Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd & Anor

[2004] HCATrans 228

[2004] HCATrans 228

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M299 of 2003

B e t w e e n -

MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS

Appellant

and

GRIBBLES RADIOLOGY PTY LTD

First Respondent

HEALTH SERVICES UNION OF AUSTRALIA

Second Respondent

Office of the Registry
  Melbourne  No M302 of 2003

B e t w e e n -

GRIBBLES RADIOLOGY PTY LTD

Appellant

and

HEALTH SERVICES UNION OF AUSTRALIA

First Respondent

MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS

Second Respondent

GLEESON CJ
KIRBY J
HAYNE J
CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON TUESDAY, 22 JUNE 2004, AT 10.19 AM

Copyright in the High Court of Australia

__________________

MR R.R.S. TRACEY, QC:   If the Court pleases, I appear with my learned friend, MR M.P. McDONALD, for the Minister for Employment and Workplace Relations in both matters.   (instructed by Australian Government Solicitor)

MR J.L. BOURKE:   If the Court pleases, I appear on behalf of Gribbles.   (instructed by Clayton Utz)

MR M. BROMBERG, SC:   If the Court pleases, with my learned friend, MR D.C. LANGMEAD, I appear for the Health Services Union of Australia in both matters.  (instructed by Health Services Union of Australia)

MR K.H. BELL, QC:   If the Court pleases, I appear on behalf of the Attorney‑General for the State of Victoria with my learned friend, MS R.M. DOYLE, intervening in both matters.   (instructed by Victorian Government Solicitor)

GLEESON CJ:   Yes, Mr Tracey.

MR TRACEY:   Your Honour, there has been some discussion along the Bar table as to the preferable order of address.  It has been agreed, subject to the leave of the Court, Mr Bourke will go first, because we do have a difference on the constitutional issue and that will obviate the need for a reply.

GLEESON CJ:   Thank you.  Yes, Mr Bourke.

MR BOURKE:   If your Honour pleases.  Your Honours, this case generated a surprising result.  The Full Court found that Gribbles, who were in competition with MDIG in the radiology sector, acquired his competitor’s business or part of that business:  one, without Gribbles having to pay one dollar to MDIG; two, without MDIG intending to give away its business to a competitor; three, with Gribbles and MDIG having no dealings at all of any material nature between the two.  It will be our submission that the result is too divorced from commercial reality and it was not the intention of this section to catch these types of situations.

GLEESON CJ:   Why did you use that word “acquired”?

MR BOURKE:   It is our submission that what is contemplated by the section – if I could take the Court to it, we have provided the Act as at 1 September 1999 ‑ ‑ ‑

KIRBY J:   Maybe you would not have been so surprised if you had concentrated on the section.  It just talks of you being a successor to part of the business. 

MR BOURKE:   Sorry, your Honour – can I just give the page reference, page 131.  You will see that section 149(1)(a), (b) and (c) deal with different types of parties, and then when you come to (d) it talks about “successor, assignee or transmittee”.  It is our submission that those three words are meant to take their meaning one from the other and were, in a sense, meant to be read in a composite way, really to amount to some form of transfer. 

KIRBY J:   Why would you read them like that?  Parliament could have just used the one word, but it has used three words, and then, just in case you are in doubt, it has added the words in brackets “whether immediate or not”, and then, in case you are still in doubt and prone to surprise, it has added in “part of the business”.

MR BOURKE:   Well, it is our submission that they have spread the workload over the three words to ensure that it picks up either a formal or legal transfer, or what is, in effect, by way of any commonsense view, a transfer of a business.  The reference to “whether immediate or not” deals with the fact there could be a third party as an intermediary, so it is looking at the substance of the situation.

KIRBY J:   Where is “transfer” there?  I do not see the word “transfer” there.

MR BOURKE:   No, I accept that. 

KIRBY J:   It is best not to gloss the statute here.  We just have the words that Parliament has adopted.  “Successor” is one of them.  It just means that you are a successor.

MR BOURKE:   Our submission on that is that ‑ ‑ ‑

KIRBY J:   You succeed, you follow.

MR BOURKE:   The critical point in this case is that we say – and this is essentially what the Full Court said.  They said a mere following, when one business closes and another business starts, is enough for this section to be activated.  Now ‑ ‑ ‑

KIRBY J:   They were not the facts.  They took the place, they took the employees, they took the equipment, they took the shop and they put up different signage that they succeeded.

MR BOURKE:   That depends on the meaning, your Honour, of the word “succeeded”.  We say the critical aspect here is that the focus of the section is on the one and the same business, not, as the Full Court characterised our business, a similar business to MDIG’s.  The section speaks of that in going on to refer to “the business or part of the business”.  Staying with the language of the section, not “a similar business”, which the legislature could have easily chose – that form of words – “of an employer who was a party to the industrial dispute”.  So there is a focus on the identity of the successee and that successee’s business coming over into the hands of the successor.  We say that notion contemplates a form of transfer.  It contemplates a disposal of the successee’s business in order that it can be acquired by the successor.

GLEESON CJ:   Is this the same sort of question that would arise if you were asking whether Virgin Airlines is successor to part of the business of Ansett?

MR BOURKE:   Exactly, your Honour.  The ramifications of the Full Court’s approach are profound.  It is our submission that the legislature would have been a lot clearer if they expected that a lot of ordinary commercial transactions would in fact cause a succession of business where, in the general community, it would not be seen that way.

KIRBY J:   Yes, but if Virgin had taken over Ansett’s planes, Ansett’s staff, Ansett’s facilities at the airport, then it may well be a successor.  We have to look at the purpose of Parliament.  This is just another statutory provisions of the Federal Parliament.  We have to give it a purposive construction.  Its purpose is to make sure that there is a way of dealing with the continuity of industrial relations.

MR BOURKE:   We will come to that as a discrete point, your Honour, but can I briefly say, we say the purpose of the section is to maintain the settlement of industrial disputes.  It is not to establish, outside of the award, a further regulatory regime to apply to similar businesses that were not parties to the dispute.  The parties to the dispute – and we will take the Court to George Hudson later – are the actual disputants and the classes they represented.  That class in relation to employees is future employees, that class in relation to a respondent business is the operator of the business from time to time, not a similar business.

Just responding to your Honour Justice Kirby’s comment, one of the traps in this case, it is submitted, is that you can get caught up in looking at indicia, various little indicia, are you using the equipment, et cetera, to assess whether there has been a succession of business ‑ ‑ ‑

KIRBY J:   Do you say those indicia are irrelevant?

MR BOURKE:   They are not irrelevant, but there will be cases where if you get too close to the subject, being the business, and start looking at all the indicia, you will lose perspective of what the reality picture is.

KIRBY J:   You may lose perspective of reality.

MR BOURKE:   It is our submission, when one steps back and if the Full Court had properly stepped back and saw you had one business closing, going out of business because it was uneconomic, and another business starting which was similar – when you look at the indicia, they start looking the same, but, as a realistic approach, they were not the same business.

KIRBY J:   Your have not mentioned the arrangement with Region Dell.  Could you explain that to me?  Who they were and what the arrangement was?

MR BOURKE:   Region Dell, which traded as Heritage, ran a series of medical clinics.  One of the medical clinics, the relevant one for this case, was at Moorabbin.  They had medical practitioners operating from that clinic and they leased out space for someone to put in – for want of a better word – a radiology practice.  Now ‑ ‑ ‑

KIRBY J:   So they wanted their radiologist, an in‑house radiologist ‑ ‑ ‑

MR BOURKE:   No, that is not correct.  They wanted the income from a radiology practice coming in there and effectively paying a licence fee or what could be described as a rent.

KIRBY J:   They did not want a fruit shop.

MR BOURKE:   They did not want a fruit shop, but the arrangement was that they charged a licence fee for the benefit of a radiology practice coming into that clinic.  That practice then had the advantage of the chance of referrals from the general practitioners that practised at the clinic, and Heritage encouraged their general practitioners to make those referrals.

KIRBY J:   It is like a little, happy family, really.  Your client succeeded to it, became a member of the family.  That is the truth of the matter.  It succeeded to the business that had previously been there in this happy, little, medical family.  Law has happy families, medicine has happy families.

MR BOURKE:   Can I just say to that, your Honour, it was not sufficiently happy enough that everyone stayed at home.

CALLINAN J:   I must say, I need to know the exact legal personalities involved, and by that I mean legal personalities, whether they were natural persons or whether they were companies, and what the precise relationship was between each of them, that is, the predecessor and the successor.  Could you assist me in that, please? 

MR BOURKE:   Yes, your Honour.  Your Honour, Heritage was an incorporated body.

CALLINAN J:   What is its correct name?

MR BOURKE:   Region Dell Proprietary Limited.

CALLINAN J:   All right.  Region Dell Proprietary Limited. 

MR BOURKE:   They were the operators of a medical clinic ‑ ‑ ‑

CALLINAN J:   Now, how can a company operate a medical clinic?  Was it a service company?  What was the situation?

MR BOURKE:   I do not think there was any evidence as to how they managed to operate ‑ ‑ ‑

CALLINAN J:   Well, we need to know who actually owned the business and who operated it.  Were there service companies involved?

MR BOURKE:   There was no evidence of the relationship ‑ ‑ ‑

KIRBY J:   Was it a shop or a self‑contained building?  Was that revealed?

MR BOURKE:   I think it was.

GLEESON CJ:   You are really invited to look at it from an accountant’s point of view.  Now, you said Region Dell Pty Ltd was Heritage.  Do you mean by that that Region Dell Pty Ltd traded under the firm name or style of Heritage?  What is the proper name or style?  Heritage what?

MR BOURKE:   Heritage was the business name. 

GLEESON CJ:   Okay, so Region Dell Pty Ltd traded under the firm name or style of Heritage.

CALLINAN J:   Just Heritage?

MR BOURKE:   That is correct.

GLEESON CJ:   What was their trading activity?

MR BOURKE:   Their trading activity under the evidence was that they operated medical clinics where they had general practitioners operating in that medical clinic.

GLEESON CJ:   As their employees?

MR BOURKE:   The evidence did not go that far as to the nature of the relationship between the general practitioners and Heritage.

GLEESON CJ:   That seems to suggest the evidence did not go very far at all, because most of us when we get bills these days from medical practices see the name of a corporation up in the top left‑hand corner.  There is nothing surprising or new about corporations carrying on medical practices, but if you want to describe to us the legal realities then we need to know with some degree of accuracy and specificity.

MR BOURKE:   I cannot ‑ ‑ ‑

CALLINAN J:   Were the doctors tenants?  I have no idea what this involves.  I do not understand the statutory framework under which corporations can bill people for medical services and what the relationship is between the corporation and the doctor, you see.  I just do not know anything about this, and I think I need to before I can deal with this case.

MR BOURKE:   I can only say there was no evidence led by either party as to the exact relationship between Heritage and the doctors.  If I can take the Court to the appeal book at page 58 ‑ ‑ ‑

GLEESON CJ:   It was not trading as Heritage, it was trading as Heritage Clinics, according to page 58.

MR BOURKE:   I apologise, your Honour.  The recital B refers to the fact that:

HERITAGE currently operates medical Clinics and engages the services of doctors, dentists and other allied health care practitioners – 

KIRBY J:   At line 7 it says:

trading as Heritage Clinics hereinafter known as “Heritage” –

Presumably, you may be forgiven for that, because that seems to be the way people refer to it, I suppose.

GLEESON CJ:   Does it engage the services of doctors, dentists and other allied health care practitioners as its employees? 

MR BOURKE:   I cannot take the matter any further, your Honour.

GLEESON CJ:   On what other basis might it engage them?  What are the competing possibilities?

MR BOURKE:   It could be some type of contract arrangement.

GLEESON CJ:   They could be either employees or they could be independent contractors? 

MR BOURKE:   They could, your Honour.

GLEESON CJ:   And we do not know which.

MR BOURKE:   We do not know.

KIRBY J:   If you go to those Medicare clinics, in common experience you sit there waiting your turn, and one gets an impression that some of them may be experts in particular disciplines, who come in and hire the room for a particular service.  Some of them may be employees, some of them may not; I never knew.

MR BOURKE:   There was no evidence led by either side as to what the nature of that relationship was.

CALLINAN J:   Well, would there not be some statutory framework?  I do not know whether it would be Victorian or Commonwealth, but would there not be some legislation which made provision for employment of doctors by corporations?  It is a relatively recent development, is it not?

MR BOURKE:   All I can say, your Honour, is that issue was not explored.

KIRBY J:   It is not uncommon for such clinics to have their own – I use the word loosely – “in house” pathology, “in house” radiology and other related services.  It is quite common, I think.  That is essentially what was the case here at Moorabbin.

HAYNE J:   That seems to be the finding of fact by the primary judge at page 85, paragraph 18.  Perhaps I am referring to part only of the relevant findings, but paragraph 18 seems to be a place to begin in the findings of the primary judge.

MR BOURKE:   Your Honour, that dealt with the fact that there was the encouragement by practitioners to pull their patients to the radiology practice.  The MDIG ‑ ‑ ‑

GLEESON CJ:   Is there a relevant difference between radiology and radiography?

MR BOURKE:   Radiography, your Honour, is the taking of the X-ray.  Radiology is the total service, including the analysis of the X-ray and report, which is then forwarded to the general practitioner.

GLEESON CJ:   So the radiographer would be a technician who takes the X‑ray, and the radiologist would be a medical practitioner who interprets it?

MR BOURKE:   Correct.

KIRBY J:   And both you and the subsequent company were providing both services, I think.

MR BOURKE:   Correct.

KIRBY J:   Both taking the photographs and also interpreting them.

MR BOURKE:   At the clinic, the only activity done was the radiography.

GLEESON CJ:   Did the company that was providing the services employ the radiographer at the clinic as its employee?

MR BOURKE:   Yes.

GLEESON CJ:   So there was a relationship of employer and employee between the company that was trading as Heritage Clinics and the radiographer.

MR BOURKE:   Sorry, your Honour, the relationship of employer and employee was in relation to MDIG, with their radiographers and radiologists, and the same thing applied in relation to Gribbles.

GLEESON CJ:   We do not seem to be in any uncertainty.  The corporation, whichever it was at any particular time, that was carrying on the medical practice and providing the services was the employer of the radiographers and the radiologists.

MR BOURKE:   No, your Honour.  The two radiology companies that employed all the radiographers and radiologists was MDIG, the first occupant at the Heritage Clinic, and then Gribbles.

KIRBY J:   At the Heritage Clinic?

MR BOURKE:   At the Heritage Clinic.

GLEESON CJ:   Now, you used the word “employed” and you used that advisedly.

MR BOURKE:   Yes.

GLEESON CJ:   So we can forget about independent contractors, can we?

MR BOURKE:   The independent contractors issue was only, I think, in response to a question from Justice Callinan concerning the general practitioners.

GLEESON CJ:   I see.  As far as the radiographers and radiologists were concerned, they were all employees of one or other corporation?

MR BOURKE:   Correct.

KIRBY J:   Something is made in the Full Court about the arrangement with Region Dell by which successively or – I do not mean to prejudge the matter – by which respectively the two corporations entered the premises.  Can you take us to those details, so that we understand?  Because I gather that there is some similarity between the arrangements made originally with the former company and then with your company.

MR BOURKE:   The evidence was that they were similar businesses, run in a similar way, in terms of their activities at the clinic.

HAYNE J:   Well, that is to come in at about episode three of Blue Hills.  Do you not have to begin at paragraph 19 of the primary judge’s findings and work forward?  The description you give may be accurate.  There is a description of what ultimately emerges from a series of events which commenced with the description at paragraphs 19 and 20, pages 85 and 86.

MR BOURKE:   He is starting at 18.  There is the fact that it is under the one roof.  There is the set‑up with the reception area and the arrangement with the patients.  There were particular areas of ‑ ‑ ‑

KIRBY J:   Who supplied all that great big equipment that they typically have in radiologists’ – was that supplied by Region Dell, was it?

MR BOURKE:   Correct.

KIRBY J:   So that was in the shop or facility?

MR BOURKE:   Correct.

KIRBY J:   And that was there when Southern Radiology conducted, it was there then when MDIG took it over, and then, when they left, it was there when Gribbles took it over.

MR BOURKE:   Correct.  So there was the common machinery and furniture and there was the reception facility.  The services were offered at the clinic and were available either for referrals from practitioners that worked at the clinic or from practitioners outside the clinic that may refer patients to MDIG and then Gribbles.

HAYNE J:   Now, the provision of equipment, I think, may be reflected in paragraph 38, page 93, from about line 8, “Region Dell was obliged” – this being obliged under the agreement with MDIG, the first radiology company with which we are concerned:

Region Dell was obliged to provide the radiology equipment specified in the agreement, non‑exclusive use of reception –

et cetera.  Am I right in understanding that to be the findings at trial about who supplied what to whom under the first arrangements, if that is sufficiently neutral?

MR BOURKE:   That is correct, your Honour.

HAYNE J:   And do we find an equivalent finding about the second arrangements with Gribbles?  Where do we find it?  I thought, perhaps wrongly, that we could not find it in the primary judgment, that we had a description there of what the relationship with MDIG was and we did not quite complete the picture, I thought, in relation to Gribbles.

MR BOURKE:   It was not articulated.  It was clearly the evidence that the equipment was the same and the activities were conducted the same way.  Our fundamental point is that although there are similarities in the activities conducted at the clinic by both MDIG and Gribbles, on any proper realistic assessment they are not the same business.  When you have one business closing up because the location is unprofitable and another business opening up, running the same or similar business ‑ ‑ ‑

KIRBY J:   Self‑evidently, they are not the same business.  That is the whole point of section 149(1)(d).  It is to cover the case of a new business and therefore that is a given.  Therefore the section or the paragraph is not addressed to that, it is addressed to whether, where there is a new business, it can be described as a successor, assignee or transmittee. 

MR BOURKE:   In our submission, the use of the word “the” in relation to business in the section, and, further on, in relation to an employer who is a party to the industrial dispute identified – we are talking about the notion of the one business being succeeded to by any putative successor.

KIRBY J:   But your view would really narrow radically the operation of the paragraph.  It would mean that unless it is really a legal assignee, transmittee or new manifestation of the old business, it is not within the section, but that is not the purpose of the Act.  The purpose of the Act is to deal with a change of enterprise that is still relevant to the industrial dispute and the industrial relations.

MR BOURKE:   We have no argument with ‑ ‑ ‑

KIRBY J:   I mean, otherwise, you could really walk right through this Act.  You could just reconstruct the corporate structure of the business and you would then just say, “Well, I am outside the industrial dispute.  You have to start all over again”.

MR BOURKE:   With respect, your Honour, in substance, they are the same business and with a corporate restructure they would be still the same business.  That situation is covered by the Act.

KIRBY J:   That is covered by “assignee” or “transmittee”, but the word “successor” is a word of generality.

MR BOURKE:   If I could just take your Honours to the latter part of the section, where it speaks of:

including a corporation that has acquired or taken over the business –

again “the” business –

or part of the business of the employer –

Now, that is expressed really as a clarification of how the words “successor, assignee or transmittee” will operate.  It is our submission that there is no particular attribute that is to relate particularly to “successor” or particularly to the word “assignee” or “transmittee”.  It is consistent with the fact that the target of those three words is generally aimed at some form of transfer, where there will be an acquisition of the former employer’s business.  You can see ‑ ‑ ‑

KIRBY J:   The word “business” is wide enough; it does not mean taken over the corporation or part of the corporation of the employer.  It means the business in the sense of the economic activity, the work.  If you give it that meaning, then it is not difficult to say that part of the business of the previous corporation – namely, its Moorabbin branch, its economic activity – has been taken over by this new corporation, your client. 

MR BOURKE:   Your Honour, a business will involve an economic activity, but there needs to be a boundary drawn between mere business activities and when business activities become a business.  That line is not necessarily easy to draw, but it is our submission that the target of the section was to capture businesses that go from one employer to another and not mere activities, and for that reason the legislature has used the term “business” and not “activity”, and, further, has used the term “part of the business” and not “activity of a business”.  It is our submission when you have a situation when, clearly, one business has closed down and another business opens, it is not appropriate to then go further and start looking at various indicia to see whether the activities are similar and whether, in a sense, it is the same business.

HAYNE J:   I am not sure that that is an especially helpful way to approach it.  Can we understand what the Full Court and the trial judge have found, because they have been against you.  Whose business is Gribbles found by the courts below to have been a successor to?  Whose business has it succeeded to?

MR BOURKE:   MDIG’s.

HAYNE J:   What is the business, or part of business, of MDIG to which it is said Gribbles succeeded?

MR BOURKE:   As we understand the Full Court, it was the radiography services, the radiography activities, that were conducted at the clinic.  There was no radiology conducted at the clinic, only radiography.  Somehow it was said that we acquired ‑ ‑ ‑

HAYNE J:   Leave aside “acquired.  “Acquired” we do not find in the Act.  To what business or part of business of MDIG is it said that Gribbles was successor?

MR BOURKE:   The radiography activities at the clinic.

HAYNE J:   And what is said to mark or identify what occurred as being succession?  Is it more than bare identity of activity?

MR BOURKE:   The Full Court considered there needed to be a transfer, but they said – and we say this was an error – that transfer could be procured by a third party, an independent third party, not someone acting for and on behalf of the original business owner, that being the Heritage Clinic.  Now, we say this section was intended to operate in a commonsense way and that ‑ ‑ ‑

KIRBY J:   I would keep away from common sense.  Your argument is more technical.

MR BOURKE:   With respect, your Honour, we are saying, test this by the ordinary person in the marketplace.  Do they understand that you have acquired a competitor’s business when that business closes down and you open up at the same location? 

KIRBY J:   Again, you use the word “acquired”.  The statute says, and the question for the person in the street is, “The arrangement we can show was with Region Dell.  The place is the same, the equipment is the same, most of the employees are the same, the signage has been changed but it’s in the same little family and they get the same business.  Have they succeeded to that which was there?”  The man in the street, or the woman in the street, I think, would say, “Well, they may not be the assignee or transmittee, but they have succeeded to the part of the business at Moorabbin”.

MR BOURKE:   It is our submission that the person on the street, once the additional ingredient is explained, that the first business closed, the new entrant was already in the business of radiology and expanded into that location ‑ ‑ ‑

KIRBY J:   That just means a common business.  They operate a common business.

MR BOURKE:   They operate in the same sector, but we say as a result there is no succession.  The notion of succession involves taking over the same thing or the same matter, not beginning to do something similar.  If you succeed to a throne, you succeed to the one and the same throne.  Now, on the uncontroversial facts of this case, where you had one business closing, they quit the premises, and another business opening, albeit same premises, same equipment, they hired some of the staff that were otherwise not going to be used, you have not got a succession of the one and the same business.  You have got a similar business operating at the same location interfacing with the same third party. 

In our submission, it is no different than if you have a situation of a retailer, who – for example, the lease expires and a new retailer, conducting the same type of business, comes in.  That is not a succession of a business in any ordinary community understanding, irrespective of the fact.  You look at the things they do, you look at their equipment, it might be the same shelving, but does not change the character of it.

GLEESON CJ:   You may not get very far by appealing one way or the other to ordinary community understanding.  It may be that ordinary members of the community would go red or blue in the face, stamp their feet and assert the conclusion.  But what we have to do is analyse the problem involved.  Is it part of your submission that for this paragraph to operate there has to be a continuity of a business or part of a business?

MR BOURKE:   Correct.

GLEESON CJ:   What then do you have to find in order to have the necessary continuity?  How do you distinguish between a situation where there is a continuation of a business or part of a business, and a situation where today there is a pie shop in a particular location and tomorrow there is a pie shop in the same location?  How do you decide whether there is a continuity of the business of a pie shop?

MR BOURKE:   In our submission, the section contemplates some mechanism or means that has caused the succession, if I can use that word, of the business, because you are talking one and the same business.  So where someone else opens up exactly the same pie shop, it is not the one and the same.  It is our submission that is what is behind 149(1)(d).  So you need to be able to find some dealing or some means in which the original business from the old employer has gone over to the new employer.

GLEESON CJ:   Well, if at 100 Bourke Street, Melbourne on last Friday afternoon there was a pie shop called “Fred’s Pie Shop” and at 100 Bourke Street, Melbourne on next Monday morning there is a pie shop called “Mary’s Pie Shop”, how do you tell whether or not there has been a continuing business or part of a business?

MR BOURKE:   Your Honour, you look for the nature of the dealings, if any, between the two pie operators.  If there are ‑ ‑ ‑

HAYNE J:   With a view to identifying what?  Yes, you look at the dealings, but to identify what?

MR BOURKE:   To identify whether the dealings between the two amounts to, in effect or in substance, a transfer.  It may not have to be a legal document, but you would expect that in a normal market situation ‑ ‑ ‑

HAYNE J:   It seems to bring the submission to this, and it may not.  Here there are at least three factors in play:  employment of the same staff, use of the same premises, use of the same equipment.  Let me add a fourth:  performing the same function, the same business activity, if you like.  What your point seems to come to is that unless there is a succession to some of the economic entity, such as, for example, succession to goodwill or the like, there is no engagement of the section, and that the purpose that seems to lie behind the proposition, “Oh well, find an arrangement between them, look to the transactions between them” seems to be, “Find something that is moving from old to new”.  Does that capture it, or is there more to it, or less to it? 

MR BOURKE:   No, that is our submission, that there needs to be some disposal of something that could be characterised as a business or part of a business from the old employer and subsequently in the hands of the new employer.

KIRBY J:   But why would one give the word, especially in the concatenation there appearing, “successor”, such a meaning?  It is purely a description of the fact whether the second business is a successor to the first.  Why would one give it such a narrow construction, especially in a statute whose purpose, generally speaking, is to keep alive the mechanisms for industrial relations, settlements and disputes that may continue in one pie shop to another, or in one radiographical surgery to another?

MR BOURKE:   Your Honour, the two factors in this section that point to the need for some mechanism or some means of transfer are the reference to the business of the employer – there is an identification of the business ‑ and two, the fact that it does not merely refer to activities.  When one does – and the HSUA submissions are just to a “before and after” examination of the businesses, of the pie shops.  That is all you need to do.  In our submission, where you have arm’s length dealings in an open market situation, why are you not allowed, under the application of the section, to look at the commercial realities of the situation and say, well, was there any form of sale agreement or any type of agreement or dealing where ‑ ‑ ‑

KIRBY J:   If you look at the industrial relations realities, which is what we are in the realm of, the industrial relations realities are that this is a successor business.  It is in the same place, it is pursuant to a similar arrangement with the lessor, it is the same employees, same equipment, the patients and clientele will be the same, the referrals will be the same.  The signage has changed, but it is the successor to the business, successor to the economic activity that was there before.

MR BOURKE:   Your Honour, I will come to an analysis of George Hudson, but if I can just deal with purpose now.  The proper analysis is that one goes first to the notion of an award which is in settlement of an industrial dispute between actual disputants.  The purpose of 149(1)(d) is not to undo that settlement if there is a change of the relevant respondent that conducts the business. 

Now, it is our submission that when one goes to George Hudson, where the predecessor was examined in terms of constitutional validity, the point was made by the Court that you are not going outside the ambit of the dispute to extend the effect of an award to what would otherwise be viewed as not one of the formal disputants, because an industrial dispute is different in character from a normal civil dispute between citizens.  It involves a fight not only by the actual disputants, but a battle on behalf of their class.  The word “class” is used throughout the judgments in George Hudson.  In relation to employees, the class includes future employees.  In relation to the respondent business, it is our submission it must be contemplated it would be any person that subsequently actually took hold of that business, stepped into the shoes of that business.

KIRBY J:   But the employees, the future employees, do not have to be relatives of the past employees.

MR BOURKE:   No.

KIRBY J:   So why does the new business have to be a relative of the past business?  It just does not square with what the Court held in Hudson.  That is what you want to impose.  You want to impose that they have got to be related in a legal sense, but that is not what the Act says.  It says it just has to be a successor to the business.

MR BOURKE:   But if one goes back to the battle of the dispute, it is, for example, in relation to employment issues in relation to a particular business, and thus you could extend the award to anyone that takes over that business.  But it is not a battle in relation to employment issues in relation to a possible similar business that might have identical activities and conduct itself at the same location.

GLEESON CJ:   Mr Bourke, this may not ultimately be decisive, but I am afraid I still need to understand the facts in a little more detail before I come to a view of the reality.  The activities, some of which take place at the clinic and some of which take place away from the clinic, as I understand it, involve the provision of imaging and diagnostic services, is that right?

MR BOURKE:   The part of the business that the Federal Court found was succeeded to was only the activities at the clinic which were radiography, being the X-ray side. 

GLEESON CJ:   Can we put the findings of the Federal Court to one side?  I want to understand the facts.

MR BOURKE:   Yes.

GLEESON CJ:   At the clinic there are located radiographers.

MR BOURKE:   Correct, your Honour.

GLEESON CJ:   Relevantly any other kind of people?

MR BOURKE:   Not material, no.

GLEESON CJ:   The radiographers take medical images of people.

MR BOURKE:   Correct.

GLEESON CJ:   Now, the radiographers then send those images away to somebody else for diagnosis, is that right?

MR BOURKE:   Correct.

GLEESON CJ:   The diagnosis being done off the premises?

MR BOURKE:   Correct.

GLEESON CJ:   So if somebody has a pain in the arm and it is desired to know whether that is the result of a fractured bone, somebody on the premises will take an X-ray and the X-ray will then be sent off the premises to a radiologist who will look at the X-ray and say, “That person has a fractured bone”?

MR BOURKE:   Correct.

GLEESON CJ:   And the element of continuity that was involved was that after one corporation ceased to carry on any activities at the clinic, another corporation began to carry on activities at the clinic in the sense that radiography was still done by the same radiographers who had become employees of the new employer.

MR BOURKE:   Correct.

GLEESON CJ:   Are those the relevant facts?

MR BOURKE:   Correct.

GLEESON CJ:   Thank you.

MR BOURKE:   Can I just further complete my answer to Justice Kirby regarding purpose.  When one looks at the class, it could be understandable that a union or a group of employees as a class also see themselves as in dispute on behalf of future employees.  In an open market situation, it is artificial to characterise a particular respondent business – in this particular case, MDIG – was fighting the dispute in terms of the terms and conditions that would apply to their business – also on behalf of a class that included a competitor that may, at a later time, come and operate at the same location after they have been forced to close.

KIRBY J:   But that is the competitor’s lookout, if it becomes a successor to a business which has an industrial dispute. It is just their lookout, subject to the Constitution.

MR BOURKE:   Your Honour, in our submission, that crosses the line in terms of constitutional validity.  It becomes too remote to the area of the dispute.

KIRBY J:   Why are successive employees not too remote on that theory of the Constitution?  Are you into your constitutional argument now, are you?

MR BOURKE:   No, I am just briefly dealing ‑ ‑ ‑

KIRBY J:   Just giving us a little taste of it. 

MR BOURKE:   Just in terms of your point, as you raised it, but I will be coming to the constitutional point later.

KIRBY J:   You are on your own on the constitutional point, are you?

MR BOURKE:   That is correct.

KIRBY J:   All the parties at the Bar table oppose you. No, I think it is a bit more subtle than that. I think Mr Tracey says the Constitution can and should be used in construing the Act in such a way that it does not exceed constitutional power. Am I wrong in that? I think he says it is a factor to read down, if necessary, the section in a way that supports your argument.

MR BOURKE:   Mr Tracey does say that, but his primary submission, as we understand it, is that there is no need to read it down for constitutional validity.  Our submission is you do need to read down the Full Court’s approach for constitutional validity.

Now, one of the key ingredients we point to is that this was an open market situation, where people were acting at arm’s length with no sham arrangement, and you should then look at the reality of the transactions.  You have a situation where the original owner of the business has taken no step to transfer the business to Gribbles.  In that circumstance, we say it is artificial to start sitting down and comparing, for example, your Honour the Chief Justice’s example of the pie shops.  You start getting into dangerous territory.  One needs to first step back and say, “Do I need to do that exercise in circumstances where it’s clear on the face of the transactions there has been no succession of the one and the same business?”

Further to that, we say it is a very surprising outcome that in an open market situation, a third party, an independent third party, can procure a transfer of one person’s business over to another person.

KIRBY J:   No, it does not have to have – you keep going back to transfer.  You love that word transfer.  It just does not happen to have commended itself to the Federal Parliament.  It just asks, is the new business a successor to the old business?  It does not have to be a transfer from one and the same.  It is just not the terms of the Act.  Do not gloss the Act.

MR BOURKE:   In fact, the Full Court adopted the phrase “procure the transfer”, they use that phrase.  In our submission, there needs to be some mechanism akin to some form of transfer to justify ‑ ‑ ‑

KIRBY J:   I do not see why.  I think it is just a factual question.  Is one business a successor to another business?

GLEESON CJ:   Perhaps more accurately is an employer a successor to a business or part of a business?

MR BOURKE:   Correct, your Honour.  If one is left with just the “before and after” test, then one is ignoring any form of dealings in terms of making that assessment of whether the section applies, and issues such as intent of the parties, which are matters often used to assess the nature of a commercial arrangement, are put completely to one side.  Now, it is our submission that the legislature intended – taking on board whatever broad reach the policy is – the legislature intended that this section would work and needs to be understood by people in the community, in the business world. 

If you are left with businesses having to assess whether they are going to be exposed to a penal provision for breach of failing to follow an award, because on the face of it there is no mechanism or means in which they acquired a business, they have opened up a similar business, under the “before and after” test, one is left with people in the community having to make an assessment on a range of indicia and saying, “Well, does this stack up before and after?  Is it the same equipment?  Is it the same staff?”  Once you are left with that, you are left with a very unworkable situation in that people in the community who have to comply with the section are having to make ‑ ‑ ‑

HAYNE J:   Whatever form of Act you have, you will have cases which lie at the margin.  I do not think you advance your case at all by saying that there may be difficulties at the margin.  However they draft it, there will be difficulties at the margin.

KIRBY J:   And the heartrending story that you present to us can be turned around. I mean, what about the employee? They get on the bus, they go to work, one day they are covered by an award and the next day they slip out. It is the same old employees, they are using the same equipment, they are going to the same place, they are doing so pursuant to an arrangement between the same lessor with their successive employees, and one day they are covered by an award and the next day they are not. That is your theory of the Act. That does not seem the sort of provision that one would see in an Industrial Relations Act, unless you were trying to cut back the operation of the Industrial Relations Act.

MR BOURKE:   Your Honour, that hypothetical employee has a decision whether they want to be an employee with the new business.  It is not automatic.  We say there is a qualitative difference between going over to the one and the same business you have worked for – take the MDIG example.  They were employed by MDIG, they have seen, and know, the MDIG are closing up, they have found it uneconomic and they would otherwise – unless they can be re‑employed – be unemployed, and we come along and hire them.  There is no reason they would have an expectation of being covered by all the awards.

GLEESON CJ:   What is the evidence or the findings of fact as to how they came to be employed by your client?

MR BOURKE:   We contacted MDIG and said, “We would like to hire some of the radiographers that had been working with you.  Do you mind?”  MDIG said, “We don’t mind”.  There may have been – it is not clear on the evidence – then provision of their addresses or telephone numbers, and we made contact with them and offered them contracts of employment.

GLEESON CJ:   Were the offers in writing?

MR BOURKE:   Offers in writing.

GLEESON CJ:   Where do we find them?

MR BOURKE:   Page 68 of the appeal book, your Honour.

GLEESON CJ:   Thank you.

KIRBY J:   What does that mean, “All other award conditions apply”, line 20?

MR BOURKE:   It is unclear what that means. 

KIRBY J:   Does it not mean that the award which was applicable to them in their previous employment continues to apply to them?  That is the normal meaning of it.

MR BOURKE:   That may be ‑ ‑ ‑

KIRBY J:   Because we are the successors to the business.  We are taking it over, and you will have the same award conditions.  It does not mean you are out on your own.

MR BOURKE:   In our submission, it does not mean they are indicating they are the successors to the business.  Just offering ‑ ‑ ‑

KIRBY J:   But you keep appealing to common sense, the person in the street and all that.  The common sense is that this is just continuity of the particular economic activity, i.e. business, the same award conditions.  What other award conditions would apply, save for the award that previously applied to the predecessor in business?

MR BOURKE:   There appears…..

KIRBY J:   There certainly does.

MR BOURKE:   In our submission, whatever was put in the letter does not determine whether this section applied or not.  One has to look ‑ ‑ ‑

KIRBY J:   It shows that whoever wrote it thought that the industrial relations situation would remain the same.  Why?  Because they were a successor to the business.  It looks like an admission against interests.

MR BOURKE:   In our submission, there is no suggestion that it is on the basis of succession.

KIRBY J:   Why else would the award apply?

MR BOURKE:   It could be an indication that, as a matter of contract, you will get the award conditions.

KIRBY J:   It does not say that.  It says, “award . . . apply”.

MR BOURKE:   I cannot take the matter further, your Honour.  Can I come back to this issue of disposal.  That was a matter that was quite important when this Court looked at PP Consultants and the question of whether St George Bank had disposed of part of its business when it entered into an agency agreement with the pharmacy.  The Court in PP Consultants asked the question, looked at whether there was a disposal, looked at whether there was an acquisition, and found none had occurred.  If the Full Court had properly asked that question they would have found that no part of MDIG’s business actually was disposed of.  It, in fact, closed its doors, the same way as a business on tentative premises and the lease expires closes its doors.  Your Honours should have our folder of authorities.  If I could take the Court to tab 2, the PP Consultants decision, at paragraph 19: 

It is correct to say that, in conducting the branch agency, the appellant is involved in banking activities.  It is not, however, correct to say that it is carrying on banking business.  It is carrying on the business of a bank agent.  Moreover, the Bank has not disposed of any part of its business.  All that has happened is that the Bank has changed the method by which it carried on its banking business in Byron Bay. Thus, no part of the Bank’s business has been acquired by the appellant, whether as successor, assignee or transmittee.

It is our submission that when MDIG closed, it closed its business, it did not dispose of any business and we did not acquire any part of its business.  Justice Callinan, at paragraph 36 in the PP Consultants decision tested whether a business had been acquired by the pharmacy by asking the question, “Could the business be onsold?”  In a different manner, we ask the question, going back to the original employer, MDIG, “Were they in the position to sell a business?”  After they had given their notice to quit to Heritage Clinic because they found it uneconomic to stay there, they were in no position, in any realistic view, to then sell a business, but somehow a third party, being the Heritage Clinic, has been able to cause a succession of the business without the original holder of the business disposing of its business.

KIRBY J:   But that is because the Act does not talk of sell a part of the business.  It talks of it being a successor to part of the business. 

MR BOURKE:   That comes back to my original point.  When you have a notion of “the business” as recognised in the section of the employer of the original industrial dispute, the section is directed at one and the same business, no matter how difficult that might be to identify, and that implies there must be a giving up by the original employer.  In this case there is just no disposal.  There is a closure of a business and that is why ‑ ‑ ‑

GLEESON CJ:   That is the question, is it not?  So there must be giving up.  It commonly happens that a person or a corporation carrying on a business will just walk away from the business, just go, just leave, because it is unprofitable.  Your argument may or may not be correct, but if it is correct, then in those circumstances there can never be any succession. 

MR BOURKE:   That would be correct.

KIRBY J:   That seems a very odd thing for the Industrial Relations Act to provide.  Employees are completely uncovered from that moment even though an award bound them up to that time and even though somebody else comes in and carries on the same economic activity, let it avoid the word “business”.  It seems a very odd result and it is a result that could lend itself to manipulation, which is the very thing that Hudson was seeking to deal with.

MR BOURKE:   Your Honour, we are talking about arms‑length transactions.  The courts can see through sham-type arrangements and do not need to visit the section on commercial ‑ ‑ ‑

KIRBY J:   …..does not talk of sham.  It is focusing on a factual issue of succession of business.  It did not stick to assignment or transmit and indeed, just in case you were in doubt, it added the words in brackets and then it added the words “or part of” so it is all aiming to protect people who are the subject of awards so that by the arrangements that their employer business makes they do not suddenly lose the protections that awards are designed to give them. 

MR BOURKE:   Your Honour, on that analysis, a critical piece is the hiring of the new staff.  It is my submission the fundamental policy behind the section is to ensure the integrity of the award in settlement of the dispute; that you cannot evade.  What follows from that is that once there is a settlement it cannot be undermined by someone, for example, just setting up another business.  That is where it is directed at, holding the integrity of the settlement together, not so much ensuring that a particular employee that may have been covered by an award, if they go, in our submission, to a similar business or similar activity as described by the Full Court, continues to be covered.  That is like what we put in our written submission as the de facto localised common rule where, taking your Honour’s example, Justice Kirby, there could also be a concern if an employee left a particular business and went to a similar business that was not a respondent to the award. 

KIRBY J:   There is no argument that that is not a successor to the business.  Here, there are so many indicia of succession:  place, equipment, employees, super‑arrangement with the lessor, relationship with the other doctors in the Heritage Centre.  It just seems impossible to me to say it is not a successor.  These matters are partly matters of reaction, the words of statutes read in contest to perform the purpose that the statute was intending to operate and different people can have different reactions. 

MR BOURKE:   And your Honour’s approach with the “before and after” test, you can have a situation of a succession not requiring any act of the successee, not requiring any intent of the successee, not requiring any knowledge from the successee that they had had part of their business succeeded to by a competitor ‑ ‑ ‑

KIRBY J:   None of that is in the Act, it just talks of “successor”, unless it is incorporated in “successor” or the word “the”, the definite article.  You attach importance to that and I understand that article.  It is “the” business.

MR BOURKE:   In our submission, and in a policy sense, it must have some practical application when you come to a private sector situation where people are acting at arms‑length for the idea there is a succession of the business when the successee may have done nothing, know nothing, intend nothing.  As far as they are concerned they may have just packed up and gone home, they may not even know someone else is moving in, going to run a similar business.  That is a succession on a “before and after” test.  It would also apply in situations where someone has already moved on and another retailer running a similar business moves into the location and did not know that the first retailer ran a similar business.  They would be caught by the section.  The section is directed to businesses.  The section will apply whether you hire the former staff or do not hire the former staff, so in those types of situations you will have a transmission of business.

The other type of situation in terms of via a third party you acquire their business is, for example, a contracting situation.  You may deal with a particular type of function of a particular third party, their accounting practice, the accounting side of their business.  You lose that contract, let us say they are not happy with your services, another business comes in, offers exactly the same service, and may even hire some of the old staff.  On the Full Court’s application that is a succession and you inherit the industrial regime of your unsuccessful competitor who has lost a client and you have gained a client.

HAYNE J:   Can I take you to page 96 of the appeal book at paragraph 46 of the primary judge’s reasons as a convenient place to find, in paragraph 46 a quotation that raises some of the issues that are underpinning all this.  Do you have page 96?

MR BOURKE:   Yes, thank you.

HAYNE J:   The question that is presented in that citation is whether, in effect, it is enough to see that there is substantial identity of activity and that is rejected.  Let us leave aside for the moment whether that rejection is right or wrong.  We have in play here, as I have said, the elements of same business activity - no interruption, that is, one goes out day one and the other comes in day two; use of same equipment; use of same premises; use of same staff, that is, employment of same staff.  Now, are not the integers of identity of staff and equipment significant in determining whether there is a succession to the business of the employer who was party?

MR BOURKE:   It is our submission they would be relevant if there was uncertainty as to whether the one and the same business has gone over from the ‑ ‑ ‑

HAYNE J:   Dividing the world into certain and uncertain cases is, I would have thought, fraught with peril.  Let us leave aside whether certain or uncertain.  What is it that would make identity of staff equipment and premises relevant to the question of whether there has been a succession to the business or part of the business of an employer who was a part.

MR BOURKE:   It is part of the matters you could look at, but we come back to a fundamental position, the one thing that did not change is that MDIG’s business remained distinct and intact at all times and our business remained distinct and intact as part of an integrated business and that, in those circumstances ‑ ‑ ‑

KIRBY J:   MDIG’s corporation remained intact and separate, but the business, in this context, is the economic activity that is carried on, it is not the corporation.  We are not just here concerned with matters of form.  We are looking at the substance of the business.

MR BOURKE:   I accept we are looking at substance, but when the section is directed at the business there must be some disposal of part of the original employer’s business ‑ ‑ ‑

KIRBY J:   But to say that is…..succession.  I mean, it does say you can have assignment and you can have transmission, but there is this third noun, “successor”.

MR BOURKE:   We can only point to the business of the employer and the fact that the legislation has not spoken about similar businesses.  The legislation has not spoken about it is a succession when you open a similar business which does similar activities.  It is focusing on the business. 

GLEESON CJ:   Is there any authority about whether the concept of succession in this paragraph has any technical meaning?  The concepts, “assignment” and “transmission” sound fairly technical.  The concept of succession has certain kinds of technical meaning but it also has a broader meaning. 

MR BOURKE:   In North Western Health Care, the court in that case suggested that those three words were to be read in a non-technical way.

KIRBY J:   Which court?  Is that this Court?

MR BOURKE:   No, the Full Court of the Federal Court.

HAYNE J: That is 92 FCR 477, North Western Health Care Network v Health Services Union, is that right?

MR BOURKE:   It is our submission that also if you confine your task to before and after and ignore any need to find a means or mechanism you are ignoring a substantial part of the section which talks about assignee, transmittee, acquired, taken over and on the before and after construction, because of the word “successor” you have a completely different type of analysis open as to when the section applies.  It is submitted that if that was the approach there was really no need to talk about assignee, transmittee, acquired or taken over, which focus on the means and mechanism.

GLEESON CJ:   Is it possible that the question whether one person or legal entity is the successor to the business or part of the business of another person or legal entity might be affected by the nature of the activity that constitutes the putative business?  In the case of a pie shop, the activity of selling pies might make it easier to conclude that the fact that Mary today is selling pies at the same place where Fred was selling them from yesterday does not involve any succession.  But this business with which we are concerned in this case involved a relationship of some kind, did it not, between the medical practitioners whose patients provided the receivers – not all the receivers as I understand it, but at least most of the receivers – of the services of the imaging and diagnostic people.  It was not just a question - if you had to describe the business, it was not just a business of providing imaging and diagnostic services.  It was providing it as part of a health clinic in a locality where the recipients of the services would be directed towards the services by the general practitioners in the clinic.  Is that material?

MR BOURKE:   In our submission, the fact that the location does give you particular advantages and access to custom, which it did in this case, does not disturb our fundamental point that where there has been no disposal, no means or mechanism for the business to go from the old employer to the new employer, the character of that does not change because the bulk of the custom came as a benefit of operating within that location.  It would be different if you entered into an arrangement or some dealing with the actual owner of the business which caused that to occur but, in our submission, the Act should not apply because you have entered into the same arrangement as your competitor had entered into with a third party.

KIRBY J:   That is really the essence of your argument, is it not, that it is not enough for a successor of the part of the business to succeed factually.  There has to be an arrangement between the old business and the new business.  It is not enough that A, the third party, should make the same dealing with B and C.  It has to be B makes an arrangement with C.

MR BOURKE:   Correct.

KIRBY J:   That is the essence of your ‑ ‑ ‑

MR BOURKE:   You could go in a sham arrangement via B, but the dealing in truth must be between old and new employer. 

KIRBY J:   That is really refining the point.  We have to decide whether it is enough that there can be a succession A to B, A to C, or whether to be a succession within this provision it must be C to B and B to C.

KIRBY J:   I hardly think MDIG would have left all their negatives there.

MR BELL:   No, your Honour, but they may have left chemicals or ‑ ‑ ‑

KIRBY J:   Trivia, we are talking about trivia now.

MR BELL:   Perhaps so in the present circumstances, your Honour.  Can I bring the two submissions together since we are here, your Honours, to make submissions in relation to the constitutional aspect.  The acceptance or not by the Court of the submissions made by the Commonwealth and the Victorian Attorney in relation to the constitutional aspect are not unconnected with the manner in which the Court might approach the construction of the provision because, in our submission, since the constitutional connection required in order for the provision to be properly founded is not one involving a direct contractual nexus between the successor and the predecessor employer.  The Court would, in our submission, be more likely to construe section 149(1)(d) as one that also does not require a contractual nexus of that kind.  Section 149(1)(d) is more likely to be construed in the broader fashion for which we have contended if the constitutional submissions that we have put forward with respect to the validity of the provision are accepted.  We otherwise rely upon our written submissions.

GLEESON CJ:   Thank you, Mr Bell.  Yes, Mr Bourke.

MR BOURKE:   If the Court pleases, could I first go to my learned friend, Mr Bell’s, point.  He appears to accept that constitutional validity turns to some degree on the subject area of the dispute concerning the business.  Can we take your Honours to the appeal book 124, line 14 which discloses how far the Full Court went from looking at the business:

It is quite consistent with the purpose of s 149(1)(d) discussed earlier, for it to operate so as to render applicable the Award on a private sector employer operating a similar business ‑ ‑ ‑

that was the view they saw our business -

in the same industry, who employs radiographers performing the same functions as those performed by employees of named respondents at the same location.

We say that that characterisation of us as a similar business in the same industry, same location does not equal the business within that notion of area of dispute.  We further say, on any view, it should take us outside the catch of 149(1)(d) which speaks of not only “business”, and we have heard that business can be a nebulous concept, but “the business of the employer”, not a similar business in the same location.  We say the area of dispute has to then be the business of the next employer and we did not fulfil either of those requirements. 

Just on the question of costs, we agree with my learned friend, Mr Bromberg, that section 347 applies and, accordingly, we do not seek costs against him as well and consider that he could not seek costs against us.  We would seek no costs against the state of Victoria if we are successful.

KIRBY J:   What about the Minister?

MR BOURKE:   No, we seek no costs against the Minister. 

KIRBY J:   What is that section of the Act?

MR BOURKE:   Section 347.  Can I come back, one of the focuses of my learned friend, Mr Bromberg, was the fact the workforce went over, that played a critical role in building this nexus or connection that was required.  We say to this, your Honour, that the section speaks of “the business” not of employees.  That is in contrast to the European directive where the focus is on attempting to achieve continuity of employment.  That is where it is directed at.  This is directed at - of the award being preserved in relation to the business.

There is no case I know of where it has been suggested that section 149(1)(d) has a different operation whether the employees follow or do not.  There is either a succession or there is not succession.  What the employees going over does, it can cause the situation to be coloured and for you to fail to therefore distinguish that you are maybe talking about distinct businesses.  The going over of the employees, in fact, was not a matter the Full Court put any weight on in their process and, it is submitted, that was implicit that they accept, in my submission below, that the issue of employees was not relevant and that point, your Honours, is made at 126, point 28 of the judgment at line 28:

It is not an essential element in our analysis that the transfer also included taking steps to facilitate the transfer of the four radiographers.

We say it is, in fact, not an essential element and it is not the type of platform that can build the necessary nexus.

KIRBY J:   Why did they say “four radiographers” when I thought we were told there were nine of 10.

MR BOURKE:   There were four claimants, your Honour, only four claimants were involved in the suit against Gribbles.  We also say that on my learned friend’s, Mr Bromberg’s, construction where Heritage can effectively effect the transfer or effectively passing of the business, you have a situation where Heritage can somehow rise above the source.

MDIG had come to the view they had a hopeless business.  They had quit the premises.  They had given notice to the actual employer of the business that the Act focuses on could not have handed over a going concern, the notion of a going concern, when you have an employer saying, “I’m going broke, I’m packing up”, that somehow an independent third party can do better than that and give us everything we need to run the business.  That view of my learned friend, “There’s everything we need to run a business, we got that”, the fact of the matter is we had the knowledge or whatever and the manpower to provide the radiologist reports.  We did not get them from Heritage.  We did not get the staff from Heritage and we did not get any type of no competition commitments, adjustment of rights, any ability to use the name of MDIG, the type of things you would normally expect in commerce. 

There was a suggestion made that somehow it can be inferred that MDIG was motivated in allowing us to approach these people, that they would then get out of their applications of the award.  No such suggestion was ever put below.  There was a representative of MDIG who was called to give evidence.  It is at appeal book, page 36, lines 30 to 34.

The evidence from MDIG was that they thought these radiographers were casuals so the issue of redundancy did not even come up.  We were the first people to actually formally say, “We’re going to employ you permanent part-time”, and it is because of permanency in employment the issue of redundancy arose.  We gave evidence when the staff came to us they told us they had been employed as casuals.  What occurred after that was that his Honour, Justice Gray, found that although, in their contracts – you will find an example of the letter of appointment in the appeal book at page 55, “Your employment status will be on a casual basis” – as a matter of true construction, they were permanent part-time and that is why we had to pay all the back years and that is why no one really made a demand on MDIG because at that stage it was on a casual arrangement, or perceived to be such.

KIRBY J:   But we are not asked to review that part of Justice Gray’s finding.

MR BOURKE:   No.

KIRBY J:   Do you accept, as Mr Bromberg appears to have demonstrated, that the award that was referred to in that letter from you to the employees was the award under which the claim has been made in this case?

MR BOURKE:   I did not check the reference when Mr Bromberg was on his feet, but he appeared to indicate that it was referred to in evidence and identified.

KIRBY J:   When it said, “All other award conditions apply” on page 68 ‑ ‑ ‑

MR BOURKE:   Yes, I accept the reference ‑ ‑ ‑

KIRBY J:   Do you accept that it is the award which is the subject – what is the name of the award?

MR BOURKE:   The private radiology award.  Can I go to another point ‑ ‑ ‑

KIRBY J:   Is that a nationwide radiographers’ award?

MR BOURKE:   No, it is just for the State of Victoria.  On that point, to the extent that somehow the area of the dispute is geographical, and we say that is just wrong, the only location relevant for this award which set out the end of the dispute was Victoria, not any particular location of any respondent at all.  In fact, MDIG did not even come to Heritage until four years after the award was put in place.  There is no mention in the award in terms of the ambit of the dispute to Heritage or that particular location.  The only geographical confinement is Victoria as a whole. 

There was an allegation made that there was a level of co‑ordination in ensuring that it was an ongoing concern.  Again, there was no evidence of that, no allegation put below that Gribbles were trying to make sure that they moved in the next day.  The only finding on that, the Full Court, appeal book 126, point 25, was that – and this is stating the obvious – Heritage was motivated by getting someone in as soon as possible because they make money from the very day they step in.  So they had a clear motive to tee us up to come in the minute MDIG vacated, but to suggest we somehow co‑ordinated that was never suggested.  It has never been part of the reasoning of either the primary judge or the Full Court.

My learned friend says you can give the section a bigger reach, or a big reach, because you have this dispensation power where you can go to the Commission and say, “Please don’t let us be required to inherit the industrial regime”, what were, in this case, of a competitor.  The submission we make in respect of that is this.  The overarching principal object of the Act is economic prosperity.  If this section is to apply in circumstances where you cannot have a go, where a competitor has failed, because you will inherit the industrial regime, which may have caused them to fail, but you have a right to go to the Commission, you are not going to take that

chance that you will not get a favourable exercise of discretion besides the costs and time involved.  It will stifle economic activity if the application of this section will stifle people having a go to run similar business where one has failed or pulled up stumps. 

Can I just say one comment on the tendering example of your Honour the Chief Justice.  With respect to my learned friend, you have, on the one hand, a very crisp approach in Bransgrove, which would have answered that question, with respect, relatively quickly, that one would look, is there a material dealing that builds a nexus between the two, some type of privity?  On my learned friend’s approach you have an answer that you have to elaborate to a great degree, and it becomes completely unworkable in a matter of practice out in industry.  Where will you stand in relation to a common day event like tendering which, in 1998 when this section was amended and put in the Industrial Relations Act, the legislature must have known tendering was a very common activity, but under my learned friend’s construction, it is a very difficult exercise.  You would have to be running to lawyers to work out, through all the indicia my learned friend, Mr Bell, went through, whether in a private sector, no sham case, you have inherited the business of somebody else as distinct ‑ ‑ ‑

KIRBY J:   Do not start complaining about having to run to lawyers in the industrial relations field.  That is what it has been for a century.

MR BOURKE:   Can I just say this, your Honour, where there is open for construction, the Court, in our submission, should err on a construction that is easily workable and has functionality.  The reason for that is the whole concept of this section is that upon succession you have to do the right thing with these awards.  People are scratching their head trying to work out, is it a week that I have had to have a break or, if I come in immediately am I caught, and all the other indicia, then people will not know where to stand and the Act will not function.  If the Court pleases.

GLEESON CJ:   Thank you, Mr Bourke.  Yes, Mr Tracey.

MR TRACEY:   Two short matters, if the Court pleases.  Firstly, could I respond to the submission that in some way Employment National can be construed as undermining Bransgrove.  We direct your Honours’ attention to the prefatory words of paragraph 167, on page 352, of the joint judgment in Employment National where the basis for departing from Bransgrove is identified and the Court will see that that is the passage which our learned friend, Mr Bromberg, quoted from from this Court’s decision in PP Consultants.  What the Full Court was plainly unaware of was that the Bransgrove position had been conceded in argument in this Court and that it simply was not an issue. 

The second matter is the costs issue.  We would submit that costs should not be awarded against the Minister in the event that the HSUA is successful because the litigation has not extended beyond what it would have been in terms of time and other relevant factors than if the Gribbles appeal had proceeded alone and, accordingly, there is nothing that the Minister has done that has added to the HSUA’s costs.

KIRBY J:   Do you want to say anything more about the Minister’s suggestion earlier today that it might have been another award and that we should not speculate on the fact that it ‑ ‑ ‑

MR TRACEY:   I hear the concession and in the light of that concession the Minister will not be heard to say that the position is any different.  All that the Minister had was the relevant document.  He did not have the advantage of the concessions at the time I made those submissions.  If the Court pleases.

GLEESON CJ:   Thank you, Mr Tracey.  We will reserve our decision in this matter. 

AT 4.30 PM THE MATTERS WERE ADJOURNED