Truckbug Pty Ltd v Blue Circle Southern Cement Ltd

UNION Transport Workers' Union of Australia, New South Wales Branch, SYDNEY. LEGAL REPRESENTATIVES: RESPONDENT Mr K G Bennett of counsel

AGENT FOR RESPONDENT Australian Business Lawyers SYDNEY.

CORAM: PETERSON J THE HON. DR MACKEN LLD MR TINNEY.

TRUCKBUG PTY LTD & BLUE CIRCLE SOUTHERN CEMENT LIMITED

Notification of claim for compensation by Truckbug Pty Ltd pursuant to s348 of the Industrial Relations Act 1996.

1 The part-time members of the Tribunal are in agreement on the outcome of these proceedings; this decision constitutes the reasons for the decision of those members only (s352(ii) of the Industrial Relations Act 1996 ('the Act')).

2 The applicant, Truckbug Pty Limited, is the family company of Gary Blair and operated as a contract carrier to Blue Circle Southern Cement Ltd ("Blue Circle") working from its Seven Hills warehouse.

3 Although Truckbug is the applicant and was the contractual party involved in that relationship, we refer to Mr Blair as representing the reality of the circumstance. In November 1997 Mr Blair bought a 12 tonne tabletop vehicle which was in work at Blue Circle, being then operated by one Reg Hay through his company, Regay Transport Pty Ltd. Again, Regay and Mr Hay were operating as a contract carrier to Blue Circle. The purchase price paid for the vehicle was $130,000 which comprised approximately $40,000 for the vehicle and a $90,000 premium. These facts satisfy two of the five jurisdictional requirements imposed by s346(1) of the Act as contained in subss.(1)(a) and (1)(b).

4 An affidavit from Mr Hay was tendered in evidence which said that he had been informed by a previous Blue Circle Manager, Mr Matheson, that "there was no goodwill in the yard". He deposed that he informed Mr Blair of this when he bought the truck. He did not demur from the proposition that the price of $130,000 paid by Mr Blair included a premium of the order of $90,000. Save for that reference from Mr Hay, there is no evidence that the company took any steps to inform Mr Blair that it was not a requirement of Blue Circle that a premium or fee be paid (s346(1)(e)).

5 The evidence establishes that within the experience of those called to give evidence, each time a contract carrier replaced another in the yard, it was in circumstances where the truck was sold at a premium with the buyer having the expectation of access to the work done by the outgoing contract carrier. As a matter of fact we are satisfied that the practice at the yard was for this to occur. Indeed Blue Circle offered Truckbug and Mr Blair the opportunity in October 1999 to sell his vehicle in work but an agreed alternative was later adopted. An issue was raised by Blue Circle through its counsel, Mr Bennett, that this practice to which we have referred did not constitute a "custom and practice" within the meaning of s346(1)(c) of the Act and, that being a fundamental jurisdictional requirement, the Tribunal lacked jurisdiction to make any order in the matter. We will return to that issue.

6 The applicant worked under the contract between 1997 and January 2000, when Blue Circle terminated the contract, leaving Truckbug with its truck but no contract, either in hand or to sell.

7 Truckbug seeks an order from the Tribunal that Blue Circle pay an amount of $115,000 being $90,000 representing goodwill, premium or fee and $25,000 representing the loss ultimately incurred by Truckbug after it sold the vehicle it had been operating in the relationship at the time of its termination.

8 The termination of the contractual relationship arose from Blue Circle's eventual conviction that Truckbug, through Mr Blair, was incapable of adhering to an operating requirement of Blue Circle which had been stipulated to Mr Blair and the two other contract carriers involved as fundamental, namely that if any delay in effecting a delivery was to be or being experienced, the driver was to contact Blue Circle's allocator/s so that consideration could be given to making alternative arrangements for delivery. This requirement arose in the context where Blue Circle was seeking to develop and maintain an edge in a highly competitive market for the delivery of bagged cement.

9 The work involved under the contract was the delivery of bagged cement and other products, some of which was unloaded by mechanical means but much of which was required to be unloaded by hand. It thus involved heavy and time consuming labour to effect much of the deliveries. 10 The evidence involved a detailed trawling through the minutiae of particular incidents which occurred in August, September, October, December of 1999 and January 2000. It was Blue Circle's position that none of the particular incidents themselves would be relied on as justifying the termination of the contract but that, taken together, they indicated a course of conduct which illustrated the refusal or inability of Mr Blair to comply with their customer service requirements. We have to agree with the concession but, in looking at the course of conduct suggested to be represented by these facts, we find that while Mr Blair on occasion showed some failings of relevance, in other incidents the conduct appears to us to have been considerably less serious than postulated by the company. Further, there is no evidence of any damage having actually been suffered by Blue Circle as a result of the incidents even as they were alleged against Mr Blair. 11 Three of the alleged incidents will illustrate our concerns. In August 1999 Mr Blair was given four deliveries to be effected between Seven Hills and Taren Point. He was asked by the allocator to telephone the Taren Point customer and arrange a delivery time, this delivery appearing to be critical. He did this and arranged to be at the customer's premises no later than 5pm at Taren Point. He effected the first two deliveries on the run at Wetherill Park and Fairfield, but he felt and, we would accept as obvious, that he could not effect the Greenacre delivery and be at Taren Point by 5pm. He attempted to ring allocations with his mobile phone but found it inoperative because the battery had gone flat. He was under time pressure to get to Taren Point and rather than seek out a public phone he decided to cut out the Greenacre delivery and proceed to Taren Point, he arriving there shortly after 5pm. A complaint of the company of course is that Greenacre was a failed delivery, the customer was disappointed and contact was not made with allocations. Mr Blair's position in evidence was that in hurrying to Taren Point he was concerned to ensure that, having decided to cut Greenacre, he would not fail to deliver to Taren Point because if he did Blue Circle would have two unsatisfied customers rather than one. We consider that there is room for the view that the exercise of judgment by Mr Blair was reasonable in the circumstances even though it might not have been what Blue Circle would have preferred. 12 The second incident occurred in October 1999 when Mr Blair had been given a final warning that a failure to comply with the requirements would cause his termination. He loaded a delivery for Cammeray shortly after 5am in the morning. Two forklift drivers were utilised in the loading, one of which had his delivery sheet and was loading to that. It appears that Mr Blair was on the truck organising the loading and a file note made by an allocator suggests that the second forklift loader was being directed what to load by Mr Blair, who disputes this. His evidence was that the lighting was poor or not working on the day, as he contended it often did, and that he did not notice that one of the 10 pallets loaded contained incorrect product. He drove from Seven Hills to Cammeray and upon effecting the delivery discovered the error. Because of his anxiety about the error causing the risk of his termination, he decided not to contact allocations, but to return to the yard, exchange the product and return to Cammeray, at his own expense, to satisfy the delivery. As he drove away from the yard the second time with only one pallet on board he was observed by the Manager from Picton, Mr Moore, who was arriving at the Seven Hills site. Mr Moore made enquiries as to why a truck was going out with only one pallet and enquiries were made through the forklift operator as to what had happened. We accept unreservedly that Mr Blair's failure to advise allocations in this respect constituted an error but again his state of anxiety goes some way to explaining his conduct. What does concern us though, is that upon his departure from the yard the second time Blue Circle, through Mr Moore and its enquiries, became aware of the events. It was then in a position to make any alterations to plan that this may have required. Blue Circle's complaint (as recorded again through a file note made by the allocator, Mr Render, who was not called to give evidence) was that he could have effected the replacement of the wrong product in conjunction with other deliveries that he was to make in the general direction of Cammeray that day. The file note also suggests that other deliveries could not be effected as promised on the day. No details of these deliveries or the reaction of customers was evidenced. 13 The third incident to which we refer is that which caused the eventual termination. Mr Blair delivered a truckload of bagged cement to Brookvale. During the course of unloading the cement by forklift it appears that it rained and the customer later claimed a credit for the load due to rain damage. It was accepted by Blue Circle that Mr Blair had delivered the product in the rain without it having been covered by a tarpaulin. 14 Mr Blair's evidence on this point was that the load was tarped in transit. Rain was threatening. During the course of the unloading it commenced to rain but the forklift driver wished to continue to finalise the unloading, which was nearly complete, regardless. The forklift driver signed the delivery docket recognising that the goods were received in good condition, a fact which appears only to have come to Blue Circle's attention during the course of these proceedings when a call was made for the production of the delivery docket. Again, this event does not conform with the same type of conduct referred to in the other circumstances, but nevertheless, on the evidence before us, Mr Blair must be exonerated of any blame in the matter. 15 While we accept that management may have experienced a fair degree of frustration in its dealings with Mr Blair, the incidents we have summarised, if involving an employee, we consider could not justify a termination of employment. It is one thing to adopt a policy of general application but quite another thing to require blind adherence to it without regard for developing circumstances. The Taren Point delivery is an illustration in point. Had the mobile phone not failed and had a public telephone presented itself readily, in working order, Mr Blair may have been able to satisfy the company's requirements without jeopardising the Taren Point delivery. 16 The fourth incident to which we refer concerns another series of four deliveries involving hand unloading in four areas in the western suburbs. Mr Blair left the yard at 3.50pm with the objective of making all four deliveries. His evidence is that he said to Joanne Flicker, an office person, that she should contact allocations and have them ring his customers to have them stay open to await his arrival and that he would be doing his best to make the deliveries. He rang allocations himself at about 4.15pm to advise that he could not get parking at the first delivery point and to have them contact the customer to grant him access. We would have thought that allocations would be becoming concerned at this stage that four deliveries were to be now effected between 4.15 and 5pm. Nevertheless, the first delivery was made and Mr Blair then proceeded to attempt to make the other deliveries but found each location closed. He rang both allocations and the Blue Circle office but found both of them closed and telephones switched off. 17 Section 346(1) of the Act provides a number of jurisdictional barriers to the making of an order. By s.346(1)(c) it is necessary, in order that the carrier may claim compensation from the principal contractor, to demonstrate that "it is a custom and practice in the relevant section of the industry or business of the principal contractor that such a premium or fee be paid". 18 Blue Circle submitted that there is no such "custom and practice" in existence; this was the only matter raised by s.346 which was so disputed.. It was argued that a custom and practice must be "certain, reasonable, notorious and must not offend against the intention of any legislative enactment or any award". This quotation comes from the judgment of Sharkey P (Chief Commissioner Coleman and Beech C to like conclusion in separate decisions) in The Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union of Worker, W.A. Branch s v Western Australian Mint 76 W.A.I.G. 932 at 935). It may be observed that the issue in that case concerned whether employees were entitled to rely upon the long standing payment of a tool allowance to require its continuation despite contrary provisions in the award. The quotation we have cited refers to a "custom", not a "custom and practice". 19 Clause 11 of the Transport Industry - General Carriers Contract Determination provides: Selling of Vehicles

No circumstances shall exist where a vehicle is sold with work. No Contract Carrier shall be engaged to perform work who does not supply a vehicle approved by the Principal Contractor or who, personally, is not approved by the Principal Contractor. 20 It was submitted the first sentence of the clause operates to prevent the sale of a vehicle with work, so any agreement to sell contrary thereto necessarily offends against the Contract Determination and accordingly could not conform to a custom or practice within the meaning of s346(1). 21 This issue raises the juxtaposition of the statutory provisions under which this claim is brought and the provisions of cl.11 of the Determination. It is readily apparent that the legislation anticipates that a remedy will be available, providing all jurisdictional requirements including that of the custom and practice of selling vehicles in work are met. We understand the legislative scheme to be directed to ensuring that where such a custom and practice exists and as the remaining provisions suggest the principal contractor "knew, or ought reasonably to have known", of that matter the contract carrier may bring a claim seeking compensation. 22 The legislation imposes no definition of "custom and practice". For example, it does not specify that a custom and practice should conform with the general conception of "custom" or the phrase sometimes utilised in industrial jurisprudence of "custom or usage". Where there has existed a system by which to all intents and purposes a contract carrier would not be able to obtain work in a yard without having purchased that opportunity either from the principal contractor directly or indirectly through another outgoing contract carrier, we consider that conforms with the concept of a custom and practice. The evidence here establishes that to be the case. The only evidence of actual sales entailed the payment in each case of a premium. 23 We find it unnecessary to consider whether the operation of that provision is effective in the face of what might be described as an illegal custom or practice. We do not agree that the sentence "No circumstances shall exist where a vehicle is sold with work." works to actually prevent the sale of trucks in work in the usual way. It is apparent that if its intention was to ban the sale of trucks in work it has been quite ineffective in the instant case. We consider cl.11 is couched in terms of admonition rather than prohibition. It seems to us that the intention behind the provision may be gleaned by its context in cl.11 as a whole. If it were intended to operate as a prohibition there may be room for that language to be employed as against a principal contractor. However, a contract carrier is not in any real or literal sense able to sell a vehicle with work. All he can do is sell a vehicle to a buyer of the vehicle in a context where that buyer understands the principal contractor will continue to offer work to the contract carrier. That expectation places the outgoing contract carrier in the queue of respondents should the arrangement fail to the loss or at the expense of the incoming contract carrier. 24 It seems to us that the expression "custom and practice" in s.346(1)(c) is intended to have a somewhat looser scope than that of "custom" dealt with in authorities such as The Minister v Dey [1919] AR 19. In that matter Curlewis J, with whom Edmunds and Rolin JJ agreed, said at p.25: Now, I am inclined to think that where there is a standing custom in an industry, and an award is made which is not in terms inconsistent with that custom, the award is to be read as leaving the custom untouched. This seems to be reasonable, and, as I shall point out presently, is supported by authority.

On the other hand, I think that if the award is plainly inconsistent with the previously existing custom, the making of the award puts an end to the custom, at any rate to the extent of the inconsistency. 25 In Hackshall's Limited v McDowell [1930] AR 620 at 623 Cantor J said: Custom is defined in Halsbury's Laws of England , vol.10, p.218, as "a particular rule which has existed either actually or presumptively from time immemorial, and has obtained the force of law in a particular locality, although contrary to or not consistent with the general common law of the realm." There is no evidence which it can be suggested even remotely establishes the existence of a custom so defined, and I think the learned Magistrate really used the word "custom" - as it sometimes is used - in the sense of "usage". Usage is defined by the same authority at page 249 of Vol. 10, as - ". . . a particular course of dealing or line of conduct generally adopted by persons engaged in a particular department of business life; or more fully, as a particular course of dealing or line of conduct which has acquired such notoriety that, where persons enter into contractual relationships in matters respecting the particular branch of business life where the usage is alleged to exist, those persons must be taken to have intended to follow that course of dealing or line of conduct, unless they have expressly or impliedly stipulated to the contrary; that is to say, that a rule of conduct amounts to a usage if so generally known in the particular department of business life in which the case occurs that, unless expressly or impliedly excluded, it must be considered as forming part of the contract."

Moreover, every usage must be certain, reasonable and notorious, that is to say, so notorious in the branch of trade or commerce that any person in that branch who entered into a contract of a nature affected by the usage must be taken to have done so with the intention that the usage should form part of the contract. 26 The phrase "custom and practice" could not possibly conform with the definition of "custom" as in Halsbury. We think it is more directed to a situation which in fact prevails - an established practice - an unavoidable fact rather than the older expressions. 27 Where the transport industry has been rife with the practice, well known to all, of contract carriers selling their vehicle with a pre-arranged opportunity to work in a particular yard, which pre-arrangement has led to the addition of a premium to the value of the truck, it is simply unthinkable that the intention of the consenting parties to the Contract Determination and of the Industrial Commission of New South Wales in making it would have been to wipe out such rights as may have accumulated under that practice. 28 Having regard to all of the circumstances of the matter, the Tribunal is satisfied that jurisdiction exists to make an award of compensation in this case and that such an order is justified on the evidence. Having regard to the premium paid by the applicant, the fact that he obtained work from Blue Circle and that he was in no small measure a factor in the souring of the parties' relationship, we consider that an appropriate result in this case is that the respondent pay to the applicant the sum of $70,000. The Tribunal orders accordingly.

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