Peter Zabrdac v Transclean Facilities Pty Ltd

[2011] FWA 4492

[2011] FWA 4492

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Peter Zabrdac
v
Transclean Facilities Pty Ltd
(U2011/5703)

COMMISSIONER BISSETT MELBOURNE, 25 AUGUST 2011

Application for unfair dismissal remedy - jurisdiction - qualifying period.

[1] Mr Peter Zabrdac (the Applicant) has made an application under s.394 of the Fair Work Act 2009 (Cth) (the Act) claiming his dismissal from Transclean Facilities Pty Ltd (Transclean or the Respondent) was unfair.

[2] Mr Zabrdac’s employment was terminated on 25 February 2011.

[3] The matter was referred to conciliation where it failed to settle. Following the conciliation directions were issued to the parties to file and serve witness statements and any material on which they intended to rely.

[4] Mr Zabrdac and the Respondent filed materials as directed. The matter was listed for hearing on 8 July 2011.

[5] On 7 July 2011 my chambers received further material from the Respondent advising that it intended to raise a jurisdictional objection to the matter being heard. A witness statement was lodged in support of this objection. Whilst it was not clearly stated, the witness statement suggested that the jurisdictional objection was that the Applicant had not been employed for the requisite minimum employment period of six months 1 (the Respondent not being a small business) and hence was not protected from unfair dismissal.

[6] This jurisdictional matter must be determined prior to the hearing of the merits of the application. 2

Background

[7] The Respondent holds a contract to provide security services to Yarra Trams at the Preston Depot. It won this contract following a competitive tender process undertaken by Yarra Trams. The contract commenced on 1 October 2010.

[8] Prior to 1 October 2010 the contract to provide security services at the Preston Depot was held by a company called Secure One.

[9] Mr Zabrdac worked for Secure One at the Preston Depot from 11 May 2009 until the end of its contract. At the expiration of the Secure One contract he was paid out all of his entitlements by Secure One.

[10] In late September 2010 Mr Zabrdac was advised by Mr Jamie Russell, the Yarra Trams site supervisor at the Preston Depot, that Transclean were taking over the security contract at the Preston Depot. Mr Russell gave Mr Zabrdac the business card of Mr Ken Hawkins, General Manager of Transclean, and told Mr Zabrdac to contact him.

[11] Mr Zabrdac and a number of other employees of Secure One met with Mr Hawkins and Mr Alex Kyritsis, a Director of Transclean. Mr Zabrdac was subsequently offered and accepted employment with Transclean on 30 September 2010. He commenced employment with Transclean on 1 October 2010.

[12] Mr Zabrdac was dismissed from his employment with Transclean on 25 February 2011.

Statutory consideration

[13] The Respondent says that Mr Zabrdac was employed by it from 1 October 2010 until 25 February 2011. He, therefore, had not completed six months employment at the time of the termination of his employment.

[14] The Applicant claims that he was a transferring employee as defined by the Act and he therefore had the requisite service such that he was protected from unfair dismissal.

[15] The Act relevantly provides:

384 Period of employment

(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.

22 Meanings of service and continuous service

…

When service with one employer counts as service with another employer

(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:

(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and

(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee’s continuous service with the second employer(taking account of the effect of paragraph (a)), but does not count towards the length of the employee’s continuous service with the second employer.

...

Meaning of transfer of employment etc.

(7) There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer) if:

(a) the following conditions are satisfied:

(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee’s employment with the first employer;

(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or

(b) the following conditions are satisfied:

(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;

(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.

Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to the second employer.

(8) [Types of transfer of employment] A transfer of employment:

(a) is a transfer of employment between associated entities if paragraph (7)(a) applies; and

(b) is a transfer of employment between non-associated entities if paragraph (7)(b) applies.

[Underlining added].

[16] For s.22(7)(b) of the Act to be satisfied a transfer of business must have occurred. Section 311 of the Act is relevant to this question:

311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5) There is a connection between the old employer and the new employer if:

(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.

[17] There is no dispute between the parties that Mr Zabrdac’s employment with the old employer (Secure One) was terminated, 3 that he was subsequently employed by the new employer (Transclean)4 and that the work he performs for the new employer is the same work he performed for the old employer.5 It is also agreed that Secure One and Transclean are not related entities.

[18] There is, however, no agreement that there has been a transfer of business for the purposes of s.311(1) such that there has been a transfer of employment pursuant to s.22(7) of the Act.

Re-opening of case

[19] This matter was heard on 8 July 2011. At the time of the hearing the Applicant complained that he had only learned of the Respondent’s jurisdictional objection the day before and had not had the opportunity to prepare. The Applicant was offered the opportunity to seek an adjournment but declined to do so.

[20] On 11 July 2011 I received correspondence from the Applicant requesting that I re-open the jurisdictional hearing:

to allow evidence to be submitted from Mr. Lee Mammarella (director of Secure One Pty Ltd). The evidence will be directed at the issue of whether or not there was a transfer of business from Secure One (the old employer) to the Respondent (the new employer). 6

[21] In the event that the application was granted the Applicant submitted that he would:

provide a signed statement from Lee Mammarella to Fair Work Australia and the Respondent and, in the event that the Respondent wishes to cross-examine Mr Mammarella, he will attend for that purpose. 7

[22] The primary reason for the application was a view of the Applicant that he had been ambushed by the late notification of the jurisdictional matter and hence was unfairly prejudiced in the presentation of his case.

[23] The request to re-open the matter was strongly objected to by the Respondent on the basis that the Applicant was not prejudiced in the initial hearing, that he had indicated that an adjournment was not sought and that he had not made the request to re-open in accordance with the Act. If the matter were to be re-opened the Respondent requested that a directions hearing be held.

[24] Arising from the material submitted by each of the parties I issued a statement that said, in part:

[6] Section 590 of the Act sets out the powers of Fair Work Australia. These include the power to inform itself in such a manner as it considers appropriate, except as provided for in the Act.

[7] In performing functions or exercising powers in relation to a matter or proceedings under the Act or a part of the Act, FWA must take into account:

(a) the objects of this Act, and any objects of the part of this Act; and

(b) equity, good conscience and the merits of the matter; and

(c) the need to respect and value the diversity of the work force by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin. 8

[8] The unfair dismissal provisions are in chapter 3, part 2-3 of the Act. The object of that part of the Act is set out in s.381:

(1) The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(b) to establish procedures for dealing with unfair dismissal that:

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.

Note: The expression “fair go all round” was used by Sheldon J in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.

[9] Whilst re-opening the matter will delay its finalisation, the requirement that a “fair go all round” be accorded to both parties cannot be ignored. Such a concept requires that procedural fairness be accorded to the parties.

[10] In Egan v Botanic Gardens Management Services Pty Ltd, a Full Bench of the AIRC found:

that it is clear that members of the Commission are bound to act in a judicial manner and the principles of natural justice are applicable to hearings before the Commission. While the requirements of natural justice or procedural fairness are not prescribed in a fixed body of rules it is clear that parties are entitled to be given a reasonable opportunity to present their case.

[11] In Sandman v Visyboard Coolaroo, a Full Bench of the AIRC found that ‘the rules of natural justice require only that a reasonable opportunity to present a case be given, not that the best possible case be presented.’

[12] In these circumstances I do not consider that the Applicant has been given a reasonable opportunity to present his case. The short notice of the jurisdictional matter to be raised and the provision of the witness statement are telling in this respect. This should not be taken as a criticism of the Respondent. As I said earlier it is appropriate that a jurisdictional matter be brought to the tribunal’s attention. It should be noted that I asked the Applicant at the hearing on 8 July 2011 if an adjournment was sought. The answer was no. That the Applicant did not seek an adjournment at the time does not bar him from seeking the re-opening of the matter.

[Footnotes Omitted].

[25] I then issued directions as follows:

1. The Applicant shall file with Fair Work Australia and serve of the Respondent a written statement of Mr Mammarella and any other material on which they intend to rely by 4.00pm Monday 18 July 2011.

2. The Respondent shall file with Fair Work Australia and serve on the Applicant any witness statements and material in reply by 4.00pm Monday 25 July 2011.

3. The matter shall be listed for hearing if required at 2.30pm Tuesday 2 August 2011.

[26] Subsequent to these directions the Applicant lodged a statement from Mr Mammarella (the Director of Secure One) and statements from a Mr Dennis Pozzebon and a Mr Angelo Fini (both previous employees of Secure One and now employees of Transclean).

Admission of statements of Mr Pozzebon and Mr Fini

[27] The matter was further heard on 2 August 2011. At that hearing the Respondent objected to the witness statements of Mr Pozzebon and Mr Fini on the grounds that they did not accord with the directions issued (that the Applicant file and serve a written statement of Mr Mammarella) and in any event they could not give evidence about any arrangement entered into between the new and old employer with respect to the beneficial use of assets of the old employer by the new employer.

[28] The Applicant argued that the statement should be admitted on the grounds that the evidence would allow me to strongly infer that such an arrangement had been entered into. The Applicant also submitted that the statements came within the scope of ‘any other material’ that could be filed in accordance with the directions.

[29] Following submissions from the Respondent and the Applicant, all of which I carefully considered, I declined to allow the statements of Mr Pozzebon and Mr Fini to be admitted. I indicated at the time I would issue reasons for doing so. The following are my reasons for refusing to admit the statements.

[30] The request put to me by the Applicant to reopen the jurisdictional hearing on this matter was unusual, particularly as counsel for the Applicant had declined to seek an adjournment of the hearing on 8 July 2011. On receipt of the Applicant’s letter I was mindful of the need to ensure that parties were given an adequate opportunity to present their case. The request asked that the matter be re-opened specifically to allow Mr Mammarella to give evidence with respect to the transfer of business. It was for this purpose that I decided to re-open the matter.

[31] Mr Pozzebon and Mr Fini were employees of Secure One and are now, presumably, employed by Transclean. They were not and are not employed in any management capacity. They are security guards working at the Preston Depot. The jurisdictional matter before me relates to whether or not there was a transfer of business and in particular whether there is a connection between the old (Secure One) and new (Transclean) employers in accordance with an arrangement between them with respect to the beneficial use of some or all of the assets of the old employer by the new employer. 9 Neither Mr Pozzebon nor Mr Fini could give me any direct evidence of such an arrangement nor could they give me direct evidence on any other matter that might demonstrate a transfer of business. Mr Mammarella is the Managing Director of the old employer. He can provide evidence of any arrangement with the new employer.

[32] Counsel for the Applicant suggested that I could draw strong inferences from the evidence of Mr Pozzebon and Mr Fini of an arrangement between Mr Mammarella and Transclean. Mr Mammarella can give me direct evidence of any such arrangement. The matter was re-opened to hear from him. Given Mr Mammarella was available, and given the positions occupied by Mr Pozzebon and Mr Fini at Secure One and subsequently Transclean, I do not consider that the evidence of Mr Pozzebon and Mr Fini would be probative to the matter to be determined.

[33] In addition, the directions were clear. To suggest that ‘any other material’ referred to in the directions for the Applicant included other witness statements does not bear scrutiny nor does it reflect the argument of the Applicant for re-opening. Had it been intended that the Applicant should lodge any witness statements it chose the direction to him would have reflected this. The direction would have been phrased in a similar way to the direction to the Respondent, which was to lodge any witness statements and material on which it intended to rely. The term ‘material’ reflects the capacity to provide material other than witness material, such as submissions and authorities.

[34] For these reasons I refuse to admit the statements of Mr Pozzebon and Mr Fini.

Evidence and submissions

Respondent

[35] Evidence for the Respondent was given by Mr Steven Kyritsis (Infrastructure Security Manager, Transclean) and Mr Hawkins.

[36] Mr Kyritsis’ evidence is that Transclean was awarded the contract following a competitive tender process. Prior to the awarding of the contract he says Transclean had no knowledge of Secure One. Secure One was not party to the awarding of the contract to Transclean nor did it assist Transclean in gaining the contract with Yarra Trams.

[37] Mr Kyritsis’ evidence is that there is no commercial relationship between Transclean and Secure One, there has been no transfer of assets with Secure One and no in- or out-sourcing of work with Secure One.

[38] However, Transclean did offer employment to former employees of Secure One. Mr Kyritsis’ evidence is that he was not party to any discussions with Yarra Trams (the client) or Secure One with respect to who should be employed, nor was he involved in any discussions concerning the acquisition or purchase of any of the assets of Secure One by Transclean.

[39] Mr Kyritsis said in his statement that neither Secure One nor Yarra Trams played a part in the choice or decision of Transclean to employ Mr Zabrdac. Under cross examination he said he did not believe that this statement was inconsistent with an email sent to Secure One by Mr John ter Haar, an employee of Transclean, which stated, in part, that ‘following a recommendation from Jamie Russell, the Operations Manager at the site, this company is however willing to employ the staff currently engaged on security duties at Preston, should they be willing to work for us.’ 10 Whilst he acknowledged that some advice may have been given by Yarra Trams, he said the decision to employ Mr Zabrdac had been Transclean’s decision.

[40] Mr Kyritsis agreed that there had been commercial negotiations with Secure One as evidenced by the email. 11 These had not resulted in any agreement or arrangement being entered into with Secure One.

[41] Mr Kyritsis gave evidence that he was aware of a microwave oven, a fridge, a radio, a sandwich maker, a kettle (the ‘appliances’), assorted stationery and a procedures manual in the guardhouse but is not aware if they were there prior to Transclean taking over the contract, although he agreed that Translcean had not put them there. 12

[42] Mr Hawkins gave evidence that he was involved in developing the Transclean manual for the Preston Depot. He ‘got some documents and...reviewed those documents and wrote them into Transclean’s procedure manual.’ 13 He also gave evidence that he got a copy of the Secure One manual and used ‘some of that stuff there because they had site-specific areas of the site that we weren’t aware of.’14 Beyond some broad statements Mr Hawkins had limited knowledge of what information was in the manual or how up to date it was. He did agree that parts of it were a verbatim copy of the Secure One manual15 and that Transclean had only ‘changed minor parts’16 of the Secure One manual.

[43] Mr Hawkins also gave evidence that Transclean provided fluro vests, polo shirts and trousers within the first week of the commencement of the contract, although Mr Zabrdac indicated he did not want the trousers offered but wanted cargo pants instead.

[44] The Respondent submits that there is no evidence, even on an inferential basis, that an arrangement was entered into between Secure One and Transclean. Further, it submits that the retrieval of some of the assets by Mr Mammarella through Mr Zabrdac suggests that Secure One retained control at all times over its assets.

[45] The Respondent submits that the use of the words ‘transfer of assets’ suggests the transfer of commercial assets and not items such as a microwave and fridge that have been left behind when a contractor leaves the site.

[46] The Respondent submits that whilst the requirements of ss.311(1)(a)-(c) may be satisfied and Mr Zabrdac may be considered a transferring employee, this is not sufficient to prove a transfer of business. Whilst Mr Zabrdac may be a transferring employee as defined in the Act there has not been a transfer of business and hence there is no transfer of employment.

Applicant

[47] Mr Zabrdac provided a written witness statement and gave evidence on his own behalf. He was employed by Secure One until they lost the contract at the Preston Depot. He was offered and accepted employment with Transclean. He gave evidence that the appliances and assorted stationery, which were in the guardhouse prior to the changeover of the contract and were the property of Secure One, were still in the guardhouse at the time of the termination of his employment by Transclean. In addition there was an operations manual that had been compiled by Secure One in the guardhouse before the transfer, which was also there after the transfer date.

[48] Mr Zabrdac also gave evidence that following his suspension by Transclean and prior to the termination of his employment he contacted Mr Mammarella who asked him to retrieve from the guardhouse material and documentation, including logbooks and an operations manual belonging to Mr Mammarella. 17 Mr Zabrdac collected the requested material because he understood it to be the property of Mr Mammarella.18

[49] Mr Mammarella gave evidence that applicances left in the guardhouse were the property of Secure One. 19 He had left them along with the operations manual in the guardhouse to assist the guards in doing their job. He stated that the operations manual ‘was my own personal writing, so that was my property.’20

[50] Mr Mammarella gave evidence that there had been discussions between Secure One and Transclean for a potential subcontracting arrangement but this did not eventuate. In the context of these discussions there had been discussion of what Secure One could offer in terms of licensing arrangements, uniforms and so on.

[51] Mr Mammarella gave evidence that his initial contact with Transclean was direct and with respect to the subcontracting arrangement but after that any contact was via Yarra Trams. He was ‘approached directly by people from Yarra, asking if I could assist them in the transition to make it as smooth as possible.’ 21

[52] Mr Mammarella says that he did have some general conversations with Mr ter Haar from Transclean, which included a discussion of the operations manual that Mr Mammarella was not willing to relinquish because it was his ‘own personal property.’ 22 This conversation was in the context of a subcontracting arrangement,23 which did not eventuate.

[53] Mr Mammarella’s evidence is that once the subcontracting discussions ended he had no more direct contact with Mr Hawkins or Mr ter Haar. 24 He stated, however, that he ‘was contacted and requested via Yarra Trams by Peter [Mr Zabrdac] that they continued to use the uniforms and whether...I was willing to let them do that [sic].’25 He then clarified that it was Mr Zabrdac who contacted him about the matter who, at that time, was an employee of Transclean.

[54] Mr Zabrdac submits that he was employed by Transclean as a Security Supervisor 26 and it was expected by Transclean that the Supervisor would be responsible for the day to day running of the site.27 Mr Zabrdac’s discussions with Mr Mammarella with respect to the uniforms, therefore, constituted an arrangement for the beneficial use of some of the assets of Secure One by Transclean.

[55] The Applicant submits that pursuant to s.311(2) of the Act he is a transferring employee and that there has been a transfer of employment from Secure One to Transclean as defined in s.22(7) of the Act. Given this transfer of employment his service with Secure One counts as service with Transclean. He therefore has more than the required period of service such that there is jurisdiction for Fair Work Australia to deal with his application.

[56] With respect to s.311(3) the Applicant submits that there is a connection between Secure One and Transclean in that an arrangement was entered into between Secure One and Transclean for Transclean to have the beneficial use of some of the assets of Secure One, namely the uniforms. The Applicant submits that this arrangement was entered into by Mr Zabrdac, as a representative of Secure One, requesting of Mr Mammarella that the guards be allowed to wear the uniforms.

[57] Alternatively, Mr Zabrdac also submits that an arrangement was entered into between Transclean and Secure One using Yarra Trams as a conduit. He submits that this is evidenced by: Yarra Trams indicating that it would implement a transition plan for the changeover from Secure One to Transclean; Mr Russell from Yarra Trams being copied into an email between Transclean and Secure One with respect to subcontracting; and Mr Zabrdac’s evidence that he was approached by Yarra Trams to contact Mr Mammarella with respect to the use of the uniforms.

[58] The Applicant submits that the word ‘arrangement’ should be given its ordinary meaning and to arrange something is to ‘come to some agreement or understanding’. 28 The Applicant also submits that an arrangement as used in s.311(3) of the Act does not have to be a direct arrangement.

[59] The evidence of this, in the Applicant’s submission, relates to the appliances, stationery and a procedures manual that were owned by Secure One and have remained in the guardhouse at the Preston Depot following Transclean taking the contract and the continued use of the uniforms.

[60] The Applicant submits that the arrangement that was entered into can be inferred from the fact that the assets described above were present in the guardhouse both before and after the change of contract on 1 October 2010 and by the fact that Transclean used these assets. The Applicant submits that there does not need to be a formal agreement to evidence an arrangement between the old and new employer.

Consideration

[61] Section 22 of the Act deals with the meaning of service. Section 22(5) of the Act provides that if there is a transfer of employment then service with the old employer counts as service with the new employer. Section 22(7)(b) says there is a transfer of employment if the employee is a transferring employee in relation to a transfer of business and the old and new employers are not associated entitles.

[62] Section 311(1) of the Act provides that there is a transfer of business if each of the conditions in ss.311(1)(a)-(d) are satisfied. It is agreed that each of the conditions in ss.311(1)(a)-(c) are satisfied (that is Mr Zabrdac is a transferring employee) but for there to be a transfer of business, as required under s.22(7)(b), there must be a connection between the old and new employer as described in any of ss.311(3)-(6) of the Act.

[63] Secure One and Transclean are not related entities nor is it the case of outsourcing or an end to outsourcing of work. Therefore, ss.311(4)-(6) of the Act are not relevant.

[64] For there to be a transfer of business in this case the condition in s.311(3) of the Act must be satisfied. That is, there must be an arrangement between the new and old employer for the beneficial use of assets of the old employer that relate to, or are used in connection with the transferring work.

[65] If such an ‘arrangement’ as described in s.311(3) can be established then there is a connection between the old and new employer such that the requirements of ss.311(1)(a)-(d) of the Act have been met and there is a transfer of business for the purposes of the Act.

[66] The word ‘arrangement’ is not defined in the Act. The Explanatory Memorandum to the Fair Work Bill 2009 states that ‘the word arrangement is intended to be interpreted broadly.’ 29 This does not, however, suggest that it should be given a loose form. It must be a term that has some meaning.

[67] The definition of ‘arrangement’ in the Macquarie Dictionary is of little assistance although I agree with the Applicant that ‘arrange’ is defined as ‘to come to an agreement’. An agreement, however, is defined as ‘the act of coming to a mutual arrangement’ or ‘the arrangement itself’, 30 which does not assist.

[68] The word ‘arrangement’ has been judicially considered, primarily in the context of trade practices and taxation matters. While there appears to be no consideration of the term ‘arrangement’ in a transfer of business context in the Act, guidance as to the use and meaning of the word can be found in these decisions.

[69] In Australian Competition & Consumer Commission v CC (NSW) Pty Ltd 31Lindgren J considered the meaning of the phrase ‘arrangement or understanding’ as it appears in s.45(2) of the Trade Practices Act 1974 (Cth). His Honour considered a number of decisions on the meaning of the word ‘arrangement’:

In Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 the Privy Council was concerned with the expression “[e]very contract, agreement, or arrangement” in s 260 of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth), and expressed the opinion (at 7):

“that the word ‘arrangement’ is apt to describe something less than a binding contract or agreement, something in the nature of an understandingbetween two or more persons - a planarranged between them which may not be enforceable at law.” (Emphasis added.)

Clearly, the scope of ss 45(2) and 45A(1) with which I am concerned extends beyond legally enforceable agreements, that is, contracts.

In British Basic Slag Ltd v Registrar of Restrictive Trading Agreements [1963] 1 WLR 727; [1963] 2 All ER 807, the English Court of Appeal had to consider the meaning of the expression “any agreement or arrangement, whether or not it is or is intended to be enforceable” in s 6 of the Restrictive Trade Practices Act 1956 (UK). It was argued that the trial Judge had erred in holding that an arrangement within the meaning of the expression exists when, by communications between the parties, “each has intentionally aroused in the other an expectation that he will act in a certain way”. It was submitted that the expression also required “that there must be mutuality in the acceptance of rights and obligations”. In the Court of Appeal, Willmer LJ said (at 739; 814):

“ ..., I think it is highly significant that Parliament did not see fit to include any definition of ‘arrangement.’ I infer from this that it was intended that the word should be construed in its ordinary or popular sense. Though it may not be easy to put into words, everybody knows what is meant by an arrangement between two or more parties. If the arrangement is intended to be enforceable by legal proceedings, as in the case where it is made for good consideration, it may no doubt properly be described as an agreement. But the Act of 1956 clearly contemplates that there may be arrangements which are not enforceable by legal proceedings, but which create only moral obligations or obligations binding in honour. This seems to me to be entirely consistent with the dictum of Upjohn J. to which I have already referred. Nor do I consider that there is any inconsistency between that and the view expressed by the judge in the present case. For when each of two or more parties intentionally arouses in the others an expectation that he will act in a certain way, it seems to me that he incurs at least a moral obligation to do so. An arrangement as so defined is therefore something ‘whereby the parties to it accept mutual rights and obligations.’”

In the same case, Diplock LJ said that there were many ways in which arrangements might be made and (at 747; 819):

“[I]t is sufficient to constitute an arrangement between A and B, if (1) A makes a representation as to his future conduct with the expectation and intention that such conduct on his part will operate as an inducement to B to act in a particular way, (2) such representation is communicated to B, who has knowledge that A so expected and intended, and (3) such representation or A’s conduct in fulfilment of it operates as an inducement, whether among other inducements or not, to B to act in that particular way.”

In Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286, a Full Court of this Court had to consider the expression “a contract, arrangement or understanding to the extent that it is in restraint of trade or commerce” in the then s 45(2)(b) of the Act. Smithers J referred to Newton and British Basic Slag and said (at 291) of the expression “arrangement”, that by parity of reasoning with British Basic Slag:

“ ... the existence of an arrangement of the kind contemplated in s.45 is conditional upon a meeting of the minds of the parties to the arrangement in which one of them is understood, by the other or others, and intends to be so understood, as undertaking, in the role of a reasonable and conscientious man, to regard himself as being in some degree under a duty, moral or legal, to conduct himself in some particular way, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.”

His Honour added (at 291):

“Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct, it would seem that there would be an understanding within the meaning of the Act.”

In Trade Practices Commission v Nicholas Enterprises Pty Ltd(No 2) (1979) 40 FLR 83, Fisher J considered the notion of a “contract, arrangement or understanding” in the context of s 45 of the Act. After setting out certain passages from the cases, his Honour concluded (at 89):

“A significant feature of each of the above passages is the emphasis placed upon the necessity for each of the parties to have communicated with the other, for each to have raised an expectation in the mind of the other, and for each to have accepted an obligation qua the other. These are in my opinion the essential elements of the requisite meeting of minds.” (Emphasis added.)

(His Honour appears to have seen the words “arrangement” and “understanding” as synonymous in the present context, as Toohey J seems to have done in Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 at 32.)

...

The cases require that at least one party “assume an obligation” or give an “assurance” or “undertaking” that it will act in a certain way. A mere expectation that as a matter of facta party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attended the Meeting may have expected that as a matter of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have “aroused” that expectation by things he said at the Meeting. But these factual expectations do not found an “understanding” in the sense in which the word is used in ss 45 and 45A. The conjunction of the word “understanding” with the words “agreement” and “arrangement” and the nature of the provisions show that something more is required. With respect, the first passage set out above from the judgment of Smithers J in Top Performance Motors, although addressing the term “arrangement”, seems to me to describe appropriately that further necessary element of the “understanding” to which the provisions refer. 32

[Emphasis in original].

[70] In Pullen v R & C Products Pty Ltd and Another 33 Marks J considered the meaning of the word ‘arrangement’ in the context of s.275 of the Industrial Relations Act 1991 (NSW), which states in part that the ‘Industrial Court may make an order declaring wholly or partly void or varying,...any contract or arrangement...under which a person performs work.’ His Honour found that:

The meaning of “arrangement” was discussed by the former Industrial Commission in Court Session in Custom Credit Corporation Ltd v Goldsmith [1976] AR (NSW) 98. The usual meaning of “arrangement” was said to be one which is in the nature of a bargain, which involved a degree of understanding but which may not satisfy the legal requirements of certainty as to terms so as to amount to a contract, or indeed even an agreement. 34

[71] In The Commissioner of Taxation of The Commonwealth of Australia v K. Porter & Co. Pty. Ltd 35Mahoney J considered the meaning of the term ‘arrangement’:

In the case as conducted before me and before the board of review, argument took place, first, as to the meaning of the term “arrangement” and, second, as to the evidence to which reference may properly be made in determining whether there is an arrangement and (if there is) what are its terms. 36

[72] His Honour found that

In Newton v. Federal Commissioner of Taxation it was said: “ Their Lordships are of opinion that the word ‘ arrangement ̕ is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons—a plan arranged between them which may not be enforceable at law. But it must in this section comprehend, not only the initial plan, but also all the transactions by which it is carried into effect—all the transactions, that is, which have the effect of avoiding taxation, be they conveyances, transfers or anything else. It would be useless for the commissioner to avoid the arrangement and leave the transactions still standing. The word ‘ purpose ̕ means not motive, but the effect which it is sought to achieve—the end in view. The word ‘ effect ̕ means the end accomplished or achieved. The set of words denotes concerted action to an end—the end of avoiding tax.”

In my opinion, the term “arrangement” as used in s 80B (5) includes “an understanding” or “a plan” which may not be enforceable in law and would include, inter alia, the legally effective acts which are done in the carrying out of that plan or arrangement. 37

[Footnotes omitted].

[73] The decision in Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) 38 reached a similar conclusion.

[74] These decisions provide authority for the proposition that an arrangement, whilst not necessarily legally enforceable, requires:

• That there be communication between the parties to the arrangement; and



• That the parties must reach some understanding; and



• That there is some expectation that each of the parties will behave in a particular way.

[75] An arrangement is not an expectation that a party will behave in a particular way and it cannot be contrived. It requires some substance.

[76] It is this approach that I have used in determining whether an arrangement has been entered into between Secure One and Transclean.

[77] The Applicant referred me to the decision of Hamberger SDP in Mr Laurence Farrugia v Building Technology Integrators Pty Ltd 39where his Honour found:

The evidence of the applicant was that BTI had continued to make use of some of the tangible assets belonging to Austcoms. These included four registered vehicles, some items of furniture, computers and stationery that were used by BTI in the performance of work. 40

[78] Further his Honour found:

Having regard to these considerations, I make the finding that Austcoms previously owned the registered vehicles, furniture and various equipment that BTI subsequently used in connection with the performance of its work. Whilst the evidence is slightly unclear as to which company took immediate ownership of the relevant assets subsequent to the liquidation of Austcoms, I am satisfied that even if BTI did not take immediate ownership of all of these assets, they did have beneficial use of some of those assets. 41

[79] I was also referred to a decision of Rafaelli C in Michael Osmond v NBS Transport (SA) Pty Ltd T/A NBS Transport 42 in which it was found that a requisite connection existed between the old and new employer.

[80] Neither of these cases is of assistance in the matter. Neither provides a detailed examination or explanation of the arrangement entered into that could provide any guidance as to the operation of s.311(3) of the Act. These decisions do not change my findings above as to the meaning to be given to the term ‘arrangement’ as it appears in s.311(3) of the Act.

Findings

[81] Without any direct evidence that Yarra Trams was, with the consent of both Transclean and Secure One, attempting to broker some arrangement between the parties I cannot accept that an arrangement was entered into indirectly between Secure One and Transclean.

[82] Submissions were made that I should draw an inference as to the role of Yarra Trams in facilitating or being an indirect conduit of an arrangement based on the evidence. To draw such an inference on the evidence before me is just not possible. There is no basis on which I can find that Yarra Trams either directly or indirectly brokered, procured or facilitated an arrangement between Secure One and Transclean. That Yarra Trams may have provided some advice with respect to the potential to employ ex-Secure One employees or was copied into emails when potential subcontracting was being discussed does not assist the Applicant on this point.

[83] Further, there is no evidence that would allow me to conclude that Mr Zabrdac had the authority to enter into any arrangement on behalf of Transclean with Secure One. Neither Mr Zabrdac nor witnesses for Transclean were questioned on this. He may well have been a Supervisor but this does not establish authority to enter into arrangements on behalf of his employer. That he may have been given responsibility for security matters at the site including the hiring of staff does not imply he had the authority necessary to enter into an arrangement on behalf of Transclean with Secure One.

[84] Mr Mammarella left some appliances and a procedures manual in the guardhouse because he thought they might be used by Transclean or employees of Transclean. This does not, however, satisfy the requirements of an arrangement. Further, Mr Mammarella removed the operations manual by instructing his ex-employee Mr Zabrdac to collect it militating against any finding of an arrangement between Transclean and Secure One. Mr Mammarella clearly considered the operations manual to be solely his personal property to be recovered and removed at will without any consultation with anyone else. That Yarra Trams may have thought it was its manual again does not assist the Applicant in his submissions.

[85] Mr Hawkins gave evidence of the development of the Translcean procedures manual. I find, in this respect, Mr Hawkins to be vague and his evidence generally unreliable. Even so, this does not get me to the point where I can find the existence of an arrangement between Secure One and Translcean. At best Transclean used the manual left by Mr Mammarella to develop its own manual. This is not evidence of an arrangement between Transclean and Secure One.

[86] With respect to the uniforms at best Mr Mammarella entered into an arrangement with Mr Zabrdac. There is no direct evidence or basis on which I can infer that Mr Zabrdac had the authority to enter into such an arrangement on behalf of Transclean.

[87] The Applicant did not give any evidence that he was authorised by Transclean to enter into an arrangement with Secure One. Mr Mammarella did not give evidence of entering into an arrangement with Transclean. Mr Hawkins and Mr Kyritsis for Transclean gave evidence that Transclean did not enter into any arrangement with Secure One. No one from Yarra Trams was called to give evidence on any arrangement it facilitated between Transclean and Secure One.

[88] On the basis of the evidence, I find that there has been no arrangement entered into between Secure One and Transclean with respect to the beneficial use of assets of Secure One by Translcean as required under s.311(3) of the Act. There is no evidence of any communication between Transclean and Secure One beyond discussions for a subcontracting arrangement that did not eventuate. Furthermore, there is no evidence of any understanding reached between the two parties or evidence of any expectation of behaviour.

[89] Whilst it is not necessary to decide it, I comment for completeness that I am not convinced that the appliances are assets in the strict sense that they have some economic value. I did question if they had any value but this information was not provided. If they are old it is likely that they will have been written off in terms of any value they may have had. Further, even if they are assets in the strict sense it is not obvious to me that they relate to or are used in connection with the transferring work. 43 The transferring work is security work. A microwave or fridge is not an asset related to or used in connection with security work. They are perhaps more properly described as incidental to work in that the employment of staff normally requires that some amenity be provided.

[90] Given no arrangement was entered into between the new and old employer there is no connection between the new and old employer in the terms contemplated by s.311(3). Therefore, the requirements of s.311(1)(d) are not met and there is no transfer of business.

Conclusion

[91] On the basis of the material before me I find that there is no connection between Secure One and Transclean as required by s.311(1)(d) because there is no arrangement between Secure One and Transclean with respect to the beneficial use of some or all assets.

I find that there was no transfer of business from Secure One to Transclean as defined in the Act.

[92] Mr Zabrdac was employed by Transclean on 1 October 2010. His employment was terminated on 25 February 2011. To be protected from unfair dismissal Mr Zabrdac must be employed for a minimum of six months at the time of the termination of his employment. Mr Zabrdac was employed for almost four months at the time of the dismissal. Therefore, he is not protected from unfair dismissal.

[93] The application is dismissed.

COMMISSIONER

Appearances:

Mr D. Staindl of Counsel for the Applicant

Mr S. Reid of Counsel for the Respondent

Hearing details:

2011.

Melbourne:

July 8 and August 2.

Final written submissions:

Applicant, 12 August 2011

Respondent, 22 August 2011

 1   Fair Work Act 2009 (Cth) s.383(a).

 2   Fair Work Act 2009 (Cth) s.396.

 3   Fair Work Act 2009 (Cth) s.311(1)(a).

 4   Fair Work Act 2009 (Cth) s.311(1)(b).

 5   Fair Work Act 2009 (Cth) s.311(1)(c).

 6   Correspondence of 11 July 2011.

 7   Correspondence of 11 July 2011.

 8   Fair Work Act 2009 (Cth) s.578.

 9   Fair Work Act 2009 (Cth) s.311(3).

 10   Exhibit A1.

 11   Exhibit A1.

 12   Transcript PN87-103.

 13   Transcript PN929.

 14   Transcript PN942.

 15   Transcript PN965.

 16   Transcript PN993.

 17   Exhibit A3, 3.

 18   Transcript PN309-10, Exhibit A3, 3.

 19   Transcript PN760.

 20   Transcript PN177.

 21   Transcript PN764.

 22   Transcript PN797.

 23   Transcript PN836.

 24   Transcript PN883.

 25   Transcript PN875.

 26   See letter of offer, Exhibit T1, attachment SK3.

 27   Transcript PN1034-5.

 28   Macquarie Dictionary (4th ed).

 29   Explanatory Memorandum, Fair Work Bill 2008 (Cth), paragraph 1222.

 30   Macquarie Dictionary (5th ed).

 31 (1999) 92 FCR 375.

 32   Australian Competition & Consumer Commission v CC (NSW) Pty Ltd (1999) 92 FCR 375, 406-409.

 33 (1994) 60 IR 183.

 34   Pullen v R & C Products Pty Ltd and Another (1994) 60 IR 183, 200.

 35 (1974) 22 FLR 344.

 36   The Commissioner of Taxation of The Commonwealth of Australia v K. Porter & Co. Pty. Ltd (1974) 22 FLR 344, 351.

 37   The Commissioner of Taxation of The Commonwealth of Australia v K. Porter & Co. Pty. Ltd (1974) 22 FLR 344, 351-2.

 38 (1979) 40 FLR 83.

 39   [2011] FWA 1285.

 40   Mr Laurence Farrugia v Building Technology Integrators Pty Ltd[2011] FWA 1285, 24.

 41   Mr Laurence Farrugia v Building Technology Integrators Pty Ltd[2011] FWA 1285, 29.

 42   [2010] FWA 5076.

 43   Fair Work Act 2009 (Cth) s.311(3)(d).

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