dated September 2000. It will be remembered that by cl 9.1, the contractor is bound to adhere to the provisions of the Manual as amended from time to time. 34 Relevantly, cl 1.4 of the Manual entitled "Duties and Responsibilities of Supermarket Contractors" is in the following terms:

1.4.1 Picking up Orders from the Distribution Centre Dairy Farmers' Distribution Centre staff is to load your truck provided that your truck takes pallets and forklift.

You, the Supermarket contractor, are required to: check that your load is secure perform the Food Safety Plan checks i.e.: Warehouse temperature check your delivery dockets You may wish at this point to check if the load is correct.

1.4.2 Delivery At the store dock you are required to: Unload pallets Source empty crates Rearrange load Load empties onto truck for return to the Distribution Centre As the Supermarket Customer (sic?) you are also required to: Perform temperature checks Sign off the delivery Tie empty pallets together for collection When delivering it is important to adjust any paperwork and take note of credit procedures.

1.4.3 Second Deliveries Make second and emergency deliveries as agreed

Pick up and return used pallets to the Distribution Centre.

1.4.4 Returning to your Distribution Centre Dairy Farmers will unload empties from your vehicle

Returns should be processed and paper work handed in.

1.4.5 Re-load If applicable re-load the vehicle.

1.4.6 Clarify details You are required to clarify details and any customer issues with the Distribution Manager.

1.4.7 Cleaning You are then required to hose and clean your vehicle to standards as required by your Food Safety Plan.

You must then sign the form Daily Task Sheet; FO001 in all instances.

1.4.8 Data Logger Data logger readings are then to be downloaded according to your food Safety Plan.

1.4.9 Additional Duties In addition to daily duties you, the Supermarket Contractor, are required to: Perform Customer visits Maintain Food Safety records Upkeep Truck and refrigeration maintenance

1.4.10 HACCP You are required to comply with Food Safety Plan standards at all times. 35 A presentation made to prospective franchisees by the respondent in September 1997 under the heading "Commitment" stated that "to maximise the net worth strength, Franchise Owners are expected to devote their full-time attention to the Franchise Business." 36 A presentation made in February 2007 under the heading "Supermarket Delivery Service Requirement" specified the duties of the contractor to unload and check orders, pick up empty crates and damaged product, return empty crates and damaged product, unload empty crates and that deliveries were required up to seven days per week. 37 In a document entitled "Franchise Information" which does not seem to be dated, there is material under the heading "Eligibility to be a Dairy Farmers Franchise Owner". This states that such owners

should be an incorporated legal entity where possible. The principal of the business must be involved in the distribution operation on a day-to-day basis. Dairy Farmers Franchise Owners have a responsibility for the ongoing development of new business opportunities. They must also play a hands-on role delivering products to customers on a daily basis. Like any small businessperson, the Franchise Owner will be responsible for a multiplicity of tasks including staff management, promotion of the product range and collection of accounts. Deliveries, made from early in the morning, can be strenuous work and the pace is constant throughout the year. Determination and physical fitness are prerequisites for a Franchise Owner. 38 Whilst Mr Reilly referred to this latter document as having been made available at the time that the respondent was releasing new franchise agreements, presumably an agreement of the kind which became the Supermarket Delivery Contract, which is the basis of these proceeding, there is no specific assertion made by him that he saw this document at the time that the Contract was entered into or that he relied upon it. Is this the appropriate time?

39 There is a well-known line of authority that deals with interlocutory strike out applications and the circumstances in which they should be dealt with. 40 A convenient starting point is the judgment of Barwick CJ in the High Court of Australia in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. In a judgment which is often cited, Barwick CJ said:

[8] The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion. I have examined the case law on the subject, to some of which I was referred in argument and to which I append a list of references. There is no need for me to discuss in any detail the various decisions, some of which were given in cases in which the inherent jurisdiction of a court was invoked and others in cases in which counterpart rules to Order 26, r. 18, were the suggested source of authority to deal summarily with the claim in question. It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense".

[9] At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance".

[10] As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J. (as he then was) sums up a number of authorities in Dey v. Victorian Railways Commissioners (1949) 78 CLR 62 VOL CXII-9 where he says (1949) 78 CLR, at p 91: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." Although I can agree with Latham C.J. in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings (1949) 78 CLR, at p 84, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed." (At pp 128 - 130) 41 More recently, in Agar v Hyde (2000) 201 CLR 552, Gaudron, McHugh, Gummow and Hayne JJ in the High Court of Australia said:

[57] It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court's jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways ( Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, per Dixon J; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130, per Barwick CJ), but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. 42 In Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27, Gleeson CJ, Gummow, Hayne and Crennan JJ in a joint judgment observed that "The statements in General Steel should not be given canonical force." Their Honours then cited [73] from Agar v Hyde, previously set out. 43 As the authorities make clear, an interlocutory strike out application should not be entertained by a court until the "appropriate stage" has been reached in the proceedings, namely where

the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, it seems to us, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such determination to be made. (Per Fisher CJ, Hungerford and Peterson JJ in the Full Court of the Industrial Court of New South Wales in Nagle v Tilburg (1993) 51 IR 8 (at 11-12).) 44 Before dealing with the relevant principles and their application to the factual circumstances of these proceedings I observe that, in accordance with well established authority, the respondent bears a heavy onus in convincing the Court that there is "a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial in the ordinary way." A contract whereby a person performs work in an industry - relevant principles

45 The jurisdiction of this Court under s 106 can only be exercised with respect to either a contract whereby a person performs work in any industry (s 106(1)) or a contract that is related to such a contract and the performance of work is a significant purpose of the arrangements (s 106(2A)). 46 The proper approach to construction of the provisions of s 106 has been the subject of much attention in recent years in the High Court of Australia and in the New South Wales Court of Appeal. In Sin Yong Yim and Tae Sik Kim v Industrial Relations Commission of New South Wales and anor [2007] NSWCA 77, Spigelman CJ observed that:

[55] Prior authority, both in this Court, in the High Court and in the Privy Council, on the interpretation of s106 has now been superseded by the joint judgments of the High Court in Solution 6 , Batterham and Old UGC supra. Both Mason P and Handley AJA agreed with his Honour's judgment. The reference by the Chief Justice to the High Court judgments is respectively a reference to Fish v Solution 6 Holdings Limited (2006) 225 CLR 180, Batterham v QSR Limited (2006) 225 CLR 237 and Old UGC v Industrial Relations Commission of New South Wales (2006) 225 CLR 274. 47 In each of these judgments, the High Court by majority described the basis for the exercise of jurisdiction as being a contract (as defined) "according to which a person performs the work (or in consequence of which or in fulfilment of which a person performs that work)". In each case, the performance of work must be performance of work in an industry. (See Solution 6 at [41], Batterham at [13] and Old UGC at [25].) 48 The principles were most recently the subject of consideration in the New South Wales Court of Appeal in Caterpillar of Australia Pty Ltd v Industrial Court of New South Wales [2009] NSWCA 83. The judgment of the Court of Appeal was delivered by Spigelman CJ, with whom Allsop P and Tobias JA agreed. 49 Spigelman CJ referred to the joint judgment of the High Court of Australia in Fish and noted that:

"The power given to the Commission by s 106(1) to declare wholly or partly void or to vary certain contracts should be understood as hinged about the reference to performance of work in any industry."

"The first enquiry required by s 106(1) is whether a person 'performs work in any industry'. What may be declared wholly or partly void or varied is any 'contract' whereby a person performs that work."

This in turn directs attention to the contract as defined "according to which a person performs the work (or in consequence of which or in fulfilment of which a person performs that work)" which is the only contract that may be avoided or varied under s 106(1). 50 In the context of these proceedings, the applicant submitted that the work that was performed in an industry was the driving of vehicles in order to deliver milk products of the respondent. In my opinion, taking the evidence available at its highest, it could not be argued that this was not work performed in an industry as contemplated by s 106(1). Indeed, the respondent did not argue to the contrary. 51 It is then next necessary to identify what was the contract as defined pursuant to which that driving work was performed. Again, it is not controversial that the proceedings are directed to the involvement of Stephen William Reilly, a director of the applicant. This in turn leads to an enquiry as to which of a number of possible contracts or arrangements was the contract or arrangement pursuant to which Mr Reilly performed the driving work. The logical possibilities are either the New South Wales Supermarket Delivery Contract between the applicant and the respondent or any other contract or arrangement between Mr Reilly and the applicant pursuant to which he drove the vehicle in order to effect the deliveries of milk products which the applicant was required to carry out pursuant to the Supermarket Delivery Contract. 52 In Caterpillar, Spigelman CJ recognised that, in the context of some proceedings, there may be alternative contracts or arrangements which could conceivably fall within s 106. Such was the case in those proceedings and such is the case in these proceedings, as I have just referred to. In determining which of the alternative contracts or arrangements should be accepted, Spigelman CJ said:

[124] When determining which contract or arrangement satisfied the "hinge" word of "whereby", the industrial context of the legislative scheme remains significant. The identification of which of more than one possible contract or arrangement is or includes the contract or arrangement "according to" or "in accordance with" or "in fulfilment of" or "in consequence of" which work was performed, must have regard to the scope and purpose of the legislative scheme. Issues of fact and degree will arise. However, by reason of the industrial context, the further away the relevant contract is from something resembling an employer/employee relationship, the less likely it is that it satisfies the statutory "hinge". 53 In considering these matters, Spigelman CJ was cognisant of the difficulties in identification and characterisation that may be presented by the range of the different factual circumstances that may be relevant in the consideration of any given set of proceedings. At [137] to [140], Spigelman CJ said:

[137] The characterisation of a person as a "working proprietor", or an equivalent characterisation, is not determinative. The legislative scheme was clearly directed to regulating persons in situations where the formal contractual relations had changed from that of an employer/employee to that of an independent contractor. Contractual relations or arrangements which take the form of a dealership or franchise relationship are capable of answering the description of a contract 'whereby work is performed in an industry' within s 106. The section is concerned with matters of substance not form. The surrounding circumstances must be reviewed to assess whether the relationship has any analogy with an employer/employee relationship and is capable of falling within the industrial context in which the statutory formulation must be understood.

[138] The "industrial" context of the legislative scheme must be taken into account. The High Court's characterisation of the scheme as such was not a matter to which the Full Bench gave express regard in its reasons for judgment on the jurisdictional question.

[139] There will be cases in which it is correct, or at least open, to conclude that the working proprietor of a franchise or dealership does perform 'work in an industry' in accordance with the dealership or franchise agreement. When exercising its supervisory jurisdiction, this Court would not substitute its own views on such a matter for those of the Industrial Court where the issue turns on matters of fact and degree. However, the fact that there may be cases in which drawing the line is difficult, does not mean, when a particular fact situation clearly falls on one side of the line, that the Court must refrain from exercising its supervisory jurisdiction. That, in my opinion, is the case in the present proceedings.

[140] Messrs Gough and Gilmour conducted an enterprise in which they were the only investors and occupied the senior managerial positions. They were entrepreneurs who conducted a business of significant scale, involving tens of millions of dollars of capital investment, with 700 employees, over a score of business locations. No doubt they worked. They did not, however, 'perform work in an industry' "according to" the Dealership Agreements or the Overall Arrangement, within the meaning of s 106 of the Act. 54 As with many principles of law, their statement and a conceptual understanding can be undertaken in terms which are capable of being readily understood. However, in many cases it is the application of the principles to particular factual circumstances that will give rise to difficult decisions. Such is the case in these proceedings. 55 In Alto Artarmon Pty Ltd v BMW Australia Limited [2007] NSWIRComm 172, I reviewed a number of decisions dealing with franchise arrangements to illustrate the nature of the activities and the range of activities which have been considered relevant by courts at appellate level in undertaking the identification and characterisation process which is necessary to determine whether a contract or arrangement falls within s 106. As I did in Alto Artarmon, I point out that of these cases those decided prior to the decisions of the High Court in Fish and the other matters, previously referred to, which were handed down on 18 May 2006, may need to be considered with some degree of caution. With this in mind, I repeat [49] to [56] in Alto Artarmon.

[49] The principles formulated by the High Court of Australia had previously been utilised by the Privy Council in Caltex Oil (Australia) Pty Ltd v Feenan (1981) 1 NSWLR 168. Those proceedings involved a licence given by Caltex Oil to Mr and Mrs Feenan to operate a service station business conducted on premises owned by Caltex. Caltex granted a non-exclusive licence to use the premises and a lease of the goodwill of the business, which it had previously operated itself. Lord Diplock, whose speech constituted the decision of the Privy Council, described the obligations imposed on the operators of the business in these terms: "The Feenans undertook to conduct the business on the premises during all lawful hours and to use their best endeavours to secure any necessary authority or permission to secure that those lawful hours should be as long as possible. If they should fail to carry it on for any period during lawful trading hours, Caltex could terminate the licence immediately without notice. In fact while the Feenans were running it, the service station was open from 7am to 10.30pm each day and from 8am to 10.30pm on Sundays, or one hundred and seven and a half hours a week. Needless to say, the Feenans were required to purchase all petroleum products sold at the service station from Caltex only although no price was specified. They also undertook not to be concerned in the sale of petroleum products from any other place within a 5 mile radius of the service station." (At 172)

[50] The Privy Council held that the work performed by Mr and Mrs Feenan was work in an industry and that "The remaining question of construction is whether the Solus Contract was a contract 'whereby' they did so. In their Lordships' view this provision in the context of contract or arrangement bears its ordinary meaning of 'in consequence of which' or 'in fulfilment of which'. Either meaning is sufficient to bring the Solus Contract within the description of contracts to which s 88F applies. The Feenans were required to carry on the task of supplying petroleum products to motorists throughout all lawful working hours. In doing so they were fulfilling their contractual obligations to Caltex…." In that Mr and Mrs Feenan had "bound themselves" to perform work which paid employees would otherwise be doing "the Solus Contract falls fairly and squarely within the ambit of s 88F." (At 173 - 4) (s 88F is a predecessor to s 106).

[51] Majik Markets v Brake and Service Centre (1991) 28 NSWLR 443 is a decision of the New South Wales Court of Appeal dealing with a franchise arrangement between Majik Markets Pty Ltd and a number of franchisees which allowed them to conduct and operate, at premises leased by Majik, a convenience store which sold among other things Caltex brand motor fuel and other petroleum products. In these proceedings, the franchisee was a corporation. A provision of the franchise agreement was to the effect that a person or persons named in the schedule "shall devote his or their full-time personal attention and effort to the conduct, operation and management of the Business and at all times whilst the premises are open for business, he will maintain adequate personnel to facilitate the checking-out and handling of orders, including the dispensing of motor fuel, and other needs of customers so as to avoid any unnecessary delay to and on the part of customers." There was a requirement also that the franchisee would staff premises with uniformed competent and adequately trained personnel.

[52] It was held by Handley JA (Kirby P agreeing) that the franchise contract was a contract whereby work was performed in an industry and that the facts were indistinguishable from those in Caltex Oil v Feenan . Mahoney JA came to the same conclusion. His Honour said: "I am conscious that the franchise agreements contemplate and intend that the franchisees will become the proprietors of businesses, that they may acquire assets, and that they will, as proprietors or otherwise, be involved with the operation of those businesses. But the work to be done in the industry in which the business is to operate was, in my opinion, to be done not merely as a means of carrying out another purpose, viz, the setting up and conduct of a business by the franchisees but was, in the relevant sense, the purpose which the agreement sought to achieve: it was, in my opinion, the purpose of Majik that that work should be done and accordingly the petroleum and other products should be sold and it was the purpose of the franchisee that they would do or cause to be done such things." (At 459)

[53] McDonald's Australia Holdings Limited and anor v Industrial Relations Commission of New South Wales and 2 ors [2005] NSWCA 286 is a decision of the New South Wales Court of Appeal. It concerned applications brought under s 106 of the Act on behalf of a licensee/lessee of four McDonalds outlets. The licensee/lessee was a company of which Mr McLaughlin was the sole director and shareholder. Handley JA, with whose reasons for judgment Mason P agreed, concluded that the four lease and licence agreements either collectively or separately were not contracts for the purpose of s 106. His Honour's reasons for judgment were put succinctly and it is appropriate, in the circumstances, to set them out in full: "[93] However I am unable to agree that these four transactions, comprising leases and licence agreements, collectively or separately are contracts, agreements or arrangements (contract) whereby Mr McLaughlin performs work in an industry within the meaning of s 106(1). In his affidavit of 4 April 2005 filed in this Court Mr McLaughlin said (para 98) that his company "currently employs in excess of 350 employees of which about 20 to 25 employees are full time".

[94] Franchise agreements with a working proprietor or proprietors were held to be within the jurisdiction of the Commission under the predecessor of s 106 in Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169 (PC) and Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443. The Chief Justice holds that these cases cannot be distinguished and since the subject contracts require Mr McLaughlin to work fulltime in the business they are contracts whereby he performs work in an industry.

[95] It seems to me, with respect, that this view involves an over literal construction and application of the section. The earlier franchise cases in the superior courts did not involve contracts with a working proprietor who employed a workforce of this magnitude.

[96] The Court decided in Production Spray Painting and Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644 that the outright sale of a business to a working proprietor is not a contract whereby the purchaser performs work in an industry. In that case Priestley JA and myself gave examples of other contracts of sale which indirectly led to the performance of work in an industry which are not within the section including (at 656) the sale of a hotel, a grazing property or a city building.

[97] A building or engineering contract for a major project will create a lot of employment but such a contract does not lead directly to the performance of work in an industry and does not have a recognisable and direct impact on the conditions of employment of those working on the job: compare Spigelman CJ [paragraph 34].

[98] In my judgment the result in such a case would not be different if, in the contract, the proprietor required the contractor to employ identified persons on the project as site manager, architect, or engineer. One could not characterise the contract as a whole as one whereby the named persons performed work in an industry. It could only properly be characterised as a construction contract. To adopt the language of Sir Frank Kitto in Ready Mixed Concrete (Victoria) Pty Ltd v FCT (1969) 118 CLR 177, 184 its characterisation would be "understated to the point of misdescription" if it was described as one whereby those individuals worked in an industry.

[99] I have no difficulty in characterising the franchise agreements in Feenan and Majik Markets as contracts within the section although they contemplated the employment of additional staff by the franchisees. The Court could also find, without difficulty, that the terms of the contract had a recognisable and direct impact on the working conditions and remuneration of the proprietors.

[100] No such conclusion is open on the facts of the present case. The impact of particular clauses in the leases and licenses on Mr McLaughlin's remuneration and profits would be anything but recognisable and direct. In Brown v Rezitis (1970) 127 CLR 157 Barwick CJ said at 164: '... one of the purposes of the section is to deal with subterfuges ... which will take the worker out of the relationship of master and servant and therefore out of the operation of an industrial award designed, among other things, for the protection of workers in industry.'

[101] Barwick CJ recognised that the section is not confined to contracts of that character but nevertheless it seems to me that its basic purpose was to provide a safety net for workers or persons in the position of workers. In my judgment the present application to the Commission attempts to turn the section on its head.

[102] Characterisation of a contract to determine whether it is within the jurisdiction of the Commission under s 106 will raise questions of fact and degree in franchise cases near the borderline and the decision may not be an easy one. However there is no difficulty in the present case where the working proprietor's company employs some 350 staff. The distinction is one of substance, not form, and the Commission, in the words of Barwick CJ in Brown v Rezitis at 164, can uncover the real transaction between the parties. The real transaction here does not have to be uncovered, and it is not a contract whereby Mr McLaughlin works in an industry."

[54] Spigelman CJ dissented being unable to distinguish the facts in that case from the franchise arrangements in Majik Markets and Caltex Oil v Feenan .

[55] I note that Handley JA emphasised, in a characterisation sense, the fact that franchise agreements, which fell within s 106, were those with a working proprietor or proprietors. It follows that franchise agreements, which could not be so characterised, might or would fall outside the reach of s 106.

[56] Wirraway (NSW) Pty Ltd and anor v Ultratune Australia Pty Ltd [2006] NSWIRComm 300 is a decision of the Full Bench of this Court. It concerned an interlocutory application to strike out a summons brought under s 106 for want of jurisdiction on the basis that a franchise agreement was not one falling within s 106. The Full Bench determined that the application was premature because not all of the available evidence was before it. Nevertheless, there are observations made by the Full Bench that assist in identifying provisions of a franchise agreement which may result in it being characterised as one falling within s 106. In particular, there was only one outlet being operated with the employment of "a modest number of people, approximately eight in total together with the working proprietor." Furthermore, the franchise agreement required that, in the case of a corporate franchisee, there be nominated a person to operate, manage and conduct the franchise, namely to "run the franchise business." (At [36]). There were specific provisions of the franchise agreement which required the operation of the business to be undertaken in a specified manner, and provisions compelling the undertaking of training programs and the like. 56 As is obvious, every case must be decided by reference to its own facts and circumstances. It is with this in mind that I now proceed to determine whether the respondent's application must succeed. In undertaking this task, I repeat that, in accordance with well-established authority, the respondent bears a heavy onus in convincing the Court that there is "a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial in the ordinary way." Does the New South Wales Supermarket Delivery Contract arguably come within s 106?

57 I have already observed that Mr Reilly personally undertook work driving vehicles and assisting his wife with administrative tasks and undertaking "a lot of the ordering." On the evidence, his wife was personally involved in the administrative work associated with the Supermarket Delivery Contract. Thus there is identified work that is of a kind that would normally be the subject of personal exertion undertaken by an employee or an independent contractor. 58 However, it is then necessary to identify the contract or arrangement according to which or in fulfilment of which that work was performed. I have previously observed at [51] that logically the Supermarket Delivery Contract is only one possible contract or arrangement that may fall within s 106. A difficulty which confronts me in determining these proceedings is that there is very little if any evidence contained in the affidavit material that is indicative of the nature and extent of any relationship between the applicant and Mr Reilly. Perhaps this is explicable because the applicant seeks to rely only on the Supermarket Delivery Contract as forming the basis of the proceedings. In circumstances where there is simply a paucity of evidence about any relationship between Mr Reilly and the applicant, and the applicant relies solely on the Supermarket Delivery Contract, it is difficult, if not impossible, to examine the totality of the circumstances which apply to the work performed by Mr Reilly. The applicant relies solely on one particular specified contract. The respondent says that this is not a contract that attracts jurisdiction under s 106. The respondent can support its case by proving either that the Supermarket Delivery Contract cannot by its terms come within s 106 thereby denying jurisdiction, or that there is some other contract or arrangement that falls within s 106 and that therefore the Supermarket Delivery Contract does not. 59 The respondent says that the relevant and appropriate contract is one between Mr Reilly and the applicant but concedes in submissions that there is little or no evidence about any such contract or arrangement. It seems to me that unless it can be determined that the Supermarket Delivery Contract can in no sense be a contract of the kind that comes within s 106, then it would be inappropriate to accede to the respondent's motion because to do so would amount to a strike out on the equivalent of a "no case to answer" basis. This, in my opinion, would be an inappropriate step to take by way of an interlocutory application. Furthermore, if the respondent is to assert, as I understand it to do, that there is another contract or arrangement that falls within s 106 or, at the least, is the one which is the source of the work performed by Mr Reilly, then the burden of establishing that other contract or arrangement will arguably fall on the respondent. 60 The respondent has filed evidence in the proceedings. However, I have not been referred by either party to that evidence for the purpose of these interlocutory proceedings. Whether and to what extent that evidence goes to the establishment of any alternative contract or arrangement between Mr Reilly and the applicant that comes with s 106 is unknown to me. 61 Given the uncertain state of the evidence about any alternative contract or arrangement, I conclude that I am unable to carry out any required examination of the totality of the circumstances that may allow determination as to whether there are any competing contracts or arrangements of the requisite kind and, if so, which of them might apply in all the circumstances. This conclusion would in turn militate towards a determination that the appropriate stage has not yet been reached in the proceedings for this particular issue to be concluded. It would be preferable that the matter proceed to a final hearing before this matter is determined. 62 Accordingly, it is now necessary to determine whether I am able to conclude, for the purpose of these interlocutory proceedings, that the Supermarket Delivery Contract cannot be characterised as a contract within s 106. 63 As I understand its terms, it contemplates that contractors will engage persons to perform the work that is required to be undertaken by contractors who are described as "operators". I have previously set out a definition of "operator" in [6] above. The definition contemplates employment of an operator by the contractor to drive a vehicle or "otherwise assist" in servicing customers. There is a further reference to operators in cl 6.2 ([11]) and, importantly, cl 6.4. Thus, the contractor is required to appoint an operator and notify the respondent of that appointment. Furthermore, cl 9.3 ([13]) requires both contractors and operators to wear Dairy Farmers uniforms, which are to be provided at the expense of Dairy Farmers ([14]). 64 The Supermarket Delivery Contract imposes a principal responsibility for the performance of the Contract on the contractor. This is made clear by cl 13.1 ([16]). 65 Nevertheless, there are provisions of the Supermarket Delivery Contract that appear to impose a personal responsibility for the performance of work on the contractor, as referred to in cl 1.4 of the Operations and Procedures Manual set out in [34] above. 66 In my opinion, the Supermarket Delivery Contract when read with the provisions of the Manual by which the parties are bound create uncertainty by their terms in the manner in which it is intended to govern the work to be performed by contractors and in particular individuals in circumstances where the contractor is incorporated. For example, the "franchise information" document set out in [36] above speaks of the contractor being an incorporated legal entity "where possible". It then refers to "the principal of the business" which one might assume is a reference to the directing and controlling mind of the incorporated entity. Such a person is required to be involved in the distribution operation on a day-to-day basis. Such a requirement would seem to imply one of personal involvement. I assume that the reference to "franchise owner" wherever appearing within that material is intended to be a reference to the individual who is the "principal of the business". Mr Reilly, in his affidavit, said that some contractors were individuals and some were incorporated. 67 There are some provisions of the Supermarket Delivery Contract that assume that contractors are individuals or that otherwise may be capable of being construed as indicating a requirement for personal exertion on the part of a contractor. These include: 6.2 (the contractor is obliged to satisfactorily complete an initial training program) 9.3 (an obligation by the contractor to wear a uniform) 9.4 (an obligation of the contractor to build and maintain "positive personal relations" with representatives of customers) 19.1 (termination by the respondent if the contractor dies or is permanently incapacitated) 20.3(a) (termination if the contractor commits an act of bankruptcy) 20.3(b) (termination if the contractor is convicted of a criminal offence carrying a gaol term of six months or more) 68 The provisions of cl 1.4 of the Operations And Procedures Manual which have been extracted above are all framed in terms of what a contractor as an individual is personally obliged to do. 69 There are some provisions that are capable of being understood as contemplating that those who perform the work will be engaged by the contractor. They include: 6.4 (the contractor is required to appoint an operator) 13.4 (the contractor is responsible for the payment of group tax, income tax, workers compensation payments, payroll tax, superannuation and the like) 16.1 (the contractor is required to insure all drivers of any relevant vehicle) 20.3(a) (termination upon the contractor entering into a scheme of arrangement with creditors, or placed in receivership, liquidation, administration or any form of insolvency administration) 70 My analysis of the provisions of the Contract and the Manual, the terms of which are comprehended within the Contract, creates, in my opinion, some degree of uncertainty as to whether or not the Contract by its terms creates personal obligations on the contractor to perform work. Of course, this sits uncomfortably with circumstances where, as is the case in these proceedings, the contractor is an incorporated entity. The Contract is, in my opinion, inelegantly framed in that parts of its provisions are directed to circumstances where a contractor is an individual and parts of its provisions apply to circumstances where a contractor is incorporated. Moreover, the Contract itself in its terms does not seek to deal specifically with the discharge of the obligations imposed personally on an individual in circumstances where the contractor is incorporated. 71 Although I am required to take such evidence as has been adduced in the proceedings by way of affidavits and material annexed or exhibited thereto at its highest in favour of the applicant, it is not appropriate in my opinion to speculate as to what the effect of the overall evidence in the proceedings might be if they were determined by way of a final contested hearing. My reading of the affidavit and other material does not lead me to conclude with any degree of certainty as to how the contractual arrangements between the applicant and the respondent played out in terms of the performance of work by Mr Reilly (and assuming that any work performed by Mrs Reilly is irrelevant for the purpose of proceedings). In these circumstances, I am unable to determine, on the basis of such evidence as has been adduced for the purpose of this interlocutory application, that the Supermarket Delivery Contract may not be a requisite and relevant source whereby work was performed by Mr Reilly. 72 Given these difficulties, I am unable to determine at this stage of the proceedings that if the matter went to trial in the ordinary way, that there is a high degree of certainty about the outcome. Furthermore, it is not clear to me whether and to what extent Mr Reilly undertook some entrepreneurial role involving the performance of "senior managerial positions" nor is there sufficient evidence about the nature and size of the applicant's operations. (See per Spigelman CJ in Caterpillar at [140]). 73 For these reasons, the respondent's motion should be dismissed. Is Mr Reilly a deemed employee of the respondent?

74 The applicant submitted that by reason of certain provisions of the Act, Mr Reilly was deemed to be an employee of the respondent and that such a deemed relationship per se created the necessary industrial flavour so as to bring the Supermarket Delivery Contract within s 106. 75 The relevant provisions are contained within the Act. They have their genesis in predecessor legislation. 76 S 5 of the Act defines an employee. Specifically s 5(3) is in the following terms:

(3) Deemed employees The persons described in Schedule 1 are taken to be employees for the purposes of this Act. Any person described in that Schedule as the employer of such an employee is taken to be the employer. 77 Relevantly, in Schedule 1, cl 1(a) contains the following provision

The following persons are taken to be employees: (a) Milk vendors Any person (not being registered as a milk vendor to sell milk or cream from a vehicle or any other conveyance) who sells or delivers for the purpose of sale milk or cream from any vehicle. (In such a case, the employer is taken to be any person whose milk or cream is so delivered or who supplies the milk or cream so delivered.) 78 It was submitted that, to the extent that Mr Reilly drove vehicles for the purpose of effecting deliveries of milk products to supermarkets, his circumstances fell within cl 1(a) of Schedule 1 and he was therefore "taken to be" an employee of the respondent, because it is the respondent's milk products that were being delivered. 79 There was debate between the parties as to whether or not any person referred to in cl 1(a) was confined to a natural person (as asserted by the respondent) or could include a corporation (as asserted by the applicant). 80 In view of the conclusion which I have reached that this is not the appropriate time to determine the respondent's motion, it is not appropriate that I determine this matter at this stage of the proceedings. Orders

81 I propose to dismiss the respondent's motion. Costs would normally follow the event. I intend making an order for costs in favour of the applicant but reserving the right of the respondent to seek a contrary order within a period of one month. 82 I make the following orders:

The respondent's motion is dismissed. 2. If the respondent does not exercise within one month of this date the liberty to apply with respect to costs, which I hereby grant, the respondent is to pay the applicant's costs of the motion in an amount assessed in default of agreement.

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