The Newsagents' Association of NSW and ACT Ltd v State Transit Authority of New South Wales

AWU v Coles (1917) VLR at 336) Euphoric Pty Ltd v Ryledar Pty Ltd and anor (2002) 117 IR 1 Fish v Solution 6 Holdings Pty Ltd [2006] HCA 22 Gould v AIU (1957) 87 CAR 939 Hyde v Energy Australia (1999) 92 IR 409 Jones v Farrow (1971-3) 20 FLR 73 at 83 CASES CITED: Metrocall Inc v Electronic Systems Pty Ltd (No 2) (2000) 102 IR 309 Production Spray Painting v Newnham (1991) 27 NSWLR 666 Roughan v Day and ors (1991) 39 IR 385 Sydney Water Board Corporation Ltd v Industrial Relations Commission of New South Wales (2004) 61 NSWLR 661 Sydney Water Corporation Ltd v Industrial Relations Commission of New South Wales (2004) 141 IR 14 Thorpe v The Commonwealth [No 3] (1997) 71 ALJR 767 at 774 Wirraway (NSW) Pty Ltd and anor v Ultra Tune Australia Pty Ltd (2006) 156 IR 367

APPLICANT: Mr J Phillips SC SOLICITORS: W. G. McNally Jones Staff LEGAL REPRESENTATIVES:

RESPONDENT: Mr I Latham of counsel SOLICITORS: Clayton Utz

INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Haylen J 19 February 2007

Matter No IRC 1171 of 2005 NEWSAGENTS' ASSOCIATION OF NSW AND ACT LTD v STATE TRANSIT AUTHORITY OF NEW SOUTH WALES Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2007] NSWIRComm 32 BACKGROUND 1 In March 2005, The Newsagents' Association of NSW and ACT Ltd ("the Association") commenced proceedings under s 106 of the Industrial Relations Act 1996 seeking orders against State Transit Authority of New South Wales ("STA") arising from the terms of a ticket resellers' agreement offered by the STA, inter alios, to newsagent members of the Association. Under these arrangements individual newsagencies were licensed to resell STA bus tickets as well as providing information in relation to the operation of the buses, and did so for a stipulated commission. In 2005, a dispute developed between members of the Association and the STA as to a revised resellers' agreement and the STA's proposal to reduce the commissions from a variety of rates to a single rate of 2.5 per cent, a rate which was alleged to have significantly reduced the remuneration available to newsagents under the ticket selling agreement. 2 In addition to seeking orders declaring the agreement to be unfair, orders were also sought varying the contracts or arrangements from January 2005 by inserting a requirement to pay a commission of six per cent on the gross turnover of tickets sold in the prior calendar month and to pay that sum within seven working days of the conclusion of each calendar month, to increase the commission by the Consumer Price Index ("CPI") from May each year, to insert a dispute resolution clause in the agreement so that any dispute over the terms or alteration of the terms of the contract could be submitted to the Industrial Relations Commission of New South Wales for arbitration and, finally, a clause permitting the termination of the agreement by the giving of two years' notice in writing. A general order sought the payment of such amount of money in connection with the contracts or arrangements as the Commission considered just in the circumstances. The essence of the relief sought was to set a higher rate of commission than presently applied under the STA standard form agreement, to have that figure automatically indexed and to insert an arbitration clause to deal with any disputes over the terms of the agreement. Previous agreements had allowed termination of the agreement on the giving of 30 days' written notice which was continued in the 2005 agreement offered by the STA but the Association sought a period of two years' notice to be inserted in the contract by way of variation. 3 After the Association instituted these proceedings, the STA commenced proceedings in the Court of Appeal challenging the jurisdiction of the Commission to make the orders sought. While those proceedings were before the Court of Appeal, a number of other challenges concerning the scope and operation of s 106 were proceeding to the High Court and the parties accepted that it was appropriate to wait until those proceedings were concluded. Following the decisions of the High Court and amendments to the Industrial Relations Act 1996, the respondent returned to the Industrial Court by way of Notice of Motion raising several issues as to the jurisdiction of the Commission to make the orders sought by the Association. Ultimately, four issues were pressed by the STA namely: that the Summons for Relief had not been properly authorised by the Association; that the orders sought could not be obtained by the Association because the Association claimed that the industry in which work was performed was the "transport industry" and that it was not registered in relation to the "transport industry"; that the contract was not one whereby work was performed in an industry and that the resellers' agreement was no more than a commercial arrangement; and, that the orders sought were in breach of the principles laid down by the Court of Appeal in Sydney Water Corporation Ltd v Industrial Relations Commission of New South Wales (2004) 141 IR 14 in that an allegation of unfairness was based upon the contract permitting the respondent to unilaterally vary the terms of the contract without sufficient reason, in essence, being a claim that the contract permitted a breach in the form of a unilateral repudiatory variation of the contract. This judgment deals with these various challenges raised by the respondent STA. HAS THE APPLICATION BEEN AUTHORISED BY THE ASSOCIATION? 4 The Association is an industrial organisation of employers registered pursuant to the provisions of the Industrial Relations Act 1996. Under its rules, the Board of Directors had the control and management of the affairs of the Association and was entitled to exercise all such functions and powers as could be exercised by the Association other than those that the rules required to be exercised through a decision of a general meeting of members. The Board of Directors was comprised of metropolitan, northern and southern Directors, giving a total of nine directors. The rules provided for a Chief Executive Officer ("CEO") appointed by the Board of Directors. The duties of the CEO included control of the documents, books and records of the Association, the keeping of minutes of all meetings of the Association and its Board of Directors, keeping account of monies received and expended, and other duties as directed by the Board. It was the duty of the CEO to summon all meetings of the Board of Directors and the rules provided that it was the duty of the CEO at all times, to promote the objects of the Association. 5 The respondent submitted that there was no authorisation of the application before the Court beyond the resolution set out in the minutes of the Association as produced on summons. The resolution so produced was in the following terms: On the report of the company secretary regarding State Transit ticket sales changes as outlined in the McNally's letter, that we instruct McNally to proceed in the Industrial Court and put a provisional limit of $3,000.

It was submitted that this resolution, even giving it its broadest meaning, was insufficient to authorise a Summons for Relief under s 106. 6 The respondent's submissions went further and suggested that the meeting of the Association at which this resolution was passed was itself invalid because of the participation in the meeting of the CEO (or company secretary) who was not a director of the Association and therefore had no role in the control and management of the affairs of the Association under its rules. It was asserted that the minutes showed that Ken Packham took the minutes as company secretary and, in other documents of the Association, he appeared to be the CEO and not a director. It was submitted that he was not entitled to speak on the motion or move the motion. He was entitled under the rules to keep the minutes. The minutes suggested, so it was submitted, that he spoke in detail as to the STA issue and "implored the meeting to take the matter to court". In this regard, the minutes stated: Ken explained that the State Transit issue will affect members and bring a 50 per cent cut in commission. He suggests we should accept the position that we can, through the Industrial Commission, take it to court. We need to act now. 7 The respondent submitted that, in disciplinary proceedings, it had long been established that the participation of an unauthorised person in the decision -making process led to invalidity and that principle clearly extended beyond disciplinary proceedings. It was suggested that there was no doubt that the presence of Mr Packham "may have made" a difference to the decision-making process because of his apparent strong support for taking court action. On that basis, the meeting was invalid and could not have authorised the issuing of the Summons for Relief under s 106.

8 The applicant Association drew attention to the same minutes as containing a later resolution approving a levy of $50 per month for two months to cover legal fees for the "State Transit and Fairfax 106 matters to be dealt with in the Industrial Court". It was submitted that the two resolutions were to be interpreted in their context. The context made it clear that proceedings under s 106 of the Industrial Relations Act 1996 had been authorised by the governing body of the Association. The Association then asserted that the position of Mr Packham was misunderstood by the respondent: the Association was both a registered organisation of employers under the Industrial Relations Act 1996 and a registered company with Mr Packham occupying the position of company secretary. He was not the CEO under the registered rules of the employer Association. These asserted facts were not contested by the respondent. In those circumstances, the Association argued that there was no invalidity of the resolution as there was clearly a quorum under the rules and the board of directors was entitled to manage the affairs of the Association. Mr Packham had not moved or seconded the resolution nor had he voted on the resolution. The resolution dealt with the ordinary business of the Association and therefore was not subject to the special rules dealing with disciplinary proceedings within an organisation. 9 Of particular significance in relation to this issue is the affidavit evidence of Gary Monks who was the "general manager" of the applicant, a position he occupied on a full-time basis. He attended the Board of the applicant Association held on 25 January 2005 and said that Mr Packham attended the meeting although he was not a director of the applicant. He spoke at that meeting but did not vote on any motion nor did he move or second any motion put before the meeting. At that meeting, a letter was circulated from Messrs W.G. McNally Jones Staff, Solicitors, recording that they had met a representative of the Association in conference and had given certain advice confirmed in the body of the letter. That advice included the expression of the view that the Association had the ability to bring an unfair contract claim on behalf of its members in relation to the proposed reduction of resellers' commission by STA. The letter also set out the type of relief that should be sought. It is to be noted that the substance of that advice is reflected in the orders contained within the Summons for Relief filed on behalf of the applicant. 10 It is also of significance that the minutes of the meeting where this issue was discussed drew a distinction between those who were "present" at the meeting, being the executive and four directors, and those who were "in attendance" including Mr Packham the company secretary, Mr Monks the general manager, Ms O'Connell the minutes secretary and two representatives from the Loan Enquiry Centre. The minutes presented in that way suggested that the meeting was constituted by the executive and the directors (charged under the rules with governing the Association) and indicating those present who were not directors were merely "in attendance" and were not purporting to act as directors. Not surprisingly, the tenor of the minutes suggested that those who were "in attendance", from time to time as was relevant to what was then being discussed by the directors, were requested to assist the meeting by making a report or otherwise addressing the meeting. 11 The minutes disclosed that there was some issue as to whether the meeting should continue or whether it should be adjourned. During this discussion the President noted that the "State Transit position" needed to be looked at "today". Although christian names were used, it appears that the Vice-President then explained the importance of the State Transit contract decision which affected the members of the Association and discussed the time needed to lodge an unfair contract case. It appeared to be suggested that, if the meeting adjourned without making a decision on that issue, the directors would be negligent. Some little while later, the minutes record that the State Transit matter was discussed and the letter from W.G. McNally Jones Staff was circulated. Mr Packham then explained the issue, and that it would affect members of the Association possibly bringing a 50 per cent cut in commission. He suggested that the Association should accept the position that it could, through the Industrial Commission, take the matter to court but urged the need for action (Mr Packham was not the CEO and did not take the minutes). The President then suggested a $3,000 limit on legal fees and that the implication for members was "statewide". The motion was then put and seconded by a director and acting on the report contained in the W.G. McNally Jones Staff letter, they were instructed to proceed in the Industrial Court with a provisional limit of $3,000 imposed. That motion was passed. Later in the day, it was moved and seconded that a levy of $50 per month for two months to cover the legal costs for the "State Transit and the Fairfax 106 matters" to be dealt with in the Industrial Court should be imposed: that motion was passed unanimously. 12 The point raised by the respondent is highly technical and, ultimately without merit. A real issue may have arisen about the locus standi of the respondent to raise the validity of this resolution as the respondent specifically disavowed an intention to challenge the retainer of senior counsel and solicitors to appear for the Association on the respondent's Notice of Motion even though the consequence of invalidity of the motion would be that the legal representatives had no authority to act in the matter. The approach of the applicant appears to have been that, rather than being diverted by further technical issues, it was better to confront the merit of the point raised. I am content to proceed in that manner. 13 Having regard to the contents of the letter from W.G. McNally Jones Staff, Solicitors and the course of the discussion by the Board of Directors I am in no doubt that the resolution passed at the meeting of the Board of Directors on 25 January 2005 authorised the commencement of these proceedings. The later motion endorsing a levy to support the "s 106" cases supports a finding that the Board of Directors had already determined to commence legal proceedings in this Court pursuant to the provisions of s 106 in accordance with the advice received from W.G. McNally Jones Staff, Solicitors. In Roughan v Day and ors (1991) 39 IR 385 a Full Court of the Federal Court, in the context of deciding the scope of a rule change abolishing an office within a federally registered organisation of employees, permitted consideration to be given to a preamble to a resolution as assisting in concluding what had been decided by the organisation's governing body. Black CJ noted that, if material other than the rule amendments themselves could be looked at as showing the intention of the body with the sole power to alter the rules, it was not logically inappropriate to look at that material. The relevant intention to be ascertained was that of the body with the power to alter the rules. Three motions had been debated and voted on in one motion and in such circumstances it was not sensible that the intention of the alteration to the rule sought to be affected could not be confirmed by reference to another resolution which preceded it and which was carried at the same time and on the same motion. In particular, his Honour noted: In passing the resolution to amend the rules and in passing the related resolution, the Federal council was acting as a deliberative body. Where a deliberative body identifies by resolution the problem to which a related resolution, passed on the same motion, is addressed it is hard to see how, assuming good faith, there could be more cogent evidence of the mischief to which the latter resolution was directed. Indeed, evidence of this nature is more cogent than a Minister's speech would ordinarily be, because the resolution that reveals the mischief aimed at is carried on the votes of the same persons who, at the very same time, vote for the resolution that is directed to that mischief. ( at 387). 14 As with a challenge to retainer, the respondent bears the onus in establishing that the resolution passed by the Board of Directors did not authorise the commencement of these proceedings. The point seems to be taken on the basis of the bare terms of the resolution and ignores the context in which that decision was taken. The respondent has failed to discharge that onus. 15 The second issue is whether the participation of Mr Packham by addressing the meeting invalidated the resolution. Mr Packham was not the CEO under the rules of the registered employer organisation: it appears that Mr Monks may hold that position although described as "general manager" even though the evidence does not precisely reveal that position. Mr Packham was the company secretary and does not appear to have any role under the rules of the registered organisation. While it is readily accepted that special rules apply to disciplinary meetings of registered organisations and that invalidity may follow a determination made in circumstances where an unauthorised person participated in the process, the respondent was unable to cite any authority for the proposition that a governing body that received a report from a person who is not a member of that governing body, in the course of its deliberations before passing a resolution, risks having that resolution declared invalid. Counsel for the respondent readily conceded that it was common practice for registered organisations to receive financial and legal reports in the course of their deliberations and that normally no invalidity would flow from such an occurrence. 16 It seems that the respondent suggests that the level of participation of Mr Packham went beyond the mere giving of a report and extended to strong advocacy for a course of action that otherwise may not have been taken by the Board of Directors. Mr Monks was cross-examined but this issue was not canvassed with him. Mr Packham was not called, nor were any of the directors called for cross-examination. The suggestion that Mr Packham strongly advocated and/or persuaded the directors to take a course of action that they had either not given consideration to or were inclined not to pursue simply has no basis in the evidence. The Association had already taken steps to seek legal advice and that legal advice (distributed at the meeting) set out a course of action involving proceedings in this Court which was available to the Association - the Board of Directors adopted that advice. The respondent's submission exaggerates the role of Mr Packham and the strength of his advocacy in supporting a proposition that the result of the discussion may have been different if he had not spoken. Before Mr Packham spoke, the President had referred to the need for an urgent decision and had been supported by the Vice-President on the timing of lodging an unfair contract application and the possible charge of negligence if that course was not followed. The Association had already made arrangements for Mr Packham to discuss possible s 106 relief with W.G. McNally Jones Staff, Solicitors - his address is framed in the content of W.G. McNally Jones Staff, Solicitors advice that such relief was available. There is nothing in the minutes to support a description of Mr Packham's address as being an address "in detail" or that he implored the meeting to adopt a course of action and certainly not a course to which they were initially opposed. 17 In written submissions, the respondent referred to Gould v AIU (1957) 87 CAR 939 for the proposition that the participation of persons not entitled to be at a meeting was fatal to the validity of the meeting was a principle that clearly extended beyond disciplinary proceedings. In Gould's case, rule alterations had been adopted by a body comprising branch representatives some of whom had not been properly elected. Those people participated in the meeting that approved the rule alteration and the Commonwealth Court of Conciliation and Arbitration held that the rule alteration had not been made in accordance with the rules of the Association, adopting an earlier decision that a meeting was invalid because of the direct participation of people who had no right to be present. It appears that those people were not only "present" but, as in Gould's case, acted as if they were entitled to be fully involved in the deliberative processes. That is a quite different position to the present case. As the learned authors of Halsburys observed in the 5th edition, there is no general rule of invalidity flowing from the participation of strangers in meetings and the circumstances of each particular case have to be considered. 18 It should also be noted that the rules of the Association do not prohibit persons other than directors from addressing the meetings of the Board. Under the rules, the Board of Directors is charged with the overall governance of the Association in the interests of its members. In the absence of specific rules, the Association can adopt any course it thinks appropriate or convenient to assist in its governance and administration and is not to be stultified by a gap in the rules but is entitled to take any reasonable course available to it (Jones v Farrow (1971-3) 20 FLR 73 at 83; AWU v Coles (1917) VLR at 336). According to the letter from W.G. McNally Jones Staff, Solicitors, Mr Packham represented the Association in conference and had outlined the circumstances in which it sought advice as to whether the Association had grounds to commence s 106 proceedings against STA in relation to the resellers' agreement. There is no suggestion and no evidence that suggests that Mr Packham was not authorised to seek that advice and it is not surprising in those circumstances that he was then called upon to report on his discussions with solicitors when that important matter was considered by the Board of Directors. There is no substance in this challenge raised by the respondent. IS THE NEWSAGENTS' ASSOCIATION ABLE TO MAKE THE APPLICATION? 19 The rules of the Association establish the eligibility of members as being those who are authorised territorial newsagents or newsvendors. It was submitted that the notion of an authorised exclusive territory for the operation of an agent had ceased and that other newsagents' associations had changed their conditions of eligibility to recognise this position. While this difficulty with the eligibility rule of the Association was noted, the respondent accepted that the Association could be validly constituted by those who were members meeting the eligibility criterion of the past, although continuing recruitment would be impossible. It was also accepted that an organisation could have members who were no longer eligible for membership of the Association. No particular point was therefore taken about these matters. 20 The question raised was whether the application came within the provisions of s 108(c) of the Industrial Relations Act 1996. Section 108(c) is in the following form: An order may be made under this Division on the application of: (a) ... (b) ... (c) An industrial organisation of employers whose members employ persons working in the industry to which the contract relates ... 21 The respondent submitted that an order may be sought by an industrial organisation of employers whose members employ persons working in the industry to which the contract relates. It was accepted that there was no doubt that the word "relates" was of broad meaning subject to its context but it was not unlimited - it required a not insignificant connection between the relevant contract and the industry in which the members of the organisation work. In this case the connection was claimed by the applicant to be between the contract and the "transport industry". Reference was made to the Summons for Relief and the claim contained in para A1, namely: An order declaring void in whole or in part either from its commencement or some other time, the contracts between individual members of the applicant and the respondent, whereby the members of the applicant perform work in the transport industry. 22 The respondent submitted that there was no connection between the contract and the transport industry - the employees of the employer members of the applicant were not employed in the transport industry. The transport industry meant the commercial transport industry and involved the transport of persons or goods for reward. The newsagents provided a service for those in the transport industry but that did not make them part of the transport industry. The substantial character of a newsagency was not that of the transport industry in any sense. As persons working for newsagents were not in the transport industry, the Association had no capacity to make the application. 23 Both parties made reference to industrial cases primarily involving the construction of a federal union's industry and eligibility rules in determining the organisation's capacity to represent certain classes of employees. The provisions of s 108(c), however, appear to be directed to a significantly different matter, namely, the identification of the industry to which the contract relates and those employees of the members who work in the industry to which the contract relates. It was accepted that the word "relates" is of wide import. The contract sought to be impugned by the application is a ticket resellers' agreement: the contract involves the selling of bus tickets provided by STA to customers who wish to use the bus service. Identifying the industry to which the contract relates may not always be an easy task but, on one view of it, such a contract relates to in the ticket reselling industry or the ticket selling/newsagency services industry. Although the tickets sold are for use in obtaining bus services, it might not be inaccurate to say that the reselling agreement "relates" to the bus services industry or the transport industry. The respondent erroneously approached the question as being whether or not the employees worked in the transport industry rather than examining the contract to establish the industry to which it was related. Whatever the proper description be of that industry, it seems to me that no question arises that persons employed by members of the Association are working in the industry to which the contract "relates". There is some force in the applicant's submission that all s 108(c) requires is that the Association of employers has members in the industry who are engaged in an occupation to which its membership relates and are concerned in the contracts sought to be impugned. Such an approach would prevent an applicant from bringing a case whose members are engaged in other trades or callings foreign to the contracts sought to be impugned: for example, an employer association of plumbers could hardly seek to have set aside a contract concerning newsagents under s 106. Ultimately, the precise ambit of s 108(c) does not have to be decided in order to deal with the respondent's challenge. 24 The President, Wright J, in Hyde v Energy Australia (1999) 92 IR 409 considered s 108 and stated: The intention of the limitation expressed in that section is, in general terms, to limit those who may make an application to the parties to the contract, as defined, or to registered organisations and thus precludes non-parties to such contracts from having standing to commence such proceedings.

This approach was adopted by the Full Bench in Metrocall Inc v Electronic Systems Pty Ltd (No 2) (2000) 102 IR 309. 25 The approach in Hyde essentially looks for a relevant interest in relation to the contract of an employer or an employee organisation. Here, the Newsagents' Association covers newsagents and newsagents employ persons within their newsagencies. The respondent STA has a ticket resellers' agreement with newsagents. Members of the Association employing persons "working in the industry to which the contract relates" requires a consideration of the contract. The contract might be the reselling of bus tickets and when this is done by newsagents, the Association has an interest in such contracts and has standing under s 108 to bring an application pursuant to s 106 of the Act. The submissions for the respondent appear to be misdirected and encompass a consideration of the industry in which employees work: organisations registered in New South Wales frequently do so by reference to occupations and not industries and even federally registered bodies could enrol beyond the reach of the industry rule if the eligibility rule was sufficiently wide. On one view, the resellers' contract with the respondent STA could "relate" to the transport industry but that would not require employees of newsagents to work "in" the transport industry but merely to be employed in the industry to which the contract relates. On this approach, such employees may actually work in the newsagency industry but when they perform that work they may be working in relation to the transport industry if the transport industry is the industry to which the contract in question relates. 26 When all the evidence is received in this case, the Court may be in a better position to identify the "industry" to which s 108(c) refers and which is also to be identified pursuant to s 106(1). Indeed, para A1 of the applicant seems to deal with the requirements of s 106 rather than addressing the provisions of s 108(c) - but this position is not totally clear. The present pleadings might contain a misdescription of that industry but it is no more than a misdescription: at worst it might be rectified or more accurately identified during the hearing or at its conclusion. Such a misdescription (if found) will not operate as a fatal flaw requiring the application to be struck out. Plainly, the employees of members of the Association being newsagents, inter alia, resell bus tickets: this fact leads to the conclusion that the organisation is one whose members employ persons working in the industry to which the resellers' contract relates and thus the provisions of s 108(c) are satisfied. 27 To the extent that the point raised by the respondent is a pleading point, it is appropriate to recall the words of Kirby J in Thorpe v The Commonwealth [No 3] (1997) 71 ALJR 767 at 774: Even if a party makes good its attack on another's pleadings, a court will ordinarily permit the opponent to reframe the pleadings so long as it is clear that there is a point in doing so and that the further time and opportunity will have utility. The guiding principle is doing what is just. Courts, particularly today, strive to uphold efficiency and economy in the disposal of proceedings before them. But they also remember that pleadings are a means to the end of justice according` to law. Pleadings are the servants, not the masters of the judicial process. IS WORK PERFORMED IN AN INDUSTRY? 28 The respondent referred to a line of well known cases, including more recent decisions of the Court of Appeal and the High Court, to argue that the ticket resellers' agreement was not a contract whereby work was performed in an industry. By reference to these well known authorities it was suggested that the contract did not result in the direct provision of work but led merely to the consequential provision of work. The purpose of the transaction was not that relevant work be performed and that any work performed was an accidental consequence of the transaction. Further, the contract did not directly envisage the employment of a person or persons in an industry nor did it have a recognisable impact on the conditions of employment. In essence, this was no more than a commercial contract and it was indistinguishable from the sale of goods as discussed by the Full Bench in Euphoric Pty Ltd v Ryledar Pty Ltd and anor (2002) 117 IR 1. 29 The applicant submitted that the evidence, even at this early stage, showed that the respondent usually sold tickets for its bus services using its own employees such as drivers, conductors and at STA shop outlets. For some considerable time, STA has also used agents (such as newsagents and convenience stores) to sell its tickets for the provision of bus services. The agents were now called "resellers" but newsagents sold tickets, accounted for monies received and remitted them to STA and were obliged to provide related services to STA customers such as advice on concessions, bus routes and timetables. For the performance of this work, newsagents were paid a commission. It was submitted that the contract operated in a similar fashion to a franchise in that the reseller arrangement was the means by which STA, in part, conducted its business and did so using newsagents rather than solely using its own employees. It was in this way that the contract envisaged and had as its purpose the performance of work, namely, the selling of bus tickets for STA. 30 There have been some variations to the ticket sellers' agreement over the years but the 2005 agreement with the reduced commission is the agreement attacked in the proceedings brought by the Association. The agreement in the preamble states that STA issues passenger tickets for use on its commuter services and that the reseller wishes to procure sales of the tickets as an STA reseller and had requested STA to grant to the reseller a "non-exclusive licence" to sell the tickets on the terms and conditions contained "in the agreement and the Schedule to the agreement". It was then agreed that STA granted a non-exclusive licence to the reseller to sell the tickets but the licence was not transferable or capable of being assigned, mortgaged or otherwise encumbered or disposed of by the reseller without the prior written consent of STA. The tickets delivered by STA to the reseller were to remain "the sole and absolute property" of STA as legal and equitable owner until such time as the invoice for the amount of the tickets had been paid to STA, whereupon title was to pass to the reseller for those tickets still in the reseller's possession. The reseller acknowledged that it was in possession of the tickets as "bailee" for STA until such time as they were sold to a purchaser or until payment of the invoiced amount, whichever occurred first. The tickets were to be supplied directly by STA to the reseller and were to be sold by the reseller at prices determined by STA and advised by STA. The reseller was limited to selling the tickets solely within its business premises and the tickets were to be sold in strict sequential number order. The State Transit Authority was to provide the reseller with all equipment and materials necessary for or ancillary to the sale of the tickets by the reseller which equipment was to remain the property of STA. Provisions were made for the payment to STA, usually on a weekly or fortnightly basis, with the reseller to order its stocks of tickets on a weekly basis or such other basis as set out in the Schedule. 31 The 2005 agreement set the margin due to the reseller at 2.5 per cent per annum and provided that the risk for the loss, theft or destruction of the tickets was to pass to the reseller upon delivery of the tickets to the reseller. The reseller was obliged to comply with all reasonable instructions and directions given by STA relating to the conduct and operation of its business in pursuance of the agreement. The reseller was also obliged to supply an unconditional bank guarantee in a form satisfactory to STA in an amount not less than that set out in the Schedule. STA reserved the right at any time to waive the requirement for security and "to review the security at regular intervals and to request the reseller to increase or reinstate the amount of the security" if in the opinion of STA, the circumstances warranted such an increase or reinstatement. The reseller was to provide, at no cost to STA, adequate security at its business premises for the safe custody of tickets or monies received for the tickets and all equipment, books, records and other materials relating to the tickets. 32 Under the agreement, the reseller was to comply with all reasonable directions of STA relating to security requirements. The reseller was to produce all ticket stocks and related records for inspection by officers of STA and provide all such information as required by STA. The reseller was to display prominently at its business premises such regulations and other materials supplied by STA for the viewing and information of the public. The reseller was not to use, without the prior approval in writing by STA, any document containing words indicating that the reseller was a reseller or official reseller of STA or that the reseller in some way represented STA. The reseller was not, without the prior written consent of STA, to disclose or permit to be disclosed any information of a confidential nature obtained by or given to the reseller in relation to the agreement. The reseller was to insure and keep insured for the period of the agreement its business premises against loss, theft or destruction of STA equipment and the loss, theft or destruction of the tickets to the full value of the tickets. The policies had to be endorsed with a note indicating the interests of STA. The reseller was required to indemnify STA and its successors and the Minister responsible against loss or damage to the property of STA, losses incurred by STA for an act done outside the scope of the authority by the reseller or any servant of the reseller and all claims for compensation for injury to persons or property arising out of or in consequence of carrying out the agreement. The reseller was to notify within five days if a bankruptcy petition was presented or of a meeting of creditors called, or if a scheme of arrangement or composition with its creditors or if the reseller was placed under official management or placed into voluntary liquidation. 33 Upon termination of the agreement, the reseller was to deliver to STA all tickets, stamps, advertising materials, application forms, books, records, monies, securities, documents, materials and other equipment relating to the agreement in the possession or control of the reseller and was to remove any sign or material indicating that the reseller was a reseller of STA. In the event that the reseller intended to sell, assign, transfer or otherwise dispose of its business, the reseller was required to give STA no less than 14 days' notice of the proposal. 34 In Wirraway (NSW) Pty Ltd and anor v Ultra Tune Australia Pty Ltd (2006)156 IR 367, the Full Bench observed that the majority of the High Court in Fish v Solution 6 Holdings Pty Ltd [2006] HCA 22 had stated that : ... what must be identified is the set of arrangements according to which, that is, "whereby" a person performs the relevant work. What may be declared void or varied was any part of those arrangements being the arrangements in accordance with which a person performs work. The performance of work in an industry was the hinge about which the s 106 turned.

The Full Bench warned against using a number of terms from cases where the scope of s 106 had been considered and treating those terms as tests for jurisdiction. The High Court had identified the relevant test especially in the passage cited above. 35 As the evidence presently stands, the agreement envisaged that somebody within the reseller's business would perform work by reselling the tickets, accounting for them and providing information to the bus travelling public. This work might be performed personally by the agent reseller: the agreement also contemplates that the work might be performed by a servant of the reseller. Further, the reseller was obliged to comply with all reasonable instructions and directions given by STA relating "the conduct and operation of its business in pursuance of the agreement". The newsagent was to become STA's ticket reseller. This reselling agreement might be described as at least a step further than the arrangement dealt with by the Court in Euphoric: in that case, all that was really involved was the purchase of the oil supply and the respondent had no real or relevant interest in what the applicant did with that product after its receipt. In the present case, STA has chosen to make multiple tickets available to the bus travelling public not only through its own transit shops, kerbside machines and drivers but also through a number of outlets such as newsagents and convenience stores. This method of ticket sale is an integral part of STA's business and STA has a real interest in having the work performed by a reseller to ensure there is a widespread availability of tickets for its bus services. In evidence, the manager for ticket distribution and agency control, Mr Neil Bannon, said that, when STA received applications for a reseller's licence from newsagencies or convenience stores in close proximity, an assessment was made as to which site was best located to sell the most tickets. While it was not a regular occurrence, STA reserved the right to cancel an agreement where, for some reason, a reselling outlet was selling less than was reasonably expected from that outlet. In those circumstances, STA might give consideration as to what other outlet might provide a greater turnover. 36 Unlike the situation dealt with by the Full Bench in Euphoric, this resellers' agreement envisaged that the newsagent (and any employees engaged) would perform work in an industry: the tickets were to be recorded and accounted for; they were to be resold in strict numerical sequence; they were to be sold at the price nominated by the respondent; they were to be sold only at the identified premises operated by the newsagent; the newsagent was obliged to supply information to the public regarding timetables, routes and concessions relating to the bus service operated by the respondent; the newsagent had to comply with all reasonable instructions and directions given by the respondent "relating to the conduct and operation of its business in pursuance of the agreement"; and, the newsagent was to be supplied with all equipment and materials necessary or relating to the sale of the tickets by the reseller, such equipment remaining the property of the respondent". 37 As with the franchise cases, the respondent was selling its product not only by its own employees but using newsagents and their employees - in this way, the contract envisaged that work would be performed in industry and such work was not merely incidentally or accidentally a result of the contract. The purpose of the contract was that the newsagents would perform work by reselling the tickets and providing information to both the respondent and the areas of the respondent's bus service. Unlike the sale of goods arrangement discussed in Euphoric, under the re-sellers' contract the newsagents could not do what they liked with the tickets - everything from price, place of sale and related records and, potentially, how the tickets would be marketed were under the continuing control of the respondent to achieve the aim of having the newsagents resell the tickets to the mutual benefit of the respondent and the newsagents. Even where newsagent paid for the tickets and ownership passed to the newsagent, the licence to resell the tickets could not be transferred or assigned by the newsagent without the prior written consent of the respondent. The newsagent was obliged to return the tickets to the respondent on termination of the agreement and in those circumstances would be re-credited the value of those tickets. These provisions suggest a relationship with some similarities to that of a joint venture - however described, the aim was that the newsagents perform work (either themselves or through employees) by selling tickets and providing bus services information. It is to be noted that in Production Spray Painting v Newnham (1991) 27 NSWLR 666, the fact that the arrangement was a simple outright sale without any provision of ongoing services was held to be a relevant factor in deciding that the contract was not within jurisdiction: the opposite facts appear from the terms of the contract presently under consideration. 38 The evidence presently before the Court as to the way in which work is performed by the reseller and/or through persons employed by the reseller is neither detailed nor comprehensive. Although there are strong grounds for regarding the resellers' agreement as falling within the Court's jurisdiction under s 106 of the Act, as in Wirraway the preferable course is to wait until all the evidence has been received before making a final determination on this issue. THE "TRUELOVE" CHALLENGE 39 In Sydney Water Board Corporation Ltd v Industrial Relations Commission of New South Wales (2004) 61 NSW 661 (the "Truelove" litigation) the Court of Appeal held that unfair conduct in breach of a contract of employment did not render a fair contract unfair and therefore amenable to relief under s 106 of the Act. It was the contract itself that had to be demonstrated to be or to have become unfair. Where a contract was contravened or repudiated, the conduct must be in defiance of the contract thus exposing the party at fault to a range of adverse consequences under the general law. 40 Relying on this approach, the respondent STA alleged that one of the claims made by the applicant was that the contract was unfair because it permitted the respondent to unilaterally vary the terms of the contract without any or sufficient reason. It was alleged that this claim was, in essence, that the contract permitted breach in the form of a unilateral repudiatory variation of the contract. 41 In dealing with this somewhat convoluted challenge it should be understood that it is only in relation to one of the many grounds of unfairness alleged by the applicant that is challenged in this way by the respondent STA and that success on this point would not lead to the dismissal of the entire claim. Having regard to the evidence presently before the Court, it appears that the previous agreements entitled STA to determine the rate of commission from time to time and the latest such determination would be binding on the reseller. In that way, it might be said that an agreement in that form, by its terms, permitted unilateral variation and unilateral variation, without the giving of reasons or giving an opportunity to the reseller to make submissions as to the reasonableness of a proposed new determination. Action taken under such a clause would not be in repudiation of the contract but would be permitted under the terms of the contract. Such a position is quite different to the point raised in the Truelove litigation. 42 The 2005 resellers' agreement appears to have replaced the clause permitting a determination to be made by STA that was binding upon the reseller during the course of the agreement with a declaration that the commission would be a flat amount of 2.5 per cent per annum. The Association's concern appears to have been raised by the fact that STA, in correspondence, stated that it was always part of the arrangement under the agreement that STA "could vary the margins fee paid to a reseller". Corporate counsel for STA made that statement in correspondence dated 16 February 2005. The claim made by the applicant therefore appears to proceed on the basis that, beyond the terms of the resellers' agreement, STA operates on the basis that there is an arrangement whereby it may from time to time, unilaterally alter the commission. That arrangement is attacked as being unfair and the applicant seeks to vary the resellers' agreement so as to provide for a higher commission and for a disputes settling mechanism should a dispute arise in the future about the proper level of commission for undertaking the reselling task.

The respondent has failed to establish a proper basis for striking down this aspect of the claim. CONCLUSION 43 Having regard to these determinations, the appropriate course is to dismiss the respondent's Notice of Motion. Should the parties wish to be heard on the question of costs, that matter will be dealt with after the conclusion of conciliation. The parties are to contact my Associate with convenient dates for the conduct of conciliation.

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