FEDERAL COURT OF AUSTRALIA

Jordan v Aerial Taxi Cabs Co-operative Society Ltd [2001] FCA 972

industrial law – whether taxi driver’s agreement with taxi-owners’ co-operative is a contract for the purposes of s 127A of the Workplace Relations Act 1996 (Cth) – taxi driver bailee from taxi-owner – respondent provides radio network booking services to driver – driver provides ancillary services to respondent – driver’s agreement to be bound by respondent’s rules and by-laws which in large measure reflect requirements of the law – agreement to abide by law and provide ancillary services does not make agreement a contract for services – independent contractor must provide services for the other party.

trade practices –whether respondent misused market power in disciplining applicant and issuing penalty – purpose of disciplining applicant – inference of purpose from conduct –respondent’s by-laws gave effect to legislation – no prohibited purpose established.

WORDS & PHRASES – “contract for services”

Workplace Relations Act 1996 (Cth), ss 88A, 127A, 127C, 347(2)

Trade Practices Act 1974 (Cth), ss 4F(b), 46(1), 46(7), 82

Co-operative Societies Act 1939 (ACT), s 47

Motor Traffic Act 1936 (ACT), s 36

Taxi and Hire Car Regulations (ACT), reg 13

Finch v Herald & Weekly Times Ltd (1996) 65 IPR 239, cited

Harding v EIG Ansvar Ltd [2000] FCA 46, cited

Commonwealth of Australia v Crothall Hospital Services (Aust.) Ltd (1981) 36 ALR 567, applied

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, applied

Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61, applied

Lee v Aerial Taxi Cabs Co-operative Society Ltd [1999] FCA 1727, referred to

General Newspapers Pty Ltd v Telstra (1993) 117 ALR 629, referred to

Melway Publishing Pty Ltd v Robert Hick Pty Ltd (2001) 178 ALR 253, referred to

DOUGLAS JORDAN v AERIAL TAXI CABS CO-OPERATIVE SOCIETY LIMITED t/as CANBERRA CABS

A7 of 1999

MADGWICK J

SYDNEY (HEARD IN CANBERRA)

27 JULY 2001

THE COURT ORDERS THAT:

1.             The application be dismissed.

2.             Costs be reserved.

3.             The parties provide written submissions as to costs within 7 days.

REASONS FOR JUDGMENT

HIS HONOUR:

Introduction

1                     The applicant was a taxi-driver.  The respondent was and is a co-operative society of taxi owners incorporated under the Co-operative Societies Act 1939 (ACT) (“the Co-op Act”).  The respondent operates the sole taxi radio network in the Australian Capital Territory.  As an independent contractor, the applicant drove and operated a taxi as a bailee of it from the lessee of the taxi, Mr Donn McMichael, a member of the respondent.  The applicant is supported in the proceedings by the Australian Capital Territory Taxi Drivers Association.  His concern is two-fold:

(a)                allegedly inadequate remuneration, following some recent and far-reaching changes in the Australian Capital Territory taxi industry; and

(b)               alleged injustice in the treatment he received in a disciplinary matter.

2                     The applicant seeks a determination pursuant to s 127A of the Workplace Relations Act 1996 (Cth) (“the WRA”) that an agreement between himself and the respondent was an unfair and/or harsh contract; that he thereby suffered damage and orders that the terms of the contract be varied ab initio so that: he might be adequately remunerated by the respondent for abiding by the respondent’s By-laws; fines imposed by the respondent should be no more than proscribed by the Co-op Act; and the disciplinary procedures and enforcement measures would not take unfair advantage of the respondent’s monopoly power.

3                     In relation to a determination made by the respondent disciplining him, the applicant also claims that such conduct constituted a misuse of market power in contravention of s 46 of the Trade Practices Act 1974 (Cth) (“the TPA”) and seeks that the determination be quashed and an order that he suffered damage as a consequence of the alleged breach of s 46.  The applicant is also seeking monetary payments pursuant to s 127A of the WRA and s 82 of the TPA.

4                     The applicant began driving a taxi in August 1996.  He drove a taxi, number 175, which was owned by Mr McMichael, five days a week for 42 weeks of the year.  The agreement with Mr McMichael was that the applicant would retain 50% of the takings, and he did not receive any payments for holidays, sick leave or any other entitlements.  He ceased working as a taxi driver in May 2000 for reasons unrelated to these proceedings. 

5                     The respondent employs staff and utilises a computer radio system to record telephone bookings for taxis from members of the public and to make those bookings available to individual drivers who are accepted as affiliated to the network.  The respondent does not own or operate any taxis.  The respondent makes its radio network services available to its members, who are all taxi owners or authorised licensed operators.  The respondent charges members a flat fee, set annually, for the use of the radio network and for other base services which the respondent provides.  The fee is not affected by driver usage of the radio system or whether a driver is disciplined during the year. 

Modernisation of ACT taxi services

6                     On 20 June 1997 the respondent entered into a “Taxi Network Contract” with the Australian Capital Territory government which purported to allow it to conduct and deliver taxi services for the Territory and surrounding regions from 1997 to 2002.  The contract with the government placed a number of requirements on the respondent and also directed that the network be operated in a certain manner.  The presently relevant provisions of the contract are found in Schedule 1 and were:

“1.       The taxi network must meet

(A)             minimum service levels, and

(B)              any special conditions in the Taxi Network Contract, and

(C)             any additional benefits (such as service and fare innovation), if offered by the taxi network contractor as part of the Taxi Network Contract bid.

…

4.                  Every taxi operator must be affiliated with a taxi network.  A taxi operator may be a member of one taxi network only at any point in time.  A taxi network may not accept a taxi operator when it is a member of another taxi network.  Affiliation means:

(A)              the taxi uses the name of the contracted taxi network, and

(B)               the taxi network provides the taxi operator with a booking service and bookings.

5.                  Authorised taxi drivers are deemed to be affiliated with the same taxi network as the taxi operator they are driving for.

…

9.                  The taxi network must take all reasonable steps to ensure that all taxi drivers are authorised, receive appropriate ongoing structured training to accommodate changes to basic entry training requirements, and are at all times properly attired in the network’s approved uniform.”

7                     On and after 1 July 1997 a change occurred in the taxi industry in the Australian Capital Territory.  A system of “accreditation” of holders of a licence for a taxi and driver authorisation was introduced.  The standards were set out in a document issued by the Territory’s Department of Urban Services entitled “A.C.T. Taxi Operator Accreditation and Driver Authorisation Standards”.  Among other things, the document imposed a number of requirements on a network operator, such as ensuring that drivers were dressed in the network’s uniform and that vehicles met age and type conditions as specified by the Registrar of Motor Vehicles.  More specifically, vehicles to be registered as taxis were subjected to age limits.  Vehicles were also required to have air-conditioning and be regularly inspected.  The introduction of “accreditation”, indicating compliance with the requirements, meant that the respondent had to alter and add to its Rules and By-laws to comply with the accreditation requirements.

8                     Prior to the introduction of accreditation, the respondent was also responsible for providing training to drivers.  However this responsibility, in consequence of the accreditation system passed to “Transport Training ACT”, an independent organisation authorised by the government to provide training.

9                     The respondent produces a magazine entitled “CabChat” informing drivers of goings-on in the industry and other matters of interest.  The respondent used “CabChat” to disseminate information about the introduction of accreditation and to advise drivers of the need to prepare for the introduction of uniforms and the like. 

Fare increases on and after accreditation

10                  As a result of the introduction of accreditation, the respondent made submissions to the Minister for Urban Services on 11 April 1997 for fare increases.  The submissions were made after deliberations of the Taxi Industry Advisory Committee, which was made up of a number of interested groups including the public, the Transport Workers Union, the Department of Urban Services, the respondent and drivers appointed by an Australian Capital Territory Taxi Drivers Association (this Committee was replaced by the Transport Reform Advisory Committee in late 1998, similarly constituted).  The Committee formulated a “Taxi Industry Rise and Fall Cost Formula” in 1997, comprising a regimen of fixed and variable costs by which cost variations in the period 1996 to 1997 could be calculated so as to indicate a notional total percentage change in the cost of running a taxi.  This formula was presented to the government as the basis for the requested fare increases.  The submission also requested a fare increase taking into account general and transport-related movements as measured by the Consumer Price Index (CPI), and a “catch-up” fare increase.

11                  The government accepted the Committee’s formula and the Minister informed the Chief Executive Officer of the respondent that he had decided to increase the maximum taxi fares by 3.75% for kilometre rates and 30 cents for flagfall.  In his letter to the Chief Executive, the Minister stated:

“This increase in maximum taxi fares will take effect from 1 July 1997.  This reflects the increases in both the general and transport rates of the CPI of 3.75 per cent and a 30 cent increase on flagfall for costs due to the introduction of taxi accreditation.

…

Future fare increases will be annual and based on the transport CPI with effect from 1 July each year.  A submission from Aerial should be provided to the Minister for Urban Services by 1 May each year.  Any submissions for amounts greater than the CPI should also be made to the Minister to be assessed independently, including any matters arising from the implementation of accreditation.”(emphasis added)

The 30 cent increase, which applied to the flagfall for every hiring, was as part of the total takings, split between the driver and the owner of the car.  In the case of the applicant, and generally in the industry, this split was 50/50.

12                  Since 1999, submissions for price increases have been made to the Independent Competition and Regulatory Commission (“the Commission”) which then reports to the government on the adequacy of any request for fare increases above the CPI.  The year 2000 price increase was based on a “2000 Taxi Industry Prices Index” (itself based on the same components as the 1997 Formula) which was produced by the Canberra Taxi Proprietors Association and some members of the respondent.  Submissions relying on this index were presented to the Commission which recommended to the government that the respondent’s submissions be accepted.  This involved the Commission’s acceptance of the index which indicated that there had been an 8.42% increase in the costs of running a taxi from 1999 to 2000.  The Commission recommended, contrary to the respondent’s submission, that that increase should apply across all components of the fare including the flagfall.

The respondent’s booking operations

13                  When a taxi driver in the Australian Capital Territory commences a shift, the driver may choose to drive the streets looking for passengers; park on a taxi rank or use the radio network.  These options are not mutually exclusive; a taxi may, for example, be parked on a rank and also be logged on to the network.  Once drivers are logged on to the network, they need to indicate whether they are available for hire and in which geographic “zone” of Canberra they are available or, alternatively, that they are not available for hire.  The driver may interrogate the computer to determine which zone has the most work.  Once the driver notifies the network that he or she is available and books into a zone, the computer automatically places the driver into a queue.  Taxis are placed into the queue in the order in which they book into the zone.  When a passenger telephones the respondent and books a taxi, the request is entered into the computer.  The computer then offers the trip to the first taxi booked into the zone in which the pick-up has been requested.  The computer sends the driver a “trip offer”.  The driver may accept it by pressing the “accept” or “AC” button on the in-vehicle booking system apparatus.  Alternatively, the driver may decide not to accept the trip by pressing the “load” or “LD” button.

Drivers bound by respondent’s rules and by-laws

14                  In order to operate with the aid of the taxi network, run by the respondent, a taxi driver needs a “pin” number to access the radio network.  To be issued with a pin number, a taxi driver who is not a member of the respondent, such as the applicant, must enter into an agreement with the respondent to abide by its rules and by-laws. By-law 16 of the respondent’s By-laws provided:

“Drivers are required to sign an agreement to abide by the Rules and By-laws of Aerial Taxi Cabs Co-operative Society Limited (Aerial) prior to driving a taxi operating in Aerial’s fleet.  Operators who allow drivers to drive their taxis without first having signed the agreement will be responsible for the driver’s actions and may have their taxi(s) suspended from the radio network as a result of the driver breaching a Rule or By-law.”

15                  The applicant entered into such an agreement on 10 August 1996 (“the Agreement”).  The terms of the Agreement were:

“I, D JORDAN, licence number 404365, agree to abide by the Rules and By-Laws of Aerial Taxi Co-Operative Society Limited (Aerial) as a prerequisite to the use of a personal identification number on Aerial’s radio network and to driving a taxi in Aerial’s fleet.  I further agree to notify Aerial and the bailor of any taxi I may wish to bail of any cancellation or suspension of my licence to drive a motor vehicle.”

This agreement was entered into prior to the introduction of the accreditation system.

16                  After the introduction of accreditation, amendments were made to the Rules and By-laws which the applicant had agreed to abide by when he signed the Agreement in order to enable the respondent to meet its obligations under its contract with the Australian Capital Territory government.  The Rules and By-laws by which it may nevertheless be inferred that the applicant agreed to be bound included provisions relating to complaint handling and disciplining of drivers. 

The respondent’s Rules

17                  The Rules at relevant times provided:

“DISCIPLINE

            14.(1)   If a Director, the Chief Executive or a member has reasonable grounds to suspect that a member has:

(a)               contravened or failed to comply with a provision of these Rules or the by-laws or allowed a driver of his or her taxi to contravene or fail to comply with these Rules or the by-laws; or

(b)               acted in a way, or allowed a driver of his or her taxi to act in a way, that is likely to bring the Society into disrepute or contempt, or to harm the proper operation of the business of the Society or the common interests of its members; or

(c)                breaches, or allows a driver of his or her taxi to breach, the code of conduct for drivers of taxi cabs established by the By-laws; or

(d)               failed to comply with a requirement made in accordance with by-laws made for the purposes of paragraph 70(1)(d); or

(e)                been convicted of a criminal offence of a serious nature;

he or she may refer the matter to the Supervisory Committee in writing.

(2)               The Supervisory Committee shall hold a meeting to consider a matter referred to it under this Rule.

…

(5)               If, after considering those submissions and all other evidence in relation to the matter that is available to the Supervisory Committee, the Committee is satisfied that the member has:

(a)               contravened or failed to comply with a provision of these Rules or the by-laws or allowed a driver of his or her taxi to contravene or fail to comply with these Rules or the by-laws; or

(b)               acted in a way, or allowed a driver of his or her taxi to act in a way, that is likely to bring the Society into disrepute or contempt, or to harm the proper operation of the business of the Society or the common interests of its members; or

(c)                breached, or allowed a driver of his or her taxi to breach, the code of conduct for drivers of taxi cabs established by the by-laws; or

(d)               failed to comply with a requirement made in accordance with the by-laws made for the purposes of paragraph 70(1)(d);

the Supervisory Committee may do one or more of the following:

(e)                recommend to the Board that the member be expelled;

(f)                 fine the member an amount not exceeding $1,000;

(g)               suspend the provision of radio services to that member, to the relevant taxi cab or to all taxi cabs of the member for a period not exceeding 4 weeks;

(h)               reprimand the member.

…

APPEALS

            15. (1)  A member aggrieved by a decision of the Supervisory Committee under Rule 14 may, within 7 days after being notified of the decision, notify a Director or the Chief Executive in writing that he or she wishes to appeal against that decision.

…

CONSTITUTION OF APPEAL COMMITTEE

            16. (1)  If a Director or the Chief Executive receives notification under Rule 15 that a member is to appeal against a decision of the Supervisory Committee, the Director or the Chief Executive shall notify the Chairman of the member’s intention.

(2)               The Chairman shall, as soon as practicable, nominate:

(a)               a Director; and

(b)               2 other persons, neither of whom is a member or an officer or employee and each of whom has had experience in;

(i)                 business; or

(ii)               public administration; or

(iii)             arbitration of disputes; or

(iv)             legal matters;

to constitute an Appeal Committee to hear the appeal.

HEARING OF APPEALS

            17. (1)  If an appeal is duly made, a member of the Appeal Committee shall, at least 7 days before the appeal is to be heard, notify the member concerned in writing of the time and place at which the appeal is to be heard.

(2)               The member or both the member and his or her representative may:

(a)               appear before the Appeal Committee at the hearing of the appeal to make submissions, and or call witnesses to give evidence on the member’s behalf; or

(b)               make written submissions in relation to the matter.

(3)               After considering those submissions and all other evidence in relation to the matter that is available to the Appeal Committee, the committee may:

(a)               confirm the decision of the Supervisory Committee; or

(b)               vary the decision of the Supervisory Committee; or

(c)                annul the decision of the Supervisory Committee.

(4)               In varying the decision of the Supervisory Committee, the Appeal Committee has the same powers as the Supervisory Committee under Rule 14.”

The By-laws

18                  Pursuant to Rule 70, the respondent’s By-laws were enacted.  As to discipline, the By-laws relevantly provided:

“DISCIPLINE

SUPERVISORY COMMITTEE

…

19. a.   Any driver who allegedly contravenes or fails to comply with any provision of the Rules or the By-laws may be informed by the dispatcher.  The driver may be offered the option of taking two penalty points immediately or have the matter referred to the Supervisory Committee as hereinafter provided.

…

c.          If the Supervisory Committee is satisfied that a driver has contravened or failed to comply with a provision of the Rules or the By-laws the Supervisory Committee may-:

(1)               Reprimand the driver and/or

(2)               Require the driver to attend all or part of the Aerial Taxi Cabs Co-operative Society Limited approved driver training course for refresher training and/or

(3)               Fine the driver an amount not exceeding $1,000 and/or

(4)               Suspend the provision of the radio services to that driver and/or that operator’s taxi cab or cabs for a period not exceeding four (4) weeks, and/or

(5)               Recommend to the Board that the driver be suspended from access to the radio network and/or

(6)               Impose a suspended sentence and/or

(7)               Recommend to the Board that the matter be referred to the Motor Registrar and/or

(8)               Award the driver demerit points where the Committee considers a monetary fine inappropriate.”

The provisions relating to appeals in the By-laws are, so far as is material, the same as those in the respondent’s Rules.

19                  The By-laws set out the way in which drivers are to conduct themselves, and By-law 40 relevantly provided:

“Drivers will:-

(a)       At all times drive in a safe manner and/or show consideration to passengers and other members of the public and other road users.

…

(c)                Not act in a manner that brings the Society into disrepute, or is likely to bring the Society into disrepute.

(d)               Not charge more than the legally prescribed fare.

…

(f)                 Not pick up a hiring allocated to another driver.

(g)               Not fail to carry out a radio hiring.

…

(l)                  Abide by the requirements of the A.C.T. Motor Traffic Act and Taxi and Private Hire Car Regulations.

(m)              Remain at a designated pick up point for a radio hiring for a minimum of five (5) minutes and make all reasonable attempts to make contact before registering a No Contact.

…”

The way complaints are handled

20                  Complaints may be made against a taxi driver by a member of the public or another driver.  A complaint by one driver against another is referred to over the radio network as an “M50”.  In the case of such a complaint for something like a breach of By-law 40(f), the complainant makes the complaint to the dispatcher by radio.  The dispatcher then promptly notifies the allegedly offending driver and gives the driver the option of taking a two point penalty or electing to have the matter dealt with by the Supervisory Committee.  After a loss of 12 points drivers are suspended from the network.

21                  When a complaint is made by a member of the public, he or she is asked to put that complaint into writing.  Until a written complaint is received no action is taken.  Once a written complaint is received, the Chief Executive Officer of the respondent determines whether the written complaint should be passed to the Supervisory Committee for determination.

The complaint against the applicant

22                  On the evening of 28 May 1998, the applicant responded to a booking dispatched by the respondent.  The passenger whom the applicant collected subsequently made a complaint against the applicant.  The passenger was another taxi driver.  His complaint was that the applicant had overcharged by charging on a wrong fare basis.  The substance of the complaint was that the applicant had charged the complainant at rate 2 rather than rate 1, which provides a lower fare.  Rate 1 applies from 6am to 9pm Monday to Friday.  Rate 2 applies from 9pm to 6am Monday to Friday, all day on the weekend, public holidays, and for trips to Queanbeyan and other specified locations.  The circumstances giving rise to the complaint were that the applicant had taken a passenger from Canberra airport to Queanbeyan at about 6pm for which he correctly charged rate 2.  However, he then had a number of trips back within the Australian Capital Territory all before 9pm, which should have been charged at rate 1 but instead were charged at rate 2.  One of the persons overcharged was the complainant.

23                  As a result of the complaint, the respondent charged the applicant with a breach of By-law 40(d) for overcharging.  At the relevant time, taxi fares were prescribed by a gazettal notice authorised pursuant to s 36 of the Motor Traffic Act 1936 (ACT).  The fare meters installed in the taxis applied the gazetted fares to the kilometres travelled, automatically producing the correct fare.  However, the onus was on the driver to ensure that the correct fare rate was selected for each hiring and the meter set accordingly.

24                  The respondent’s Supervisory Committee conducted a hearing into the complaint.  It determined that the complaint was made out, rejecting the applicant’s claim that it was an honest mistake, and the applicant was fined $100 and lost two points.  He appealed against that determination.  On 8 December 1998, the Appeals Committee conducted a hearing of the applicant’s appeal and determined that the breach was one of strict liability and that the original decision of the Supervisory Committee was correct.  The Appeals Committee took into account the applicant’s good driving history and reduced the fine to $55 but otherwise dismissed the appeal.  The applicant was also ordered to pay the costs of the appeal which were $90.

25                  The application to this Court arises out of this determination and the Agreement the applicant entered into with the respondent.

The relevant legislation

26                  Section 127A of the WRA relevantly provides:

“127A(1) In this section and in section 127B:

            ‘contract’ means:

(a)              a contract for services that:

(i)                 is binding on an independent contractor; and

(ii)               relates to the performance of work by the independent contractor, other than work for the private and domestic purposes of the other party to the contract; and

(b)              any condition or collateral arrangement relating to such a contract.

127A(2) Application may be made to the Court to review the contract on either or both of the following grounds:

(a)              the contract is unfair;

(b)              the contract is harsh.

127A(3) An application under subsection (2) may be made only by:

(a)               a party to the contract; or

(b)               an organisation of employees of which the independent contractor is (or has applied to become) a member, if it is acting with the written consent of the independent contractor; or

(c)                an organisation or association of employers of which the person contracting for the services is (or has applied to become) a member, if it is acting with the written consent of the person.

127A(4) In reviewing the contract, the Court may have regard to:

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

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

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

(e)               any other matter that the Court thinks relevant.”

27                  Section 46 of the TPA relevantly provides:

“(1)     A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of:

(a)      eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;

(b)      preventing the entry of a person into that or any other market; or

(c)   deterring or preventing a person from engaging in competitive conduct in that or any other market.”

Section 46(1A)(b) makes it clear that subs 1(b) refers to the prevention or detention of anyone (not just direct competitors) from competing in a market.

28                  Section 82 of the TPA provides:

“(1)     A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.”

29                  Section 47 of the Co-op Act relevantly provides:

“(1)     A society may impose a fine on a member for any infringement of the society’s rules.

(2)               No fine exceeding $1 is to be imposed until:

(a)   the society has given the member written notice of its intention to impose the fine, accompanied by a statement of its reasons; and

(b)   the member is given the opportunity of:

(i)                appearing before the Board in person, with or without witnesses; or

(ii)               giving the Board a written statement;

            for the purpose of showing cause why the fine should not be imposed.”

The controversy

1.         A s 127A WRA contract?

30                  The applicant claims that the Agreement he entered into with the respondent is a contract within the meaning ofs 127A of the WRA.  

31                  The respondent submitted that the Agreement, despite its title, is not a contract for services nor does it relate to the performance of work by the applicant, as set out ins 127A(1)(a).  It is a contract by which the applicant agrees to be bound by the respondent’s By-laws and Rules and neither the applicant or the respondent contracts to provide any services.  It was also submitted for the respondent that the Agreement is not a contract as defined ins 127A(1)(b) because it cannot be an arrangement collateral to the contract between the applicant and Mr McMichael which gave the applicant the right to use the taxi.  This it was submitted was because that arrangement was itself not a contract for services but simply a contract of bailment.  Further, it was said that s 127A is directed at the review of contracts as at the time they are entered and not with the conduct of the parties following the entry of the contract.  If there was a contract for services to which the Agreement could be said to be collateral the arrangement the applicant entered into with Mr McMichael was not done so at the same time the applicant entered into the Agreement with the respondent and, accordingly, the Agreement could not be rendered reviewable by reason of the conduct of the applicant and a third party after the Agreement was entered into.

2.         An unfair contract?

32                  The applicant submitted that the Agreement was unfair because:

·               The By-laws imposed by the Agreement were unjust as they prescribed disciplinary procedures and penalties exceeding those contemplated by s 47(2) of the Co-operative Societies Act;

·               There was inequality of bargaining power as between the parties when the Agreement was entered into.  The applicant had no opportunity to negotiate the terms of the Agreement, but the applicant’s agreement to abide by the respondent’s Rules and By-Laws was made a pre-condition to the use of a pin on the respondent’s radio network and access to the respondent’s taxi fleet.  The applicant was obliged to enter the Agreement because the taxi to be bailed/driven by him was a taxi in the respondent’s fleet.  There was no alternate taxi radio network in the Australian Capital Territory;

·               The By-laws which were applicable to the applicant as a result of the Agreement, imposed obligations on the applicant to purchase and wear a uniform displaying the respondent’s logo; to conduct himself in a manner which promoted the respondent’s interests and reputation; and to provide services to customers as directed by the respondent.  The Agreement made no provision for any monetary consideration for the value of the applicant’s compliance with the By-Laws and the high standard of appearance, conduct and the manner in which the applicant was required to perform work as a taxi driver.  The lack of adequate consideration makes the Agreement unreasonable; and

·               The By-laws applicable to the applicant pursuant to the Agreement provide for strict liability on the part of a driver and the lack of any provision for disciplinary committees to take account of an honest and reasonable mistake leading to the commission of an offence makes the Rules and By-laws unjust.

33                  The respondent submitted that the Agreement was neither harsh or unfair when it was entered into.  It was claimed that the Taxi Network contract between the Australian Capital Territory government and the respondent was plainly designed to provide and enforce professional and efficient standards or service to the public and the methods adopted by the respondent to achieve those designs were consistent with industry norms.  It was submitted that, in essence, the applicant’s complaint was not about the Agreement but the application of the By-laws by a disciplinary committee in the circumstances of a complaint about the applicant a long time after the Agreement was entered into.

3.         Misuse of Market Power?

34                  The applicant submitted that the disciplinary action and penalties imposed upon the applicant as a consequence of the complaint by a passenger who, also being a taxi driver, was a competitor of the applicant, coupled with the fact that the respondent had a substantial degree of market power in the Australian Capital Territory taxi market meant that the sanctions had the purpose of deterring the applicant from competitive conduct.

35                  The respondent submitted that it was obliged to have in place rules and by-laws which support the Motor Traffic Act, particularly as to the maximum fares to be charged, and to provide an appropriate forum for the enforcement of those matters as required by its contract with the Australian Capital Territory government.  This, coupled with the respondent’s need to conduct its network in an orderly and business-like fashion, was the purpose behind the provisions in the Agreement relating to the disciplinary system, rather than any anti-competitive purpose.

Consideration

Is the Agreement a s 127A contract?

36                  An application under s 127A of the WRA is concerned with the review of the terms of a contract at the time the contract was made and not any subsequent conduct: see Finch v Herald & Weekly Times Ltd (1996) 65 IPR 239 per North J at 251 and Harding v EIG Ansvar Ltd [2000] FCA 46 per Spender J at para 37.  An issue was raised as to which contract the application related to: was it the drivers’ agreement as entered into on 10 August 1996, or was it the contract that existed after the accreditation system, which placed new requirements on drivers, began?  As a result of the accreditation system, new By-laws were created, such as that imposing the requirement to wear uniforms.  As the drivers’ agreement required drivers to comply with the By-laws there was an alteration of the terms of the contract, thereby giving rise to an offer for a new contract.  In this case, the applicant’s conduct, by the continued use of the network and enjoyment of the benefits of the contract, allows the inference to be drawn that he accepted the variation of the terms of the contract, thus giving rise to a new contract, despite there being no actual communication by the applicant of his acceptance, as is usually required: see Commonwealth of Australia v Crothall Hospital Services (Aust.) Ltd (1981) 36 ALR 567 at 580 per Ellicott J, Blackburn & Deane JJ agreeing; Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 528 per Kirby P and at 534-535 per McHugh JA; and Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61 at para 173 per Ipp AJA, Mason P agreeing.  It is clearly the contract as amended by the introduction of accreditation that is the subject of this application.

37                  It was agreed that the applicant was not an employee of the respondent but was rather an independent contractor.  But it was argued that he provided no service to the respondent and, therefore could not fall within s 127A.  Section 127A is remedial legislation and should be beneficially read in favour of the classes of persons it was intended to protect.  Those classes are not limited to the independent contractors who personally perform work and who are expressly referred to by the section.  A concurrent purpose (among other, concurrent purposes), is the protection of employees against having their wage and conditions, as fixed by the various processes – awards and different kinds of recognised agreements made available by the WRA, undermined by oppressively cheap competition from “quasi-employee”, independent contractors.  The latter purpose is readily inferred from the terms of s 127A(4)(d) and from the terms, objects and purposes of the Act generally.  Section 127A occurs in Part VI of the Act, entitled “Dispute prevention and settlement” and s 88A provides that:

“The objects of this Part are to ensure that:

(a)               wages and conditions of employment are protected by a system of enforceable awards established and maintained by the Commission; and

(b)               awards act as a safety net of fair minimum wages and conditions of employment”

38                  Clearly, the respondent provided the applicant with services pursuant to the Agreement, namely its radio network services.  In my opinion, but for the terms of s 127A(3)(b) and (c), this would be enough to enable s 127A to catch the Agreement:  it is a contract for services; it is binding on an independent contractor and, in my view, it “relates to” the performance of work by him or her.  There is no justification for reading down the language of s 127A(1).  However subs (3) indicates that the contracts touched by the section are to be those as to which the interested parties are, on the one hand, the “independent contractor” and, on the other, “the person contracting for the services”.  This is a clear indication that the section was indeed intended to be limited to cases where one party, the “independent contractor”, performs work and thereby provides services to the other, the “person contracting for the services”.  It would not be enough that the applicant had provided services, for example, to the taxi-owner, for s 127A(1)(a) to catch his contract with the respondent.  (See below as to whether the arrangements between the applicant and respondent are, within s 127A(1)(b), collateral to a contract of services with the particular taxi-owner.)

39                  The next question then is whether a driver provides the respondent with services such as to allow the Agreement to be classified as a contract for services.  While it is fair to say that the driver principally provides a service to the members of the public whom he or she transports, in relation to the respondent, the possible services that a driver may be said to provide are some which assist the respondent’s marketing effort.  These include:

·               the wearing of a uniform bearing the respondent’s name and logo;

·               ensuring that the taxi is clean and tidy at all times;

·               exhibiting politeness and courtesy to passengers;

·               the requirement that the driver must answer requests for a taxi once booked into the network (although he or she can choose not to accept a booking); and

·               the necessity to attend promptly (within a time set by the respondent) upon a waiting passenger whose booking the driver has accepted.

40                  When an individual who can, in the sense explained above, be called an independent contractor contracts to provide some service, it is not, despite the necessity for a liberal interpretation of s 127A(1), the case that such contract is necessarily to be characterised as a contract “for services”.  The question calls for assessment of the purpose of the contract and involves matters of degree.  If a consumer, in the course of buying a television set from a sole trader who sells and repairs such goods, haggles on price and arranges that, for the vendor’s last price offered, the vendor will deliver the set and get it working in the consumer’s house, neither party would be entitled to the benefit of s 127A.  Although the services of delivery and set-up are contracted for, the contract cannot realistically be characterised as a contract for services.  It is a contract for sale of a television set; the condition that some, relatively minor services will be supplied is a mere adjunct to the contract.  The same would be true of a contract for the sale of a motor vehicle to a carpenter where the consideration is mainly cash but, in part, also the carpenter’s promise to install some shelving for the vehicle vendor.  The contract remains one for sale of a vehicle, and not one “for services” even though services are to be performed.  However, compare the position if the carpenter has let it be known that he wants work and will accept payment in kind by the transfer to him of a suitable vehicle.  The contract might fairly be called one for services as well as for sale of the vehicle. 

41                  In the present case, my view is that the contract is fairly to be understood as one for access to the radio network, that is for a service provided by the respondent and not the driver.  While the fulfilment of the driver’s obligations provide some marketing or public relations benefits, and in that sense a service, to the respondent, the driver also benefits directly and substantially from the fulfilment of those obligations.  It is not realistic to say that the contract is one for the driver’s services as well as for the respondent’s services.  The driver promises to accept the respondent’s terms and conditions.  While that promise is valuable to the respondent, one cannot say that it is the purpose, or a principal purpose, of the contract.  The gist of the contract is not the provision of services, by the driver’s work, for the respondent.

42                  In deference to the matters argued, I deal with some more specific submissions. 

43                  In relation to the requirement that the driver attend to bookings, the position, as agreed between the parties, is that a driver has the option not to accept a booking.  By a driver’s agreeing to be bound by the By-laws as to the matters relating to punctuality and acceptance of fares, the driver is doing no more than is required by reg 13(1) of the Taxi and Hire Car Regulations (ACT).  That requires the driver of a taxi to “not neglect, refuse or fail to carry out punctually any hiring he or she has agreed to take”. 

44                  The same can be said of the By-laws as they relate to overcharging and compliance with s 36 of the Motor Traffic Act.  In large measure, the Agreement merely re-obliges drivers to do what they are already legally bound to do. In being so re-obliged, it cannot be said that the driver is providing the respondent with a service within the meaning of s 127A of the WRA.

45                  Acceptance by drivers of the degree of control by the respondent over them, arising from the discipline system is not, in any meaningful sense, indicative of the driver providing the respondent with services.  An internal remedy for breach of the contract is hardly a principal purpose of the contract.

46                  Counsel for the applicant sought to place reliance on the contract between the respondent and the government, characterising that contract as giving rise to an obligation on the respondent to provide not only a radio network but the entire gamut of taxi services in the Australian Capital Territory.  Accordingly, it was submitted that, by agreeing to the By-laws as to performance of their work, drivers were providing a service to the respondent, namely driving services, that allowed it to provide an entire service to the public.  However, the evidence was that a driver is not obliged to accept a booking but may choose to obtain

passengers by other means, such as cruising the streets.  This reinforces the point that it is essentially the respondent which provides the applicant with a service that he may or may not accept.

47                  Thus, the evidence simply does not show that the applicant as a driver actually provides any service to the respondent, which would make the nub of the Agreement a contract for services.  The same conclusion was shortly reached by Gyles J of a drivers’ agreement which was not materially different in Lee v Aerial Taxi Cabs Co-operative Society Ltd [1999] FCA 1727 at para 16.

48                  It was submitted in the alternative, relying on s 127A(1)(b) of the WRA, that the Agreement was a collateral arrangement to the contract between the applicant and Mr McMichael which was a contract for services.  Section 127C(1)(e) provides for the application of s 127A to a contract “so far as it affects matters that take place in or are otherwise connected with a Territory”, so that it is not necessary to find a constitutional corporation: c.f. s 127C generally.  The issue therefore would be characterisation of the agreement between the applicant and Mr McMichael, which would necessitate examining the extent to which the applicant was contractually obliged to do something for Mr McMichael.  Leaving aside that the applicant’s final form of pleading did not raise this way of viewing the case, there is a marked paucity of evidence about the contract between the applicant and Mr McMichael.  Ultimately, the applicant chose not to prolong the proceedings by seeking to introduce further evidence that would enable a satisfactory determination to be made about this matter.  As matters stand, there is no or no adequate material to deal with this possible way of formulating the applicant’s position.  Such a possible formulation raises interesting, far-reaching and, perhaps, difficult questions, and the evidence to deal with them might well be complex.  Those questions must await another day.

49                  Accordingly, for the reasons given, I need not consider whether or not, in any respect, the terms of the Agreement are harsh or unjust as the Agreement is not itself a contract for services nor, on the evidence in this case, can I conclude that it is a collateral arrangement to another agreement that is itself a contract for services.  The application under the WRA cannot be made out.

Misuse of market power

50                  The applicant claims that the disciplinary action and penalties imposed on the applicant arising out of a complaint by another taxi driver and competitor of the applicant gave rise to a breach of s 46 of the TPA.  This was submitted to be so because the sanctions imposed on the applicant amounted to the respondent’s having taken advantage of its substantial degree of market power for the purpose of deterring the applicant from engaging in competitive conduct.  It was claimed that the respondent’s purpose may be inferred from the Agreement and By-laws and the manner in which the By-laws were applied to the applicant.

51                  In dealing with claims under s 46, it is normally necessary firstly to define the market, and then to deal with the issues of whether the corporation has a substantial degree of power in that market, the purpose of the impugned conduct and any connection between the market power and the conduct complained of.  However, in these proceedings the issue of purpose is the crucial issue and my conclusion as to that issue disposes of the applicant’s claim under s 46.  For the analysis of purpose, I will assume the market to be the provision of taxi or other hire care services to the public in the Australian Capital Territory and surrounding regions.

52                  The claim alleges that the respondent’s purpose is to deter or prevent the applicant from engaging in competitive conduct in that or any other market: s 46(1)(c).  In General Newspapers Pty Ltd v Telstra (1993) 117 ALR 629 at 650, Davies and Einfeld JJ dealt with the definition of purpose in s 46 and said:

“The term ‘purpose’ necessarily has subjective implications for, although it does not mean motive, it means ‘the effect which it is sought to achieve – the end in view’… or ‘the result aimed at’…and it carries with it ‘the notion of an intent to achieve the result spoken of in each of the paragraphs in s 46(1), per Toohey J in Queensland Wire at CLR 214.”

The majority of the High Court in Melway Publishing Pty Ltd v Robert Hick Pty Ltd (2001) 178 ALR 253 at 262 confirmed that “[p]urpose [in s 46] involves intention to achieve a result”.

53                  Section 46(7) makes it clear that the relevant purpose need not be established by direct evidence and can be proven by inference alone from the conduct of the corporation or any other person or from other relevant circumstances.  Section 4F(b) provides that a corporation is deemed to have engaged in conduct for a particular purpose if it engaged in conduct for that purpose and that purpose was a substantial purpose.

54                  In my opinion, there was nothing in the evidence presented to the Court to establish that the respondent’s purpose in the administration of its disciplinary system and/or in the way in which it dealt with the applicant in particular, was to prevent or hinder the applicant from competing in the market.  It would actually be contrary to the interests of the respondent to remove any capable taxi driver, including the applicant, from the network as this might tend to limit the number of drivers available to answer bookings for taxis made with the respondent.  Further, the applicant was a driver who had had no previous penalty imposed upon him and had been praised by the respondent’s agents for his efforts in returning a passenger’s keys left in his taxi.  It would be reasonable to assume that the respondent would wish to retain such a driver as a competitor with other drivers in the market.  While it is unnecessary for me to determine what alternative purpose or purposes the respondent had, it appears to me, without being exhaustive or attempting precision, that the respondent’s purpose was protection of the provision of taxi services in the Australian Capital Territory from degradation in fact or by reputation, in order to maximise its own and its members’ revenue.  As explained, the larger the pool of keenly competing drivers, the better the respondent’s and at least some of its members’ (perhaps not owner-drivers) chances of that revenue being maximised.

55                  Some significance was sought to be drawn from the fact that the man who complained about the applicant was another taxi driver, and one of his competitors.  Assuming that he may have had, as his purpose, putting the applicant out of business, which however the evidence did not establish, what is of importance is the purpose of the respondent, not that of the complainant.  The complainant’s intentions cast no light on those of the respondent

56                  The applicant also claimed that the way in which the respondent dealt with the complaint gave rise to an inference of a proscribed purpose.  The applicant pointed to the fact that the respondent treated the complaint as being made by a member of the public, required a written complaint, and did not offer the applicant the option of taking an immediate two point penalty to dispose of the complaint.  Further, the complainant driver received information as to where the applicant had been that evening which would not be offered to a complainant who is an ordinary member of the public.  The radio room supervisor had told the complainant that the applicant had not been to Queanbeyan that night (which was incorrect). In my opinion these events indicate nothing more than some individuals being somewhat over-zealous or insensitive in dealing with the complaint.  They do not give rise to any inference that anything was done by the respondent’s agents for the purpose of deterring or preventing the applicant from competing in the market.

57                  On the evidence presented, the applicant received a hearing from the Supervisory Committee that in my opinion was not entirely unsympathetic.  The fine of $100 which had been imposed on the applicant was reduced to $55.  That is less than, say, a person would expect to pay by way of a fine for a parking infringement.  It is not of a quantum one would expect if the respondent wanted to force the applicant out of the market.  Furthermore, the respondent’s By-laws and disciplinary system simply seek to enforce the law as to maximum taxi fares as prescribed by s 36 of the Motor Traffic Act.

58                  On the evidence presented, it is in my view not possible to draw the inference that the respondent’s purpose in the administration of its disciplinary system in relation to the applicant, was of a kind prohibited by s 46 of the TPA.  Accordingly, the applicant’s claim under s 46 is not made out.

Disposition

59                  For the reasons given, the application will be dismissed.  The question of costs will be reserved as the applicant has been unsuccessful in his claims under both the TPA and WRA.  Section s 347(2) of the WRA provides that costs are not be ordered for proceedings instituted under that Act unless they are instituted vexatiously or without reasonable cause.  The parties are to provide to my Associate by fax within 7 days their submissions as to costs.

Associate:

Dated:              27 July 2001