Minister of State for Employment, Workplace Relations and Small Business v Community and Public Sector Union - [2001] FCA 316

FEDERAL COURT OF AUSTRALIA
Minister of State for Employment Workplace Relations and Small Business v CPSU, Community and Public Sector Union [2001] FCA 316
INDUSTRIAL LAW – award prescribing salaries and conditions of employment for employees of the former Commonwealth Employment Service (“CES”) under Public Service Act1922 – formation of companies controlled by Commonwealth to engage in competitive tendering for provision of services previously supplied by CES - whether activities of new companies a “business” for purposes of Workplace Relations Act1996 – whether new companies government authorities or agencies – whether new companies successors, assignees or transmittees from CES – whether awards and agreement formerly binding on CES binding on new companies - one company a wholly-owned subsidiary of the other and providing employees and other services for parent - whether subsidiary bound by awards formerly binding on CES - declaratory relief - utility of general declaration when extent to which party bound by award will depend on application of award on its proper construction to detailed findings of fact.
Workplace Relations Act 1996 ss 149, 170MB
Re-Establishment and Employment Act 1945 ss 47, 48
Employment Services Act 1994
Public Service Act 1922 s 81C
Commonwealth Services Delivery Agency Act 1997 (Cth)
Industrial Relations Act 1988 (Act No 86 of 1988) s 149
Conciliation and Arbitration Act 1904 s 61
Corporations Law
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Australian Federation of Air Pilots v Skywest Airlines Pty Ltd (Industrial Relations Court of Australia, 31 October 1995, unreported) cited
Australian Rail Tram & Bus Industry Union v Torrens Transit Services Pty Ltd [2000] FCA 1683 followed
Barratt v Howard (2000) 96 FCR 428 followed
Bransgrove v Ward and Syred (1931) AR 272 not applied
CEEEIPPAU v Telstra Corporation Ltd (1998) 85 IR 318 followed
Clyne v Federal Commissioner of Taxation (1980) 49 FCR 25 followed
Community & Public Sector Union v Stellar Call Centres Pty Ltd (1999) 92 IR 224 cited
Crosilla v Challenge Property Services (1982) 2 IR 448 cited
Darling Point Securities Pty Ltd v Industrial Equity Pty Ltd (1991) NSWConvR 55-589 followed
Deputy Commissioner of Taxation v State Bank(NSW) (1992) 174 CLR 219 followed
Employment National Ltd v CPSU, The Community and Public Sector Union (2000) 173 ALR 201 cited
Federation of Air Pilots v Skywest Airlines Pty Ltd (1996) 67 IR 347 cited
George Hudson Ltd v Australian Timber Workers Union (1923) 32 CLR 413 distinguished
Hillman v The Commonwealth (1924) CLR 260 distinguished
Jenkins v NZI Securities Australia Ltd (1994) 124 ALR 605 followed
Kawasaki Steel Corporation v Owners (etc) of “Daeyang Honey” (1993) 120 ALR 109 followed
Meat & Allied Trades Federation of Australia v Australasian Meat Industry Employees Union (1995) 58 IR 90 cited
Messier-Dowty Ltd v Sabena SA (No. 2) [2001] 1 All ER 275 followed
Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 followed
North Western Health Care Network v Health Services Union of Australia (1999) 164 ALR 147 cited
North Western Health Care Network v Health Services Union of Australia (1999) 92 FCR 477 cited
PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 176 ALR 205 followed
R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297 cited
Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation (1990) 171 CLR 216 distinguished
Shaw v United Felt Hats Proprietary Limited (1927) 39 CLR 533 followed
State Bank of New South Wales v Commonwealth Savings Bank of Australia (1986) 161 CLR 639 cited
Stellar Call Centres Pty Ltd v CEPU [2001] FCA 106 cited
MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS V CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION, EMPLOYMENT NATIONAL LIMITED AND EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED
NO. N 429 of 2000
AND
EMPLOYMENT NATIONAL LIMITED AND EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED V CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION AND MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS
NO. N 432 OF 2000
JUDGES:  BEAUMONT ACJ, RYAN & MADGWICK JJ
DATE:  15 JUNE 2001
PLACE:  SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 432 OF 2000

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

EMPLOYMENT NATIONAL LIMITED AND EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED
APPELLANTS

AND:

CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION
FIRST RESPONDENT

MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS
SECOND RESPONDENT

JUDGES:

BEAUMONT ACJ, RYAN & MADGWICK JJ

DATE:

15 JUNE 2001

PLACE:

SYDNEY

THE COURT ORDERS THAT:
1.The appeal be allowed in part.

2.The order made by Einfeld J on 11 April 2000 be varied:

(a)by adding to the declaration made in the proceedings numbered NG181 of 1998, the words: “to the extent that each such award or agreement (as the case may be) was capable, according to its terms, of applying to the applicants or either of them on or after that date”;

(b)by adding to the declaration made in the proceedings numbered NG 331 of 1998 the words: “to the extent that each such award or agreement (as the case may be) was capable, according to its terms, of applying to the first respondents or either of them on or after that date”;

(c)by adding to the declaration made in the proceedings numbered NG 402 of 1998 the words “to the extent that each of such award or agreement (as the case may be) was capable, according to its terms, of applying to the first and second respondents or either of them on or after that date”.

3.        The appeal be otherwise dismissed.
.
Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 429 OF 2000

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS
APPELLANT

AND:

CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION
FIRST RESPONDENT

EMPLOYMENT NATIONAL LIMITED
SECOND RESPONDENT

EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED
THIRD RESPONDENT

N 432 OF 2000

AND BETWEEN:

EMPLOYMENT NATIONAL LIMITED AND EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED
APPELLANTS

AND:

CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION
FIRST RESPONDENT

MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS
SECOND RESPONDENT

JUDGES:

BEAUMONT ACJ, RYAN & MADGWICK JJ

DATE OF ORDER:

15 JUNE 2001

WHERE MADE:

SYDNEY

REASONS FOR JUDGMENT
BEAUMONT ACJ:
INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 3
(1)    NG 181 of 1998........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 3
(2)    NG 331 of 1998........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 3
(2)    NG 402 of 1998........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 3

EN AND ENA’S CLAIM FOR A NEGATIVE DECLARATION........ ........ ........ ........ ........ ..... 4
CPSU’S DEFENCE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 7
THE PROVISIONS OF THE AUSTRALIAN PUBLIC SERVICE, GENERAL EMPLOYMENT CONDITIONS AWARD 1995 [a 1660]........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. 10
THE AGREEMENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 10
THE PRINCIPAL AGREEMENT BETWEEN EN AND THE COMMONWEALTH (DEETYA) DATED 26 FEBRUARY 1998........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 12
EN’S CORPORATE STRUCTURE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 13
THE COURSE OF AUTHORITY IN THE HIGH COURT AND THE FEDERAL COURT, DEALING WITH THE MEANING AND OPERATION OF S 149 AND ITS PRECURSORS........ ........ 14
George Hudson Limited v Australian Timber Workers’ Union (1923) 32 CLR 413....... 14
Hillman v The Commonwealth (1924) 35 CLR 260........ ........ ........ ........ ........ ........ ........ 15
Shaw v United Felt Hats Proprietary Limited (1927) 39 CLR 533........ ........ ........ ........ 17
Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation [“ATOF”] (1990) 171 CLR 216........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 18
North Western Health Care Network v Health Services Union of Australia (1999) 92 FCR 477........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 21
Australian Rail Tram and Bus Industry Union v Torrens Transit Services [2000] FCA 1683 (Mansfield J, 21 November 2000)........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 25
PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 176 ALR 205 (Full High Court)........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . 28
Stellar Call Centres Pty Ltd v CEPU (2000) FCA 106 (Full Federal Court)........ ........ ... 30

THE REASONS FOR JUDGMENT AT FIRST INSTANCE........ ........ ........ ........ ........ ........ .. 30
(a)    Introduction and background facts........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 30
(b) Did the activities of the departmental entitles constitute a “business” for the purposes of s 149(1)(d)? 34
(c)    Was there a transmission of the business?........ ........ ........ ........ ........ ........ ........ ........ ... 35
(i)     The test........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 35
(ii)    The evidence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 36
(iii)   Application of the test to the evidence........ ........ ........ ........ ........ ........ ........ ........ ........ 39
(d) The “parties bound” clause and the PS Act........ ........ ........ ........ ........ ........ ........ ........ . 42
(e)    The Public Service........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 43

DECLARATORY ORDER MADE AT FIRST INSTANCE........ ........ ........ ........ ........ ........ .... 43
EN’S AND ENA’S GROUNDS OF APPEAL........ ........ ........ ........ ........ ........ ........ ........ ........ . 44
THE MINISTER’S GROUNDS OF APPEAL........ ........ ........ ........ ........ ........ ........ ........ ........ . 44
CONCLUSIONS ON THE APPEAL........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... 45
(a) The material provisions of the PS Act........ ........ ........ ........ ........ ........ ........ ........ ........ . 45
(b) Analysis of the course of High Court authority on s 149 and its precursors and its significance for present purposes........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... 49
(c) The results of the appeals........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... 53

ORDERS PROPOSED........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... 54
INTRODUCTION

There are two appeals before the Full Court from declaratory orders made by a single Judge of the Court (Einfeld J) in three proceedings heard together as follows:
(1) NG 181 of 1998
An application brought by Employment National Limited (“EN”) and Employment National (Administration) Pty Limited (“ENA”) (the appellants in N 432 of 2000) against the CPSU, Community and Public Sector Union (“CPSU”) (the first respondent in N 429 of 2000 and N 432 of 2000) in which EN and ENA sought declarations that certain Public Service awards and a particular Department of Employment, Education, Training and Youth Affairs (“DEETYA”) Certified Agreement (“the Agreement”) were not binding on either of them.
(2) NG 331 of 1998
An application brought by the Minister of State for Employment Workplace Relations and Small Business (“the Minister”) (the appellant in N 429 of 2000 and the second respondent in N 432 of 2000) against EN and ENA and CPSU in which the Minister sought declarations that the awards bind and apply to employers only in respect of employees employed under the Public Service Act 1922 (Cth) (“the PS Act”).
(2) NG 402 of 1998
An application brought by CPSU against EN and ENA in which CPSU sought declarations that the awards and the Agreement were binding on EN and ENA.
Einfeld J made declarations that the awards and the Agreement were so binding. EN, ENA and the Minister now appeal from those orders.
In order to understand the issues on the appeals, it will first be necessary to explain the nature of the claim sought to be made by EN and ENA at first instance, and CPSU’s defence to that claim, and the relevant statutory context, and the main instruments involved in the dispute.
EN AND ENA’S CLAIM FOR A NEGATIVE DECLARATION
By their amended statement of claim dated 3 September 1998, EN and ENA made the following claims:
·EN and ENA were companies incorporated under the Corporations Law.
·CPSU was an organisation of employees registered under the Workplace Relations Act 1996 (Cth) (“the WR Act”).
·EN employed one person, its managing director.
·ENA employed more than 1,000 persons.
·Neither EN nor ENA employed, or intended to employ, any person under the PS Act.
·EN was formed with the object of providing employment services.
·ENA, a wholly owned subsidiary of EN, was formed and on 20 October 1997 contracted to provide administration and other services necessary to enable EN to operate its business.
·EN entered into agreement with the Commonwealth (as represented by DEETYA) on 27 November 1997, whereby EN agreed to provide the Department with operational, management and consultancy services during the period 1 December 1997 to 30 April 1998. During this period, ENA provided these services to EN.
·EN and the Commonwealth (represented by DEETYA) entered into an agreement on 26 February 1998 whereby EN was to provide certain employment services to the Department. On 1 May 1998, EN commenced to provide those services to the Commonwealth; and ENA commenced to provide services to EN.
·CPSU and the Commonwealth were respondents to and bound by the following awards and Agreement:
qThe Australian Public Service, Administrative Service Officers (Salaries and Specific Conditions) Award 1995
qThe Australian Public Service (General Employment Conditions) Award 1995
qThe Australian Public Service, Professional Officers (Salaries and Specific Conditions) Award 1995
qThe Australian Public Service, Senior Executive Service (Salaries and Specific Conditions) Award 1995
qThe Australian Public Service, General Service Officers (Salaries and Specific Conditions) Award 1995
qThe Australian Public Service, Technical Officers (Salaries and Specific Conditions) Award 1995
qThe Australian Public Service, Specific Professional Classifications (Salaries and Specific Conditions) Award 1995
qThe Department of Employment, Education, Training and Youth Affairs Network Certified Agreement 1998
·Neither EN nor ENA is a named respondent to any award or certified agreement made under the WR Act.
·In relation to the awards and the Agreement, neither EN nor ENA is a successor to, or assignee or transmittee of, any business or part of a business, of the Commonwealth for these reasons:
qThe Commonwealth did not conduct a business within s 149 of the WR Act (see below for the provisions of s 149(1)(1A)).
qThe business conducted by EN, or by ENA, is not a business, or part of a business, formerly conducted by the Commonwealth.
qThe agreement made on 26 February 1998, abovementioned, was due to come to an end on 30 November 1999.
·Alternatively, if either EN or ENA is a successor, assignee or transmittee of the business, or part of the business of the Commonwealth, none of the awards nor the Agreement were binding upon either EN or ENA.
·Alternatively, if the awards or the Agreement binds EN or ENA, the awards and the Agreement did not apply to either EN or ENA in respect of persons who are not employed by either of them under the PS Act.
(Section 149 provides:
“(1)Subject to any order of the Commission, an award determining an industrial dispute is binding on:
(a)all parties to the industrial dispute who appeared or were represented before the Commission;
(b)all parties to the industrial dispute who were summoned or notified (either personally or as prescribed) to appear as parties to the industrial dispute (whether or not they appeared);
(c)all parties who, having been notified (either personally or as prescribed) of the industrial dispute and of the fact that they were alleged to be parties to the industrial dispute, did not, within the time prescribed, satisfy the Commission that they were not parties to the industrial dispute;
(d)any successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer; [Emphasis added]
(e)all organisations and persons on whom the award is binding as a common rule; and
(f) all members of organisations bound by the award.
(1A)For the purposes of subsection (1), the Australian Capital Territory Government Service is taken to be the successor to the business of the Australian Capital Territory in relation to the transitional staff within the meaning of the ACT Self-Government (Consequential Provisions) Act 1988.” )
(Section 170MB of the WR Act makes similar provision for certified agreements.)
CPSU’S DEFENCE
By its amended defence dated 12 June 1998, CPSU admitted some formal matters, but otherwise contended as follows:
Although (as claimed by EN and ENA) neither EN nor ENA intended to employ any person under the PS Act, the relevant employees were transferred to the employment of ENA by virtue of the certification of the Prime Minister and a declaration of the Public Service Commissioner under s 81C of the PS Act.
(Section 81C of the PS Act provides:
“(1)Where the Prime Minister certifies in writing that a function that has been performed by persons appointed or employed under this Act is to be performed by a Commonwealth authority, the Board may, by declaration in writing published in the ‘Gazette’, declare that specified officers or classes of officers are in the employment of the Commonwealth authority.
(2)An officer specified, or included in a class of officers specified, in declaration under subsection (1):
(a)on the day specified in the declaration for the purpose of this subsection, ceases to be an officer; and
(b)from and including that day, is employed by the Commonwealth authority specified in the declaration.
(2)For the purpose of facilitating a transfer of persons into the employment of a Commonwealth authority, the Commonwealth authority may, notwithstanding anything in any other law (other than an industrial award), determine any special terms or conditions of employment that are to apply to the persons.” (Emphasis added)
“Commonwealth authority” is defined to include (amongst others) a company in which (as here) the Commonwealth has a controlling interest (s 7(1)).)

No determination of special terms or conditions of employment under s 81(C)(3) was made.
The Declaration, dated 1 May 1998, was as follows:
“Public Service Act 1922
DECLARATION UNDER SUBSECTION 81c(1)
Whereas on 1 May 1998, John Winston Howard, Prime Minister, pursuant to subsection 81C(1) of the Public Service Act 1922 (the Act) certified that supervisory, administrative, clerical and administrative support functions in support of employment services, that have been performed by persons appointed or employed under the Act in the Department of Employment, Education, Training and Youth Affairs, are to be performed by Employment National (Administration) Pty Ltd, a Commonwealth authority within the meaning of subsection 7(1) of the Act;
NOW therefore, I, Peter William Miller, delegate of the Public Service Commissioner, declare that the officers whose names are listed in the Schedule to this Instrument, are in the employment of Employment National (Administration) Pty Ltd with effect from 1 May 1998.”
The Prime Minister’s certificate was to the effect stated by the Commissioner.
·The objects for which EN was formed were set out in its Memorandum of Association in these terms:
“(a)to provide employment services, including but not limited to, the provision of employment assistance to a person that:
(i)is based on an assessment of the person’s individual circumstances; and
(ii)is aimed either at enabling the person to gain employment or at improving the person’s prospect of gaining employment;
(b)to provide such employment services as are identified by the Minister as services to be provided in the public interest, and in respect of which the reasonable costs of which will therefore be met by the Commonwealth …;
(c)to provide assistance to the Secretary to the Department … on terms agreed between the company and the Secretary in relation to the Commonwealth … and Employment Assistance Australia;
(d)to perform any function conferred upon it by Commonwealth legislation;
(e)to [provide] services by way of:
(i)matching with employers who are seeking staff, persons who are seeking employment;
(ii)counselling, training and mentoring or other relevant services to enhance the capacity of persons to gain employment;
[f]to perform any function which relates to the above objects and which will enhance its commercial viability, and its capacity to meet its other objectives.
In this memorandum of Association, ‘employment services’ means unemployment benefits (within the meaning of paragraph 51(xxiiiA) of the Constitution of the Commonwealth) and ‘Minister’ means the Minister for the Commonwealth for the time being responsible for Employment Education Training and Youth Affairs.”
·In practical terms, the implementation of the agreements relied upon by EN and ENA involved no substantial change to the identity or functions of existing staff; and the staff who managed the Commonwealth Employment Service (“CES”) pursuant to the agreements were existing CES or DEETYA staff on leave without pay, who were supplied by ENA to EN to perform the functions that they had previously performed directly for DEETYA and CES.
·By providing services to the Commonwealth (as represented by DEETYA) pursuant to the agreement dated 26 February 1998, EN became the successor, assignee or transmittee of the business, or part of the business, of the Commonwealth for the purposes of s 149(1)(d) and s 170MB(1) of the WR Act.
·By providing the services mentioned to EN, ENA became the successor (etc) for the purposes of s 149(1)(d) and s 170MB(1).
·The application of the awards and the Certified Agreement is not limited to persons employed under the PS Act.
THE PROVISIONS OF THE AUSTRALIAN PUBLIC SERVICE, GENERAL EMPLOYMENT CONDITIONS AWARD 1995 [A 1660]
As has been seen, several awards are involved here, including this one. However, for immediate purposes, it will suffice to refer to this award, by way of illustration of some of the questions that now arise.
In this award, the parties bound clause (cl 5) provides (cl 5.1) that it will apply to, and bind, the officers, members and all persons eligible to be members, of a number of unions, including the CPSU.
Clause 5.2 states:
“5.2 Employers
This award will apply and be binding upon all Ministers of the Crown for the Commonwealth and the presiding officer(s) in respect of employees under the [Public Service] Act (1922).”
“Employee” is defined (cl 3.1) so as to include –
“[an] officer and employee whether full or part-time as defined in the [Public Service] Act, excluding those employed under [s] 82AF of [that] Act, unless the contrary intention is specified”.
(Section 82AF, which provides for the employment of overseas employees, is not material for present purposes.)
Clause 6.2 deals with the relationship between the award and the PS Act by providing that “this award will be read in conjunction with the Act …” (cl 6.2.1).
Reference should next be made to the relevant provisions of the Agreement.
THE AGREEMENT
The Preamble to the Agreement, which came into force from 30 March 1998 and was to remain in force until 30 June, 1999, stated:
“Preamble
The Department [DEETYA] is entering into this Agreement with staff to provide certainty in relation to employment conditions and the way their career paths will be handled during a period of significant transition.
This Agreement addresses the particular circumstances of DEETYA staff who, as a consequence of the implementation of the employment services market, are not able to be placed in a position in the Department. It is intended to provide stability in employment conditions while introducing flexibility in the way work is arranged, and it provides for a pay increase and a one-off bonus payment for staff. This Agreement will support the continuing achievement of operational outcomes during the transition and, after the commencement of the market, finalisation of discontinued activities.”
The “Parties Bound” provision, cl 3, provided that the Agreement shall apply and be binding upon the Minister and –
“(b)Non-SES [Senior Executive Service] DEETYA staff who are employed in the Commonwealth Employment Service, Employment Assistance Australia or in Transition Services Units.”
“Staff” were defined (cl 4) to mean people who are –
“… employed under the Public Service Act 1922 who are employed in or who are unattached from and last held office in the Commonwealth Employment Service, Employment Assistance Australia or Transition Services Units”.
The relationship of the Agreement to existing awards, agreements and Acts was dealt with in some detail by cl 5.
For example, with respect to awards, cl 5.2 provided:
“5.2 The parties agree that the APS Salaries Awards as varied from time to time, will be read in conjunction with this Agreement.”
(“APS Salaries Awards” was defined (cl 4) to mean the:
“•Australian Public Service, Administrative Service Officers (Salaries and Specific Conditions) Award 1995;
•Australian Public Service, Professional Officers (Salaries and Specific Conditions) Award 1995; and
•Australian Public Service, Specific Professional Classifications (Salaries and Specific Conditions) Award 1995;”)
With respect to “Acts”, the following (amongst other) provision was made:
“5.8This Agreement operates in conjunction with the Determinations made under section 82D of the Public Service Act 1922 and prevails to the extent of any inconsistencies.
5.9It is acknowledged that employment is subject to the provisions of the following Acts (and regulations or instruments made under the Acts) amongst others:
Workplace Relations Act 1996
Long Service Leave (Commonwealth Employees) Act 1976
Maternity Leave (Commonwealth Employees) Act 1973
Superannuation Act 1976
Superannuation Act 1990
Superannuation Productivity Benefit Act 1988
Merit Protection (Australian Government Employees) Act 1984
Safety Rehabilitation and Compensation Act 1988
Occupational Health and Safety (Commonwealth Employment Act 1991
and the Public Service Act 1922 except where it is affected by the terms of this Agreement.
5.10The Department will consult with staff covered by this Agreement and/or their representatives on any significant implications for matters covered by this Agreement that may arise from changes to the Public Service Act 1922.”
It will be convenient next to refer to the general provisions of the Principal Agreement between the Commonwealth and EN.
THE PRINCIPAL AGREEMENT BETWEEN EN AND THE COMMONWEALTH (DEETYA) DATED 26 FEBRUARY 1998
The Principal Agreement was to be in force from 1 May 1998 until 30 November 1999 (cl 2.1).
EN (“the Provider”) could not assign or sub-contract any of its rights and obligations under the contract without DEETYA prior written permission (cl 3.5; cl 3.6).
No fee was payable to EN for the provision of employment services to an ‘Eligible Job Seeker” where EN may be entitled to a fee for the provision of the same or a similar service” from another public sector funded body” (cl 4.6).
Ownership of all Commonwealth Material remained vested in the Commonwealth (cl 9.1).
EN was to assist DEETYA to monitor and evaluate the provision of services under the contract (cl 11.1).
DEETYA could terminate the contract for breach or other (specified) just cause (cl 15.4).
DEETYA could terminate for any reason by giving at least fourteen days’ notice (cl 15.5).
EN was to notify Centrelink of changes in the circumstances of Eligible Job Seekers (cl 18.1).
EN was to be deemed to be in default under the contact, if without DEETYA’s prior written consent – “Effective Control” of EN was changed (cl 21.2).
The Agreement made provision for EN to supply specific services known as “Flex” 1, 2 and 3 for reward in the form of particular fees. The precise nature of these respective employments is described in the summary of the primary Judge’s reasons given below.
Reference should now be made to aspects of EN’s corporate structure, as described in its Memorandum of Association.
EN’S CORPORATE STRUCTURE
Reference has already been made to the objects clause (cl 3) of EN’s Memorandum of Association.
Mention should also be made of cll 7 and 8 of the Memorandum as follows:
“7Limits on Commonwealth Power
While the Commonwealth is legally or beneficially entitled to all of the issued shares in the company, the company shall not carry on any business or do any act or thing that would render the holding of those shares in the company beyond the powers of the Commonwealth under the Constitution of the Commonwealth.
8.Compliance with the ‘Governance Arrangements for Government Business Enterprises’
While the Commonwealth is legally or beneficially entitled to all of the issued shares in the company, the company shall comply with the ‘Governance Arrangements for Government Business Enterprises’ as revised form time to time.”
The identity of the subscribers and the numbers of shares taken were:
·The Minister for DEETYA – 40 shares of $1.00.
·The Minister for Finance – 40 shares.
·The Secretary and Deputy Secretary, Department of Finance – 5 shares each.
·The Deputy Secretary and First Assistant Secretary, DEETYA – 5 shares each.
Before going to his Honour’s reasons, it will be convenient to refer to the course of authority, in the High Court and in this Court, dealing with the meaning and operation of s 149 of the WR Act and its precursors, noting that some of the decisions were made after his Honour’s judgment.
THE COURSE OF AUTHORITY IN THE HIGH COURT AND THE FEDERAL COURT, DEALING WITH THE MEANING AND OPERATION OF S 149 AND ITS PRECURSORS
George Hudson Limited v Australian Timber Workers’ Union (1923) 32 CLR 413
Section 24(1) of the Conciliation & Arbitration Act 1904 (Cth) provided that a certified agreement shall, unless otherwise ordered, have the same effect as between the parties as, and be deemed to be, an award for certain statutory purposes. Subsequently, s 24(1) was amended by inserting after the words “as between the parties” the words “or any successor, or any assignee or transmittee of the business of a party bound by the agreement, including any corporation which has acquired or taken over the business of such party”. It was held by Isaacs, Higgins and Starke JJ that, as so amended, s 24(1) applied to an agreement made, and to a successor (etc.) who has become such, prior to such date.
Isaacs J (with the agreement of Starke J (at 453)) said (at 438):
“In the present instance Parliament has thought it expedient, in order to prevent injustice or even a defect of the scheme of industrial peace intended by the statute, to enact that the employees’ rights shall not be disturbed by the mere fact that the owner of the business happens to be another individual. In this case the only difference, so far as appears, is a mere change in name. It may or may not be substantial. It is ‘George Hudson Limited’ instead of ‘George Hudson and Son Limited’; and the change was effected in less than a fortnight after the agreement was registered.”
Hillman v The Commonwealth (1924) 35 CLR 260
An award provided that it bound the Naval Board, the Minister for Navy and the Minister for Defence. It was held by Knox CJ, Isaacs and Gavan Duffy JJ, dismissing an appeal from Starke J, that the award was not binding upon the Commonwealth, either as an original party or by virtue of s 29(ba) of the Conciliation & Arbitration Act 1904 (Cth) (the counterpart of s 149), in respect of employment in the same activities subsequently carried on by the Commonwealth through representatives other than those aforementioned.
Starke J said (at 264):
“The award fastens upon the officers who actually control the dockyard in the name of the King rather than upon the nominal controller – the King himself. But the award does not purport to, and does not in point of law, bind the King or the Commonwealth generally: it only binds them so far as an activity covered by the award is administered or controlled by the named executive body or officers – the Naval Board, the Minister for Navy or the Minister for Defence. If the activity passes from the administration and control of the named executive officers of State or the named administrative body to other officers of State or other administrative bodies, then, subject to any special provision of the Arbitration Act, the award ceases to operate or at all events does not bind those officers or bodies or the Commonwealth in their administration or control of the dockyard.”
Turning to consider s 29, Starke J said (at 265 – 266):
“I see no reason to doubt the identity of the business. It was carried on in the same place, by the same staff, doing substantially the same kind of work. But there is, in my opinion, no successor, assignee or transmittee of the business of a party to the dispute or of a party bound by the award. Cockatoo dockyard and the business there carried on are and always have been, in substance, the property of the King in right of the Commonwealth, or else of the Commonwealth itself, under whatever control the business has been placed or in whatever body it has been vested. And the party to the dispute who is bound by the award is and has always been the King or the Commonwealth, in respect of the activities carried on by him or it under the administration and control of the Naval Board, the Minister for Navy, or the Minister for Defence. Consequently sec. 29 of the Arbitration Act does not, in my judgment, aid the plaintiff in this action.”
Knox CJ and Gavan Duffy J agreed (at 268) with Starke J, and added (at 268 – 269):
“Finally, it is said that the parties actually named in the award were merely acting as agents for the Commonwealth in carrying on the business of the dockyard; that the agents who subsequently carried on the business were their successors within the meaning of sec. 29 (ba); that the contracts of those successors, being made on behalf of the Commonwealth, bind the Commonwealth; and that, as the contracts which they made with the members of the Union were subject to the provisions of the award, the provisions of the award bind the Commonwealth. The vice of this argument appears to us to be that it overlooks the fact that the Commonwealth Conciliation and Arbitration Act, and the award made under it, deal with actual employers, not with their agents. If the Union has been so unfortunate as to select for respondent, not an employer, but the agent of an employer, it cannot obtain an award to bind either principal, or agent, or agent’s successor. The award does not affect the agent or the agent’s successor because ex hypothesi they are not employing anyone; it does not affect the principal, who is the employer, because he is not a party to the award.”
Isaacs J said (at 273):
“I entirely agree with [the] view [of Starke J] as to the Commonwealth being bound by the names referred to. It is not at all like a private individual employer whose manager, for instance, is named as respondent. In that case there is a distinct and separate individuality, the identification of principal and agent depending on the existence of extraneous facts not disclosed by the award. But in this it is the law, the Constitution itself, which without more identifies the Commonwealth as the employer and recognizes that the ‘Naval Board, the Minister for Navy or the Minister for Defence’ cannot possibly, except as convenient names for the Commonwealth, be the employers. A moment’s consideration of the consequences of the opposite doctrine will demonstrate that.
Reluctantly also, I feel bound to agree with the further view of Starke J. that this identification is limited to the activities of the Commonwealth carried on by the named representatives. As I put in argument, even though the original award remained unvaried, if members of the Union were employed in the Home and Territories Department, say, at Canberra, there would be no award obligation as to them.”
Shaw v United Felt Hats Proprietary Limited (1927) 39 CLR 533
The defendant in the Court of Petty Sessions took over a business, Denton Hat Mills Pty Ltd, and a business, Fairfield Hat Mills Pty Ltd. Both companies were bound by Commonwealth awards. The complainant in Petty Sessions was employed by Denton when its business was taken over and he remained in the defendant’s employment at premises which had been occupied by Denton until those premises were closed. Subsequently, the defendant moved Denton’s plant to Fairfield’s premises, and shortly after the removal, employed the complainant there. It was held by the Full High Court (Higgins, Gavan Duffy, Powers, Rich and Starke JJ) that the complainant had not established that the business in which he was employed at Fairfield’s premises was the business formerly carried on by Denton; and that the defendant was not bound, by virtue of s 29(ba) of the 1904 Act to pay the complainant at the rate fixed by the award for Denton.
Citing s 29(ba), Higgins J said (at 536 – 537):
“United Felt Hats Pty. Ltd. is a corporation which has taken over the businesses of the Denton and Fairfield and other mills. The only way I can see of reading that section as applicable to the amalgamation is to adopt the principle of reddendo singula singulis [by applying each to each, that is, or a ‘distributive’ construction], business by business. In other words, as some covenants run with land, so the obligation runs, as it were with the business. The criterion is the business; and it appears to me that, unless there is evidence establishing that the business upon which the appellant is employed is the old Denton business, it must be assumed that the place is the criterion of the business; and, as he is not working at the Denton Mills but is working at the Fairfield Mills, he must be paid at the Fairfield rate. I only say that that is the prima facie test, and I wish to guard myself against deciding that the Denton business could not, under certain circumstances, be proved to have been transferred bodily, without qualification or exception, to Fairfield. But there is no proof of that at all.”

Higgins J added (at 537) that –
“The proper remedy for the union and its members is to go to the Arbitration Court and to ask that Court to make such variation as may seem to that Court to be just.”
Powers J agreed with the reasons of Higgins J and added (at 537):
“… and I also agree with what [Higgins J] has said as to an application to the Arbitration Court. I would point out that, although the award has worked satisfactorily for so many years, it is now impossible to continue it satisfactorily to either of the parties without variation. An application should be made to the Arbitration Court to make the award apply to the circumstances existing since the amalgamation of the different businesses carried on when the award was made.”
Rich J said (at 537 – 538):
“There is no evidence in this case that Shaw was employed in the Denton business, and, assuming that sec. 29 (ba) applies to the case of an amalgamation, it must be read on reddendo singular singulis [by applying or assigning each to each]. During the argument I pointed out that the Arbitration Court was the appropriate tribunal to deal with this case. That suggestion has been strengthened by what has fallen from my brothers Higgins and Powers.”
Starke J said (at 538):
“I rest my decision on the narrow ground that it is not established in point of fact that the complainant was employed in the business of the Denton Hat Mills to which the defendant succeeded.”
Re Australian Industrial Relations Commission; Ex parte Australian Transport Officers Federation [“ATOF”] (1990) 171 CLR 216
ATOF’s eligibility rule relevantly provided for persons employed in the transport industry by the Crown, statutory bodies representing the Crown, instrumentalities and authorities under the control of the Crown, including persons employed at an annual salary rate in any capacity by the Commissioner for Motor Transport (NSW) (“CMT”), together with “a successor or assignee or transmittee of the business of any of the foregoing.” CMT, a body corporate responsible for the administration of the Department of Motor Transport (“DMT”), was abolished (along with DMT) by legislation providing for the amalgamation of the functions formerly performed by the DMT and the Department of Main Roads (“DMR”). All the functions of the DMR and the major functions of the DMT were vested in a new statutory body, the Roads & Traffic Authority (“RTA”). The major activities of the RTA were the former functions of DMR and most of its staff were former employees of DMR. It was held by Mason CJ, Gaudron and McHugh JJ: (1) that DMT’s activities amounted to a “business” for the purposes of the eligibility rule, notwithstanding that DMT did not carry on a commercial undertaking for profit; (2) distinguishing Hillman (above) that the “successor” clause (above) was capable of applying to a succession to a business as between two statutory authorities, notwithstanding that the functions which they discharged were governmental functions performed by, or on behalf of, or for the benefit of, the Crown; (3) that RTA was the “successor” of CMT’s business because there was a substantial identity between the activities formerly carried on by CMT and those then carried on by RTA notwithstanding that RTA’s major activities were DMR’s former functions and that RTA’s staff were, predominantly DMR’s former employees; and (4) that, accordingly, ATOF had capacity to generate a dispute between itself and RTA.
The Court said (at 226):
“Of all words, the word ‘business’ is notorious for taking its colour and its content from its surroundings: see Federal Commissioner of Taxation v. Whitfords Beach Pty. Ltd. Its meaning depends upon its context. It is common and apt to speak of 'the business of government': see, for example, Conway v. Rimmer. In the context of sub-r. (1)(a)(v) it is plain enough that the successor clause relates back to the activities of public authorities and departments of government, which do not or may not carry on commercial undertakings for profit, as well as to such undertakings. Indeed, the structure of sub-r. (1) suggests that the eligibility rule is primarily concerned with public sector employment; ….”
Mason CJ, Gaudron and McHugh JJ noted (at 225 – 226) the respondents’ contention that, even if DMT’s activities under CMT did amount to a business, that business was, and remained, the property of the Crown, so that there could be no succession by RTA to the business of which CMT was the titular head, the argument being that CMT was the Crown’s agent and at all times administered DMT for and on behalf of the Crown, so that, it was said, the Crown remained the employer. Their Honours observed (at 226) that Hillman “provides some support for this proposition”, but went on to say (at 227 – 228):
“[In Hillman] [a]n appeal from the decision of Starke J. was dismissed. Isaacs J. agreed with the reasons given by Starke J. Knox C.J. and Gavan Duffy J. held that the appeal must fail whether the Commonwealth was the real respondent to the award – as Isaacs J. thought it was – or whether the Ministers named and the Naval Board were the real respondents.
Even if the view expressed by Isaacs and Starke JJ. be taken as correct, it is not decisive of the present case. In Hillman the question was whether the parties named in the award were the real respondents. If not, no question of succession to the Commonwealth’s business arose. Here a different question arises and it is to be determined as a matter of construction by reference to the particular and rather complicated provisions of r. 6 of the A.T.O.F. constitution. The question is not whether the Crown in right of the State is party to, or bound by, an award, but whether the A.T.O.F. has coverage in respect of the employees of a statutory body in a setting in which the statutory body is treated as the employer, even if the statutory body is or represents the Crown, and in which the proviso in the successor clause is looking to an employer as a successor to the business of the first employer. In that context sub-r. (2)(b)(i) is of special significance. The function of that provision is to exclude from A.T.O.F. membership persons employed in a professional capacity by twelve named statutory authorities, including the C.M.T.’s predecessor, the Superintendent of Motor Transport. The provision contains a successor clause in the same terms as that contained in sub-r. (1)(a)(v) subject only to the elimination of the proviso to that clause. It is obvious that, in sub-r. (2)(b)(i), there is scope for the concept of succession to a business as between two statutory authorities, notwithstanding that the functions which they discharge are governmental functions performed by, on behalf of or for the benefit of the Crown in the right of the State. That is how Gibbs J. saw sub-r (2)(b)(i) as operating in Holmes when the C.M.T. succeeded the Superintendent of Motor Transport. The successor clause in sub-r. (1)(a)(v) must operate in the same way. Accordingly, the question in the present case is not governed by the way in which the Court in Hillman applied s. 29 (later s. 61) of the Commonwealth Conciliation and Arbitration Act 1904 (Cth).”
Turning to the “most difficult” question, whether on the facts RTA was “a successor … (etc)” of CMT’s business, their Honours (at 229) distinguished Shaw, above, on the basis that it related to s 29(ba) of the 1904 Act as it then stood and “turned on its own facts”.
Mason CJ, Gaudron and McHugh JJ said (at 230):
“According to the natural reading of the language of the successor clause, the inquiry should be directed to ascertaining whether the business or the activities formerly carried on by the C.M.T. are still carried on by the R.T.A., notwithstanding that the R.T.A. also carries on one or more other substantial activities. The question then is whether the purpose of the clause viewed in this context requires a different reading for which the respondents contend. The natural reading, it is urged, could give the A.T.O.F. very wide, indeed ‘windfall’, coverage, even a coverage unrelated to employment in the business of the kind carried on by the former employer. There is force in this argument and it may be perhaps that some limitation would need to be implied in order to preclude such an extreme operation. However, there are two answers to the respondents’ argument. The first lies in the proviso to the successor clause and requires the successor to be an employer within sub-r (1)(a)(i) to (v). The second is that the Commission has a discretion under the Act to refuse to make an award at the instance of a registered organization which has a peripheral interest in the industry. Accordingly, on the reading of the clause which we favour, the ultimate issue is whether there is a substantial identity between the old activities and those now carried on by the R.T.A. which correspond with the old activities.”
The High Court accepted (at 230) that not all the functions previously performed by DMT under CMT were then performed by RTA. Yet, their Honours held, the major part of DMT’s functions were then undertaken by RTA and the bulk of DMT’s staff had been transferred to RTA. The Court concluded (at 231) that –
“… the R.T.A is the successor of the C.M.T., notwithstanding that the major activities of the R.T.A. are the former functions of the D.M.R. and predominantly the staff of the R.T.A. are former employees of the D.M.R.”
North Western Health Care Network v Health Services Union of Australia (1999) 92 FCR 477
The issue here was whether, when North Western Health Care Network (“Network”) assumed the management of the provision of certain mental health services previously provided by the State of Victoria, Network, by virtue of the operation of s 149 of the WR Act, became bound by awards to which the State had been bound in respect of the provision by it of those services. The primary Judge (Marshall J) had made declarations (1) that, prior to 1 July 1995, the activities of the State comprising the provision of the health services constituted “part of a business” within s 149(1)(d); (2) that, on or after 1 July 1995, Network became a successor (etc) of those parts of the State’s business; and (3) that Network had become bound by the awards. An appeal to the Full Federal Court (Spender, R D Nicholson and Madgwick JJ) was dismissed.
R D Nicholson J (Spender J (at 479) and Madgwick J (at 497) agreeing) cited Starke J in George Hudson (at 455), and observed (at 485) that the purpose of s 149 is to make the power to settle industrial disputes effective by extending the instrument of settlement of the award to “the ever changing body of persons within the area of such disturbances”. Features of the language used in s 149 identified by his Honour included the following (at 485 – 486):
·The reference to “the business or part of the business” is “to whatever it is [that] an employer who is a party to the industrial dispute has been conducting in order to fulfil the role of employer”.
·The words “the business” take their colour and context from the reference to the “industrial dispute” in relation to which the employer is involved.
·In strictness, “succession (etc)” is referable to property, not an activity, so that, strictly speaking, there cannot be a succession (etc) of a business, or part of a business. This points to a “broad” construction of s 149(1)(d).
R D Nicholson J held (at 488) that, although based upon a different context, the reasoning in ATOF was “persuasive to the approach to be taken in relation to s 149(1)(d)”. His Honour concluded (at 489) that this provision “intended a general and not legally specified characterisation, “so that the words “the business” in s 149(1)(d) “encompassed conduct by the State … and so encompassed the provision of the State’s mental health services”.
·Turning to the “transmission” issue, R D Nicholson J said (at 494):
“Once it is accepted that the object of the transmission must be ‘the business or part of the business of an employer who was a party to the industrial dispute’ attention is directed to what it is that the employer who is party to the dispute is doing. It is that which identifies the object of the transmission. The fact that government as an employer may have continuing functions in relation to the provision of mental health services is not a determinative factor in relation to whether there has been a transmission of the relevant business of the employer. Specifically, transmission of part of the business is expressly made possible by the section in determining the extended application of an award.
I also do not agree that the primary judge fell into error because he looked at what was occurring before contracting out and contrasted it with what was occurring after contracting out without examining the nature of the nexus between the two stages. Once it is accepted that the reference to ‘the business’ in s 149(1)(d) has the wide reference which the primary judge found, it is not necessary to search for some legal form of succession, assignment, transfer, corporate acquisition or takeover. What is necessary is to determine as a question of fact whether ‘the business’ understood in the wide sense so found has been transmitted to other hands. That does not require a search for some legal mechanism as a nexus between the pre and post transmission stage.
It follows that I do not accept the appellant’s argument that the ‘substantial identity test’ utilised in the ATOF case is wrong in the context of the WR Act.
I agree with the submission for the respondent that the High Court in the ATOF case was determining whether there was a transmission and the court there developed a concept or a criterion for identifying whether or not a transmission had occurred. The formulation of that concept was not dependent upon the particular nature of the rule in that case.”
His Honour (at 494) noted that the same patients had become Network’s responsibility; that medical records and stock had been transferred; that leased assets had been assigned; and that staff had been transferred. In concluding that there was a “transmission”, his Honour said (at 494 – 495):
“While the State retained control over funding and audit that was but the consequence of it having transferred the responsibility for the provision of the relevant mental health services so that it was now required to pay for the delivery of such services. What was involved was a transmission of the core of the relevant services not, as in Crosilla or Kelman v Care Contract Services [1995] ICR 260, a peripheral activity.”
In his concurring judgment, Spender J said (at 479) that the arrangements made at the time –
“… make it plain that there was a transfer of the management and provision of mental health services from the Department of Health in the State of Victoria to the hospital/agency, the ‘date of transfer’ referring specifically to the date at which the activity of providing adult mental services in the relevant area ceased to be carried on by the State of Victoria and commenced to be carried on by the respective Network.”
His Honour said (at 479) that the State’s retention of control over funding and audit meant that the State continued to meet the cost of the provision of the health services, but the industrial activity constituted by the management and provision of those services previously part of the State’s business, was then the business or part of the business, of Network.
Spender J noted (at 479) that the real question before Marshall J was whether the award applied to two members of the respondent Union. However, since Marshall J’s judgment, an Agreement between the relevant parties had been negotiated and certified, so that, as Spender J said (at 480):
“The position … is that ongoing industrial relations are now governed by the Agreement and the matters in issue are of essentially historical significance.”
In his concurring judgment, Madgwick J (at 503) adopted a beneficial construction of s 149. His Honour noted (at 497) that, with immaterial exceptions as to senior functionaries of government, the “Social Welfare” Case (R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297) held that the award system could extend to “industrial disputes” between all employers and all employees.
Madgwick J went on (at 501) to note that the main point in ATOF (which was “not really apposite” in North Western) was the reference in the rules to “a successor …”. But, his Honour added (at 501):
“However, what is noteworthy is that the Court implicitly rejected any idea that a statutory process consisting of (a) the ‘abolition’ of one statutory corporation, (b) the ‘substantial amalgamation and rationalisation [of its and other statutory bodies’] functions’ and (c) the ‘imposition’ of those functions on a new corporation (see at 222-223), could not or did not fall within the process comprehended by the succession clause in issue.”
His Honour (at 502) explained “aspects of a single overriding conception” of s 149, namely –
“… that settlements by award-making, aimed at quelling present industrial disputes and the prevention of future disputes, should be kept effective, pending conscious variation or replacement of the award, regardless of mere changes in arrangements as to which legal entity might be the employer of an unchanged industrial class of employees, regardless of such matters as whether the original employer had other classes of employees as well and may have remained their employer, and regardless of whether the legal ownership of all of the plant and equipment used by the employees for their work and the other resources of the employer utilised in the undertaking should have likewise changed.”
Australian Rail Tram and Bus Industry Union v Torrens Transit Services [2000] FCA 1683 (Mansfield J, 21 November 2000)
The applicant unions claimed declarations under (amongst other provisions) s 170MB of the WR Act that the respondent (“TTS”) was bound to employ persons engaged to drive buses operated by TTS on bus routes formerly operated by the State Transport authority (retitled TransAdelaide) (constituted by the State Transport Authority Act 1974 (SA)) under terms and conditions of employment in accordance with certain certified agreements.
The parties agreed that the Court should deal with the following preliminary issue:
“Whether TTS is bound by the [certified agreements] by operation of s170MB of the Act.”
Mansfield J noted (par 3) that the parties had anticipated that if this question were answered affirmatively, it was likely that issues as to the extent to which the agreements were binding could be resolved privately.
Mansfield J further noted that Community & Public Sector Union v Stellar Call Centres Pty Ltd (1999) 92 IR 224 concerned the question whether awards and certified agreements binding Telstra in respect of employees who take customer calls at Telstra operated call centres, bound Stellar, a joint venture company of Telstra and another company. Stellar contracted with Telstra to respond to Telstra customers who dialled the Telstra customer inquiry number as part of a virtual single call centre when Telstra’s own facilities overflowed. Under that arrangement, the Telstra customer was unaware of the fact that a Stellar (as opposed to Telstra) employee was responding to the inquiry. At first instance, Wilcox J had held that s 149(1)(d) and s 170MB(1) applied since, in operating the “outsourced” call centre, Stellar was a “successor (etc)” of part of Telstra’s business. (However, as will be seen, this decision was, subsequently, to be reversed by a Full Federal Court.)
Mansfield J also noted the decision of Einfeld J in the present case.
Mansfield J further observed that questions may arise about the individual circumstances of the case at hand. His Honour said (par 28):
“The fact of those slightly different geographical areas, and of the different terms and conditions which did or may have applied to the employment of employees of TransAdelaide within the different areas, either under the Port Adelaide Agreement or under the Mile End Agreement or otherwise, or to employees of Serco or Hills Transit gives rise to the possible need later in these proceedings to consider the individual circumstances of each employee. It also gives rise to the need to consider the applicability either of the Port Adelaide Agreement or the Mile End Agreement or some other terms of employment to them in comparison to the terms of employment now offered to them by TTS. The parties are agreed, however, that those matters of ‘detail’ (not to underscore their significance in any way) are all subject to the issue of principle which I have separately decided to hear and determine before addressing those other issues. It is agreed that, if that issue of principle is decided in the affirmative, TTS will be bound by both the Mile End Agreement and by the Port Adelaide Agreement to some extent (that is, to some degree, s 170MB(2)(c) will operate). It is also acknowledged that there are, in some respects, differences between the Port Adelaide Agreement and the Mile End Agreement, and that by virtue of the way in which TTS and TT now operate to provide contract services for the East West area and the City Free area, questions may arise about the individual circumstances of each employee. It is not now necessary, for the purposes of answering the question now before the Court, to address those differences.” (Emphasis added)

Mansfield J went on to say (par 29):
“It is sufficient for present purposes to find that the service contract between TT and the PTB to a significant degree provides for the provision of passenger transport services by bus which were previously provided by TransAdelaide, (and to a lesser degree provided by Serco, and by Hills Transit) under previous service contracts, including to a significant degree services which certain employees of TransAdelaide carried out under the terms of the Port Adelaide Agreement or the Mile End Agreement.”
His Honour (par 49) agreed with Spender, R D Nicholson and Madgwick JJ in North Western and with Marshall J in Federation of Air Pilots v Skywest Airlines Pty Ltd (1996) 67 IR 347 that ATOF was relevant, notwithstanding that it dealt with an eligibility clause. In his Honour’s view (par 54) North Western indicated the following:
“(1)the expression “successor, transmittee or assignee … of the business” is to be interpreted in a practical and broad rather than a technical way which might require some formal instrument of succession or transmission or assignment of the assets of a business,
(2)where the ‘business’ concerned is the performance of some functions by or on behalf of government, the legislative or administrative structure under which the performance of those functions or certain of them comes to take place may indicate whether in a practical and broad sense there has been a succession transmission or assignment of that ‘business’ or of a part of that business, and
(3)in addition there will need to be a substantial identity of activities in the business or part of the business being carried out by the new employer when compared with those previously being carried out by the former employer.”
Mansfield J went on to say (par 54):
“Those conclusions … support the contention of TTS that the ‘substantial identity of activities’ test is not of itself a sufficient test to determine if there has been a succession transmission or assignment of a business. I think that is plain enough in any event. For example, if the business of a local hardware store were simply to come to an end, and the premises were then some months later purchased and then operated by an entirely new and independent operator as a local hardware store in much the same way, with some one or more of the same employees, I do not think s 149(1)(d) would then have been intended to apply to the new operator of the hardware business simply because there was a substantial identity of activities being performed in the two businesses. Cp. Bransgrove v Ward & Syred [1931] AR (NSW) 272. To conclude otherwise would be to attribute to the words ‘successor transmittee or assignee’ little or no meaning as the only focus would be upon the identity of the business activities. But I respectfully agree with the reasons given by R D Nicholson J and Madgwick J in that case for concluding that those words should be given a practical and broad meaning.”
Mansfield J next said that these views were also reflected in the more recent decision of the Full High Court decision in PP Consultants Pty Ltd v Finance Sector Union (2000) 176 ALR 205, which is considered below.
Mansfield J noted that in the Stellar case, Wilcox J had regarded the question of transmission as governed by North Western; and that Einfeld J had taken a similar approach in the present matter.
Mansfield J said (pars 79, 80):
“ultimately …, as Einfeld J stressed in the EN case at [77], the question of substantial identity of activities is one of fact. Having regard to the nature of the activities carried out by TT or TTO, the areas in which those activities are carried out, the nature of the tasks carried out by the bus drivers employed by TTS and provided by TTO to carry out its business, and the terms of the service contract with the PTB, I find that there is a substantial identity of activities between those carried out by TTO on behalf of TT in its business and those previously carried out by TransAdelaide in that part of its business to which I have referred.
That finding, together with my conclusion that TT by virtue of its service contract with the PTB in the circumstances has in a practical sense ‘taken over’ part of the business of TransAdelaide so as to qualify as a successor assignee or transmittee of part of TransAdelaide’s business, leads me to the conclusion that TT is a successor transmittee or assignee of that part of TransAdelaide’s business.”
His Honour went on (pars 82 – 83) to hold (following Einfeld J in the present matter) that s 170MB(2) clearly contemplates that the new employer may not be the immediate “successor (etc) …”, and that the Court should be slow to permit a device of sub-contracting to avoid the proper application of s 170MB. Mansfield J held that the activities carried out by TransAdelaide as part of its business were far from “peripheral”, but rather were “core activities”; so that TTS was a “successor (etc) …”, although not immediate, of a part of the business of TransAdelaide.
His Honour expressed his conclusion thus:
“CONCLUSION
For those reasons, I am of the view that TTS is bound by the Mile End Agreement and/or the Port Adelaide Agreement by operation of s 170MB(2) of the Act. However, it is clear that it is so bound only to the extent that those agreements respectively relate to the part of the business of TransAdelaide which has in fact been transmitted to TTS. [Emphasis added]
Having given that answer to the question identified by the parties, I will now hear them as to the terms of any orders or declarations which ought now to be made and I will then adjourn the proceeding to enable the parties to undertake the negotiations to which reference is made in pars 3 and 28 above.”
PP Consultants Pty Ltd v Finance Sector Union of Australia (2000) 176 ALR 205 (Full High Court)
A Bank closed a branch and appointed an agent to conduct similar activities in conjunction with the agent’s pharmacy business. The agent employed former employees of the Bank who were entitled to the benefit of an award. The question was whether the agent had succeeded (etc) to the Bank’s business, or part of it. At first instance, Mathews J had held that there was no such succession; but the Full Federal Court (Wilcox, Ryan and Madgwick JJ), in allowing the appeal, remitted the matter to Mathews J to determine whether, in respect of a particular named employee, the agent was bound by the award. However, an appeal to the Full High Court (Gleeson CJ, Gaudron, McHugh, Gummow and Callinan JJ) by the agent was allowed.
In considering the meaning of business in s 149(1)(d) Gleeson CJ, Gaudron, McHugh and Gummow J adverted (par 10) to the references in ATOF to ‘the business of Government”; and to the question of succession being answered by determining whether there was “a substantial identity between the old activities [of the CMT] and those now carried on by the RTA which correspond with the old activities.” (My emphasis).
Their Honours said (par 12):
“As was pointed out in [ATOF] ‘the word ‘business’ is notorious for taking its colour and its content from its surroundings’. Thus, for example, the expression ‘the business of government’ signifies something quite different from the expression ‘the business of grazing’ ….”
Their Honours went on to say (par 13):
“While the notions of ‘profit’ and ‘commercial enterprise’ will ordinarily be significant in determining whether the activities of a private individual or corporation constitute a business, they play little, if any, role in identifying whether one government agency is engaged in the business of government previously undertaken by another government agency. In that situation, it is sufficient to ascertain whether or not the activities of the former are substantially identical to the activities or some part of the activities previously undertaken by the latter. That is because the word ‘business’ takes on a special or particular meaning in the expression ‘the business of government’. It is not because, as a matter of ordinary language, ‘business’ means or includes activities undertaken in the course of business.” (Emphasis added)
Callinan J noted (par 38) that PP Consultants was not concerned with the transfer of governmental activities from (as in ATOF) one branch of government to another or (as in North Western) from government to the private sector.
Stellar Call Centres Pty Ltd v CEPU [2000] FCA 106 (Full Federal Court)
As mentioned, the decision at first instance in the Union’s favour was reversed on appeal to the Full Court (Ryan, Lee and Branson JJ). The Full Court applied the decision of the Full High Court in PP Consultants. Their Honours said (par 30):
“The High Court must be taken impliedly to have rejected the suggestion of the Full Court in Finance Sector Union v PP Consultants at [33] that ‘it is logical to focus on the nature of the activities undertaken by the two employers and the question whether there is any material change in the nature of the employees’ duties or working conditions’. As we understand it, even if there be complete identity between the duties and working conditions of the relevant employees of both employers, that will not attract the application of s 149(1) unless the business in which those duties are performed for the new employer is in substance identical in character with the business, or a distinct part of the business, of the presumptive transmittor.”
Ryan, Lee and Branson JJ went on to say (par 32):
“… The activities of Telstra conducted by C&C Sales are activities in support of Telstra’s businesses in the telecommunication industry; they are not themselves, in our view, the business or part of the business of Telstra. That business can appropriately be characterised as providing telecommunications services to its customers. In the course of conducting that business, Telstra is called upon to respond to enquiries, requests for services and complaints from its customers, including those made by telephone. However, the making of those responses is not a distinct ‘part’ of Telstra’s business within the meaning of s 149(1), as explained by the High Court, any more than, for example, cleaning undertaken as a necessary aspect of the conduct of a restaurant is a ‘part’ of the business of the restaurateur.”
THE REASONS FOR JUDGMENT AT FIRST INSTANCE
(a) Introduction and background facts
Relevantly, his Honour’s initial reasoning proceeded as follows:
qThe central issues were whether the activities of CES/EAA (Employment Assistance Australia) as departmental organisations who were parties to an industrial dispute from which the awards and the Agreement originally resulted, constituted a “business” for the purposes of the ss 149(1) and 170MB(1); and whether EN/ENA had become the successors, assignees or transmittees of that business, or a part of that business.
qTherefore, it was necessary to consider whether the relevant services provided by these departmental bodies (which, the CPSU alleged, were then effectively provided by EN) were capable of characterisation as a “business” susceptible of transmission in the manner provided for by s 149(1). If they were, what was then largely a question of fact arose as to whether there was such a transmission. This exercise required the Court to consider evidence relating to the respective businesses and activities of CES/EAA and those of EN in order to establish whether such a degree of identity existed between them at the relevant time as to support a conclusion that the business of the former was transmitted to the latter.
His Honour described the historical background as follows:
·The Department had been responsible for the provision of employment services to the Australian public.
·CES was established by the Re-establishment & Employment Act 1945 (Cth) with functions including the following:
“… to provide services and facilities in relation to employment for the benefit of persons seeking to become employed, to change employment or to engage labour, to provide facilities to assist in bringing about and maintaining a high and stable level of employment throughout the Commonwealth ….”
·CES served as a “labour exchange”, providing job placement and other services including the registration, screening and vetting of job seekers and the assessment of their needs, expectations and capabilities, the canvassing of employers for suitable vacancies, matching the two in order to place people in employment, and following up on referrals to achieve actual placements. Ongoing monitoring of placements also occurred. “Case management” was provided for those who were considered to be “long term” unemployed, and for whom a structured or managed program was felt necessary in order to increase the prospect of finding employment for them. CES would sometimes contract with non-departmental bodies to provide job seekers with specific services such as short training courses. This was referred to as the “labour market program”. CES was administered according to area and there were at one time over 300 branches around Australia. Its services were free to the public, except for certain “advanced” services offered to employers, such as “CES Plus”, for which a fee was charged. The employees of CES were public servants employed under the PS Act. For the most part, CES consisted of “employment officers”, who operated the “labour exchange” system.
·EAA was established by the Employment Services Act 1994 (Cth) (“the ES Act”) as a “sister” organisation to CES, to take over the individual “case management” of longer-term unemployed persons to assist a participant to obtain sustainable employment. EAA had the services of up to 250 externally contracted “case managers”, operating on a “fee for service” basis. The ES Act established the Employment Services Regulatory Authority (ESRA) to regulate EAA’s “case management” system. The scheme provided that ESRA would award tenders for the services on behalf of the Commonwealth to organisations it had accredited for the purpose. Participation in EAA’s case management system was only open to persons registered with CES and referred by it to the system according to statutory guidelines. The system required each referred unemployed person to enter into a “Case Management Activity Agreement” with a particular case manager. In general, the ES Act regulated the entire provision of the services established or consolidated under it. The contracted services included assessing each participant’s experience, abilities, goals and needs, identifying impairments to long term employment, providing information, advice and counselling, managing the Activity Agreement, surveying and liaising with potential employers, and generally monitoring the participant’s progress after employment was obtained.
The primary Judge described the changes in the way employment services were delivered, including the establishment of EN and ENA as follows:
·In August 1996, the Government announced that CES and EAA were, for all relevant purposes, to go out of existence (although the statutes establishing them still stood); instead, services would be provided by contracted bodies who would compete first for government tenders and when won, then for “customers”(job seekers). The contractors would be paid according to their success in achieving various performance indicators and “delivery outcomes” set by the Department. In effect, they would be paid by the Commonwealth, according to how successful they were in placing people into jobs. The Department’s Annual Report (1996/7) said that the scheme was intended:
“… to assist the efficient and effective functioning of the labour market by reducing unemployment through the provision of services to job seekers and employers. These services include job brokerage, facilitating skills formation and retention in individuals, industries and regions, and ensuring that statutory case management services for the disadvantaged and long-term unemployed clients are provided cost effectively and fairly through open competition among providers.”
·A Ministerial Statement made in 1996 entitled “Reforming Employment Assistance” stated that the Government was to retain some services, but all others were to be contracted out to the “Job Network” of employment service providers, of which EN/ENA were to be established by the Commonwealth as one. The system was to be transformed into a competitive market for employment placement services, with a focus on incentives to attain actual outcomes in the form of persons placed in sustainable employment. The Minister explained:
“The Government has concluded that the public sector should continue to provide, through the service delivery agency [Centrelink – see below], a uniform national service for the registration of job seekers; for the assessment of job seekers’ eligibility for employment assistance; for referral of clients to assistance in the employment placement market; and for administering the activity test and enforcing compliance with conditions of assistance. For client convenience, the agency will also provide access to vacancy information, self-help facilities and on the spot referrals to employers and employment placement enterprises (EPEs). With these exceptions, however, all other employment placement functions will be contracted out to [EPEs] including the corporatised EPE [that, is EN], in a fully contestable market for employment placement services.”
·Centrelink (created on 1 July 1997 pursuant to the Commonwealth Services Delivery Agency Act 1997 (Cth) within the Department of Social Security (DSS)) performs some of the functions previously discharged by CES, most notably the initial registration of unemployed persons, a function that it began in October/November 1997. Centrelink also makes available, at some of its branches, a “self-help” computerised searchable database of employment opportunities. The Ministerial Statement described Centrelink as integrating some of the “public contact services” of both CES and EAA. It was the “first port of call” and a “one-stop shop” to perform functions of the regional offices of DSS, and to provide the public with access to the employment scheme. Its employees are employed under the PS Act. In addition to its function as a place of registration for job seekers and a source of referral for these persons to Job Network entities such as EN, it administers the unemployment benefits scheme, which is a distinct social security function. Notwithstanding the creation of Centrelink, CES/EAA continued to provide their “labour exchange” and “case management” services until 30 April 1998.
·With respect to the staff of CES/EAA, the Minister stated:
“Many staff employed by the CES and [EAA] would eventually become employees of a new public employment placement enterprise [ie EN]. Other CES staff along with most staff in the current DSS delivery network would transfer into the proposed service delivery agency [ie Centrelink]. Others will remain with DEETYA…”
(b) Did the activities of the departmental entitles constitute a “business” for the purposes of s 149(1)(d)?
His Honour noted that in North Western R D Nicholson J (Spender and Madgwick JJ agreeing) had held that –
“… the words ‘the business’ take their colour and context from the reference to the ‘industrial dispute’ in relation to which the employer is involved.”
Observing that the word “business” is a term of “wide import” and its particular meaning dependent upon its context, the primary Judge cited the following statement by the High Court in ATOF (at 226):
“The reference to the departmental activities standing outside the world of ‘productive industry and organized business’ ... should not be understood as a statement that the departmental activities did not constitute a business within the meaning of the eligibility rule. Of all words, the word ‘business’ is notorious for taking its colour and its content from its surroundings: …. Its meaning depends upon its context. It is common and apt to speak of ‘the business of government’: see, for example, Conway v Rimmer [1968] A.C. 910, at p.952.”

It was said that each of those awards was confined in its application to those employees employed pursuant to the provisions of the Public Service Act. In a related way, it was contended that the foundational dispute in settlement of which the awards had been made had been confined in its ambit to one between the CPSU and the Commonwealth as the employer of persons employed pursuant to the Public Service Act.
Counsel for the appellant Minister pointed to the fact that the Awards listed in [173] above (“the Awards”) had been made in settlement of an industrial dispute between the CPSU and the Commonwealth as the employer of persons pursuant to the Public Service Act. That was said to explain the statement under the sub-heading “Employers” in sub-cl 5.2 of the “Parties Bound” clause of GECA that;
“This award will apply and be binding upon all Ministers of the Crown for the Commonwealth and the presiding officer(s) in respect of employees under the Act.”
In cl 3.1 of GECA, “Act” is defined to mean “the Public Service Act 1922 as amended from time to time.” On behalf of the Minister it was also pointed out that certain provisions in GECA were incapable of applying to persons other than those employed under the Public Service Act. Accordingly, so the submission went, the proviso to s 149 that the binding affect of any award is “subject to any order of the Commission” has been satisfied in respect of GECA, amongst other awards, because its application has been limited by order of the Commission to persons employed under the Public Service Act.
In aid of this argument, Mr Robertson SC, who appeared with Mr Bennett for the Minister, sought to distinguish North Western on the ground that the awards in that case were expressed to be binding “in respect of all employees of the Department of Health and Community Services (Victoria) eligible to be members of .....[relevant unions].” The Awards, by contrast, were expressed to be binding on “all Ministers of the Crown for the Commonwealth and the presiding officer(s) in respect of employees under the Act.” (ie. the Public Service Act).
The CPSU’s response to these arguments is that they do not preclude awards like those in question from applying by force of s 149(1) to employees of a transmittee insofar as those awards are capable of applying to those employees. If they are incapable of so applying, the Awards are to that extent unenforceable but that does not mean that they are deprived of the pro tanto application preserved by s 149(1)(d) of the WR Act. Support for that view is said to be derived from the fact that, in the form in which it appeared in the Industrial Relations Act 1988 (Act No 86 of 1988), s 149 differed from the corresponding provision, s 61, of the Conciliation and Arbitration Act1904 by the presence, at the beginning of the prefatory words of the section, of the expression “Subject to any order of the Commission ....”. At the same time there were inserted in par (d) of what became s 149(1) the words “or part of the business .....”. By expressly stipulating that the binding effect of an award was “subject to any order of the Commission”, the new section, it was submitted on behalf of the CPSU, effectively removed the possibility that limitations on the binding effect of a particular award, including its effect on a presumptive assignee or transmittee of the business or part of the business of a party to the dispute, might arise by implication from the terms of the award or the circumstances in which it was made. In the event, it is unnecessary to do more than note this submission because Counsel for each of the Minister and EN have disavowed any contention that any of the Awards contains a provision amounting to a contrary order of the kind contemplated by the prefatory words in s 149(1).
The CPSU sought to meet the appellants’ contention that the foundational dispute had been confined to employees covered by the Public Service Act by pointing out that the finding of dispute made on 24 November 1992 recorded:
“1.That an industrial dispute exists between the Public Sector, Professional, Technical, Communications, Aviation and Broadcasting Union and the employers named in Annexure “A” to this finding of dispute.
2.The matters in dispute are set out in a letter of demand dated 18 September 1992 and a log of claims attached thereto.
3.The dispute extends beyond the limits of any one state of Australia.”
The employers named in Annexure “A” to the finding of dispute included eighteen Ministers of the Crown in right of the Commonwealth, parliamentary officers and chairpersons, managing directors and directors of certain statutory bodies as well as the Chief Justice of the High Court and the Chief Minister of the “ACT Government”. In the log of claims itself, the word “employee” was defined to mean “a person who:
(i) is a member of the union,
(ii) is eligible to be a member of the union, or
(iii)becomes eligible to be a member of the union by an order of the Australian Industrial Relations Commission.”
The first sentence of the standard form letter addressed to each employer served with the log recited:
“The Australian Public Sector, Professional and Broadcasting Union, Australian Government Employment (PSU), on behalf of its members and persons eligible to be members now engaged in employment or hereafter to be engaged in employment in your department/agency, claims that the employment of such persons and each of them shall be under and subject to the provisions and upon the terms and conditions set out in the attached Schedule A and that all payments, allowances and benefits shall in the circumstances and under the terms and conditions set forth in the said Schedule A be made and accorded to each and all such persons.”
In the light of the conclusions reached on the issues discussed above, this question ultimately turns on whether the Awards evince an intention so to limit the obligations of the Commonwealth, as represented by the Ministers, as to indicate that the Awards can or should, exceptionally in the light of ss 149 and 170MB, have no operation following a transmission or assignment of part of the business of the Commonwealth to a corporation or corporations beneficially owned and controlled by the Commonwealth.
In favour of an affirmative answer, the following may be said:
·The Awards in terms bind the Minister only “in respect of employees [including, by virtue of interpretation clauses in the Awards, officers] under the [Public Service] Act”;
·That Act and other legislation (e.g. the Long Service Leave (Commonwealth Employees) Act 1976 (“the LSL Act”) and the Superannuation Act 1976 (“the Superannuation Act”)) provided, especially for officers, but also to an extent for employees, a specific regime of employment rights and responsibilities dissimilar in some important respects from those commonly found in employment contracts to which the Commonwealth is not directly a party;
·Each of the Awards is expressed to form “part of a set of integrated paid rates awards”. That is, the employees would ordinarily not expect to receive benefits from the Commonwealth in excess of those provided by the Awards (and relevant legislation). The position may not be the same in the new “corporatised” environment; and
·Section 149(1)(d) does not provide that employees shall continue, after a transmission, to enjoy the same remuneration and conditions prescribed by an award as binding on a former employer. What the section says is that the “award … is binding on a [transmittee etc] of the business or part of the business”. But the Awards never did regulate the salaries and conditions of persons not appointed or employed under the Public Service Act. Neither do they, after the transmission.
However, there are countervailing considerations which, in our view, outweigh these matters.
As indicated above, the Prime Ministerial certificate contemplated by s 81C(1) was duly given (see [174] above). The declaration of the [successor of the Public Service] Board also contemplated by subs (1) was likewise given: on 1 May 1998 the Board’s successor declared that the relevant officers “are in the employment of [ENA]” with effect from that day.
While s 81C may be said to have various purposes, subs (3) seems to contemplate that the receiving authority would, or at least may, make its determination before the instantaneous transfer effected by subs (2). This appears to indicate an assumption and intention that the transferred officers should continue to have the protection of any pre-transfer public service award as well as, in the light of s 149(1)(d), that of any private sector award to which the receiving authority might be subject (although s 81C would normally apply to a new authority, as yet without any (or many) employees and unlikely to be covered by an existing award). Such an intention is conformable with Division 3 (“Rights of certain former officers”) of Part IV of the Public Service Act. That Division has the evident purpose, in respect of s 81C officers (see s 87K(2A)), of preserving certain of their rights accrued whilst in the Service, for example long service leave (s 87L), and a right to be transferred or promoted to a Public Service position. Moreover, it was thought necessary in s 81C(3) specifically to empower the authority to determine only “special” terms or conditions for the single limited purpose of facilitating the transfer. Plainly, the assumption and intendment were that the ordinary operation of an award would not be affected. Such operation is prescribed by s 149, not only in relation to succession assignment or transmission situations, but generally. In general, fair dealing with, and a considerable measure of protection of the existing entitlements of, officers transferred out of the Public Service under s 81C but still, so to speak, working within the Commonwealth’s direct sphere of influence, were among the legislative purposes.
This analysis is also consistent with the general history of the determination of the employment entitlements and obligations of officers and employees of the Commonwealth Public Service. Some of these have been prescribed by statutory provisions, some by delegated legislation and some by industrial awards. However, over time, both the scope of award (as distinct from non-award) regulation and the ease with which award prescriptions might override provisions of the Public Service Act have exhibited a marked tendency to increase.
So far as is presently relevant s 81C(3) was intended to provide a means of fair, just and effective preservation, or appropriate adaptation, of the non-award rights and liabilities of officers and employees upon their transfer from the public service proper to a Commonwealth authority. S 81C(3) was not intended to be a means of displacing the pre-transfer award entitlements of officers and employees, notwithstanding that the availability of those rights against the authority might depend upon a succession mechanism (like that embodied in s 149) in the law setting up the award system, since awards are creatures of statute.
There was no need for the Parliament to provide as it did by s 81C in order to enable orderly preservation and adaptation of award entitlements. The terms of the Workplace Relations Act and its predecessors, among other things, have given broad powers to the Australian Industrial Relations Commission, including the ability to vary awards. Moreover, s 149 was itself sufficient to preserve existing award entitlement against the transferee authority .
Further, it is very unlikely that Parliament would have intended by s 81C to deprive officers and employees (and their registered organisations) of such award rights as would or might otherwise be preserved for them by s 149 without expressly and clearly saying so. Such a deprivation would have reflected an important legislative policy and one philosophically apparently at odds with the preservative approach to officers’ and employees’ rights adopted by the Public Service Act generally: see, for example, the references in [191] above.
The Awards are expressed to be “read in conjunction with the [Public Service] Act and regulations …, determinations and terms and conditions made thereunder from time to time” and “[w]here the Act, its regulations, determinations and terms and conditions made thereunder are inconsistent with the provisions of [the awards], the latter will prevail”. (See e.g. cl 6.2 of the GECA) Thus if the awards were inconsistent with any non-award action taken pursuant to s 81C(3) the Awards would prevail. That accords with the specific contemplation of s 121 of the Workplace Relations Act.
This is a case where no relevant pre-transmission employee was anything other than an officer or employee under the Public Service Act. The use of the phrase “in respect of employees under the Act” in the Awards was therefore not to mark out some classes of “employees” directly engaged by the Commonwealth from others. The point was to ensure that these awards did not reach to the particular, named “Commonwealth agencies” which were also parties to the underlying dispute, in part settlement of which the subject awards were made. Hence, it is fair to say that, in the present context, that phrase had no work at all to do. It was, in context, no more than a way of saying that, in respect of direct engagement by the Commonwealth, the Awards should extend to all officers and employees. Moreover, it seems highly unlikely that anyone connected with the making of the awards - the Commission, any of the Ministers, or (quite certainly) the appellant CPSU – would have had any interest in so delimiting the binding force of each award as to deny officers and employees the benefit of s 149(1)(d).
The Commonwealth’s activities were and are very diverse. As history shows, the policies and views of Parliament and governments are likely, from time to time, to fluctuate as to whether particular activities are best carried out by a corps of directly employed public servants, by a Commonwealth statutory authority, by a Commonwealth owned or controlled corporation or entirely by the private sector. Sections 149(1)(d) and 170MB are, in principle, available to protect the continuity of an industrial settlement and employees’ rights in every other transmission of business to which a federal award or agreement applies. It would be odd if the vagaries of the wording of an “incidence” or “parties bound” clause of an award, clearly enough aimed at excluding other particular employers from its scope, were to be able, inadvertently to create industrial confusion or uncertainty in respect of such a large body of employees, virtually any of whom might find the Commonwealth’s relevant activities and their work “outsourced” in some way. Section 149 has been enacted, we consider, to avoid difficulties of that kind, among others.
As to the Awards being “paid rates” awards, although a new industrial environment, like that created by the introduction of EN, should and would not necessarily prevent some individual employees receiving more remuneration than that provided by a general prescription, one of the purposes of s 149 is to prevent the occurrence of a hiatus in general prescription of minimum entitlements for employees, so that industrial peace might be preserved: George Hudson Ltd v Australian Timber Workers Union (1923) 32 CLR 413. Section 149 does not contemplate that the new employing entity is not, after transmission, or even in anticipation of it, free to negotiate, or obtain by arbitration, any variation to the relevant award which might be thought necessary for the new circumstances.
Further, if those new circumstances do truly make some of the award provisions quite unworkable, then so be it. But that is not determinative of the present question. The ordinary principle is that courts should strive to give effect to a legal instrument if effect can be given to it. In Darling Point Securities Pty Ltd v Industrial Equity Pty Ltd (1991) NSWConvR 55-589, Clarke JA said (Priestley and Handley JJA agreeing):
“There is, in my opinion, a general principle of construction which applies to the present agreement. This principle has been described in a number of ways but is to the effect that courts should be astute, if possible, to adopt a construction which upholds the validity of the contract.”
In the context of interpreting a statutory instrument, Cross J said in Clyne v Federal Commissioner of Taxation (1980) 49 FLR 25:
“… it appears to me not unreasonable for a court in construing an instrument affecting the requirements of citizens to furnish returns of income…to seek to give that instrument validity.”
This would indicate that the Awards should apply so far as they are capable of doing so, and that a commonsense, adaptive construction of the Awards should be adopted to enable this to occur. The Awards can, simply, apply mutatis mutandis to employees of EN. For example, the ASOs Award prescribed pay rates by broad public service classifications, notably by “classes” of Administrative Service Officer. But the CES and EAA had “local” designations for particular “jobs”, and it would not generally be a matter of difficulty to assign by analogy a post-transmission job to the appropriate class , even if the particular job had changed to some extent in the new environment. A similar process can, if necessary, be undertaken in respect of the “conditions” prescribed, e.g. by GECA.
Can ENA be bound by the Awards if EN is the successor to the business?
It was submitted on behalf of EN that the learned primary Judge had erred in failing to give effect to the distinction, as legal entities, between EN and ENA. It was said that EN’s business is that of an employment agency, whereas ENA’s business is that of a “service company”.
The “Administration and Services Agreement” between EN and ENA dated 2 October 1997 provided by cl 3 that ENA “will during the Term provide to [EN] the Services necessary to enable [EN] to carry on the Business”. Recital A to the same agreement was that “[EN] proposes to carry on the business of providing Employment Services (“the Business”)”. The following relevant definitions appeared in cl 1.1 of the Agreement:
““Administration Services” means the day to day operation of the Business which includes without limitation, the provision of Consumables, organising necessary insurances, obtaining licences or permits, the keeping of accounts, payment of invoices, the collecting of debts and the provision of office and contract administration;
.....
“Employment Services” means anything permitted to be done by [EN] its Memorandum of Association which includes but is not limited to the services to be provided pursuant to employment services agreements entered into by [EN] with the Commonwealth and includes but is not limited to employment assistance; entry level support services; job search assistance; labour exchange services and any new enterprise incentive scheme;
.....
“Services” means the services necessary to enable [EN] to operate the Business and includes but is not limited to the provision of Additional Services, Administration Services, Employees, Maintenance Services, Plant and Equipment and Premises necessary to operate the Business;”
Clause 4 of the same agreement, under the heading “Functions and Duties of [ENA]” obliged ENA to:
“(a) provide the Services to [EN];
(b)provide such human resources and equipment as is necessary to provide the Services to [EN] whenever required by [EN] during the Term and under the Agreement;
(c)act in the best interests of [EN], perform the Services in a proper and efficient manner and use its best endeavours to promote and extend the interests of [EN];
(d)at all times in providing the Services, comply with any reasonable directions given by [EN];
(e)comply with all applicable industrial agreements, laws, standards, statutes, ordinances and codes;
(f)ensure that it and the Employees obey all reasonable instructions and directions issued by [EN];
(g)attend such meetings as may be required by [EN];
(h)report on or explain any aspect of the Services of which [EN] in its absolute discretion may require clarification;
(i)deliver to [EN] all reports which [EN] may in its absolute discretion require in respect of the provision of Services;
(j)promptly deposit the Total Revenue into the Bank Account;
(k)remit the Net Revenue to [EN] as directed by [EN] from time to time;”

In the light of that agreement, and when it is remembered that EN has only one employee, its managing director, EN cannot be said, in any realistic sense, to carry on the business of an employment agency or any other business. It is, we consider, true to say that EN has delegated the conduct of, effectively, the whole of its business to ENA. The latter is not comparable with the appellant in PP Consultants, which was said to carry on the business of a banking agent required to perform a limited range of functions while the Bank continued to engage in the full range of activities comprehended by the business of banking. In that respect, it was observed at pars 18 and 19 of the joint judgment in that case:
“Although the appellant has taken over the activities, or at least, a large part of the activities in which the Bank previously engaged in Byron Bay, it has not thereby engaged, for itself, in the business of banking. It does not, in accepting deposits, receive money on loan but instead, it receives, on behalf of the Bank, moneys lent to the Bank. Nor does it, in processing withdrawals, repay money lent to it. Rather, it repays, on behalf of the Bank, money lent to the Bank. And so far as it is involved in processing loans, it is not, itself, lending money, but is handing over money lent by the Bank.
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.”
EN, on the facts of the present case, conducts no business for itself except for receiving the net fees payable by the Commonwealth for services rendered by employees of ENA after ENA has recouped the costs of paying ENA’s employees who render the services and of otherwise administering the conduct of EN’s business. It has been contended on behalf of EN that ENA’s business is that of a “service company” and distinct from the business of an employment agency said to be carried on by EN. Precisely what is connoted by the expression “service company” in this context is unclear. A labour hire company may make its employees available to service the needs of its customers in a wide range of different businesses without itself carrying on, or engaging in, any of those businesses. However, ENA does more than merely provide EN with the services of a group of employees who work at the direction of supervisory or executive staff of EN. ENA provides the premises, equipment and the whole of the services necessary to enable EN to operate the business of providing employment services. Accordingly, we regard ENA as more of a delegate than a mere agent of EN and as being no less a participant in the business of its parent company than EN itself.
It is also significant that the certificate under s 81C of the Public Service Act discussed at [174] was, we consider, predicated on ENA’s performing “supervisory, clerical and administrative support functions in support of employment services” that were previously performed by persons employed in the Department. That suggests that ENA was seen as performing those functions in its own right and not merely as agent for another entity.
Even if the matters which we have just canvassed were regarded as supporting the conclusion that EN is not presently bound by the relevant awards and agreement, that would not deprive the declarations made at first instance of efficacy in respect of ENA. In our view, the substantial identity between the activities formerly carried on by CES/EAA and those now undertaken by employees of ENA, entails that, as contemplated by ss 149(1) and 170MB, the latter has succeeded, otherwise than immediately, to at least part of the “business of government” formerly carried on by CES/EAA. These observations in respect of s 170MB by Mansfield J in Australian Rail Tram & Bus Industry Union v Torrens Transit Services Pty Ltd [2000] FCA 1683, at [81] - [82] are apposite:
“TT, however, is not the employer of the bus drivers. By the arrangement referred to, TTS is the employer. It is, therefore, necessary to determine whether TTS falls within the scope of operation of s 170MB(2) in the light of my conclusions thus far. TTS puts the contention that it is a labour hire company, whereas TransAdelaide was and is a service provider, and that as a labour hire company TTS does not in the circumstances fall within the shadow of s 170MB(2).
Mere remoteness of any relationship between the former employer and the new employer is not itself a reason to so conclude. Section 170MB(2) clearly contemplates that the new employer may not be the immediate successor transmittee or assignee of the former employer. It would also be surprising if, by the simple device of sub-contracting to a subsidiary company that part of the functions of the former employer as involved the provision of labour, an entity could void what I have found to be the intended operation of s 170MB. If TTS’ contention is correct, it would be equally correct if TT directly contracted with TransAdelaide to acquire from it the right to operate passenger transport services by bus in certain areas. The Court should be slow to permit any such processes to avoid the proper application of s 170MB. Einfeld J in the EN case made similar observations at 219 [70].”
Conclusion
It will be apparent from the foregoing reasons that, in substance, each of the appellants’ attacks on the declaration made at first instance, has failed. It appears to be common ground that either or both EN and ENA are bound, if at all, by the Awards and the agreement listed in the Schedule to his Honour’s order only to the extent that each award or agreement is capable, according to its terms, of applying to those corporations in the industrial circumstances in which they operate. That extent will be a matter of construction of particular provisions of the relevant award or agreement and the application of those provisions as so construed to given factual situations.
In his separate reasons for judgment, Beaumont J has doubted the utility of making any declarations even if the reasoning which we favour be accepted. His Honour has referred to CEPU v Telstra Corporation Ltd (1998) 85 IR 318 where, after quoting from Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581, in relation to the principles applicable to declaratory relief, Ryan J observed, at 320;
“In the present case, the question is not purely hypothetical because, the applicants contend, some, or perhaps all, of the conditions precedent to the taking of protected industrial action have been satisfied. Nevertheless, some of the relevant circumstances cannot be known with certainty at this stage. In my view, the case is not to be assimilated with Ainsworth, where the matters alleging constituting a denial of natural justice could be identified with complete certainty. Courts have traditionally set their faces against the giving of advisory opinions and the best that the applicants could achieve if their claim for declaratory relief were determined today would be a declaration as to the sufficiency of their notices, the fact that the nominal expiry date of each relevant certified agreement had passed, and perhaps other matters of the same kind.
The declaration, as far as future matters were concerned, would have to be qualified with some such rider as “if the proposed industrial action proceeds to completion without involving personal injury or wilful or reckless damage to property, it will be protected action”. A declaration in that form would be redolent of an advisory opinion.”
Although we think it appropriate to qualify, in the way just indicated, the declarations made at first instance, we do not regard that qualification as being of a kind which would render the declarations “redolent of an advisory opinion.” The question at issue here is not purely hypothetical and the parties to the appeals obviously regard its resolution as of some utility because, both at first instance and before this Court, they have argued the applicability of the Awards on an “all or nothing” basis. In this respect, the present case is similar to Australian Rail Tram & Bus Industry Union v Torrens Transport Services Pty Ltd (supra), where the parties were agreed that the only question which Mansfield J was required, in the first place, to answer was;
“Whether TTS is bound by the Mile End Agreement and/or the Port Adelaide Agreement by operation of s 170MBH of the Act.”
His Honour answered that question by holding that TTS “is so bound only to the extent that those agreements respectively relate to the part of the business of Trans-Adelaide which has in fact been transmitted to TTS”. Accordingly, the proceedings were adjourned to allow negotiations between the parties about the “matters of detail” which would have to be investigated before effect could be given to the qualified ruling which his Honour had given. In the absence of any suggestion that any investigations of that kind have been undertaken in the present case, we consider it preferable to preserve the declarations made at first instance and attach to them a qualification indicating, in general terms, the extent to which EN and ENA are bound by the listed awards and agreement. Accordingly, to make clear the extent to which EN and ENA are bound by those awards and that agreement, we would allow each appeal in part and vary each declaration made by his Honour by adding the qualification that each award or agreement set out in the schedule to each order bound EN and ENA to the extent that each award or agreement (as the case may be) was capable, on its proper construction, of applying to EN or ENA on and from 1 May 1998. Otherwise each appeal should be dismissed.

I certify that the preceding seventy five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Ryan and Madgwick.
Associate:
Dated: 15 June 2001

Counsel for the Appellant (N 429 of 2000) and 2^nd Respondent (N 432 of 2000):

Mr A Robertson SC with Mr K G Bennett

Solicitor for the Appellant (N 429 of 2000) and 2^nd Respondent (N 432 of 2000):

Australian Government Solicitor

Counsel for the 2^nd and 3^rd Respondents (N 432 of 2000) and Appellants (N 432 of 2000):

Mr J Trew QC with Mr A Gelbart

Solicitor for the 2^nd and 3^rd Respondents (N 432 of 2000) and Appellants (N 432 of 2000):

Andersen Legal

Counsel for the 1^st Respondent (N 429 of 2000 and N 432 of 2000):

Mr K Bell QC with Ms C Howell

Solicitor for the 1^st Respondent (N 429 of 2000 and N 432 of 2000):

Steve Ramsey, CPSU

Date of Hearing:

26 and 27 February 2001

Date of Judgment:

15 June 2001

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 432 OF 2000

JUDGES:	BEAUMONT ACJ, RYAN & MADGWICK JJ
DATE:	15 JUNE 2001
PLACE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 429 OF 2000

BETWEEN:	MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS APPELLANT
AND:	CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION FIRST RESPONDENT EMPLOYMENT NATIONAL LIMITED SECOND RESPONDENT EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED THIRD RESPONDENT
N 432 OF 2000
AND BETWEEN:	EMPLOYMENT NATIONAL LIMITED AND EMPLOYMENT NATIONAL (ADMINISTRATION) PTY LIMITED APPELLANTS
AND:	CPSU, THE COMMUNITY AND PUBLIC SECTOR UNION FIRST RESPONDENT MINISTER OF STATE FOR EMPLOYMENT WORKPLACE RELATIONS AND SMALL BUSINESS SECOND RESPONDENT
JUDGES:	BEAUMONT ACJ, RYAN & MADGWICK JJ
DATE OF ORDER:	15 JUNE 2001
WHERE MADE:	SYDNEY

Counsel for the Appellant (N 429 of 2000) and 2^nd Respondent (N 432 of 2000):	Mr A Robertson SC with Mr K G Bennett
Solicitor for the Appellant (N 429 of 2000) and 2^nd Respondent (N 432 of 2000):	Australian Government Solicitor
Counsel for the 2^nd and 3^rd Respondents (N 432 of 2000) and Appellants (N 432 of 2000):	Mr J Trew QC with Mr A Gelbart
Solicitor for the 2^nd and 3^rd Respondents (N 432 of 2000) and Appellants (N 432 of 2000):	Andersen Legal
Counsel for the 1^st Respondent (N 429 of 2000 and N 432 of 2000):	Mr K Bell QC with Ms C Howell
Solicitor for the 1^st Respondent (N 429 of 2000 and N 432 of 2000):	Steve Ramsey, CPSU
Date of Hearing:	26 and 27 February 2001
Date of Judgment:	15 June 2001