Keen v Health Corporation Ltd

[2008] FMCA 1622

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KEEN v HEALTH CORPORATION LIMITED [2008] FMCA 1622

INDUSTRIAL LAW – Employment – breach of contract – breach of industrial instrument – coverage by the Commercial Travellers, &C., (State) Award – Award became a Notional Agreement Preserving a State Award (NAPSA) – preliminary question – coverage of the Award.

Export Market Development Grants Regulations (Cth), Schedule 4
Federal Magistrates Court Rules 2001 (Cth), r.17
Industrial Relations Act 1996 (NSW), s.12
Workplace Relations Act 1996 (Cth), ss.4, 5, 6, 8, 16, Schedule 8

Ansett Australia Ltd v Australian Licensed Aircraft Engineers Association [2003] FCAFC 209
Bryce v Apperley (1998) 82 IR 448
Cooper, Brooks (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297
Co-operative Bulk Handing Ltd v Waterside Workers Federation of Australia; sub nom Co-operative Bulk Handling Ltd v Australian Workers’ Union (WA Branch) Workplace Union of Workers (ALR) (1980) 32 ALR 541
Construction, Forestry, Mining and Energy Union (Construction & General Div) v Master Builders’ Group Training Scheme Inc (2007) 161 IR 86
Hilroy Foods Pty Ltd v McDonald (1983) AR (NSW) 98
J Fenwick & Co Pty Ltd v Merchant Service Guild of Australia (1973) 150 CAR 99
John Farragher v Trollope, Silverwood & Beck [2004] AIRC 459
Jones v RWH Parcel Delivery & Anor [2008] FMCA 429
Jordan v Tasmanian Perpetual Trustees [2007] FMCA 1511
Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clark Union of Australia NSW Branch (2001) 106 IR 217
Kucks v CSR Ltd (1996) 66 IR 182
National Union of Workers v Modern Roof Restoration (NSW) Pty Ltd [1999] NSW IR Comm. 31
North West Beef Industries Ltd v Australian Meat Industry Employees Union of Workers (WA Branch) (1984) 12 IR 314
Otto Waste Industries Pty Ltd v Klajman (1985) 34 IR 361
Prestige Property Services Pty Ltd v Liquor, Hospitality & Miscellaneous Union (2007) 166 IR 165
Pritchard v Trident Global [2006] NSWIRComm 1124
R v Aird; Ex parte Australian Workers Union (1973) 129 CLR 654
R v Cohen; Ex parte Motor Accidents Insurance Board (1979) 27 ALR 263
Re State Rail Authority Fire Fighters Award 2001 (2002) 122 IR 13
Short v FW Hercus Pty Ltd (1993) 40 FCR 511
Simon Richards Group Pty Ltd re National Union of Workers v Skilled Communications PersonnelPty Ltd and Ors [2002] AIRC 1048
Tristar Steering and Suspension Limited v Industrial Relations Commission of NSW (2007) 158 FCR 104
VIP Airfreight Pty Ltd v Australian Trade Commission (1990) 96 ALR 667
Ware v O’Donnell Griffin (Television Services) Pty Ltd [1971] AR (NSW) 18

Applicant: BRYAN ERNEST KEEN

Respondent:

HEALTH CORPORATION LIMITED

(ACN 116 800 269)

File Number: SYG 653 of 2008

Judgment of: Lloyd-Jones FM

Hearing date: 25 September 2008

Delivered at: Sydney

Delivered on: 5 December 2008

REPRESENTATION

Counsel for the Applicant: Mr J.I. Murphy

Solicitors for the Applicant: McArdle Legal

Counsel for the Respondent: Mr B. Miles

Solicitors for the Respondent: Freehills Lawyers

ORDERS

1. In respect of the preliminary separate question I find that Bryan Ernest Keen, the applicant in these proceedings, was a person bound by a Notional Agreement Preserving a State Award.

2. Costs are reserved.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 653 of 2008

BRYAN ERNEST KEEN

Applicant

And

HEALTH CORPORATION LIMITED (ACN 116 800 269)

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Bryan Ernest Keen was employed by Health Corporation Limited (ACN 116 800 269) as its Recruitment and Marketing Director.  On 31 January 2008, the Board of Directors of Health Corporation resolved to terminate Mr Keen’s contract effective at 4.00pm of that date.  Mr Keen claims he was covered by the Commercial Travellers, &C., (State) Award (“the Award”), being, effective from 27 March 2006, a Notional Agreement Preserved State Award (“NAPSA”).  Mr Keen further claims that Health Corporation breached the NAPSA in a number of respects causing him loss and damage. 

2. After preliminary submissions from the parties, I then decided on 13 June 2008 that the following separate question had to be determined before the final hearing pursuant to r.17 of the Federal Magistrates Court Rules 2001 (Cth):

   Was the applicant a person bound by a Notional Agreement Preserving a State Award?

   The separate question was listed to be heard on 15 August 2008. Procedural orders were made in respect of the filing of affidavit evidence on this issue. This listing was subsequently vacated.

3. Mr Keen does not contend that his employment was, for the duration of the period he was employed by Health Corporation (or its predecessor, Health Information Systems Worldwide Pty Limited) from 2 December 2002 to 31 January 2008 covered by the Commercial Travellers, &C., (State) Award.

4. Mr Keen was initially employed in 2002 with Health Information Systems, a private company which went public and changed its name to Health Corporation Limited on 1 July 2006. The applicant submits that two critical dates are 27 March 2006, which was when WorkChoices commenced and any NAPSA came into existence, and 1 July 2006 which was the date Mr Keen was employed by Health Corporation.  Mr Miles, for the respondent, acknowledges that events which occurred outside those dates may have some bearing upon the separate question, however, the critical issues revolve around those dates.

Pleadings

1. The Statement of Claim filed by the applicant on 18 March 2008 pleads with respect to the separate question:

   Breach of Industrial Instrument

   Award

   The applicant was engaged in the Employment, whilst away from the employer’s premises, in soliciting orders for and promoting sales or orders for, articles and / or merchandise (which included but was not limited to performing such tasks with respect to technical services).  As such the applicant was covered by the Commercial Travellers & c Etc (State) Award, being (with effect from 27 March 2006) a Notional Agreement Preserving State Awards (“ the NAPSA”).

   32. The respondent has breached the NAPSA in a number of respects, causing the Applicant loss and damage.

   33. Clause 32 of the NAPSA provides for extra payments after 6.30pm Monday to Friday, and on weekends.

   34. In breach of Clause 32 of the NAPSA, the applicant did not receive extra payment for working after 6.30pm Monday to Friday, and on weekends.

   35. Clause 22 of the NAPSA provides for Annual Holidays Loading of 17 ½%.

   36. In breach of clause 22 of the NAPSA, the Applicant did not receive Annual Holidays Loading during his Employment.

   37. Clause 18 of the NAPSA provides that commission shall become payable upon execution of the order.

   38. In breach of Clause 18, $11,000 in commission has not been paid as required by the NAPSA.

   Particulars

   38.1 For new Melbourne Central Pharmacy acquired during December 2007, being new franchise commission $6,000 new acquisition commission $5,000.

   39. In breach of clause 25, the respondent did not, on Date of Termination pay to the Applicant his long service leave accrued since 2 December 2002, being one month and one half day’s payment in lieu of long service leave.

2. The Response filed by the respondent on 16 May 2008 pleads the following Grounds of Opposition:

   1. The grounds of opposition to the application are set out in the accompanying Defence.

   2. The respondent says that the applicant is not, and has never been, a person bound by a Notional Agreement Preserving a State Award.

   3. Accordingly the applicant is not a person who may apply for a penalty or other remedy under Division 2 of Part 14 of the Act.

   4. As the applicant has not properly invoked the jurisdiction of the Federal Magistrates Court, the Court has no accrued jurisdiction to consider the alleged breaches of the applicant’s contract of employment.

   5. The respondent denies that it breached the contract.

   6. Pursuant to s.824 of the Act, the Court must not make an order for costs, except on the conditions set out in section 824(1) and (2).

3. The Defence to the Statement of Claim filed by the respondent on 16 May 2008 pleads with respect to the separate question:

   31. The respondent denies paragraph 31 of the Statement of Claim.  The Respondent states that:

   (a) The award applies to all persons, in the State, excluding the County of Yancowinna, employed away from the employer’s place of business soliciting orders for articles, goods, wares, merchandise or materials of promoting sales or orders in addition to soliciting orders for articles, goods, wares, merchandise, or materials.

   Particulars

   Clause 54(a) of the Award.

   (b) The applicant has not particularised any activities that are alleged to fall within the above description, whether with Health Information Systems or the Respondent.

   (c) The applicant’s duties with Health Information Systems, set out at paragraph 2, did not involve soliciting orders for articles, goods, wares, merchandise or materials.

   (d) Accordingly immediately prior to 27 March 2006, none of the terms and conditions of the applicant’s employment with Health Information Systems were determined under the Award.

   (e) The applicant was employed by the respondent after 27 March 2006.

   (f) The applicant’s duties with the Respondent, set out in paragraph 4 above did not involve soliciting orders for articles, goods, wares, merchandise or materials with respect to the Applicant’s duties in the Employment (as defined in the Statement of Claim).

   (g) Under the terms of the Award, as in force immediately before 27 March 2006, the applicant was not bound by a Notional Agreement Preserving a State Award.

   Accordingly the applicant is not, and has never been, a person bound by a Notional Agreement Preserving a State Award.

   32. The Respondent denies paragraph 32 of the Statement of Claim and relies upon its pleading at paragraph 31 above that the applicant is not, and has never been a person bound by a Notional Agreement Preserving a State Award.

   33. In a response to paragraph 33 of the Statement of Claim, the Respondent:

   (a) admits that clause 32 of the Award provides for extra payments after 6.30pm, Monday to Friday, and on weekends in certain circumstances for the employees covered by the Award; and

   (b) relies upon its pleading at paragraph 31 above that the Applicant is not, and has never been, a person bound by a Notional Agreement Preserving a State Award.

   34. In response to paragraph 34, the Respondent admits that the Applicant did not receive extra payment for working after 6.30pm Monday to Friday, and on weekends and states that:

   (a) the applicant has not pleaded any particulars of the days upon which it is alleged that he worked Saturdays and Sundays and after 6.30pm Monday – Friday;

   (b) the respondent bears no liability for any event that occurred prior to the commencement of the applicant’s employment with the respondent on 1 July 2006; and

   (c) relies upon its pleading at paragraph 31 above that the Applicant is not, and has never been, a person bound by a Notional Agreement Preserving State Award.

   35. In response to paragraph 35 of the Statement of Claim, the Respondent admits that:

   (a) clause 22 of the Award provides for annual holidays loading of 17.5% for those employees covered by the Award; and

   (b) relies upon its pleading at paragraph 31 above that the applicant is not, and has never been, a person bound by a Notional Agreement Preserving a State Award.

   36. In response to paragraph 36 of the Statement of Claim, the respondent admits that the applicant did not receive annual holidays loading during his employment and states that:

   (a) the respondent bears no liability for any event that occurred prior to the commencement of the Applicant’s employment with the respondent on 1 July 2006; and

   (b) relies upon its pleading at paragraph 31 above that the applicant is not, and has never been, a person bound by a Notional Agreement Preserving a State Award.

   37. In response to paragraph 37 of the Statement of Claim the Respondent:

   (a) admits that Clause 18.1 of the Award provides that:

   (i) commission is deemed to be earned by an employee no later than the date of the execution of the order; and

   (ii) commission earned by an employee is to be paid to them no later than 21 days after the last day of the calendar month during which the order was executed; and

   (b) relies upon its pleading at paragraph 31 above that the Applicant is not, and has never been, a person bound by a Notional Agreement Preserving a State Award.

   38. The Respondent denies paragraph 38 of the Statement of Claim and:

   (a) relies upon its pleading at paragraph 31 above that the Applicant is not and has never been, a person bound by a Notional Agreement Preserving a State Award.

   (b) admits that the applicant earned $11,000 commission payment in relation to Melbourne Central Pharmacy,

   (c) states that the Respondent made this payment (less amounts deducted for taxation purposes) to the Applicant on 2 May 2008.

   39. In respect to paragraph 39 of the Statement of Claim, the Respondent:

   (a) admits that on the Date of Termination (as defined in the Statement of Claim) the respondent did not pay the applicant an amount in relation to his long service leave;

   (b) relies upon its pleading at paragraph 31 above that the applicant is not, and has never been, a person bound by a Notional Agreement Preserving a State Award; and

   (c) repeats its pleading at paragraph 13(b) above that clause 25 of the Award does not provide an entitlement to Long Service Leave.

Evidence

1. Mr Murphy, for the applicant, relied on the following evidence:

   a)Exhibit “A1” - Affidavit of Bryan Ernest Keen sworn on 7 July 2008 (“first affidavit of Mr Keen”).  This affidavit was read and Mr Keen gave oral evidence (Transcript, pp.9-19);

   b)Exhibit “A2” - Affidavit of Brian Ernest Keen sworn on 19 September 2008 (“second affidavit of Mr Keen”).  This affidavit was read.

   c)Exhibit “A3” – Health Information Pharmacy, Licence System – Standard Operating Procedures Parts 1 and 2 (Confidential Exhibit).

2. The respondent relied on the following evidence:

   a)Exhibit “R1” - Affidavit of Ken Beng Chye Lee sworn on 19 September 2008 (“first affidavit of Mr Lee”);

   b)Exhibit “R2” - Affidavit of Ken Beng Chye Lee sworn on 19 September 2008 (“second affidavit of Mr Lee”)

   c)Exhibit “R3” - Affidavit of Brian Edward Taylor affirmed on 8 September 2008.  This affidavit is referred to in this judgment for background material only.  This affidavit was read with no objections and Mr Taylor gave oral evidence at the hearing (Transcript, pp.23-24)

   d)Exhibit “R4” - Affidavit of Rena Marguerite affirmed on 4 September 2008 This affidavit was read with no objections.  Ms Marguerite was not called to give evidence.

Preliminary issue to be resolved

1. Mr Miles submits for the respondent that Mr Keen has sought to invoke the jurisdiction of the Court on the basis that he was an employee bound by the terms of the Award.  The Award became a NAPSA which Health Corporation was required and failed to comply with.  The initial question is whether Mr Keen was a person bound by a NAPSA.  Mr Miles maintains that it is essential to Mr Keen’s claim of breach of the NAPSA to show that he was bound by it.  Mr Miles contends that Mr Keen bears the onus of proof in relation to this separate question. 

2. Mr Miles submits that there are two questions the Court must consider in respect of this issue:

   a)The first question arises out of cl.31 of Sch.8 of the Workplace Relations Act 1996 (Cth) (“the Act”) as to whether the terms and conditions of Mr Keen’s employment with Health Information Systems Worldwide immediately before 17 March 2006 can be determined in whole or in part under the Award. The question is whether Mr Keen was employed away from Health Information Systems Worldwide’s place of business and to solicit orders or articles, goods, wares, merchandise or materials and technical services.

   b)If he was so employed, was the NAPSA binding upon Health Corporation in relation to Mr Keen’s employment.

3. Mr Miles submits that the two critical dates which apply are 27 March 2006 (when WorkChoices commenced) and 1 July 2006 (when Mr Keen commenced employment with Health Corporation).

4. Mr Miles further contends that there were fundamental changes to technical provisions in industrial instruments brought about by the WorkChoices legislation on 27 March 2006. Prior to that date, the Award applied as a common rule award and a person setting up a new business prior to WorkChoices would be covered by the Award. After WorkChoices and in order for there to be a NAPSA, companies would have had to be in business as at 27 March 2006 and to have employed one or more employees within the terms of that award. Both cl.32 and cl.33 of Sch.8 of the Act refer to future employees. However, the employment of future employees is dependent on there being, as at 27 March 2006, a current employee within the business entity.

Legislative structure

1. Prior to the commencement of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth), a large number of Awards made under the Industrial Relations Act 1996 (NSW) were common rule awards. Those Awards were defined by their scope and coverage and applied to all employers and employees in New South Wales within its scope and coverage, see s.12 of the Industrial Relations Act:

   12Persons bound by award

   (1) An award is binding on all employees and employers to which it relates, whether or not they were a party to the making of the award.

   (2) An award that applies to a particular industry is, subject to its terms, taken to bind all employees and employers engaged in the industry.

   (3) An award is, subject to its terms, binding on all industrial organisations that were a party to the making of the award.

   The Commercial Travellers, &C., (State) Award is within this category. The enactment of Workplace Relations Amendment (Work Choices) Act made substantial changes to the way State awards operated.

2. The applicant’s Statement of Claim states that Health Corporation is a constitutional corporation. The respondent admits this in its Defence. Accordingly, Health Corporation is an “employer” as defined by s.6(1)(a) of the Act:

   6(1)   In this Act, unless the contrary intention appears:

   employer means:

   (a)  a constitutional corporation, so far as it employs, or usually employs, an individual;

   Correspondingly, Mr Keen is an “employee” as defined by s.5(1) of the Act:

   5(1)   In this Act, unless the contrary intention appears:

   employee means an individual so far as he or she is employed, or usually employed, as described in the definition of employer in subsection 6(1), by an employer, except on a vocational placement.

3. There is no question that Health Corporation was an employer, and that Mr Keen was an employee within the meaning of both sections of that Act.

4. The “principal object” of the Act includes:

   3 The principal object of this Act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia by:

   (a)…

   (b)  establishing and maintaining a simplified national system of workplace relations;

5. The Act has declared that its provisions will prevail over certain specified State and Territory laws:

   16(1)  This Act is intended to apply to the exclusion of all the following laws of a State or Territory so far as they would otherwise apply in relation to an employee or employer:

   (a)    a State or Territory industrial law;

   (b)  a law that applies to employment generally and deals with leave other than long service leave;

   “State or Territory industrial law” is defined to include:

   4        State or Territory industrial law means:

   (a)     any of the following State Acts:

   (i) the Industrial Relations Act 1996 of New South Wales;

6. In the terms of cl.31, there is no dispute between the parties that Mr Keen was not subject to a State Employment Agreement. The question is whether he was within the scope of the Award. The effect of s.16 of the Act is that the Industrial Relations Act (NSW) can have no effect with respect to relations between constitutional corporations and their employees: State ofNew South Wales v Commonwealth of Australia (2006) 229 CLR 1 at [353]-[359]; and Tristar Steering and Suspension Ltd v Industrial Relations Commission of NSW (2007) 158 FCR 104.

1. Section 8 of the Act provides:

   8   Schedules 1, 6, 7, 7A, 7B, 8, and 9 have effect.

   …

   Note 6: Schedule 8 is about transitional treatment of State employment agreements and State awards.

   Note 7: Schedule 9 is about transitional instruments and transmission of business.

2. Clause 1 of Sch.8 of the Act defines:

   1(1)   In this Schedule:

   notional agreement preserving State awards is an agreement that is taken to come into operation under clause 31.

3. Clause 31 then provides:

   31          If, immediately before the reform commencement, the terms and conditions of employment of one or more employees in a single business or a part of a single business:

   (a)  were not determined under a State employment agreement; and

   (b)  were determined, in whole or in part, under a State award (the original State award) or a State or Territory industrial law (the original State law );

   a notional agreement preserving State awards is taken to come into operation on the reform commencement in respect of the business or that part of the business.

4. Section 4 of the Act states:

   reform commencement means the commencement of Schedule 1 to the Workplace Relations Amendment (Work Choices) Act 2005.

   This commencement date was 27 March 2006.

5. Clause 32 of Sch.8 of the Act states:

   32 Who is bound by a notional agreement preserving State Awards?

   Current employees

   (1)     Any person who:

   (a)immediately before the reform commencement, was bound by, or a party to, the original State award or original State law; and

   (b)     is one of the following:

   (i)          an employer in the business, or that part of the business;

   (ii)     an employee who is employed in the business, or that part of the business, who was so employed immediately before the reform commencement, who was not bound by, or a party to, a State employment agreement at that time and whose employment was not subject to such an agreement at that time;

   (iii)   an organisation that has at least one member who is such an employee, and that is entitled to represent the industrial interests of at least one such employee;

   is bound by the notional agreement.

   Future employees

   (2)    If:

   (a)a person is employed in the business or that part of the business after the reform commencement; and

   (b)under the terms of the original State award or the original State law, as in force immediately before the reform commencement, the person would have been bound by that award or law; and

   (c)the person is not bound by a preserved State agreement;

   the person is bound by the notional agreement.

6. Clause 33 of Sch.8 of the Act states:

   33 Whose employment is subject to a notional agreement preserving State awards?

   Current employees

   (1)The employment of a person in the business or that part of the business is subject to the notional agreement, if:

   (a)  that employment was, immediately before the reform commencement, subject to the original State award or the original State law; and

   (b)  that employment was not subject to a State employment agreement at that time.

   Future employees

   (2)     If:

   (a)  a person is employed in the business, or that part of the business, after the reform commencement; and

   (b)  under the terms of the original State award or the original State law, that employment would have been subject to that award or that law; and

   (c)  that employment is not subject to a preserved State agreement;

   that employment is subject to the notional agreement.

Transmission of business

1. In July 2006 there was a transmission of business from Health Information Systems Worldwide to Health Corporation.  At that time, Mr Keen and Health Corporation entered into an Executive Employment Agreement for a position entitled Recruitment and Marketing Director (first affidavit of Mr Keen, Annexure “BEK2”) which comprised of a remuneration package of $70,000 per annum (excluding employer’s compulsory superannuation contribution) and $20,000 director’s fee.  The agreement also included a bonus structure for:

   a)each new franchise issued ($6,000)

   b)each pharmacy acquisition ($5,000)

   c)each medical centre opportunity sourced ($4,000)

   d)each medical centre project facilitated ($6,000)

   Clause 2.1 of the Agreement states:

   The company appoints executives in the position of recruitment and marketing director, or such other position as agreed between the company and the executive from time to time.

   Clause 2.2 states:

   The executive shall be predominantly based at Sydney.  The executive acknowledges and accepts that he shall be regularly required to travel away from such location in order to effectively carry out these duties.

   Clause 11.1 states:

   The executive shall be reimbursed for all travel, hotel and other out of pocket expenses briefly incurred by him or about the discharge of his duties hereunder.

   Item 1 duties in the Schedule to the Agreement are:

   (i) expanding and developing growth of a number of company franchise outlets;

   (ii) ensuring that the company has an effective and motivated recruitment division;

   (iii) ensuring that target recruitment budgets are achieved;

   (iv) supporting the company management in developing the corporate business plan as determined by the directors; and

   (v) diligently filling the role as a director of the company.

   (first affidavit of Mr Keen, Annexure “BEK2”)

Introduction of the Health Information Pharmacy Franchise Agreement

1. In 2006 Health Corporation Ltd began to use the Health Information Pharmacy Franchise Agreement (affidavit of Mr Lee, exhibit “KBCL1”, tab 6).

Consideration

Principles of award construction

1. Mr Keen has sought to invoke the jurisdiction of this Court on the basis that he was an employee bound by the terms of the Commercial Travellers, &C., (State) Award and that award became a NAPSA by operation of the Workplace Relations Amendment (WorkChoices) Act.  He claims that his employer, Health Corporation, failed to comply with the requirements of that NAPSA.  The initial and separate question to be determined is whether Mr Keen was in fact covered by that NAPSA.  To answer this question requires a determination as to the coverage of the award and the approach to be adopted in this analysis. 

2. In Geo. A Bond and Co. Ltd (in liq.) v McKenzie 1929 AR(NSW) 498 at 503, Street J stated:

   I think, therefore, in construing an award one must always be careful to avoid a too little adherence to the strict technical meaning of words and thus view the matter broadly. 

3. Justice Burchett said in Short v FW Hercus Pty Ltd (1993) 40 FCR 511 at 518:

   The context of an expression may thus be much more than the words that are its immediate neighbours. Context may extend to the entire document of which it is a part, or to other documents with which there is an association. Context may also include, in some cases, ideas that gave rise to an expression in a document from which it has been taken. When the expression was transplanted, it may have brought with it some of the soil in which it once grew, retaining a special strength and colour in its new environment. There is no inherent necessity to read it as uprooted and stripped of every trace of its former significance, standing bare in alien ground. True, sometimes it does stand as if alone. But that should not be just assumed, in the case of an expression with a known source, without looking at its creation, understanding its original meaning, and then seeing how it is now used. Very frequently, perhaps most often, the immediate context is the clearest guide, but the court should not deny itself all other guidance in those cases where it can be seen that more is needed. In literature, Milton and Joyce could not be read in ignorance of the source of their language, nor should a legal document, including an award, be so read.

4. Both the above passages were recently cited with approval in Construction, Forestry, Mining and Energy Union (Construction & General Div) v Master Builders’ Group Training Scheme Inc (2007) 161 IR 86 and Prestige Property Services Pty Ltd v Liquor, Hospitality & Miscellaneous Union (2007) 166 IR 165. Mr Murphy submits that based on this approach it is permissible, when construing words that appear in the “Industries and Callings” assigned to an Industrial Committee, to have regard to similar words used in eligibility rules of the trade union that has representative rights on that Committee.

5. In R v Aird; Ex parte Australian Workers Union (1973) 129 CLR 654 the High Court considered a union’s eligibility rule. Chief Justice Barwick (with McTiernan, Menzies, Gibbs and Stephen JJ agreeing) stated at 659:

   In this respect it is proper, in my opinion, the present case to acknowledge that the eligibility clause will have been drawn more likely than not by union officials not familiar with the practical affairs of industry or the niceties or subtle nuisances of language.

   The issue in R v Cohen; Ex parte Motor Accidents Insurance Board (1979) 27 ALR 263 was whether or not the Board engaged in the business of insurance for the purposes of the eligibility clause of the relevant union. Justice Mason (Gibbs, Stephen, Murphy and Aickin JJ agreeing; Barwick CJ dissenting) said at 270:

   The expression is in such a context, no doubt, intended to have a wide meaning and it should be interpreted and applied in accordance with his ordinary and proper identification.

6. In Co-operative Bulk Handing Ltd v Waterside Workers Federation of Australia; sub nom Co-operative Bulk Handling Ltd v Australian Workers’ Union (WA Branch) Workplace Union of Workers (ALR) (1980) 32 ALR 541 the Full Federal Court found that it was appropriate when construing the meaning of expressions used in union eligibility rules to adopt an “ambulatory” approach so that those expressions do not lose meaning as industry and commerce evolve and develop. In that case, the term under consideration was “waterside worker”. The question was whether or not employees engaged in unloading shipping containers at container depots away from docks or the wharf could be described as waterside workers. The Court noted that there had been great changes in all industries – including the shipping and stevedoring industries – both in the degree of mechanisation and in the bulk handling and shipping of cargo and other goods. The Court observed that during this period of change it was clear that from statutes relating to the stevedoring industry that there had been vast changes in that industry. It also noted it was highly unlikely that the waterside workers federation, in changing its conditions, intended that the term “waterside worker” should always have its original meaning. The Court expressed the view that the term was to be construed in accordance with its current denotation:

   If there is, as appears clearly inevitable, a continuing change in the manner in which work is done, we see no reason why the new forms of work should not come within words used in a conditions of eligibility rule if those words are capable of bearing the appropriate current meaning. Ample scope exists in the Act for action by either the Commission or some other body to correct any injustice which may arise therefrom.

7. Mr Murphy submits that this ambulatory approach is also appropriate in construing the same or similar terms as they appear in the “Industrial and Callings” of an Industrial Committee.  Support for this is found in Kucks v CSR Ltd (1996) 66 IR 182 per Madgwick J:

   It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand. 

   This statement of principle was followed in Ansett Australia Ltd v Australian Licensed Aircraft Engineers Association [2003] FCAFC 209.

8. Both counsel made detailed submissions in respect of the approach to be adopted in determining the area of coverage of an Award.  A range of authorities were referred to, however, both agreed that a convenient summary was provided by O’Sullivan FM in Jordan v Tasmanian Perpetual Trustees [2007] FMCA 1511 at [13]-[17] and [19]:

   13.It was common ground that the Court, in interpreting the award, should have regard to general principles of statutory construction. The Court was referred to the decision of Short v F W Hercus Pty. Ltd. (1993) 40 FCR 511, where Burchett J. said at 520:

   ‘The principles of statutory interpretation referred to are not inapplicable to an award which seeks, in a way, to legislate for the terms of conditions of employment of a number of persons engaged in a particular industry: cf. George A. Bond & Co. Ltd. (in liq.) v McKenzie (1929) AR (NSW) 498 at 503. Their application to the present problem would require the Court to consider the wider context of the award provision as the product of a series of decisions which might reveal plainly its general purpose and policies.’

   14.There was no evidence before the Court regarding the history of the relevant clause of the Award. In George A Bond & Co. Ltd (in liq) v McKenzie [1929] AR (NSW) 498, Street J. said at 503-504:

   ‘Now speaking generally, awards are to be interpreted as any other enactment is interpreted. They lay down the law affecting employers and employees as such and they have to be obeyed to the same extent as any other statutory enactment. But at the same time, it must be remembered that awards are made for the various industries in the light of the customs and working conditions of each industry, and they frequently result, as this award in fact did, from an agreement between the parties couched in terms intelligible to themselves but often framed without that careful attention to form and draughtsmanship which one expects to find in an Act of Parliament. I think, therefore in construing an award, one must always be careful to avoid a too literal adherence to the strict technical meaning of the words, and must view the matter broadly, and after giving consideration and weight to every part of the award, endeavour to give the meaning consistent with the general intention of the parties to be gathered from the whole of the award.’

   15.The Court was also referred to the decision of Kucks v CSR Ltd. (1996) 66 IR 182 at 184, where Madgwick J set out the following legal principals applicable to the construction of an award:

   ‘It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framers of the document, bearing in mind that such framer(s) were likely of a practical bend of mind: and may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite near inconsistencies or infelicities of expression which might tend to some other readings. And meanings which avoid inconveniences or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.’

   16.Finally, on this issue the Court was also referred to the decision in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) FCA 813, at [57] where French J, said:

   ‘It is of course necessary, in the construction of an award, to remember, as a contextual consideration, that it is an award under consideration. Its words must not be interpreted in a vacuum divorced from industrial realities - City of Wanneroo v Holmes (1989) 30 IR 362 at 378-379 in cases there cited. There is a long tradition of generous construction over a strictly literal approach where industrial awards are concerned – see eg. Geo A Bond & Co. Ltd. (In Liq.) v McKenzie (1929) AR 499 at 503-4 (Street J.).

   
   

   It may be that this means that no more than that courts and tribunals will not make too much of infelicitous expression in the drafting of an award nor be astute to discern absurdity or illogicality or apparent inconsistencies. But while fractured and illogical prose may be met by a generous and liberal construction

   
   

   I repeat what I said in - City of Wanneroo v Holmes 380:

   “Awards, whether made by consent or otherwise, should make sense according to the basic conventions of the English language. They bind the parties on pain of pecuniary penalties.”’

   17.In summary, the approach to be taken in the interpretation of the award is well settled by the authorities. The award is to be interpreted in the same way as a statute or written contract. The award should be read as a whole, giving the words their ordinary and natural meaning. However, it is important to bear in mind that awards are often framed without careful attention to form and draughtsmanship. It is often appropriate to avoid a too literal approach to the words used.

   …

   19.In Short v FW Hercus Pty. Ltd. (1993) 40 FCR 511, Burchett J said in the context of the case before him:

   ‘The respondent says the instant award is clear, and we must shut out eyes to what went before. I think there are two answers to this argument. On the one hand, I do not accept that the award is clear on its face. The fact that I have given it a meaning by a process of construction (as it happens, contrary to the respondent’s contention) cannot disguise the possibility of understanding the language, as the learned judge understood it, differently: cf. Pickard v John Heine & Son Limited (supra) at 9, per Issacs ACJ. That is certainly sufficient to justify a reference to its source. Where the circumstances allow the court to conclude that a clause in an award is the product of a history, out of which it grew to be adopted in the present form, only a kind of wilful judicial blindness could lead the court to deny itself the light of that history, and to prefer to peer unaided at some obscurity in the language. “Sometimes” McHugh J said in Saraswati v The Queen (1991) 172 CLR 1 at 21, the purpose of legislation “can be discovered only by reference to the history of the legislation and the state of the law when it was enacted”. Awards must be in the same position.

   But even if the language, read alone, appeared pellucidly clear, the tendency of recent decisions -- and this is the other answer to the argument put – would seem to require the court to look at the full context. Only then will all of the nuances of the language be perceived.’

9. The above paragraphs were also relied upon Cassidy FM in Jones v RWH Parcel Delivery & Anor [2008] FMCA 429.

10. Mr Miles indicated that he takes no issue with the approach taken by the applicant on award construction and agrees that it is appropriate to look at the ordinary meaning of the words “used”.  In support of that view, Mr Miles referred to an established test that considers the duties which make up a substantial portion of an employee’s working week.  He submits that the test used in Ware v O’Donnell Griffin (Television Services) Pty Ltd [1971] AR (NSW) 18 was purely temporal and Sheldon J stated at 19:

    It seems to me that this is clearly a case to which the principle is applicable.  This principle is almost as old as industrial arbitration and it makes a practical approach to determine the application of awards where duties are of a mixed character and contain elements which if taken alone would be covered by more than one award.  This is not an appropriate occasion on which to discuss the method by which this test should be applied except to say that it is not merely a matter of qualifying the time spent on various elements of work performed by a complainant: the quality of the different types of work done is also a relevant consideration.

1. A similar approach was taken in J Fenwick & Co Pty Ltd v Merchant Service Guild of Australia (1973) 150 CAR 99 by Ledeke J at 101:

   To ascertain the course of the calling of particular employees, is not enough merely to make a quantitative assessment of the time spent in carrying out the various duties.  In my opinion, but only should the nature of the work done by the class of employee be examined but it is equally relevant to consider the circumstances in which they are employed to do the work; if the worker is required by his employer to carry out diverse duties, the enquiry should be directed to ascertain the principle purpose for which the worker is employed…

   It may well be that an employee who spends 25% of his time fulfilling the principle purpose for which he is employed qualifies by reason of that circumstance alone to be classified in that particular calling identified with that purpose.

2. In Bryce v Apperley (1998) 82 IR 448 the full bench of the Industrial Relations Commission of New South Wales stated at 452:

   In our view, in construing the true meaning of an industrial award, like any other instrument with legal force, the task requires the approach according to the actual words used and their, ordinary English meaning.  As was said by Kelleher J in Re Dispute between Broken Hill Pty Co Ltd and the Federated and Dockers Union of Australia, New South Wales Branch, re tank tops (1961) AR (NSW) 312 at 314;

   the meaning is to be ascertained primarily from a consideration of the words actually used and, while it is proper to pay regard to the surrounding circumstances and the purposes for which the division was intended, this cannot justify a meaning being given to the words which they are not fairly capable of bearing.  Particular words or expressions, having a special trade significance, however, may need to be construed in that light. 

   The approach in Bryce v Apperley was affirmed in Kingmill Australia Pty Ltd t/a Thrifty Car Rental v Federated Clark Union of Australia NSW Branch (2001) 106 IR 217, which also emphasised (at [63]) that an instrument should be construed by referring to the actual words used and their plain ordinary English meaning. It was also affirmed in Re State Rail Authority Fire Fighters Award 2001 (2002) 122 IR 13 at [63]-[70].

3. Justice Olney discussed the situation where there are strong competing interpretations of a particular provision in North West Beef Industries Ltd v Australian Meat Industry Employees Union of Workers (WA Branch) (1984) 12 IR 314 at 331:

   If it be the case that the correct approach to interpretation of an Industrial Award is to read the document itself and give the words used their ordinary common sense English meaning (see Jackson J in United Furniture Traders Industrial Union v Vale Manufacturing Co Pty Ltd, 30 Waig 539 at 540) then the first task in every task would be to determine whether the words used are capable of their ordinary sense of having an unambiguous meaning.  If that question is answered in the affirmative then the further consideration of the expressed or supposed intention making Tribunal does not fail to be considered.  The majority of the Full Bench in this case took that view when they said:

   It is now trite law that when the meaning of language read in ordinary and natural sense is obtained it is not necessary or indeed permissible to look at the intention of the parties.

   In my opinion the majority of the full bench has correctly stated that the basic principle to be applied in the interpretation of industrial awards.  Any other conclusion would lead to industrial anarchy.  If the contrary were the case every employer, union official and indeed each employee would need to have available to him the express views of the award making tribunal whether they be expressed before or after the making of the award in order to determine the intention of the Tribunal whilst the award itself would be rendered meaningless. 

4. The above approach is also consistent with Cooper, Brooks (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 at 321 per Mason J:

   Quite obviously questions of degree arise.  If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention.  If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.

The Commercial Travellers, &C., (State) Award

1. Clause 54 of the Commercial Travellers, &C., (State) Award reads:

   54.Area, incidents and duration

   (a)This award shall apply to commercial travellers in the State of New South Wales, excluding the county of Yancowinna within the jurisdiction of the commercial Travellers (State) Industrial Committee.

   (b)This award is made following the review under section 19 of the Industrial Relations Act 1996 and rescinds and replaces the Commercial Travellers (State) Award published 30 June 2000 (316IG897) and all variations thereof.

   (c)The award published 30 June 2000 took effect from the beginning of the first pay period to commence on or after 24 August 2001 and the variations incorporated therein on the dates set out in the attached schedule A.

   (d)The changes made to the award pursuant to the award review pursuant to section 19(6) of the Industrial Relations Act 1996 and principle 26 of the Principles of Review of Awards made by the Industrial Relations Commission of New South Wales on 28 April 1999 (310.IG.359) and take effect on 11 October 2004.

   (e)This award remains in force until varied or rescinded.

2. It should be noted for the avoidance of doubt that the Award has been varied since the relevant date.

3. The Award refers to an Order made by Schmidt J on 15 November 2002 to dissolve the Industrial Committee and establish a new Committee. However the “industries and callings” assigned to the Committee in its present form are not relevantly different from those of the previous Committee.

4. The coverage of the Award is defined by the “Industries and Callings” assigned by the Commercial Travellers (State) Industrial Committee.

5. The order of Schmidt J refers to the “industries and callings”:

   2.There be established a new Commercial Travellers (State) Industrial Committee for the industries and callings of –

   All persons, in the State, excluding the County of Yancowinna, employed away from the employer’s place of business soliciting orders for articles, goods, wares, merchandise, or materials, including (but without limited the generality of the foregoing) persons employed away from the employer’s place of business:

   (a)by a wholesale or party wholesale warehouse person or by a manufacturer, manufacturer’s agent or indent agent for the purpose of soliciting orders for articles, goods, wares, merchandise or materials:

   1.    for resale; or

   2.    for wholesale; or

   …

   (b)     soliciting orders for:

   …

   7.    technical services; or…

6. Clause 3(i) of the Award provides under “Flexibility of work”:

   Employees are to perform a wider range of duties, including work which is incidental or peripheral to their main task or functions.

7. Clause 6(i) provides under “Meaning and Interpretation”:

   Commercial travellers, sales representatives or employees shall include all persons within the jurisdiction of a Commercial Travellers (State) Industrial Committee whether remuneration is wholly or partly by commission or otherwise, and whether employed wholly or partly on a commission basis or otherwise.

8. Clause 9(i) defines a “local employee” as:

   …a commercial traveller who is not required by his/her employer to remain away from his/her usual place of residence for more than fifty-four consecutive hours in any one week of seven days.

9. Clause 11(i) refers to reimbursements:

   …all reasonable expenses actually incurred in the discharge of the employee’s duties.

10. Clause 12 provides for the provision of a motor vehicle or, by arrangement, payment of a per kilometre rate for employment related travel. 

Changes to the “Industries and Callings” provisions by various Industrial Committees

1. In 1955, “Industries and Callings” assigned to the Commercial Travellers (State) Conciliation Committee were described as:

   All persons in the state … employed outside the employer’s place of business by a wholesale or partly wholesale warehouseman or by a manufacturer, manufacturer’s or deindent agent:

   (a)for the purpose of soliciting wholesale business, that is to say, soliciting orders for articles, goods, wares, merchandise or materials –

   (i)   for resale or… (New South Wales Industrial Gazette 31 May 1955 [117 IG 318])

2. By 1969 the “Industries and Callings” assigned to the Committee included:

   All persons in the State… employed away from the employer’s place of business soliciting orders for articles, goods, wares, merchandise or materials, or promoting sales or orders in addition to soliciting orders for articles, goods, wares, merchandise or materials including (but without limiting the generality of the foregoing) persons employed away from an employer’s place of business –

   …

   (b)soliciting orders for –

   …

   (vii)   technical services; … (NSW Industrial Gazette – 8 October 1969 [175 IG 194])

3. The “Industries and Callings” did not change in any relevant way until the Committee was dissolved and the Commercial Travellers (State) Industrial Committee was established on 1 December 1995 (NSW Industrial Gazette – 14 June 1996 [253 IG 378]).  They have not been amended in any relevant way since that time.  The union representing employees on that Committee is the National Union of Workers, New South Wales Branch.  The relevant part of that union’s eligibility rule (which reflects the eligibility of the former New South Wales Sales Representative and Commercial Travellers Guild which amalgamated with the National Union of Workers) is as follows:

   C.Persons employed in the industry or calling of commercial travellers who become and remain members of the Union in accordance with these rules.

   For the purposes of the rules, ‘commercial traveller’ shall mean a person employed substantially away from the employer’s place of business in or for the purpose of soliciting orders or promoting business of whatsoever kind … and without limiting the ordinary meaning of the foregoing shall include:

   (i) persons employed substantially away from the employer’s place of business:

   ……

   (a)     for the purpose of soliciting orders for articles, good, wares, merchandise or materials:

   …

   for resale…

   (b)     soliciting orders for:

   …

   (ix)    technical and commercial services…

4. Mr Murphy drew my attention to the “Industries and Callings” of the Commercial Travellers (State) Industrial Committee and that the term “employed away from employer’s place of business” is not qualified by the word “substantially”.

5. There are a number of distinct elements to invoke the jurisdiction of the Commercial Travellers (State) Industrial Committee:

   a)The person must be employed in the State of New South Wales, excluding the county of Yancowinna;

   b)The person must be “employed away from the employer’s place of business”;

   c)The person must be employed in “soliciting orders” either on their own or in addition to “promoting sales or orders”;

   d)What is being offered must fit the general description of “articles, goods, wares, merchandise and materials” or the more specific provisions of paragraph 2(a) to 2(g) of the jurisdiction of the Committee; and

   e)Both the employee and the employer must not fall within one of the exclusions at the conclusion of paragraph 2 of the jurisdiction of the committee.

6. Neither side suggested that Mr Keen was employed within the county of Yancowinna, or that Mr Keen, Health Corporation or Health Information Systems fell within one of the exclusions at the conclusion of paragraph 2 of the jurisdiction of the committee.

7. Mr Keen asserts that his duties involved soliciting orders for “articles, goods, wares, merchandise and materials” and/or “technical services”.  Mr Keen’s written offer of employment from Health Information Systems states:

   Your role will be to sell and market health information pharmacy franchises as detailed in the above job description.  The job description included the following position outline:

   (i) franchise sales from leads to closure;

   (ii) developing marketing plans;

   (iii) development of national and possible international sales teams;

   (iv) operations manual reviews;

   (v) franchise consultancy; and

   (vi) franchise management (first affidavit of Mr Keen, pp.5-6).

Previous judicial consideration of the Commercial Travellers, &C., (State) Award

1. Mr Murphy referred in written submissions to a number of decisions which considered the Commercial Travellers, &C., (State) Award.

2. In Hilroy Foods Pty Ltd v McDonald (1983) AR (NSW) 98, Macken J had to determine whether the Award applied to the respondent, Mr McDonald. Mr McDonald was employed as a truck driver on 29 May 1978. During September 1978 he was appointed as salesman of the company selling a range of Mexican food stuffs. His duties included delivering company products from a truck or station wagon and obtaining orders for goods. He sometimes obtained the orders and fulfilled them directly from stock out of his van. His Honour stated:

   It was described by Mr Hungerford as a ‘considerable mix of duties’.  He conceded that ‘soliciting orders’ was part of the ‘mix’.  The real issue (both on appeal and before the Magistrate) was whether there was a sufficient element of soliciting for orders to make the order that of a commercial traveller rather than the work of a van salesman.  It was conceded that, with respect to some of the food-stuffs, an order would be taken and immediately filled by supplies from the station wagon or van.  The nature of the product was sufficiently light and small in size to enable this to be done, in some instances.  The seeking of orders was held by the Magistrate to be dominant characteristic of the work.  Accordingly, he found that the Commercial Travellers Award applied and made the Orders appropriate in those circumstances.

   Part of the evidence relied on by the Magistrate, and which provoked considerable analysis on appeal, was a description of the quantum of soliciting of orders ‘being 99 per cent of the work’.  Read in context this can properly be understood as an expression designed to emphasise the fact that soliciting of orders comprised the greater part of the work.  There is no doubt that the core of a commercial traveller’s work is the soliciting of orders but Mr Hungerford argued that the delivery of goods from the truck was done in sufficient quantity to change the character of the employment to that of a van salesman.

   Miss Murrell of counsel, contended for the respondent that, while some of he duties were those of a van salesman, the major and substantial part of the employment was that of a commercial traveller.  She argued that looking at the evidence in context no other view could have been formed by the Magistrate and, accordingly, the appeal should be dismissed.

   To my mind the work which was central to this contract of employment was that of a commercial traveller.  The other work performed was incidental to the central function and therefore did not change its essence to that of a van salesman.  In reviewing the evidence that was put before the Magistrate I come to the same view that he arrived at.

3. In Otto Waste Industries Pty Ltd v Klajman (1985) 34 IR 361, Cahill J considered whether the Commercial Travellers’ (State) Award applied to the employment of Ms Klajman, who was employed by the applicant on a part-time basis. She was required to call on potential customers, mostly factory occupiers, and occasionally on commercial firms and institutions (such as private schools) to solicit orders for industrial waste collection. The company provided and maintained specially designed and constructed waste bins which were collected by a company driver in his specially designed and equipped “Otto” truck. The industrial waste was removed and disposed. The front page of the standard form of contract entered into between the company and the customer describes the contract as a “Service Agreement” relating to the “collection and disposal of waste from the nominated site for a specified period”.

4. In the first instance proceedings the Industrial Magistrate held that Ms Klajman had made out the case that she was soliciting orders for “the freighting or transportation of articles, goods, wares, merchandise or materials” within the Industries and Callings assigned to the relevant Conciliation Committee.  She was thus an employee covered by the Award.  However, the Commission rejected that she was soliciting orders for “technical services”.

5. On appeal from the decision of the Industrial Magistrate, Cahill J upheld the finding in relation to Ms Klajman being engaged in soliciting orders for “the freighting or transportation of articles, goods, wares, merchandise or materials”.  His Honour reversed the other finding of the Industrial Magistrate and found that Ms Klajman was involved in soliciting orders for “technical services”.

6. Pritchard v Trident Global [2006] NSWIRComm 1124 considered whether an employee whose job it was to solicit orders for computer software programs, and who spent approximately 12 hours a week (not including travel time) at face to face meetings away from the office, was covered by the Commercial Travellers’ (State) Award. The Commissioner found:

   108   I accept the definition of “software” as defined in the references provided by the Respondent.  The Applicant was engaged to sell a global trade management system for exporters of goods.  That package included after sales service and maintenance.  I am inclined towards the argument by the Applicant that the definition is not limited to “articles, goods, wares, merchandise or materials” that have a “corporeal nature” and that a commonsense interpretation of the term “ware” would result in “software” being considered as a subset of that term.

   109   Mr Pritchard was clearly employed substantially away from the employers Sydney place of business for the purpose of, inter alia, soliciting orders or promoting sales or orders.

7. In John Farragher v Trollope, Silverwood & Beck [2004] AIRC 459 the Australian Industrial Relations Commission considered whether a person employed as business development manager or an account manager was covered by the 1996 Commercial Sales (Victoria) Award:

   The facts

   [4] Mr Farragher commenced employment with Trollope on 8 July 1993 and his employment was terminated on 11 December 2002.

   [5] The position in which Mr Farragher was employed by Trollope at the time of termination of his employment was that of Business Development Manager or “account manager” (Exhibit A3)…

   [7] Mr Farragher was employed by Trollope “to build up the customer base” (Exhibit A2, cl.4).  He travelled to New Zealand four times a year to build up a New Zealand customer base for Trollope (Exhibit A2, cl.8).  He made about 12 interstate trips each year to visit existing and prospective customers (Exhibit A2, cl.9).  He “would routinely visit customers or potential customers in their stores and discuss merchandising, would develop product options and put proposals to the prospective or existing customers”(Exhibit A2, cl.10).

   [8] Mr Farragher sought out new customers and would usually secure the first order from that customer.  When the customer was secured by Trollope, Mr Farragher would usually hand the customer over to more junior account managers/sales representatives [Exhibit A2, cl.7).  Mr Farragher used telephone and other electronic means such as fax and emails in the course of his duties (Exhibit A2, cl.2)…

   [20] On this reading of the evidence before me I conclude that Mr Farragher was “on the road” either overseas or interstate for approximately sixty days of the year and otherwise conducted his business via telephone or other electronic means in order to promote sales of Trollope’s products.

   [21] As the Full Bench in Simon Richards Group Pty Ltd Re: National Union of Workers v Skilled Communications Personnel and Others, PR921909, said at paragraph [6]:

   [6] The critical issue for decision is the meaning of the phrase “employed substantially away from the employer’s place of business”.  In examining that issue it will be necessary to consider what the ordinary and natural meaning of the phrase is and whether that phrase has any particularised or specialised meaning in industrial relations usage.

   [22] This case is clearly quite different that the one considered by the Full Bench in Simon Richards Group.  That case involved telemarketing with no physical departure from the place of business.  As the Full Bench observed at paragraph [32]:

   It appears to us that the natural and ordinary meaning of the expression “employed substantially away from the employer’s place of business” is that the duties of the employment are carried out at a location physically removed from the employer’s place of business.  The phrase refers to a situation in which some work performed at the employer’s place of business and some work is performed elsewhere.  In that respect the test involved is directed at the location at which the work is physically carried out.

   [23] Considering the evidence before the Commission in this matter in the light of those principles I am of the view that Mr Farragher was “employed away or substantially away from the employer’s place of business.  I therefore find that Mr Farragher’s employment was governed by the Award, to which Trollope was a party on 11 December 2002 when Mr Farragher’s employment was terminated.

   FINDINGS

   [24] I find that Mr Farragher was a Federal award employee who was employed by a constitutional corporation within the meaning of s.170CB(1)(c) and s.170CD(1) of the Act because he was covered by cl.16.1 of the Award to which the respondent was a party.

1. In Simon Richards Group Pty Ltd re National Union of Workers v Skilled Communications PersonnelPty Ltd and Ors [2002] AIRC 1048 the Full Bench of the Australian Industrial Relations Commission considered whether telesales operatives, whose physical place of work was the employer’s premises, were nevertheless employed “substantially away from the employer’s place of business” as the term was used in the eligibility rule of the National Union of Workers:

   [36] We are not aware of any special industrial usage of the phrase “employed substantially away from the employer’s place of business”.  The only discussion of the phrase is to be found in the decisions of the Senior Deputy President under appeal and Re Franklin Mint Pty Ltd.  While it is pointed out in those decisions that modern communication has altered the way in which commercial selling takes place, we do not think it follows that the phrase in question has taken on a new meaning of the kind suggested.  As we have indicated already, we do not think that the ordinary and natural meaning of the phrase supports those decisions.

   [37] As appears from our review of the awards and decisions, awards have been made on the application of the NUW which apply to classifications of employees who do not work substantially away from their employer’s place of business but who in other respects fall within a relevant part of rule 5(D).  We are unable to accept that this fact requires us to find that in the circumstances of this case we should apply to the relevant phrase a meaning which is at odds with its normal meaning.  As we have indicated, the only analysis of the phrase is to be found in two relatively recent decisions of members sitting alone.  Having carefully considered that analysis for the reasons we have given we respectfully disagree with it.

   [38] It was suggested that we should follow the Full Bench decision in Roy Morgan Research Centre v NUW (cited above).  As we have already noted the Full Bench did not deal with the construction to be given to the relevant phrase.  For that reason, and for the reason that the decision dealt not with rule 5(D)(1) of the NUW’s rules but with rule 5(D)(2), we do not feel obliged to follow the decision.

   [39] It follows that in our view the employees of SRG are not eligible for membership of the NUW.

2. In VIP Airfreight Pty Ltd v Australian Trade Commission (1990) 96 ALR 667, Wilcox J adopted a broad approach when considering the scope of the term “technical services” as used in Item 4 of Schedule 4 of the Export Market Development Grants Regulations (Cth).  His Honour cited several dictionary definitions of the term “technical” and stated:

   [16] I see no reason to limit the term “technical services” in the manner urged on behalf of the respondent. I think that it is illuminating to look at the other services listed in the Schedule. Many of them are services which would normally be performed by a person with tertiary educational qualifications; but some are not. Some of the listed services are based upon sciences such as physics or chemistry, or mechanical knowledge; but, once again, some are not. For example, Item 1(c) refers to technical or advisory services supplied in relation to a development project being carried on outside Australia and being “services in the field of economic evaluation”. Such services may be rendered by a person with tertiary educational qualifications. But, conceivably, they may be performed by persons who have no such qualifications. More importantly, in the light of counsel's argument, the relevant expertise of the person providing those services would not be in the areas of science suggested by counsel. Similarly, Item 2(e) refers to technical or advisory services in relation to mining or processing of minerals outside Australia being “services in respect of mining or quarrying operations”. Such services may be furnished by a person drawing primarily, if not exclusively, upon practical experience. It may cover matters extending well beyond the field limited by counsel's submission.

   [17] I find the dictionary definitions compelling. They indicate that the word “technical” is appropriately applied to a trade or occupation which depends upon a body of knowledge, without further limitation. There is no suggestion in either dictionary of the narrow denotation of the word suggested by counsel.

The work performed by Mr Keen

1. Mr Keen’s initial letter of appointment of 26 November 2002 from the Managing Director of Health Information Systems, Ken Lee, informed that the position to which he was being appointed was “Director Sales and Marketing” (first affidavit of Mr Keen, Annexure 1).  The letter also stated that his role “will be to sell and market Health Information pharmacy franchises as detailed in the above Job Description”.   The job description sets out the following:

   Job description               Director Sales and Marketing

   HISW 261102

   1. Responsible to: CEO

   2. Responsible for:

   3. Lateral contacts with other sales team: Marketing Assistant, Business Development Coaches, other sales team.

   Remuneration package

   First 3 months

   Salary: $4,000 per month

   Car Allowance: $0.355c per km

   Superannuation: N/A

   Bonus: $3,000 per franchise sale

   Subsequent employment:

   Salary: $3,500 per month

   Car Allowance: $0.355c per km

   Superannuation: as per award

   Bonus: $4,000 per franchise sale

   The car allowance takes into account running costs and depreciation of your vehicle.  An ATO approved log book must be used.  The actual distance logged must relate to HIP specific business.  This amount can be reimbursed every month.

   5. Outline of Job Description

   - Franchise sales from leads to closure

   - Developing marketing plans

   - Development of national and possible international sales teams

   - Operations manual reviews

   - Franchise consultancy

   - Franchise management

   6. List of Responsibilities

   - Sales of franchises

   - Implementation of Marketing Plans – eg admin Bulletin

   7. Key Performance Indicators

   - number of leads

   - number of contacts

   - conversion rate

2. Paragraph 11 of the first affidavit of Mr Lee states:

   …Upon becoming a member of the Health Information Pharmacy Franchise Group, a franchisee has access to an exclusive range of services and benefits, some of which form part of the agreed franchising arrangements.  These benefits are only available to Health Information Pharmacy franchises and are not available to purchase separately outside the Health Information Pharmacy franchising arrangements.  They include:

   a) local area marketing programs and monthly group marketing programs;

   b) ‘Kick Start’ Master Store Orientation Program in which potential franchise members had training visiting a Health Information Pharmacy Store to experience the franchise system first-hand;

   c) Entrepreneurs Induction Training Program;

   d) business development coaching and mentoring provided by accredited business coaches including the availability of business coaching programs developed by and for Health Information Pharmacy, including HIP Philosophy, Companion Sales PCC, and Building Raving Fans;

   e) access to Health Information Pharmacy’s supplier arrangements with pharmaceutical and drug products including access to pharmaceutical products that have been developed by and branded for Health Information Pharmacy;

   f) Access from Platinum Care Club customers to a 24 hours a day, 7-days a week telephone hotline where customers can receive advice and information from a qualified pharmacist;

   g) Chemconsult, a trade marked in-store pharmaceutical consulting software program which sets out a ten-point checklist system and auditing process for some pharmaceutical consulting;

   h) Teamaximiser, a trademarked rewards and incentive software program which allows pharmacy employees to self-assess their performance against certain key performance indicators and earn rewards, such as cash incentives at a store level or team rewards; and

   i) Platinum Care Club, a trademarked customer loyalty software program which is a database system. 

3. The actual franchising agreement that was in use at that time was actually entitled “Licence Agreement, Health Information Systems Worldwide” (first affidavit of Mr Lee (Exhibit KBCL-1, Tab 2).  Clause 9 of the Licence Agreement provided that the licensee must promptly refer all enquiries or complaints that it receives from customers to health information systems worldwide and that it must deal with any enquiries or complaints so referred.

4. Clause 12 of the Licence Agreement obliges Health Information Systems Worldwide to develop and implement a national or regional marketing program.  Clause 13 obliges it to provide the licensee with:

   a)Pre-operational and operational supervision and assistance;

   b)Advice and consulting services relating to the day-to-day operation and management of the licensed business;

   c)Merchandising and advertising research data and advice developed by Health Information Systems Worldwide from time to time;

   d)Details of training courses offered by Health Information Systems Worldwide for their licensees; and

   e)The uniforms that the licensee’s employees are required to wear when operating the license business.

   Clause 14 obliges Health International Systems Worldwide to provide manuals at the licensee’s costs in paper or electronic form, and copies of all other material relating to the operation of the licensed business that Health International Systems Worldwide considers necessary or desirable.

5. Schedule 12 of the License Agreement describes the “prescribed services” as those set out in the manual and described as, or under the heading of:

   i)Chemconsult

   ii)Teamaximiser; and

   iii)Platinum Care Club.

6. Health Information Systems Worldwide states that the Health Information Pharmacy (HIP) model is designed to help “HIP store owners implement good business practice for focusing on all aspects of the business.  There is particular focus on business systemisation, incentive management, cost effective marketing, effective branding and positioning and business mentoring.”  Franchisees are required to attend a three day residential induction program at which they receive their operation manuals which detail all systems and processes.  These are detailed standard operating procedures covering in-store operation, buying, marketing, human resources, finance and accounting (first affidavit of Mr Keen, Annexure 7).

Was Mr Keen employed away from Health Information Systems’ place of business?

1. Mr Murphy submits that the major and substantial purpose of Mr Keen’s employment was the sale of Health International Systems Worldwide licenses and, more recently, Health Information Pharmacy franchises.  He was initially appointed to a position on the Health International Services Worldwide’s “Pharmacy Sales Team”.  His primary objective was “Franchise Sales from Lead to Closure” (first affidavit of Mr Keen, Annexure 1, see [67] above).

2. Mr Keen’s target market was existing pharmacy owners who converted their pharmacies to the HIP brand.  In 2004 the company’s strategy changed and Mr Keen began sourcing pharmacies that were for sale and introduced the vendor to a pharmacist interested in purchasing a pharmacy.  The purchased pharmacy would have the Health Information Pharmacy brand. 

3. Mr Murphy contends that the evidence of Mr Keen in respect to his time spent outside the offices of Health Corporation was not challenged.  It was conceded that Mr Taylor and Mr Lee had different recollections on the amount of time Mr Keen was out on the road effecting sales.  Although both conceded this was what Mr Keen did, the question involves how much time he spent outside the office and whether it was the major or substantial part of his job.  Both their recollections varied from Mr Keen’s sworn evidence which was that on average he was out of the office for 15 hours a week (first affidavit of Mr Keen, para.12).  He was not cross examined in respect of this issue.

4. Mr Murphy relied on Simon Richards Group v National Union of Workers.  In that case, which related to telesales marketers, because the sales had been affected by electronic means even though the employees were physically located within the employer’s premises it was claimed that they were employed “substantially away from the employer’s place of business”.

5. The Full Bench of the Commission stated in that case:

   [32] It appears to us that the natural and ordinary meaning of the expression “employed substantially away from the employer’s place of business” is that the duties of employment are carried out at a location physically removed from the employer’s place of business.  The phrase refers to a situation in which some work is performed at the employer’s place of business and some work is performed elsewhere. In that respect the test involved is directed at the location at which the work is physically carried out…

   [33] It is well accepted that eligibility rules are not to be construed narrowly…

   Consequently the adoption of a broad or literal approach to interpretation is not disputed in any way.  However, on the facts of that case because the employees were located within the employer’s premises for the entirety of their working time, the Commission found that despite adopting a liberal approach they could not be said to be engaged substantially away from the employer’s place of business.

6. Mr Murphy argues that in this case, Mr Keen was required to perform his work substantially away from the premises of Health International Services Worldwide.  This was recognised in Clause 2.2 of the employment agreement entered into by Mr Keen (first affidavit of Mr Keen, Annexure BEK2).  Mr Keen estimated that on average he spent approximately 15 hours per week away from the office.  Mr Murphy contends that the expression “all persons employed away from an employer’s place of business” is not to be interpreted literally as “to be employed away all the time” which would be incorrect.  He submits that commercial travellers covered by this Award spend the amount of time on the employer’s premises to complete administrative tasks. 

7. I am satisfied that the evidence before me establishes that Mr Keen performed some work at his employer’s place of business and some work elsewhere.  The purpose of Mr Keen’s work was to effect sales, which was done by approaching people at their place of business rather than at Health Corporation’s place of business. The work performed at the employer’s place of business can be regarded as ancillary or incidental to the primary purpose of Mr Keen’s work.

8. The correct approach to this part of the rule is that Mr Keen is employed away from the business premises soliciting orders.  This can be distinguished from that of a shop with goods for sale and the customers come to the premises, which is where transactions take place. 

9. Mr Lee readily conceded in cross-examination that this did not apply to the company:

   Murphy: Well the promotion of the sale is done at the potential franchisee’s premises.  That would be right – wasn’t it?

   Lee: No, not really because sometimes we would have information nights where pharmacists would come along as promotion would be done via marketing channels, advertising through fax and email, whatever.

   Murphy: Well the promotion rights you mentioned a – would occur on occasions in hotels.

   Lee: Yes

   Murphy: and on occasions like that?

   Lee: That’s correct.

   Murphy: You didn’t operate like a shop front, did you, with a sign up saying HIP Franchises For Sale, Come and Buy, did you?  It wasn’t one of those sent of retailing?

   Lee: No

   Murphy: Mr Keen and the other members of the sales team, is expected to go out and source potential franchisees?

   Lee: Yes

   Murphy: And if you go to paragraph 11, [first affidavit of Mr Lee], you say there:

   “Upon becoming a member of the Health Information Pharmacy Franchise Group a franchisee has access to exclusive range of service and benefits”?

   Do you see that?

   Lee: Yes

   Murphy: Now, the sale of the franchise was, in effect, the sale of those exclusive services and benefits, wasn’t it?

   Lee: Yes, that’s correct. (Transcript of hearing, p.37)

   Any sale occurs at the premises of the purchaser or franchisee, although the formal documentation may be finalised or executed at the offices of Health Corporation. 

10. Mr Miles indicated that the respondent accepts that Mr Keen was, on occasion, required to travel for his position but argues this does not necessarily constitute being “away from the employer’s place of business”.  He submits that the most the applicant can show is that he “spent approximately 15 hours per week away from the office”.  Mr Miles contends that the question cannot be answered merely by looking at the time spent outside the office.  Rather, the question is was Mr Keen employed to travel?  Mr Miles argues that he was not – his travel was merely incidental to the work Mr Keen was employed to do.

11. Mr Miles further submits that there does not appear to be much dispute between the parties about the legal principles used in the construction of an award.  He referred to Jordan v Tasmanian Perpetual Trustees (supra) and Jones v RWH Parcel Delivery & Anor (supra).  Consequently, Mr Miles takes no issue with the approach of looking at the ordinary meaning of the word used.

12. In support of this approach Mr Miles referred to North West Beef Industries v Australian Meat Industries Employees Union of Workers (WA Branch) at 331 (supra) per Olney J:

    It is now trite law that when the meaning of language read in its ordinary and natural sense is obtained it is not necessary or, indeed, permissible to look at the intention of the parties.  In my opinion the majority of the Full Bench has correctly stated the basic principle to be applied in interpretation of industrial awards.  Any other conclusion would be to industrial anarchy.  If the contrary were the case every employer from a union official and indeed, every employee would need to have available to him the express views of the award making tribunal dating back to 1955 to determine whether they expressed before or after the making of the award to determine the intention of the Tribunal.

13. Mr Miles contends that a number of elements need to be considered:

    a)Whether the applicant was employed away from the employer’s place of business;

    b)Whether he was soliciting orders for articles, goods, wares, merchandise or materials;

    c)Whether he was soliciting orders for technical services.

14. Mr Miles concedes that Health Corporation did sell products such as HealtheWeight to the franchisees.  However, the test is whether Mr Keen solicited orders for that product.

15. Mr Miles concedes that there was no doubt that, to some extent, Mr Keen had to travel for his work.  This was clearly accepted both Mr Taylor (Chief Operating Officer), Mr Lee (Chief Executive Officer) and the Managing Director.   This is also clearly identified in Mr Keen’s contract of employment.  However, Mr Miles contends that that is not the same as saying that Mr Keen was employed away from his employer’s place of business.  Mr Miles challenged Mr Keen’s reliance on the fact that the Award refers to being “substantially employed” away.  Mr Miles also referred to Simon Richards Group v National Union of Workers (supra) in which the history of the rules of the relevant union in that case was reviewed and, in particular, the eligibility rule of the registered organisation. 

16. Prior to the date of the introduction of the term “substantially” into the Award, the Simon Richards Group staff travelled at least part of their working hours each year.  The introduction relaxed the definition from two thirds to the broader term “substantially”.  Mr Miles submits that any travel that Mr Keen undertook was incidental to his work. 

17. Mr Keen’s job was to promote growth of the business through sales to franchises.  Mr Miles submits that the major and substantial part of Mr Keen’s duties was not that he was employed to travel: Ware v O’Donnell Griffin (Television Services) Pty Ltd (supra); Fenwick v Merchant Service Guild of Australia (supra).  He submits that Mr Keen was employed to ensure the sale of franchises and this may have involved some travel.

1. Despite the applicant’s detailed submissions that Mr Keen was not required to travel, I find this to be at odds with the contract he was required to sign with the new business entity, Health Corporation, in 2006, which was at the height of when he was supposedly engaged in managerial/strategic/non-sales activities.  Mr Keen was employed by the new entity to do the same work as he was doing the day before.  Significantly, cl.2.2 of that contract states:

   The executive shall be predominantly based in Sydney.  The executive acknowledges and accepts that he shall be regularly required to travel away from such location in order to effectively carry out his duties.

2. A considerable body of evidence was placed before the Court showing changes in the “Industries and Callings” since 1955 to reflect development and change in commerce.  Each industry will have its own unique requirements as to when a representative is required to be in the field compared with administrative tasks at the employer’s office.  The authorities support the view that the eligibility criteria of a commercial traveller has substantially expanded with the corresponding development and diversification of the industry as a whole.  On the material before me, I am satisfied that Mr Keen was regularly required to travel away from the premises of his employer in order to effectively carry out his duties.

Was Mr Keen employed in “soliciting orders” for “articles, goods, wares, merchandise or materials”?

1. Mr Murphy submits that Mr Keen’s role was to solicit sales of licenses/franchises to prospective purchasers, which amounted to soliciting orders for goods, wares and technical services for Health Corporation.  Mr Keen was also involved in promoting sales or orders for these goods, wares and services.  The goods and wares included the weight loss product known as HealtheWeight.  The technical and other services sold by Mr Keen included those set out in the manuals (see para.8, Exhibit “A3”).  Mr Murphy, for the respondent, contends that the important part of the rule and separate from the first part is:

   All promoting sales for orders in addition to soliciting orders for articles, goods, wares and merchandise.

   He argues that a person can be covered by the rule if they are soliciting for orders or promoting sales.  On the evidence given, including that of Mr Lee, Mr Keen was doing this in a variety of ways and also by attending sales nights, industry sales fairs and the like. 

2. Mr Murphy referred to VIP Airfreight v Australian Trade Commission (supra) which considered the term “technical services” in the context of export marketing development regulations.

3. Mr Murphy contends that when Mr Keen was engaged in 2002, he was informed that his position was to be Director of Sales and Marketing.  He was told he was a member of the sales team and would be required to sell and market HIP franchises as detailed in the job description.  Mr Miles submits that Health Corporation does not have to establish that Mr Keen’s work involved commercial services, but that his work fell within the meaning of “technical services”.  The fact that services are qualified by the expression “technical” must establish that they are soliciting orders for services of a particular kind.  Mr Miles then referred to Otto Waste Industries Pty Ltd v Klajman:

   The matter boils down to this: would a reasonable man, having appreciation of the service by the company to its customers in all its aspects, accept as an appropriate description of that service the term “technical service”?

   Mr Miles contends that this test to be applied to this matter should be: Would a reasonable person who has looked at the franchise agreement and understood the rights and obligations of both parties to it accept “technical services” as an appropriate description of Mr Keen’s work?  Mr Miles suggests that the answer would be no.

4. Mr Miles further submits that any reasonable reading of the franchise agreement shows that it refers to more than just the provision of services, regardless of whether those services are technical or not.  Some services might be considered technical and are based on experience and expertise.  Some services may include provision of software.  The franchise is the sum total of what was ordered.  It is submitted that a franchise does not fit within the ordinary meaning of “articles, goods, wares, merchandise or materials”.  Mr Miles concedes that although those terms are repetitive, their ordinary meanings do not include franchises because they do not include a complex bundle of rights and obligations which fall within a contractual agreement.  Health Corporation concedes that Mr Keen was involved in promoting the sale of products (being articles, goods, wares, merchandise or materials). 

5. Mr Miles submits that it is clear from the ordinary words used in the Industrial Committee that any promotion must be in addition to soliciting orders as there is a fundamental distinction between the terms.  The fundamental distinction in this case must be “in addition to soliciting orders”: National Union of Workers v Modern Roof Restoration (NSW) Pty Ltd [1999] NSW IR Comm. 31.

6. Franchising is more than a marketing concept, but the dominant method of distribution of goods and services through a retail network.  A franchise is a contract where expertise, knowledge, methods of operation and intellectual property rights are granted by the franchisor to the franchisee for a period of time.  The franchisee agrees in return to sell the products or services under the control and in the name of the franchisor.  As franchising covers such a wide range of business arrangements, I do not accept that the term “technical services” can be so easily excluded.

7. While I acknowledge the difficulty in interpreting the terms “articles, goods, wares, merchandise or materials”, I believe the inclusion of “technical services” to the term “software” broadens it to include other aspects of franchising.  When applying the more recent common understanding of these terms and the nature of business activities, I find that “franchising” can be included within their definition. 

8. Mr Murphy contends that what follows in the Award does not require a reading down of the first part:

   Persons employed away from employer’s place of business by a manufacturer for the purpose of soliciting orders for articles, goods, wares, merchandise or materials for resale. 

   There is unchallenged evidence before the Court about a weight loss product manufactured on behalf of Health Corporation and that orders were solicited for its sale.

9. I acknowledge that this matter does not stand or fall on this issue alone.  However, it is one element which supports the argument that Mr Keen was covered by the Award. 

10. Although Mr Miles initially submitted that there was no evidence that Health Corporation was a manufacturer, the evidence of Mr Keen and Mr Lee contradicts this.  Paragraph 21 of the first affidavit of Mr Keen, states:

    At all times, ie from November 2002 until January 2008, the “things” which I was selling include wholesale goods, being product lines (including a weight loss product known as “HealtheWeight”) manufactured by the Respondent from or about April 2007 onwards which HISW/ the respondent offered for sale to the pharmacies that signed up with us,… 

    Paragraph 41 of the first affidavit of Mr Lee similarly states:

    In or about April 2007, Health Information Pharmacy began to include in its franchise arrangements a new-weight loss product called HealtheWeight.  This product was developed, manufactured and distributed by Health Information Pharmacy.  For that period, as part of the franchise fee, new franchisees have been required to purchase approximately $15,000 worth of HealtheWeight and are also afforded a correspondingly reduced initial franchise fee.

11. I note that there is a dispute between the parties about the distinction between a corporate entity, Health Corporation and Health Corporation Pharmacy but they are part of a group.  It may be that a subsidiary other than Health Corporation manufactured HealtheWeight.  However, there is a corporate relationship between these entities and the evidence of Mr Keen was that he was soliciting orders for those goods.  There is sufficient evidence for me to be satisfied that Health Corporation was a manufacturer of at least one product, namely HealtheWeight.

12. Mr Murphy referred to the “Industries and Callings” assigned by the Commercial Travellers (State) Industrial Committee.  Particularly it states:

    b) soliciting orders for:

    …

    technical services; or

    Mr Murphy submits that the orthodox approach is to look at the coverage and the context of the Award as a whole, which have provisions that readily relate to the work Mr Keen performed.  The flexibility of the Award permits performance of a wider range of duties, including work that is incidental or peripheral to the main task.  Those items of work do not take Mr Keen outside the scope of the Award.  Mr Keen’s remuneration package provided for payment of commission for each sale obtained.

13. The Award provides:

    A local employee is defined as a commercial traveller is not required by his/her employer to remain away from his/her usual place of residence for more than fifty four consecutive hours in the week of seven days. 

14. Consequently a local employee is not required to be away from his usual place of residence for a period of time which is just in excess of two days.  Whereas the definition of “country employee” is one who is required to spend at least two days and six hours in a week away from his place of residence.  Mr Murphy argues that one does not need to spend a great deal of time on the road in order to come within the definition of “local employee”: VIP Airfreight Pty Ltd v Australian Trade Commission (supra).

15. In respect of reimbursement for Mr Keen’s expenses, the provision was for a kilometre rate of travel in connection with his work.  This formed a contractual part of Mr Keen’s arrangement and was another provision which had particular relevance to the work he performed.

16. Mr Miles submits that the submissions in respect of the commission structure do not assist Mr Keen.  Although he concedes that commercial travellers may receive a commission, he submits that it does not follow that receipt of a commission means that one is a commercial traveller.  Mr Miles further submits that there is no suggestion that commercial travellers are the only employees who receive commissions.  The commission structure itself reinforces that what was being sold was an indivisible whole franchise.  The franchise included at its heart the right to conduct a business exclusive manner.  Mr Lee gave the following evidence in cross-examination:

    Murphy: Now, the sale of franchise was, in effect, the sale of those exclusive services and benefits, wasn’t it?

    Lee: Yes that’s correct.

    Murphy:  And Mr Keen and – I withdraw that – Mr Keen was paid a bonus upon the closure of a – of such a sale?

    Lee: That’s correct (Transcript, p.37)

    Mr Murphy submits that the commission on sales concept is found in the Commercial Travellers Award.  I note his submission together with those in respect of car allowances, travel expenses and the maintenance of an Australian Tax Office approved transaction.  Although these are conditions commonly seen in Commercial Travellers Awards, I do not believe they carry any significant weight in establishing that Mr Keen was subject to the Award. 

17. I am satisfied that the franchise arrangements predominantly consist of free software programs which are central to them: Chemconsult, Teamaximiser and Platinum Care Club.  A review of the Health Information Pharmacy license system – standard operating procedures indicates that these software programs are the essential core of the franchise.  The suggestion that they are only peripheral to the franchise agreement cannot be sustained.  While it is acknowledged that the franchise covers a large range of materials, the system would be totally ineffective without these software programs.  The first affidavit of Mr Keen includes Annexure “BK7” which has been downloaded from the business website and is part of the marketing information provided by Health Information Pharmacy.  It refers to the business model including:

    The group is guided by five company philosophies.

    These philosophies or values stand behind the system and programs that run in every HIP store.  All HIP stores operate three core systems which are unique to the group.

    Chemconsult

    Teamaximiser

    Plantinum Care Club

    These “three core systems” are central to the franchise as they are the wares (which are in effect technical services) which are being sold.  In turn, Mr Keen was endeavouring to sell them by approaching pharmacists.  I have formed the view that it is entirely artificial to say that he was not soliciting orders for them as this is exactly the sort of approach that the authorities caution against.  I am satisfied that Mr Keen was engaged in activities that come within the “Industries and Callings”.

I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.

Associate: 

Date:   5 December 2008