Transport Industry - General Carriers Contract Determination Appliction by Australian Road Transport Industrial Organisation, New South Wales Branch for removal of Special Fuel Price Surcharge. [2010] NSWIRComm 133 - NSWIRComm 2010 case summary

Industrial Relations Commission (NSW)|2010-09-14|Before: Haylen J, Mr J, Cahill J

CITATION: Transport Industry - General Carriers Contract Determination Appliction by Australian Road Transport Industrial Organisation, New South Wales Branch for removal of Special Fuel Price Surcharge. [2010] NSWIRComm 133

Australian Road Transport Industrial Organisation, New South Wales Branch (Applicant) PARTIES: RESPONDENTS: Transport Workers Union of Australia, New South Wales Branch Australian Industry Group, New South Wales Branch

CATCHWORDS: CONTRACTS OF CARRIAGE - Industrial Relations Act 1996 - Chapter 6, s 320 - application to vary Determination - provisions of Determination reimburse carriers for vehicle running costs - price of fuel a significant and volatile element requiring re-imbursement - 1990 variation to Determination arising from fuel price spikes as result of Middle East war - new Schedule 5 specifies cents per litre for various classifications of vehicle - variation contemplates monthly monitoring of fuel prices and further variation of rate either up or down to reflect current price - Schedule 5 unaltered and not reviewed since introduced - 2008 consent variation introduces ability to review fuel prices at any time because of volatility of oil prices - new benchmark identified for calculating rise or fall in fuel prices - 2010 application to delete Schedule 5 as being redundant in light of 2008 variation - continuation of Schedule 5 claimed to result in double-dipping for fuel prices - applicant establishes case for variation - Schedule 5 deleted from Determination - prospective operation of variation

LEGISLATION CITED: Industrial Relations Act 1996

IGA Distribution Pty Ltd New South Wales Distribution Centres Award 2002 (200) 124 IR at [44], CASES CITED: Re Clerical and Administrative Employees (State) Award (No 2) (2005) 148 IR 56 at [157] Vol 235 of the New South Wales Industrial Gazette, December 1984 p 1611

Mr M Baroni, Solicitor (Applicant) Clayton Utz

LEGAL REPRESENTATIVES: Mr O Fagir (First Respondent) Transport Workers Union of Australia, New South Wales Branch

Mr B Ferguson (Second Respondent) Australian Industry Group New South Wales Branch

TRANSPORT INDUSTRY - GENERAL CARRIERS CONTRACT DETERMINATION

Application by Australian Road Transport Industrial Organisation, New South Wales Branch for removal of Special Fuel Price Surcharge

1 The Australian Road Transport Industrial Organisation, New South Wales Branch ("ARTIO"), an Association of employing contractors registered pursuant to the provisions of s 333 of the Industrial Relations Act 1996, has applied to vary the Transport Industry - General Carriers Contract Determination. In short form, the application seeks to delete Schedule 5, entitled "Special Fuel Price Surcharge". The application seeks to delete that Schedule in its entirety. The application is opposed by the Transport Workers Union of Australia, New South Wales Branch ("TWU"). 2 The grounds and reasons filed in support of the application were in the following terms: Schedule A - Grounds, Reasons and Particulars (1) The Transport Industry - General Carriers Contract Determination ( Determination) was varied on 2 October 1990 by order of the Honourable Mr Justice Cahill, Vice-President, in proceedings No 1057 of 1990 ( Proceedings) in order to, among other things, introduce a new Schedule 5 imposing a "Special Fuel Price Surcharge". (2) The variations, including the Special Fuel Price Surcharge payable under Schedule 5, took effect on and from 8 October 1990. (3) The Proceedings were commenced by the Transport Workers Union of Australia, New South Wales Branch ( TWU) on 25 September 1990 and the variations were made by consent. The following documents are attached to this application: (a) attached and marked " A " is a true copy of the application for variation lodged by the TWU on 25 September 1990 ( TWU Application) ; (b) attached and marked "B" is a true copy of the "affidavit of urgency" of Mr J B McLean dated 25 September 1990, filed on behalf of the TWU in support of expedition of the TWU Application ( Supporting Affidavit) ; (c) attached and marked "C" is a true copy of the transcript of the Proceedings on 2 October 1990 ( Transcript) ; (d) attached and marked "D" is a true copy of the decision issued by the Commission on 2 October 1990 giving effect to the variations ( Variation Decision) ; (e) attached and marked "E" is a true copy of the NSW Industrial Gazette - Volume 262, page 528 (Serial A8261) in which the variations were recorded (Gazette) . (4) The TWU Application was made in response to the then " current crisis in the Middle East" which at that time had "led to extraordinary and continuing escalation in the price of fuel" and was consented to in light of the circumstances existing at that time (Supporting Affidavit at paragraph 2(ii), Transcript at page 2.1). (5) The TWU Application sought increases to the rates payable under Schedules 1 and 4 of the Determination (based upon what his Honour described at page 1.4 of the Variation Decision as the "traditional concepts") as well as an additional increase by way of introduction of the Special Fuel Price Surcharge under the new Schedule 5. (6) The overall increase to rates payable under the Determination as a result of the variations was submitted to be in the order of 5 per cent of which " a significant portion [was] made up of the fuel price surcharge " (Transcript at page 3.8). (7) It was contemplated by the Commission and the parties to the Proceedings that further variation to the Special Fuel Price Surcharge under Schedule 5 would be made to reflect subsequent changes in the price of fuel (Variation Decision at page 1.5; Transcript at page 2.1). (8) Indeed, his Honour specifically contemplated that an application for variation to the Special Fuel Price Surcharge might be made by an employer association in the event that fuel prices subsequently reduced (Transcript at page 5.3). (9) The circumstances existing at the time of the TWU Application and which informed the parties' consent to the variation (and especially to the Special Fuel Price Surcharge) no longer exist. (10) In any event, the Determination was varied with effect on and from 4 November 2008 to incorporate into Schedule 2 of the Determination a mechanism for parties to apply to the Commission to vary rates of remuneration to account for changes in the price of fuel only. Attached and marked "F" is true copy of the NSW Industrial Gazette - Volume 367, page 422 (Serial C6883) in which this variation was recorded. (11) In light of the circumstances referred to at paragraphs (9) and (10) of this application and for such other grounds as the Commission sees fit, Schedule 5 of the Determination should be deleted in its entirety. HISTORY OF SCHEDULE 5 3 The original Determination was made operative from May 1984 and although specified to remain in force for a period of one year, the Determination has only been varied since 1985. It has not been the subject of detailed review nor has it been the subject of an application for the making a wholly new Determination. The original Determination has therefore been varied on numerous occasions over more than a quarter of a century. 4 The parties do not contest the description of the Determination as involving reimbursement of running costs. Under the original Determination, clause 16, Remuneration, provided that the rate of remuneration per kilometre in Schedule 1 to the Determination should be paid at the running rate applicable to the contract carriers' vehicle for the contract distance. Schedule 1, entitled "Rates of Remuneration", in clause 1 expressly noted that the rates of remuneration in Schedule 1 and Schedule 4 had taken into account and included payment for a number of specified factors. Included in those factors was "fuel" and the Determination then set out hourly standing rates for several classifications of vehicle, together with running rates specified at cents per kilometre. Schedule 2 laid down a procedure and a time for the adjustment of rates and amounts and provided that, amongst other things, rates prescribed in Schedule 1 were to be adjusted from 1 June and 1 December annually or as otherwise provided in the Schedule. Variations were not to be retrospective and any variation was to operate no earlier than the date upon which it was made. 5 In September 1990, the TWU applied to vary the Determination. Amongst other things the application for variation sought increased vehicle rates in Schedule 1 and sought to insert a new Schedule 5 to be entitled "Special Fuel Price Surcharge". That Schedule made the rates set out in Schedule 5 to be payable in addition to the rates set out in Schedule 1 and Schedule 4. The special fuel price surcharge was said to be introduced "specifically in response to the extraordinary increase in the price of fuel resulting from the crisis in the Middle East" being a reference to the Gulf war and its effect on oil prices. The Schedule also provided that the parties to the Determination were to review the surcharge on a monthly basis. The new Schedule then proposed additional cents per kilometre to be paid for the various classes of vehicle covered by the Determination. Those increases ranged from 2.25 cents for a rigid vehicle less than two tonnes up to 7.29 cents per kilometre for a bogie axle prime mover. 6 The 1990 application for variation of the Determination was supported by an Affidavit of Urgency sworn by the Secretary of the TWU. The affidavit noted that the Determination usually adjusted terms and rates of remuneration in March and September of each year to reflect changes in the costs of running a motor vehicle and that the current crisis in the Middle East led to an extraordinary and continuing escalation in the price of fuel, recognising that fuel was a major cost in the running of a motor vehicle. It was noted that, under the terms of the Determination, until the rates of contract carriers were adjusted, the carriers had to bear the cost of fuel price increases "entirely themselves". It was in these circumstances that the TWU, after discussions with principal contractors, had prepared the application for variation which took into account all recent fuel price increases and provided a capacity to deal with future price increases. 7 The TWU's application for variation was heard in October 1990 by the Vice-President of the Industrial Commission, Cahill J. His Honour noted that the application was consented to by the parties and having regard to the clear difficulty created by a significant increase in oil prices, his Honour approved the variation in terms ultimately sought by the TWU. 8 In the course of the proceedings, his Honour was informed that the rates proposed had been the subject of negotiation and consent and were being introduced specifically in response to the extraordinary increases in the price of fuel resulting from the Middle East crisis. The parties thereby recognised that very significant and unusual spikes in fuel prices could not fairly and appropriately await the usual six-monthly review allowable under the original Determination and that the unusual circumstances concerning fuel prices would be more appropriately met by an ability to review the rates up or down on a monthly review if so advised. 9 During submissions his Honour asked whether the remaining matters in the application for variation, apart from the new Schedule 5, had been calculated in accordance with an established formula. The TWU representative informed his Honour that those variations were made in accordance with "the established formula which has been the subject of consent between the parties". His Honour also asked about the possible future variation of the new Schedule 5 and was informed that it was to operate in a similar vein to a leave reserved clause. His Honour noted that, in effect, applications could be made to increase or decrease the amounts set out in Schedule 5 and indeed, an employer's application may be made if the oil prices came down. No party suggested that Schedule 5 would operate in any other way. Further, in his decision, his Honour noted that the parties continued to monitor fuel prices and that it was foreshadowed that, dependent on significant or substantial changes in those prices, applications for a further variation of the Determination would be made. 10 It is also to be noted that, in the course of addresses, his Honour's attention was drawn to the terms of the original 1984 Determination and the provisions of Schedule 2 setting out the procedure and time for adjustment of rates and amounts. Clause 9 of that Schedule provided that the components of remuneration were to be adjusted upwards or downwards according to the Schedule that followed. Thereafter, eleven components were set out together with the method of adjustment. In relation to the component of fuel, the method of adjustment was specified as being by the percentage change in "Shell Wholesale Price Per Litre, Duty Paid, Bulk Purchase Metropolitan". Further, clause 10 of Schedule 4 stated that the formula for adjustment "shall be as set forth in the Exhibit". That exhibit was not part of the published Determination (appearing in Vol 235 of the New South Wales Industrial Gazette, December 1984 commencing at p 1611). 11 The evidence before the Commission establishes that, notwithstanding the intention of the parties and the Commission that the special fuel price surcharge would be reviewed monthly either upwards or downwards to reflect the current price of petrol, the surcharge has never been reviewed since it took effect from 8 October 1990. Indeed, nothing further was provided in relation to dealing with fluctuations in the price of fuel until 2008 when the TWU again applied to vary the Determination. The grounds and reasons in support of this application were as follows: (1) This application seeks to instigate a system whereby any party to this Determination can apply to amend rates of remuneration and allowances to attend to the fluctuating price of fuel on a monthly basis or any time thereafter. No minimum trigger shall need to be satisfied for a party to this Determination to make such an application. (2) The system proposed recognises that fuel is by far the most volatile cost component endured by Contract Carriers. The proposed system ensures that Contract Carriers will be capable of achieving cost recovery for fuel. As a matter of equity, an effective system of costs recovery is imperative to ensure that Contract Carriers do not have to bear additional fuel costs during the period between rate adjustments. These periods, historically, have often lasted over a year. The proposed system ensures that Contract Carriers do not have to suffer the "swings and roundabouts" occasioned by fluctuating fuel price. (3) The proposed system also ensures that once an application is made it is dealt with expeditiously. This is to avoid the wholly unsatisfactory situation of applications being held up for weeks and months at a time before the Commission. The proposed system provides that the matter be determined by the Commission within a period of 48 hours after the first mention before the Commission. (4) The fuel index utilised to calculate the currently prevailing rates in matter No IRC 2209 of 2007 was the Shell automotive diesel price of Sydney on 15 January 2008. The relevant AIP benchmark preceding this date was published on 13 January 2008. That price was 153.4 cents. 153.4 minus GST, that is, 139.5 shall therefore be the current fuel benchmark for this Determination. 12 A Full Bench of the Commission dealt with the 2008 application for variation of the Determination. The matter proceeded as a consent variation and was approved by the Full Bench. 13 In addressing the Full Bench it was submitted on behalf of the TWU that the application dealt with the fuel component, one of the most volatile costs components faced by carriers in operating their vehicles. Between January and July 2008 there were very significant spikes in the price of fuel. This had led to a genuine crisis in the transport industry and serious negotiations had begun with the respondents to the Determination. It was proposed to introduce a system that provided for fuel to be dealt with separately from the rise and fall formula of the industry Determination. It was noted that the respondent employer associations regarded the Determination as having great efficiency and that there was rigor in fashioning the components and the means of dealing with the rise and fall of running costs. The TWU representative acknowledged employer commitment to the scheme of the Determination and its efficacy. Ultimately there was support for a system that allowed a review of changes in the cost of fuel on a regular basis and it was proposed that the present system would benchmark fuels across a common benchmark to ensure that the review could function in an efficient manner. Therefore, it was proposed to use the Australian Institute of Petroleum ("AIP") as a common benchmark. The figures supplied by the Institute were available on the net and provided a transparent process. 14 In the course of the hearing, submissions were made on behalf of the Road Transport Association ("RTA") and Toll Transport Pty Ltd ("Toll"). In that submission the Commission's attention was drawn to the fact that few variations of substance had been made since the Determination was made in 1984 and there had been no fundamental review of the Determination. On behalf of Toll, the view was expressed that the Determination no longer reflected modern transport practice nor was it indicative of the true costs associated with the running of any of the class of vehicle described in the Determination. The underlying formula that was originally used for the purpose of calculating various costs components was said to be "replete with errors" which had compounded from variation to variation over the years. One example specifically drawn to attention was the retention of Schedule 5 representing an individual fuel levy that stood alone and had then been in force for some 18 years, notwithstanding the fact that the Middle East oil crisis had long concluded. It was observed that the additional payment required to be made under Schedule 5 was nothing more than "a windfall for contract carriers". Toll expressed the view that, while the present application would, in part, deal with the recent problem caused by the price of fuel and there was no dispute about the existence of that problem, nevertheless, the Determination needed a complete review. 15 The variation ultimately made by the Full Bench to Schedule 2 to the Determination provided for fuel to be adjusted according to the percentage change as per the AIP NSW State weekly average for the retail price of diesel, excluding GST. Cost recovery for variations in the price of fuel was inserted in Clause 12 in the following terms: (12) Cost Recovery for variations in the Price of fuel: (a) The parties to this determination recognise that, due to the changed nature of the pricing of fuel, including recent significant fluctuations in the price of fuel, it is necessary that variations to rates of remuneration to take into account changes in the price of fuel occur in a timely and efficient manner. (b) Notwithstanding any other provisions of this determination, the parties to this determination agree that any party to this determination may make an application to the Industrial Relations Commission of New South Wales to vary rates of remuneration to account for changes in the price of fuel on the following basis: (i) an application to vary rates of remuneration for changes in the price of fuel only may be made at any time, provided that the date upon which any rate adjustment is sought to become operative is at least one calendar month after the last occasion upon which a fuel rate adjustment became operative; (ii) subject to paragraphs (iii) and (iv) below, the rates of remuneration shall vary using the existing rise and fall formula for the price of fuel in this determination; (iii) it is not a requirement of any such application that the rate adjustment sought for fuel only be one which is either below or above any minimum threshold amount; and (iv) the agreed benchmark for the price of fuel shall be the Australian Institute of Petroleum NSW weekly average for the retail price of diesel for the week ending immediately prior to the date of filing the application, excluding GST. Should the agreed benchmark become unavailable the parties shall determine an alternative appropriate benchmark.

(c) The parties to this determination shall take all necessary steps to enable an application made pursuant to subclause (b) hereof to be heard and determined at the earliest possible time, including but not limited to, consenting to have the Industrial Relations Commission of NSW hear and determine any such application within 48 hours from the initial listing of the application. (d) The fuel index, reflecting current rates, is 110.27 cents per litre. This index is exclusive of GST. SUBMISSIONS 16 There was no dispute between the parties that there was a general and wide discretion provided by s 320 of the Act to vary a Determination. It was broadly accepted that, in exercising that power to vary a Determination, the Commission may be guided by similar considerations contained within s 10 and s 17, namely, that the Determination should set fair and reasonable rates and that in making a variation, the public interest is to be considered provided there is a substantial reason for making the variation. 17 The submissions for the ARTIO were direct and to the point. The special fuel surcharge introduced in 1990 arose for a particular purpose and was a response to specific and extraordinary circumstances that no longer existed and had not existed for a very long time. The 2008 variation to the Determination provided a mechanism to vary the rates to take into account changes in the price of fuel only and such applications could be made regularly to meet the volatility of the fuel pricing market. Because of that mechanism, Schedule 5 was redundant. Further, it was submitted that it was not fair or reasonable that the surcharge be continued to be paid when the circumstances underpinning it no longer existed and where the 2008 variation had rendered the surcharge redundant. To leave the surcharge in force represented a windfall gain for contract carriers that was unfair and which constituted an unreasonable impost on principal contractors. This application to delete Schedule 5, for the reasons given, was said to fall within the approach adopted by the Full Bench in Storeworkers - IGA Distribution Pty Ltd New South Wales Distribution Centres Award 2002 (2002124 IR at [44], namely, that where it is demonstrated that conditions are no longer fair and reasonable having regard to changed circumstances or because of developments in a business, industry or the economy generally and changes in the factors that had underpinned the particular condition or conditions in question at the time of making an award, then a variation or the making of a new award could be justified. 18 In support of its application, the ARTIO read an affidavit sworn by Mr Hugh McMaster, Secretary/Treasurer of the organisation. Mr McMaster provided documentary evidence concerning the history of the Determination from its original making, the variation introducing Schedule 5 in 1990 and the fact that the first Gulf War had concluded by late February 1991. Mr McMaster also dealt with the 2008 variation introducing a new agreed benchmark for the price of fuel and a process allowing for expedited regular reviews because of the volatility of the price of petrol. Mr McMaster also noted that, at the time of the TWU's original application in 2008, the AIP benchmark was 139.5 cents but since that time, the fuel index had reduced to 110.27 cents but notwithstanding this reduction in the price of fuel, there had been no change to the special fuel price surcharge. Relying on his background as outlined in his affidavit, without objection, Mr McMaster expressed the opinion that the special fuel surcharge was irrelevant and in oral evidence, accepted the proposition that its continuation after the 2008 variation amounted to double counting. 19 There was no opposition to the ARTIO's application from other respondent employer organisations. The Australian Industry Group (New South Wales) ("AIG") appeared in the proceedings and supported the application. Apart from Mr McMasters' affidavit supporting the application, no other party, including the TWU, filed evidence. 20 Essentially, the position of the TWU was that, as applicant, the ARTIO bore a significant onus to satisfy the Commission that there were grounds to exercise its discretion to vary the Determination by deleting Schedule 5, when the Schedule had been an important part of the Determination for over 20 years. In making this submission, the TWU argued that the approach of the Full Bench in Re Clerical and Administrative Employees (State) Award (No 2) (2005) 148 IR 56 at [157] and [158] should be followed. Those passages were to the following effect: [157] This means that in considering the substantial changes sought here from the current award arrangements, the Commission must be satisfied that in granting the application, it would be making an award which meets the statutory obligation in s 10 to make an award fixing fair and reasonable conditions of employment and one which conforms with the objects of the Act.

[158 ] Existing award conditions are, of course, not immutable. Subject to compliance with the requirements of the Act and applicable principles, award provisions may be varied upon the basis of the consent of the parties, or in the case of contested proceedings, if a case is made out on the evidence that the award conditions in question no longer provide fair and reasonable conditions of employment. In a contested case, the onus falls on the applicant to make out a case for an alteration to an award, which otherwise will usually remain undisturbed: Re Pastoral Industry (State) Award (2001) 104 IR 168 at 184, 185 and Transport Workers Union of New South Wales v New South Wales Taxi Industry Association [2005] NSWIRComm 407. 21 The remaining submissions for the TWU were to the following effect: (a) an important distinction between Determinations and awards is that contract Determinations (and this particular Determination) were cost recovery instruments - in those circumstances, the Commission would require clear and cogent evidence before making a variation reducing remuneration; (b) the original Determination had been made in 1984 and had been added to in a piecemeal fashion up to the present time and as such, it was something of a "mysterious" document, largely reflecting the consent position of the parties. In those circumstances the Commission would hesitate to adjust the "internal balance" brought about by the actions of the parties; (c) the 2008 variation was not a fundamental change to the formula for recovery of fuel costs but allowed applications to be made quickly to vary the Determination in respect to fuel spikes. The application therefore overcame having to wait six months to apply for a change in the fuel rate in circumstances where the contract carriers would have to bear the burden of the increase during that period. The change in the benchmark was of no particular significance as the previous arrangements had another identified benchmark. There was no evidence to explain how the change in the benchmark affected the calculation of running costs and it was unknown whether the new benchmark was higher, lower or the same as the previous benchmarks; (d) the mechanism arising from the 2008 variation did not necessarily result in the rate reflecting the current price of fuel because variations in the fuel rate arose from inserting a benchmark figure into a formula that had existed since the beginning of the Determination and the TWU was unsure how the price was then translated into the ultimate running costs. The benchmark rate was simply "plugged in the formula" and some calculation was applied and another figure was produced. It could not be assumed that, because a particular benchmark was identified, the running cost so calculated properly reflected the actual expenditure faced by contract carriers in running their vehicle; (e) there was no evidence about the arrangements between the parties whereby the benchmark is reflected in the cents per kilometre to be paid to carriers as a reimbursement. The TWU did not know how that arrangement was reached and the arrangement may have reflected some agreement about the operation of Schedule 5; (f) the essence of the TWU's case was that the applicant could not explain why this variation was not made at any time during the previous 20 years and could not satisfy the Commission that the Schedule 5 component had not been absorbed, reflected or treated in some particular way over those 20 years. The Schedule had remained in place and untouched for over 20 years although the employer Associations had undoubtedly examined it. That raised an inference that some arrangement had been reached at some point to treat the Schedule as having been effectively, in a broad sense, absorbed into the mechanism of the Determination; (g) on the evidence, the applicant had not established the proposition that the 2008 variation meant that the running costs specified were proper and accurate in reflecting the cost of fuel expended in running a vehicle, setting aside the component found in Schedule 5. There was no clear evidence that there was double-dipping or double recovery. 22 In making those submissions, the TWU avoided the shifting evidentiary onus of raising a serious question as to the failure of the Determination (as sought to be varied) to provide effective cost recovery absent the amounts in Schedule 5. The TWU specifically declined to contest that there was double counting because of the presence of Schedule 5 but was content to rest its case on the onus to be discharged by the applicant. When the proposition was put that any deficiency in the costs recovery rates of fuel could be met by a TWU application utilising the mechanisms introduced by the 2008 variation, the TWU stated that would be a significant application that would need to examine the whole formula. It would require beginning all over again and that task should not need to be undertaken when a different formula had been developed and adopted by the parties over of a number of years and had been continued by them. The TWU did, however, accept that their submission did not go so far as to say that the 2008 variation did not provide a mechanism capable of giving rise to a proper Determination that reflected the recovery costs of fuel for contract carriers. CONSIDERATION 23 Having regard to the history of the Determination, it is difficult to accept the submission made for the TWU that it is unaware of the mechanism of the formula that brings about a rate of reimbursement for fuel costs. The TWU is the principal union party to the Determination and since the inception of the Determination has been involved in numerous negotiations to bring about consent variations to the rates, including those relating to the price of fuel. It was curious that the TWU claimed to be unaware of that mechanism. Indeed, the TWU accepted that the 2008 variation was capable of producing an amount for fuel that properly reimbursed contract couriers for their running costs. In addition, there was no evidence to support the submission that there was some agreement over the years, either actual or implied, that the Schedule 5 rate was to continue or that the alleged agreement was that those rates were effectively absorbed into the rates generally to be applied via the Determination. The submission by Toll to the Full Bench in 2008 pointing out the anomaly of the continuance of Schedule 5 is indicative of the absence of such an agreement and the proposition that the Schedule was now a proper reflection of costs and should remain untouched. Further, the TWU submission was in error in suggesting that it was the 2008 variation that permitted frequent reviews: that was achieved on a monthly basis by the 1990 variation although never taken up by the parties. 24 In light of the lack of persuasiveness of those arguments presented by the TWU, its case therefore relies upon the quite proper consideration that the applicant bears the onus of establishing a proper case for variation. The Commission is satisfied that the applicant has discharged that onus. In Mr McMaster's evidence there was a graph showing oil prices from 1972 to 2008. That graph clearly showed the spike in 1990 and a further spike in approximately 1998 with some variations up and down until 2002 and then a continual, almost unbroken line of increases through to 2008. The Commission accepts the submission for the applicant that the effect of the 2008 variation is that the mechanism used for ascertaining fuel costs reflects the current price of fuel - the setting of a rate by reference to that figure therefore represents an important step in the recovery of actual fuel costs. If the use of the formula agreed to by the parties based upon that benchmark rate does not render such a result, then the answer to that problem is not to fix in perpetuity the anomalous rate now appearing in Schedule 5 but rather lies in rectifying the formula and that is in the hands of the parties. As already noted, the TWU case did not go that far but suggested it as a possibility. 25 In reaching those conclusions it must be understood that the 1990 application introducing Schedule 5 was designed to meet an urgent and potentially devastating situation that might have forced contract carriers out of the industry or worse, into bankruptcy. On its face, it was never intended to set a permanent rate but was meant to make urgent provision having regard to the special circumstances of the time and was clearly designed to be monitored month by month and to be varied upwards and downwards. The fact that did not occur does not lead to an overwhelming inference that the parties had agreed to absorb that rate into the overall rates provided by the Determination (especially in the absence of any evidence for such a proposition) but it does strongly suggest that, over a long period of time, the contract carriers have had the benefit of a rate that was likely to exceed the real costs of fuel in the operation of their vehicles. 26 The submissions for the TWU in this matter are not able to be reconciled with its submission in the 2008 variation. The grounds in support of that application, inter alia, asserted: (a) the proposed system "ensures" that contract carriers will be capable of achieving recovery of fuel; (b) the system proposed was an effective system of cost recovery; (c) the system proposed "ensures" that carriers would not have to suffer "swings and roundabouts" occasioned by fluctuating fuel prices. 27 In its 2008 submissions the TWU argued that the proposed system provided for fuel to be dealt with separately from the rise and fall formula of the Industry Determination. Clearly, the new provision was to deliver full cost recovery for fuel. Nowhere was it suggested by the TWU (or any other party) that the new system depended on the continuance of Schedule 5 in order to effectively bring about equitable cost recovery in relation to fuel. If that was the situation the variation could not have proceeded by way of consent, having regard to the submissions put on behalf of Toll. Indeed, in light of those submissions, the TWU was obliged to clarify its position before the Full Bench if the variation could only be effective by continuing the amounts payable through Schedule 5. 28 As earlier indicated, having considered these matters, the applicant has discharged its onus. The Commission accepts the evidence and submissions for the applicant and therefore grants the application to

delete Schedule 5 from the Determination. By agreement of the parties, that variation shall take effect from the first pay period on or after 1 January 2011.

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

Transport Industry - General Carriers Contract Determination Appliction by Australian Road Transport Industrial Organisation, New South Wales Branch for removal of Special Fuel Price Surcharge. [2010] NSWIRComm 133

At a glance

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Judgment (15 paragraphs)

Cases Cited (3)

Cited By (5)