Finance Sector Union of Australia v Pp Consultants Pty Ltd

[1999] FCA 631

FEDERAL COURT OF AUSTRALIA

Finance Sector Union of Australia v PP Consultants Pty Ltd [1999] FCA 631

INDUSTRIAL RELATIONS – respondent (a pharmacy) entered into an agency agreement with a bank  after the bank closed its branch office – respondent employed two former employees of the bank to conduct banking business from its pharmacy – whether the respondent conducting “business” of the bank - whether the respondent a “successor, assignee or transmittee” of the business of the bank so as to bind it with the Banking Industry Award

Workplace Relations Act 1996 s 149

ReAustralian Industrial Relations Commission, Ex Parte Australian Transport Officers Federation (1990) 171 CLR 216 considered
ACTEW Corporation Ltd v Media Entertainment and Arts Alliance (Industrial Relations Court, unreported, 7 August 1997) considered
Meat and Allied Trades Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR 90 cited
Health Services Union of Australia v North Eastern Health Care Network and Another (1997) 79 FCR 43 considered
Kenmir Ltd v. Frizzell and Others [1968] 1 ALL ER 414 followed
Woodhouse and another v Peter Brotherhood Ltd [1972] 3 ALL ER 91 cited
R.E. Hayman and Others v Neill [1960] AR 363 considered
Crosilla v Challenge Property Services (formerly Crothall & Co. Pty Ltd) [1982] 2 IR 448 followed
Manley v Gazal Clothing Co. Pty Ltd [1973] AR 547 cited

FINANCE SECTOR UNION OF AUSTRALIA v P P CONSULTANTS PTY LTD

NG 994 OF 1998

MATHEWS J
12 MAY 1999

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 994 OF 1998

BETWEEN:	FINANCE SECTOR UNION OF AUSTRALIA Applicant
AND:	P P CONSULTANTS PTY LTD Respondent
JUDGE:	MATHEWS J
DATE OF ORDER:	12 MAY 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The declarations sought by the applicant be refused.

2.The applicant pay the respondent’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 994 OF 1998

BETWEEN:	FINANCE SECTOR UNION OF AUSTRALIA Applicant
AND:	P P CONSULTANTS PTY LTD Respondent

JUDGE:	MATHEWS J
DATE:	12 MAY 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The respondent in these proceedings conducts a pharmacy in Byron Bay. Until September 1997 the St George Bank Limited (the bank) operated a branch office nearby in Byron Bay. On 12 September 1997 it closed its office and at the same time entered into an agreement with the respondent to conduct a bank branch agency from the respondent’s pharmacy premises. For this purpose the respondent employed two of the bank’s previous employees, one of whom was Mrs Patricia Moffatt. It is the applicant’s case that the respondent, by virtue of s 149(1)(d) of the Workplace Relations Act 1996 (the Act) is a successor, assignee or transmittee of part of the business of the bank so as to bind it with the St George Bank Employees Award in respect of the employment of Mrs Moffatt. The applicant therefore seeks declarations in the following terms:

   1.A declaration that the Respondent is:

   (a)A successor, assignee or transmittee of the business or part of the business of the St George Bank Limited (ACN 055 513 070) within the provisions of s 149 of the Workplace Relations Act 1996, and

   (b)The Respondent is bound by the Banking Industry – St. George Bank Employees – Award 1995, in respect to the employment of Ms Patricia Gail Moffatt.

2. The issues raised in the case relate to the transmission provisions of s 149 of the Act. Section 149 provides as follows:

   (1)Subject to any order of the Commission, an award determining an industrial dispute is binding on:

   (a)all parties to the industrial dispute who appeared or were represented before the Commission;

   (b)all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared);

   (c)all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did  not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute;

   (d)any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer;

   (e)all organisations and persons on whom the award is binding as a common rule; and

   (f)all members of organisations bound by the award.

   …

3. At the hearing of the matter evidence was given by Mrs Moffatt on behalf of the applicant and by Mr Batholomew Vanarey on behalf of the respondent. Mr Vanarey is a director of the respondent company and the manager of the pharmacy which conducts the agency for the bank. Both had previously sworn affidavits which were filed in these proceedings. There was also a volume of documentary material tendered on behalf of the applicant. From all this material the following factual situation emerges.

   FACTUAL BACKGROUND

4. Between about 1989 and 1997 Mrs  Moffatt was employed as a bank officer in the Byron Bay branch of the bank. She was employed on a permanent part‑time basis and was working about 20 hours per week. On 12 September 1997, as already mentioned, the bank closed its Byron Bay branch. By letter dated 8 September 1997 the bank informed Mrs Moffatt that she was to be retrenched from her employment. She was to be paid 50 per cent of normal retrenchment entitlements together with the usual statutory entitlements.

5. In the meantime the bank had been negotiating with Mr Vanarey to establish a branch agency at the respondent’s pharmacy premises. Mr Vanarey and his wife are pharmacists. Together they own the registered name, stock and goodwill of a pharmacy in Byron Bay known as “Byron Bay Plaza Pharmacy” (the pharmacy). The operation of the pharmacy is undertaken by the respondent which is the lessee of the premises occupied by the pharmacy. The respondent also owns or leases the fixtures and fittings located in the pharmacy and employs the staff engaged in the business of the pharmacy.

6. The negotiations between the bank and Mr Vanarey commenced in July 1997. The bragency agreement, as it was called, was signed on 10 September 1997. The principal parties to the agreement were the bank and the respondent, with Mr and Mrs Vanarey signing as guarantors. The respondent, described in the agreement as “the bragent”, agreed to “conduct a bragency and thereby be a bragent for and on behalf of St George at the bragency address namely Shop 4, The Plaza, Jonson Street, Byron Bay”. The agreement was terminable on one month’s notice by either party, with a provision that compensation would be paid if it was terminated by the bank before March 1999. Clause 4.1 set out the general duties of the bragent under the agreement:

   4.1In conducting the Bragency the Bragent shall:

   (a)collect deposits for and on behalf of St. George customers;

   (b)open deposit accounts for St. George customers and persons who wish to become St. George customers;

   (c)make loan referrals subject to the conditions contained in Clause 5 of this Agreement;

   (d)transact withdrawals for St. George customers upon their accounts;

   (e)perform such other financial transactions and manage such other financial products for and on behalf of St. George as St. George may reasonably require from time to time in writing;

   (f)ensure that the Bragency is open for business from the hours of 9.00 am to 5.00 pm Monday to Friday inclusive (excepting for public holidays); and

   (g)monitor the operation of the ATM to ensure that it is operating, including arranging for repair.

7. Under cl 5 the respondent acknowledged that it was not entitled to conduct loan interviews or accept loan applications from customers of the bank, and agreed to refer all customers seeking loans to the Ballina branch of the bank. Under cl 7 of the agreement the relationship between the bank and the respondent was acknowledged to be one of agency and to be strictly personal between them.

8. Clause 8, which is significant in this case, relates to staffing. Clause 8.1 is in the following terms:

   8.1      The Bragent shall nominate at least one of its employees (called the “Nominated Employee”) to work in the Bragency. Such Nominated Employee will at all relevant times remain the employee of the Bragent and is not in any way deemed to be an employee of St. George.

9. Clause 8.2 relates to training of nominated employees at the bank’s expense.

10. Under cl 9, all fittings and equipment supplied and installed by the bank (which included computer terminals, cash safe, filing cabinets, ATM and other equipment) remained the property of the bank.

11. Clause 12 relates to competition. The respondent agreed not to enter into any similar branch agency agreement with another bank during the term of the agreement or for three months after its termination. On the other hand it was acknowledged that the bank had the “absolute and unfettered right” at any time to establish and conduct a full branch operation at any location, notwithstanding is proximity to the respondent.

12. As for remuneration, no monies were paid by either party on the completion of the agreement. However it was agreed that the bank would pay the respondent monthly remuneration which would be calculated according to three “performance orientated” components, namely the average monthly deposits held by the respondent, the financial transactions processed by the respondent and the financial transactions processed through the ATM equipment installed at the respondent’s premises.

13. Until this time the respondent had conducted its pharmacy at Shops 1 and 2, Stage 3, Byron Bay Shopping Plaza in Byron Bay. The bank had conducted its operations from Shop 4b, Stage 1 of the Plaza. With a view to conducting the bank’s “bragency”, the respondent negotiated to obtain the lease of Shop 4b, the bank’s previous premises, together with adjoining premises, Shop 5. During the weekend between 12 September 1997, the date on which the bank closed its branch office, and 15 September 1997, when the bragency agreement with the respondent was to commence, the wall between the two shops was demolished. The combined premises were renovated to accommodate the pharmacy and the bank’s equipment, which remained in much the same position as previously. Later again, in March 1998, the respondent obtained the lease of an adjoining shop on the other side, and extended its premises still further.

14. As to staffing, the pharmacy had, before taking over the bragency, employed four pharmacists, four full‑time assistants and three part‑time assistants. In order to fulfil its obligations under the bragency agreement the respondent decided to employ two further staff members, one being full‑time and the other part‑time. For this purpose, on 28 August 1997 Mr Vanarey interviewed Mrs Cecily Mort, who was then a full‑time employee of the bank at Byron Bay, and Mrs Moffatt. During the interview with Mrs Moffatt Mr Vanarey offered her a permanent part‑time position, working 20 hours per week. She was told that she would be employed by the respondent and would no longer be an employee of the bank. However she would be doing essentially the same work as she had performed with the bank, and would be paid at the same hourly rate. Mrs Moffatt was told that she would be required in the future to assist in the pharmacy during quiet banking times. Mrs Moffatt says that Mr Vanarey told her during this conversation that she would be working under the same award as she had with the bank. He denies this. Indeed he says that he told Mrs Moffatt that she would be covered by the pharmacy award. If it were necessary to resolve this conflict I would be inclined to accept Mr Vanarey’s version. I think it most unlikely that he contemplated the possibility at that stage that the bank award might apply to the respondent’s employees. But it is not a matter which requires resolution here. If s 149(1)(d) of the Act applies it does so by operation of law, not by reference to representations made by the parties.

15. On 15 September 1997 both Mrs Mort and Mrs Moffatt started to work for the respondent as “nominated employees” under the bragency agreement. Mrs Moffatt said that although she was physically working in the pharmacy premises, her time was entirely taken with bank work, at least until November 1998, and she had no time available for pharmacy work. According to Mr Vanarey, Mrs Moffatt worked for about one hour each week on pharmacy business from the time she commenced her employment with the respondent. This increased to about two hours per week in April 1998 when there was a change in the configuration of the counters in the shop. Mrs Moffatt disputed this and said that it was not until November 1998 that she started to do any pharmacy work at all. From then on she spent one to two hours each week working in the pharmacy.

16. Mrs Moffatt described the bank work she performed in the pharmacy as being precisely the same as she had previously performed for the bank. She wore the same bank uniform, used the same bank equipment and was paid the same wages. Her duties were the same except in relation to bank loans. Previously both personal and property loans had been transacted through the branch office. The bragency agreement specifically excluded loans from the respondent’s authority. This position changed to some extent on 27 June 1998 when the bragency agreement was varied so as to authorise the respondent to process applications for personal loans from customers of the bank. Property loans remained outside its authority. Even then it was Mrs Mort, not Mrs Moffatt, who processed applications for personal loans.

17. In late January 1999 several conversations took place between Mr Vanarey and Mrs Moffatt, following which Mrs Moffatt’s work arrangements were significantly altered. Considerable evidence was directed to these conversations. There were inconsistencies between the evidence of Mr Vanarey and Mrs Moffatt as to certain aspects of them, but it is unnecessary for present purposes to resolve these conflicts. Suffice it to say that Mr Vanarey removed the stool which Mrs Moffatt had frequently used when she was performing her banking duties. He told her that it was inconsistent with pharmacy practice for employees to be seated at the counter. She told him that she had sore feet, and later provided a medical certificate confirming that she suffered a painful heel condition. She was sent for workplace assessment at a local rehabilitation centre which recommended that she should alternate her standing counter duties with seated duties. Subsequently, in early February 1999, her work arrangements were altered so that she spent approximately half an hour standing at the front counter performing banking work, followed by another half hour seated in an office performing clerical duties for the pharmacy. This arrangement subsists to this day.

    THE SUCCESSION ISSUE – THE PARTIES’ CONTENTIONS

18. The applicant, through its counsel Mr Docking, urged that the respondent, in taking over most of the work previously conducted by the bank at Byron Bay, fell within s 149(1)(d) in that it was the successor, assignee and transmittee of part of the bank’s business. Mr Docking pointed out that the duties undertaken by Mrs Mort and Mrs Moffatt on behalf of the respondent were precisely the same as those which they had performed for the bank, apart from the acceptance of home loans and personal loans. They (the employees) were using the same equipment in the same premises. Accordingly, it was submitted that there was a substantial identity between the previous activities carried on by the bank and those later conducted by the respondent. It does not matter, according to this submission, that the successor was also conducting another substantial activity: ReAustralian Industrial Relations Commission, Ex Parte Australian Transport Officers Federation (1990) 171 CLR 216 at 229‑230 (ATOF). The applicant acknowledged that, in order to constitute successorship, there must be some legal nexus or privity between the respondent to the award (the bank) and its successor (the respondent). It relied upon the documentation, particularly the bragency agreement, to establish this relationship. Mr Docking sought to distinguish cases concerning the NSW Long Service Leave Act 1955 (referred to later). He pointed out that s 149(1)(d) differs from its legislative predecessor in that it attaches to the successor, assignee or transmittee of part only of a previous employers business. As such, Mr Docking urged, it clearly applies to the circumstances of this case.

19. Mr Dixon for the respondent stressed that, in order for s 149(1)(d) to apply, the previous employer’s business, or part of it, must move to the successor, assignee or transmittee. In this case the agency agreement enabled the bank to continue to conduct its business in Byron Bay through the services provided by the respondent. But the business remained that of the bank. The bank continued to make profits from interest, credit charges and all the other transactions which were conducted through the respondent’s “bragency”. It follows, according to Mr Dixon, that the respondent acquired no part of the bank’s business. Nor, he contended, was there any succession, assignment or transmission from the bank to the respondent: there was no transfer of goodwill between them; all relevant fittings and equipment remained the property of the bank; moreover there was no guarantee of continuity: the arrangement was terminable on one month's notice. It follows, according to Mr Dixon, that the pre‑conditions for the operation of s 149(1)(d) have not been met in this case.

    DISCUSSION OF ISSUES

20. In determining whether s 149(1)(d) applies, two questions need to be addressed. They are:

    1.Can it be said that the activities conducted by the respondent in its pharmacy premises are part of the business of the bank?

    2.If so, does the respondent conduct those activities as successor, assignee or transmittee from the bank?

    These questions are not mutually exclusive. Factors which are relevant to one are also relevant to the other. But they raise different issues and merit separate discussion. An affirmative answer to both questions is required if s 149(1)(d) is to apply.

21. Before turning to discuss these issues I should adopt as a starting point that s 149 is to be beneficially construed. As Moore J said in ACTEW Corporation Ltd v Media Entertainment and Arts Alliance (Industrial Relations Court, unreported, 7 August 1997) p 7:

    … The first point to be made about the operation of  s 149 is that it should be beneficially construed so that employers do not “avoid the settled rights of employees”: see George Hudson Ltd v Australian Timber Workers’ Union (1923) 32 CLR 413 at 435‑436.5, per Issaacs J. Thus, in my opinion, whether there has been succession, transmission or assignment of a business should not be approached on some narrow basis. …

    Is the respondent conducting part of the business of the bank?

22. The applicant relies strongly upon the High Court judgment in ATOF. That case involved the construction of the membership eligibility rules of ATOF, an association of employees. The rules provided that persons were eligible for membership if they were employed in the transport industry by, inter alia, the NSW Commissioner for Motor Transport (the CMT) or “a successor or assignee or transmittee of the business of any of the foregoing”. The issue before the court was whether the NSW Roads and Traffic Authority (the RTA) was the successor of the CMT. The CMT had been abolished by legislation which had provided that the functions formerly administered by it be amalgamated with those performed by the Department of Main Roads (the DMR), and that they be vested in the RTA. The former functions of the DMR constituted the major activities of the RTA and most of the latter’s staff were former employees of the DMR. The substantial issues before the High Court were whether the CMT’s activities constituted a “business” and, if so, whether the RTA was a successor of the business. The High Court answered both questions in the affirmative. As to what constituted a “business”, the court rejected a submission that the activities of the CMT, and later the RTA, were administrative only and “outside the world of productive industry and organised business”. The court made the following observation (p 226):

    … Of all words, the word “business” is notorious for taking its colour and its content from its surroundings: see Federal Commissioner of Taxation v. Whitfords Beach Pty. Ltd. (32). Its meaning depends upon its context. It is common and apt to speak of “the business of government”: see, for example, Conway v. Rimmer (33). In the context of sub‑r. (1)(a)(v) it is plain enough that the successor clause relates back to the activities of public authorities and departments of government, which do not or may not carry on commercial undertakings for profit, as well as to such undertakings. Indeed, the structure of sub‑r. (1) suggests that the eligibility rule is primarily concerned with public sector employment; the first four paragraphs in pars (a)(i) to (iv) inclusive are directed to such employment as are the first twelve employers listed in par. (a)(v).

1. Later the court said (p 229-230):

   The R.T.A. and the P.S.A. submit that a substantial identity between the business formerly carried on by the C.M.T. and the business now carried on by the R.T.A. must be shown to exist in order to constitute the R.T.A. as a successor of the business of the C.M.T. We do not agree that Shaw v. United Felt Hats Pty. Ltd. (40) supports such an absolute proposition. … According to the natural reading of the language of the successor clause, the inquiry should be directed to ascertaining whether the business or the activities formerly carried on by the C.M.T. are still carried on by the R.T.A., notwithstanding that the R.T.A. also carries on one or more other substantial activities. The question then is whether the purpose of the clause viewed in this context requires a different reading for which the respondents contend. … on the reading of the clause which we favour, the ultimate issue is whether there is a substantial identity between the old activities and those now carried on by the R.T.A. which correspond with the old activities.

2. This last passage is potentially relevant to both questions posed here, namely as to what constitutes a “business”, and also as to what will amount to a succession or transmission under s 149(1)(d).

3. There has been a surprising dearth of cases which directly relate to s 149(1)(d). I was referred to only two further cases under that provision which are potentially relevant to the issues raised here. They are, Meat and Allied Trades Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR 90 and Health Services Union of Australia v North Eastern Health Care Network and Another (1997) 79 FCR 43. In Meat and Allied Trades the Industrial Relations Commission found that s 149(1)(d) did not apply in relation to an abattoir previously conducted by a company which had gone into liquidation. Twelve months after the abattoir had ceased operations, the liquidator sold the plant, equipment and stock to another company which recommenced the abattoir business at the same premises, using some of the same employees. The Commission made the following observation (p 96):

   … acceptance of the proposition that there must be an ongoing concern before a business is caught by s 149(1)(d) is not a necessary precondition to a determination in this matter. What is necessary is that there be a substantial identity of the business of the employer party to the dispute and the business of the employer sought to be bound by the Award through the operation of s 149(1)(d). In Hillman (at 270) the Court generally accepted there was no reason to doubt the identity of the business where: “It was carried on in the same place, by the same staff, doing substantially the same work”.

   Similarly, evidence that a business was passed as an ongoing concern from one proprietor to another will often be the best means of establishing the identity of the business in the hands of the recipient with that carried out by the former employer party to an industrial dispute. But the identity of one business with another is not established merely by the fact that the business of the later employer is conducted at the same place, even if that employer must use that place for a similar range of work.

4. The substantial basis for the Commission’s finding that s 149(1)(d) did not apply is encapsulated in the following passage (p 96):

   … The evidence discloses that all trading activity and all employment ceased for a period of at least 12 months from the date of the winding‑up order. The subsequent sale of the assets of the abattoir was not associated with a sale or transfer of matters or interests which would indicate that there was a succession to a business, as distinct from a succession to the ownership of the necessary means whereby a business could be carried on. Thus no employment was transferred, and no existing or prospective commercial activity of the kind normally associated with a business was transferred.

5. In Health Services Marshall J found that s 149(1)(d) applied when the provision of mental health services were outsourced by the Victorian Government to non‑government community based organisations. Marshall J rejected a submission that the provision of health services was a public function rather than a business. He expressed the view that the word business “is a word of wide import” and observed that “[a]ctivities of a State constituted by the employment of persons and the provision of services to the public do not cease to be ‘business’ merely because they are not generally conducted for profit” (p 55). His Honour adopted the test enunciated in ATOF, referred to earlier, and found that there was a “substantial identity” between the activities previously carried on by the State in the provision of mental health services and those conducted by the community based organisation (p 57).

6. These cases would appear to support the applicant’s contention that the respondent, after September 1997, was conducting part of the business of the bank. For there was a substantial identity between the previous activities of the branch and those subsequently carried on by the respondent. Moreover they were being conducted in the same place, and by the same staff, who were doing substantially the same work as previously.

7. Other considerations however militate against this proposition. Some of these are referred to in cases involving continuity of employment for the purpose of long service leave. Whilst these cases are not directly on point here, many of the issues they raise are relevant to the application of s 149(1)(d).

8. Amongst these is the question of whether the subsequent employer receives a “going concern”. This was referred to by the Commission in Meat and Allied Trades Federation. It was regarded as a central consideration in Kenmir Ltd v. Frizzell and Others [1968] 1 ALL ER 414. The court in that case was required to determine whether there had been a transfer of a business so as to provide continuity of employment in the assessment of redundancy entitlements. It found that there had been such a transfer, notwithstanding that there had been no sale of goodwill to the purchaser. The court made the following observation (p 418):

   … In deciding whether a transaction amounted to the transfer of a business, regard must be had to its substance rather than its form, and consideration must be given to the whole of the circumstances, weighing the factors which point in one direction against those which point in another. In the end, the vital consideration is whether the effect of the transaction was to put the transferee in possession of a going concern, the activities of which he could carry on without interruption. Many factors may be relevant to this decision though few will be conclusive in themselves. Thus, if the new employer carries on business in the same manner as before, this will point to the existence of a transfer, but the converse is not necessarily true, because a transfer may be complete even though the transferee does not choose to avail himself of all the rights which he acquires thereunder. Similarly, an express assignment of goodwill is strong evidence of a transfer of the business, but the absence of such an assignment is not conclusive if the transferee has effectively deprived himself of the power to compete…

9. Similarly, in Woodhouse and another v Peter Brotherhood Ltd [1972] 3 ALL ER 91, a case involving a similar issue, Denning MR implicitly required that the new owner take over the business “as a going concern”.

10. These cases clearly favour the respondent. For on no interpretation of the transaction between the bank and the respondent could it be said that the latter acquired any part of the bank’s business as a going concern. The bank clearly retained that for itself. Nor was the respondent entitled, under the bragency agreement, to conduct the bank’s activities without interruption. The agreement was terminable by either party upon one month’s notice.

11. Also favouring the respondent, but on a slightly different issue, are the two Australian cases of R.E. Hayman and Others v Neill [1960] AR 363 and Crosilla v Challenge Property Services (formerly Crothall & Co. Pty Ltd) [1982] 2 IR 448. Both cases involved continuity of employment for the purposes of long service leave. The facts in Hayman are relatively complex and do not bear repetition here. The NSW Industrial Commission discussed what might amount to the “transmission” of a business under the relevant legislation. It concluded that there had been no transition of the business or any part of it in that case. Most significantly, in relation to the transmission of part only of a business, the Commission said: “… it is our view that to be a part of a business the part must itself constitute a business.”(Hayman, p 370) The reasoning in Hayman was expressly approved in Manley v Gazal Clothing Co. Pty Ltd [1973] AR 547. Further, Marshall J in Health Services said “I do not doubt the correctness of Hayman, but it is of little assistance in the unusual circumstances of the matters before this court. …” (Health Services, p 54).

12. Crosilla was, like Hayman, concerned with the purported transmission of part of a business. The proprietor of an Adelaide motel, which had previously used its own staff (including the appellant) to clean its premises, contracted with the respondent to provide cleaning services in the motel. The appellant’s employment with the motel was terminated and she immediately commenced employment with the respondent under which she performed essentially the same cleaning work at the motel as she had previously done when employed by the motel. The question was whether the appellant had continuity of service for long service leave purposes. The succession provision in the relevant legislation required that there be a “transfer, conveyance, assignment or succession” of a business or any part of a business. Russell J of the South Australian Industrial Court found that it did not apply. He made the following observation (p 457):

    Both before and after the cleaning contract was entered into, both Town House and the respondent continued to run their own businesses. The only difference, in the case of Town House, was that instead of running its business as a motel proprietor by employing servants to perform the necessary cleaning work, it reorganised the method of running its business by engaging an independent contractor to perform the cleaning work: in the case of the respondent, it was still running its business as a cleaning contractor. The only difference in the respondent’s business, after it won the Town House contract, was that it had one more customer and, for that purpose, it engaged additional servants, some of whom had previously been employed by Town House.

    It seems to me to be crystal clear that the whole of Town House’s business has remained intact at all material times.

    Mr McRae argued strenuously, however, that the change in the method by which Town House ran its business constituted a transfer of part of its business. He argued that Town House had transferred to the respondent its business of cleaning and servicing the guest accommodation at the motel. The fallacy of that argument, in my opinion, lies in the fact that no time did Town House run a cleaning business. What it did, and still does, is to operate a fully licensed motel. As a necessary adjunct to that, by one means or another, it caused its premises to be kept clean. It achieved this, in the first place, by contracting with servants to do the cleaning work and, later, by contracting with the respondent to perform the same work. In order to constitute a transmission of business, or part of the business, it must be shown that the business itself, or a severable part of the business itself, has been transferred to the transmittee. It is not sufficient merely to show that, as a result of the contract entered into with a contractor, the contractor has been given a license to enter the principal’s premises to perform certain functions, which are ancillary to the running of the business, by the principal. And that is, in my opinion, all that has been shown here.

13. With this background I return to the immediate case. It raises issues which have not directly been dealt with in any of the decided cases. On the one hand, ATOF and Health Services might be seen as supporting the proposition that a person who commences to conduct a group of activities formerly conducted as part of a predecessor’s business is himself conducting a part of that business. However I do not take those cases to be suggesting that a substantial identity between the activities carried on by the two successive entities is, on its own, sufficient to establish succession under s 149(1)(d). If it were, it would, for example, encompass the contracting out of cleaning work in Crosilla, a decision which, with respect, I think is patently correct.

14. As Mr Dixon points out, the respondent has no direct interest in any of the transactions conducted from its premises. The profit from these transactions is retained by the bank, which makes a monthly payment to the respondent based on the number of transactions completed. The respondent has no discretion as to how the bank business is to be transacted. It cannot, for example, determine the interest rate upon which loans are to be granted. It is bound by the terms of the bragency agreement to conduct the whole of the bank’s business in accordance with the bank’s direction. In effect, the respondent has become the intermediary for transactions between the Byron Bay community and the bank, thus enabling the bank to continue its operations in that area. Can it then be said that the respondent is conducting part of the bank’s business? In my opinion the answer must be in the negative. Certainly it could not be said that the part of the bank’s business conducted by the respondent itself constitutes a business (Hayman). Nor has the respondent acquired a going concern which it can conduct without interruption (Kenmir).

15. To this I would add a further element, namely that in order to conduct a business a person must be able to exert at least some control over its activities. The respondent has, as already mentioned, virtually no control at all over any of the bank’s activities conducted from the pharmacy premises.

16. To conclude on this issue, the respondent is the lessee of the pharmacy premises; it owns the fixtures and fittings in those premises; it employs the pharmacy staff and provides “administration and management support” for Mr and Mrs Vanarey in the pharmacy. It now also, pursuant to the bragency agreement, employs staff to perform bank duties as set out in  cl 4.1 of the agreement. To suggest that in doing so it is conducting part of the business of the bank is, in my view, extending the concept of a “business” beyond all realistic levels. I therefore find that the respondent is not conducting any part of the business of the bank.

17. This finding is sufficient to resolve the matter in favour of the respondent. However for the sake of completeness I should deal briefly with the issue of succession. For even if, contrary to the above finding, the respondent is conducting part of the business of the bank, I would not be able to find that it was doing so by way of succession, assignment or transmission from the bank.

18. The respondent under the bragency agreement acquired nothing from the bank except the entitlement to conduct certain banking activities for which it was to receive a monthly fee. The arrangement was terminable on one month’s notice. No goodwill passed hands. Nor would one expect it do so under such an arrangement. As the court observed in Kenmir, an assignment of goodwill is strong evidence of a transfer of a business, but the absence of such an assignment is not conclusive “… if the transferee has effectively deprived himself of the power to compete.” (Kenmir, p 418). The court continued (p 418): “[t]he absence of an assignment of premises, stock‑in‑trade or outstanding contracts will likewise not be conclusive, if the particular circumstances of the transferee nevertheless enable him to carry on substantially the same business as before.”

19. Every one of these elements is absent in this case. The bank has expressly preserved its power to compete (if “compete” is the right word, for in reality the bank would be competing with itself). Certainly the respondent obtained a lease of the premises previously occupied by the bank, but this was not achieved through any arrangement with the bank itself. No equipment was acquired from the bank: under the bragency agreement all fittings and equipment which were supplied and installed at the respondent’s premises remained the property of the bank and were to be delivered up to the bank upon termination of the agreement.

20. However broadly the concept of succession, assignment or transmission under s 149(1)(d) is to be construed it cannot, in my view, encompass the arrangement between the bank and the respondent in this case. The respondent acquired no business in its own right. It gained the entitlement to transact the bank’s business from its premises, but it did not gain any interest in the bank’s activities. Mr Dixon raised the question of whether an agent can ever be the successor of a business under s 149(1)(d). It is unnecessary to answer this question here, but I find it difficult to envisage that parties who are negotiating at arm’s length and who create an agency at will, could ever fall within this provision. Be that as it may, in the particular circumstances of this case I am satisfied that there has been no succession of the bank’s business so as to attract the operation of s 149(1)(d).

21. It follows that both declarations sought by the applicant must be refused. The applicant is to pay the respondent’s costs.

I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mathews.

Associate:

Dated:             12 May 1999

Counsel for the Applicant:	Mr B Docking
Solicitor for the Applicant:	Turner Freeman
Counsel for the Respondent:	Mr H J Dixon
Solicitor for the Respondent:	Allen Allen and Hemsley
Date of Hearing:	20 and 21 April 1999
Date of Judgment:	12 May 1999