Keldote Pty Ltd v Riteway Transport Pty Ltd

[2007] FMCA 1701

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KELDOTE PTY LTD & ORS v RITEWAY TRANSPORT PTY LTD [2007] FMCA 1701

INDUSTRIAL LAW – An interim order under s.16 of the Independent Contractors Act is in the nature of an interlocutory injunction – matters to be taken into account regarding interlocutory injunction are appropriate to be taken into account when considering whether to make interim order under s.16(3).
WORDS AND PHRASES – “desirable” – what is appropriate to do justice between the parties.

Independent Contractors Act 2006, ss.12, 15, 16

Applicant: KELDOTE PTY LIMITED

Respondent: RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

File Number: SYG 2353 of 2007

Applicant: L & D LOWE TRANSPORT PTY LIMITED

Respondent: RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

File Number: SYG 2354 of 2007

Applicant: TAMBO WATERS PTY LIMITED

Respondent: RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

File Number: SYG 2431 of 2007

Judgment of: Cameron FM

Hearing date: 22 August 2007

Date of Last Submission: 22 August 2007

Delivered at: Sydney

Delivered on: 22 August 2007

REPRESENTATION

Counsel for the Applicant: Mr. I. Latham

Solicitors for the Applicant: Turner Freeman Lawyers

Counsel for the Respondent: Mr. A. Moses

Solicitors for the Respondent: Blake Dawson Waldron

ORDERS

1. The interim orders sought by the applicants be refused.

2. The respondent has liberty to make application for an order for costs, such liberty to be exercised within 28 days.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2353 of 2007

KELDOTE PTY LIMITED

Applicant

And

RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

Respondent

SYG 2354 of 2007

L & D LOWE TRANSPORT PTY LIMITED

Applicant

And

RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

Respondent

SYG 2431 of 2007

TAMBO WATERS PTY LIMITED

Applicant

And

RITEWAY TRANSPORT PTY LTD T/AS RITEWAY EXPRESS

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 17 August 2007 matters SYG 2353 of 2007, SYG 2354 of 2007 and SYG 2431 of 2007 were ordered to be heard together today on the applications of the three applicants for interim orders under the Independent Contractors Act 2006 (“Act”), and specifically s.16(3).

2. The orders which the applicants seek today are that the respondent in each of the proceedings:

   a)be restrained from terminating the contract with each of the applicants pursuant to which the applicants provide interstate trucking services pending the hearing of the respective matters or until further order of the Court;

   b)an order that the respondent be restrained from treating the failure of the applicants to purchase new equipment at the direction of the respondent as a termination of the contracts pending the hearing of the matters or until further order of the Court; and

   c)orders that the respondent be restrained from compelling the applicants to purchase new equipment, including a 12 pallet roll-back tautliner load/22 pallet Pantech rear combination B/Double pending the hearing of these matters or until further order of the Court.

3. The applications in a case which I have heard today follow the filing of applications by the applicants in which they each seek the following orders:

   i) that the contract be reduced to writing;

   ii) that the term of the contract setting out a cap upon goodwill of $20,000 be declared void;

   iii) that the term of the contract allowing the respondent to compel the purchase by the applicant of new equipment be declared void;

   iv) that the contract be varied to provide for the binding mediation and arbitration of disputes over the terms of the contract and their operation by an agreed independent third party;

   v)that the contract be varied to provide that the applicant be paid sufficient amounts to allow the applicant to make adequate provision for the payment of overtime, paid sick leave, rostered day off, public holidays, annual leave and superannuation to the person providing labour to the applicant; and

   vi) that the respondent be restrained from breaching the above orders.

Background facts

1. In April 1998 a contract was entered into between the respondent and members of the Transport Workers Union of Australia then engaged by the respondent. The agreement, which is annexure PM1 to the affidavits of Peter John Mann sworn 21 August 2007, of which there is one for each proceeding, discloses that the respondent and the Transport Workers Union had mutually agreed upon the conditions and terms of engagement of the union members in question.

2. The copies of the 1998 contracts which are annexed to the affidavits of Mr Mann indicate that the principals of L & D Lowe Transport Pty Ltd, the applicant in proceedings SYG 2354 of 2007, and the principal of Tambo Waters Pty Ltd, the applicant in proceedings SYG 2431 of 2007, were original parties to that contract. It appears from the affidavit of Mr Mann in the proceedings brought by Keldote Pty Ltd, SYG 2353 of 2007, that the principal of that company became a party to the agreement, apparently by novation, at a later point.

3. The agreement between the parties provides for the provision of linehaul trucking services between Sydney and Melbourne and it is apparent that at least some of the principals of the applicants had been in a business relationship or working relationship with the respondent for some many years.

Respondent’s proposals

1. On 5 February 2007 the respondent wrote to the applicants indicating to them that it wished to change the trucks used on the Melbourne to Sydney route and in its letter of 5 February 2007, which is annexed to the affidavit of Mr Mann, one of the paragraphs says this:

   You need to be advised, formally in accordance with our commercial arrangement that this change will come into effect from Monday, 13 August 2007 and from this date you are required to provide a 12 pallet roll back tautliner lead / 22 pallet drop deck mezzanine tautliner rear combination B/Double.  Alternatively, if you elect to cease supplying services to Riteway, please advise me as soon as possible and no later than Monday, 16 July 2007.  In this case, the last journey that you would be required to undertake for Riteway would depart on Thursday, 23 August 2007.

2. There was some communication between the parties following that letter and on 17 March 2007 there was a meeting between the respondent and the principals, it seems, of the applicants to these proceedings. Following that meeting a letter dated 29 March 2007, which is also an annexure to Mr Mann's affidavit, was sent to the applicants. In that letter the respondent restates what it said in its letter of 5 February that, effective 13 August 2007, it intended to change its nightly linehaul operations between Sydney and Melbourne from operating three single trailer units each way to operating two B/Double combinations each way.

3. In this letter of 29 March the respondent gave the applicants two options. These were essentially to adopt the proposal being put to them by Riteway that they change the trucks and trailers that they were using, or cease their services to Riteway for which they would receive $20,000. Then followed a letter from the applicants' solicitors dated 30 April 2007 requesting additional time to respond to the proposal which had been put by the respondent. By its letter of 1 May 2007 the respondent gave the applicants a further 14 days to respond, namely until 14 May 2007.

4. On 10 May 2007 the applicants wrote again to the respondent, asking for a copy of the relevant agreement, and on 17 May 2007, by email, the respondent sent to the applicants' solicitors a copy of the relevant agreement.

5. Then on 4 June 2007 the respondent sent a further letter to the applicants' solicitors not retracting from its position. On 13 June 2007 it wrote again to the applicants' solicitors and again it is clear that it did not resile from the position which it had expressed.

6. On 23 July 2007 the respondent wrote to each of the applicants using the following words:

   I confirm that [name of applicant] wishes to cease providing services to Riteway Express effective 23 August 2007 (following the completion of the Melbourne – Sydney sector departing Wednesday evening 22 August 2007).

7. Following the despatch of that letter the first of these proceedings was commenced by the filing of an application on 31 July 2007. 

These proceedings

1. In several affidavits filed in the various proceedings the applicants' solicitor has deposed to the following matters which have been advised to him by the applicants: the freight rates paid by other transport companies for subcontractors driving B/Doubles on the Sydney to Melbourne route; the additional finance and running costs associated with a change to B/Double trailers; the length of the business relationships the applicants have had with the respondent; the costs associated with the applicants' businesses; the way the market price of a truck and trailer with work is calculated; and the costs which would be incurred by the applicants in upgrading.

2. The principal applications seek relief pursuant to s.12 of the Act and allege that the contracts are unfair or harsh. When considering such issues the Court may only have regard to the matters set out in s.12(3) of the Act, namely the terms of the contract when it was made and certain other matters which existed at the time when the contract was made. Consequently, the conduct of the parties subsequent to the entry into the contract cannot be taken into account when considering whether the contract is unfair or harsh.

3. In making a decision on the principal application, s.15 of the Act provides that the Court may have regard to:

   (a)     the relevant strengths of the bargaining positions of the parties to the contract and, if applicable, any persons acting on behalf of the parties;

   (b)     whether any undue influence or pressure was exerted on, or unfair tactics were used against, a party to the contract;

   (c)     whether the contract provides total remuneration that is, or is likely to be, less than that of an employee performing similar work; and

   (d)     any other matter that the Court thinks is relevant.

4. If the Court is of the view that the contract is unfair or harsh it may set aside the whole or part of the contract or make an order varying the contract.

5. As has already been observed in these reasons, the applications before the Court today are for interim orders pursuant to s.16(3) which provides:

   If an application under this Part is pending, the Court may make an interim order if it considers it is desirable to do so to preserve the position of a party to the services contract.

6. When considering what that section means, it is worth observing that the section says that the Court must consider whether it is desirable to do something to preserve the position of a party to the services contract. I do not read that subsection to mean that the preservation of the position of a party to the services contract is to be assumed as something which ought to be achieved. Rather, I read sub-s.3 as a provision which provides for an order in the nature of an interlocutory injunction to preserve the position generally, pending the outcome of the principal proceedings.

7. The question then is: what does “desirable” mean in the context of the section? To look at the dictionaries, meanings such as “to be wished for” or “worth wishing for” are suggested as definitions for that word. The term requires assessment by the Court and does not depend on the wishes of the parties. It includes the idea that such an order is appropriate to be made in the circumstances of the case. In my view, what is “desirable” is what is appropriate to do justice between the parties.

8. The order provided by this subsection is an order in the nature of an injunction and the law governing the making of interlocutory injunctions is sufficiently settled for it to be considered as the point of reference in considering what will be desirable for the purposes of s.16(3). That is to say, the guidance which the authorities give in relation to the circumstances in which an interlocutory injunction may be granted are those which indicate what is desirable in the circumstances of this subsection and it is appropriate that the matters to be taken into account in considering whether to grant an interlocutory injunction are taken into account when considering whether to make an order under s.16(3), namely:

   a)is there is a real question to be tried or, on some interpretations, is there a prima facie case; 

   b)will damages be an adequate remedy if the injunction is not granted; and

   c)does the balance of convenience favour the making of the order?

9. In these proceedings a number of issues stand out as being worthy of argument and as presenting a real question to be tried. These are:

   a)whether the respondent can impose upon the applicants the sorts of vehicles which they may use in circumstances where compensation for the change in trucks is more or less at large, it seems, under the contract, and certainly it does not appear that there is any guarantee provided by the contract that an increase in expense will be necessarily compensated by a corresponding increase in payment;

   b)whether the provision in the contract in relation to the cap on goodwill is or is not unfair; and

   c)the issue which has been articulated in argument, but does not emerge in the way the applications are pleaded, whether the contracts contain an implied term which permits the termination of the contracts on notice. 

10. However, notwithstanding that there are real questions to be tried, I am not of the view that any of the grounds which are raised are not potentially compensable in damages. Although the Act does not provide for damages to be awarded, damages can be awarded in the Court's associated jurisdiction and, in the context of commercial agreements such as these, if the respondent is found to have breached the contract even after any unfair terms have been remedied, then that can sound in damages.

11. Otherwise as to the balance of convenience, I note the applicants have been on notice since February that the respondent intended to change the manner it ran the Sydney/Melbourne route. They have been on notice since February 2007 of the manner in which the respondent intended to change the operation of its Sydney to Melbourne freight route.

12. Whether the respondent was entitled to act in the way it did is not a matter that I need to consider or ought to consider in the course of these proceedings relating to the applications in a case. But whether or not the respondent is in breach of the agreement or whether the terms of the agreement are unfair or harsh does not alter the fact that the applicants have been on notice since February that this is what the respondent wished to do.

13. Although there have been negotiations and correspondence between the applicants and the respondent in the intervening period it was not until just over three weeks ago that the first of the applications was filed in this Court and thereafter the interim applications followed.

14. The applicants have not put before me evidence from which I can conclude that their positions will be irretrievably damaged as a result of the contracts ending tomorrow as is likely to be the consequence of the orders made today. On the other side of the coin the respondent has engaged an alternative contractor to provide the services which the applicants are likely no longer to be providing and given that tomorrow is the commencement date of the new arrangement it appears to me that the balance of convenience does not lie in favour of making the order which the applicants seek.

15. Consequently, the interim orders sought by the applicants in each of the proceedings will be refused.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Cameron FM

Associate: 

Date: