CONTRACTUAL BENEFIT CLAIM

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2024 WAIRC 00375

DELIVERED : WEDNESday, 26 June 2024

FILE NO. : B 105 OF 2022

Applicant

AND

ATG Bunbury Pty Ltd as trustee for ATG Bunbury Unit Trust

Respondent

CatchWords : Industrial Law (WA) - Contractual benefit claim - Interpretation of contracts - Implied terms - Whether the payment of a pass-through rate was an implied term of the applicant's contract of employment - Application dismissed

Legislation : Industrial Relations Act 1979 (WA)

Result : Application dismissed

Representation

Applicant : Mr C Fogliani and Mr M Bronleigh (of counsel)

Respondent : Mr P King (of counsel)

Case(s) referred to in reasons:

Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219

BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] 180 CLR 266

Brett Arthur King v Griffin Coal Mining Company Pty Ltd [2017] WAIRC 00102, 97 WAIG 527

Byrne v Australian Airlines Ltd (1995) 185 CLR 410

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] 149 CLR 337

Dellys v Elderslie Finance Corporation Ltd [2002] WASCA 161

Griggs v Norris Group of Companies (2006) 94 SASR 126

Hobart International Airport Pty Ltd v Clarence City Council [2022] HCA 5

Mak Industrial Water Solutions Pty Ltd v Doherty (No 2) [2023] WASC 279

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 325 ALR 188

Peter Watkins v ATG Bunbury Pty Ltd as Trustee for ATG Bunbury [2023] WAIRC 00277

Triantopoulos v Shell Company of Australia Ltd [2011] WAIRC 00004

Reasons for Decision

Background

1         Peter Watkins (applicant) is employed by ATG Bunbury Pty Ltd, Trustee for the Bunbury Unit Trust (respondent), as a bus driver. The applicant is employed on a casual basis.

2         The respondent is a private bus company, providing school bus services under various contracts it has with the Public Transport Authority of Western Australia (PTA).

3         The respondent, also known as the Australian Transit Group (ATG) operates a bus depot in Bunbury (Bunbury Depot), providing school bus services on multiple routes in the South‑West of WA.

4         The are two types of contracts that apply to these various routes, respectively known as Evergreen and TCM contracts.

5         Under an Evergreen Contract, a proportion of the payment the respondent receives from the PTA is for drivers to be paid a higher 'grossed up' hourly rate of pay for each hour they perform work on a route to which the Evergreen contract applies (pass-through rate).

6         The pass-through rates that apply under an Evergreen Contract are much higher than the hourly rates of pay of pay that apply under the Passenger Vehicle Transportation Award 2020 (Award).

7         Under a TCM contract, the service fees the bus company receives do not include a component for drivers to be paid a pass-through rate. Rather, the bus drivers must as a minimum receive the rates of pay that apply under the Award.

8         One of the Evergreen Contracts the respondent has with the PTA is for the provision of school bus services on the Bunbury Stratham Capel Route (BSC Route). The applicant drives a school bus on this route. He was assigned to the BSC Route on or around 25 June 2018 and has continued to drive a school bus on this route ever since.

9         In the first part of 2021, the applicant became aware from information he received from Transport Edge Inc (Transport Edge), that his hourly rate of pay although higher than the Award, was less than the pass-through rate. After discussing this matter with the applicant and other drivers in the respondent’s Bunbury Depot, Transport Edge raised this matter with the respondent.

10      The respondent denied that it had to pay the applicant the pass-through rate for performing work on the BSC Route. The respondent disputed the Evergreen Contract contains an obligation that required the respondent to pay the pass though rate in full to the applicant.

11      On 30 November 2020, the applicant raised this matter in correspondence with the PTA. On 8 March 2021, the PTA provided a response to the applicant’s inquiry.

12      In a letter to the applicant, the PTA confirmed the BSC route was covered by an Evergreen Contract and provided him with information on the pass-through rates that applied to this work. The PTA advised the applicant to raise any complaints regarding his hourly rates of pay with the respondent.

13      It is in this context the applicant on 19 September 2022, filed a Form 3 –Contractual Benefit Claim with the Commission (application).

The Application

14      Following an initial conciliation conference that was held on 7 November 2022, the applicant instructed solicitors from Fogliani Lawyers (Fogliani Lawyers) to represent him in relation to the application. The respondent was represented by counsel; Peter King (King).

15      Pursuant to directions that were agreed between the parties, the applicant on 13 January 2023 filed an amended application (amended application). 

16      In his amended application, the applicant claims that because the BSC route is covered by an Evergreen Contract, it is an implied term of his contract of employment to be paid the pass-through rate for work performed on this route.

17      The applicant alleges that by not paying him the pass-through rate, the respondent has breached this implied term, thereby denying him a benefit that he is entitled to receive under his contract of employment (claim).

Response to the claim

18      The respondent disputes the claim and denies the applicant is entitled to the relief sought in the amended application or at all.

19      The respondent contends the applicant has signed a contract of employment, together with subsequent variations, which contains express terms on the rate of pay that applies for all hours worked, regardless of the route on which the applicant performs this work.

20      The respondent says the applicant’s contract of employment is both complete and evidenced in writing. For this reason, the respondent says there are no implied terms to pay the pass-through rate or otherwise.

21      In addition, the respondent disputes that it has acted in breach of its obligations under the Evergreen Contract. The respondent denies that it has at any time, been required to pay the applicant the pass-through rate in full.

Application programmed for hearing

22      Upon receiving the application, the respondent objected to the Commission dealing with the matter on the ground the Commission lacked the jurisdiction to hear the claim (jurisdictional objection).

23      On 19 May 2023, I issued reasons for decision in Peter Watkins v ATG Bunbury Pty Ltd as Trustee for ATG Bunbury [2023] WAIRC 00277 in which I dismissed the jurisdictional objection (jurisdictional decision). To the extent it is relevant, the jurisdictional decision should be read together with the reasons that follow.

24      Following the jurisdictional decision, I programmed the application for a hearing on the substantial merits of the claim. A hearing was held on Thursday, 12 October 2023 and Friday, 13 October 2023. At the completion of the hearing, the parties opted to make their closing submissions in written outlines.

25      After providing the parties with a transcript of the proceedings, the parties filed their outlines of closing submissions. This task was completed by 24 November 2023.

Parties' documents

26      The parties filed a significant amount of evidentiary material, much of it by agreement. Most of the documents were included in a two volume Court Book which was accepted into evidence and marked as ‘Exhibit A1’.

27      During the hearing, the Commission heard evidence from the applicant and the respondent’s managing director; Ben Doolan (Doolan). Further documents were also handed up during the hearing and accepted into evidence.

28      Whilst I have reviewed all the exhibits to reach a decision in this matter, not all of them were relevant. The documents that were pivotal to the outcome are referred to in these reasons.

Agreed facts

29      The parties filed a Statement of Agreed Facts which appears at page 636 of Exhibit A1. It is useful to set out a summary of the key facts the parties were able to agree upon.

30      Relevantly, the parties agreed that on or around 4 February 2008, the respondent became a party to the Evergreen Contract for the Newton-Moore-Stratham Capel, No. 9622 Route (Evergreen Contract). This Evergreen Contract was varied on 2 July 2013 to incorporate the BSC route.

31      It was agreed the applicant was employed by the respondent as a bus driver at the Bunbury Depot. The applicant is and at all material times was, employed on a casual basis, with no firm commitment of ongoing work.

32      The parties attached a letter from the Operations Manager at the Bunbury Depot; Denise Currie-Gamon (Currie-Gamon), to the Statement of Agreed Facts that is dated 3 November 2016 (2016 employment letter). It appears at pages 770 and 1022 of Exhibit A1.

33      Although not signed by the applicant, the parties in the Statement of Agreed Facts agreed the 2016 employment letter was the applicant’s ‘original contract of employment.’

34      The parties agreed that on or around 25 June 2016, the applicant was, as part of his casual employment, offered the opportunity to drive a bus on the BSC route.  While it appears from the documentary evidence the rate the parties agreed the respondent paid the applicant for the period July 2018 to 8 November 2020 is not correct, it was accepted that while working as a bus driver on the BSC route, the applicant was paid follows:

(a) from July 2018 to 8 November 2020: $28.56 per hour;

(b) from 9 November 2020 to 4 July 2021: $30.97 per hour;

(c) from 5 July 2021 to 3 July 2022: $32.50 per hour; and

(d) from 4 July 2022 $34.61 per hour.

35      The PTA has released a series of documents titled 'Evergreen Contract Model Payments Elements'. The parties attached copies of these to the Statement of Agreed Facts (Evergreen Payment Sheets). These appear at 775-784 of Exhibit A1.

36      The parties agreed that at no time, from 1 July 2018, was any term of the Evergreen Contract, ever discussed between the respondent and the applicant.

37      It was also agreed that at no time from 25 June 2016 until the date the application was filed (19 September 2022), had the applicant ever claimed that his contract of employment was void or unenforceable.

Evergreen Contract

38      The term of the Evergreen Contract which the applicant says imposes an obligation on the respondent to pay the applicant the pass-through rates when he is performing work on the BSC route, appears in cl 9.12. This term is set out below:

9.12  Pass-through of wages

 (a) The Contractor acknowledges that part of the Service Charge represents compensation to the Contractor for remuneration it provides to Drivers, Bus Aides and Bus Wardens in connection with the Service (that part referred to in this clause as the "Remuneration"). The Contractor agrees that it will remunerate Drivers, Bus Aides and Bus Wardens based on the amount of Remuneration it receives, to the intent that the Contractor will not make any windfall or profit in respect of the Remuneration.

 (b) Without limiting clause 9.12(a), where ethe Contractor pays:

  (i) to each Driver, an amount per hour worked by the Driver of at least the amount of the base rate per hour (plus, where applicable, an appropriate amount for each of sick leave, annual leave, long service leave, leave loading and public holiday pay) which the Authority from time to time notifies the Contractor it applies for the purposes of determining the variable "R" in the Drivers' Wages Component of Part 2 of the Schedule 3; and

 …

 …

  the Contractor will be deemed to be complying with clause 9.12(a).

39      Information on the pass-through rates that apply, for the respondent’s compliance with cl 9.12 of the Evergreen Contract is contained in the Evergreen Payment Sheets.

40      The Evergreen Payment Sheets provide details of two hourly rates that are payable to drivers who drive a bus with 25 seats or more;

i. ‘Drivers’ Wages - Base Rate’(Pass‑through base rate); and

ii. ‘Drivers’ Wages ‘Grossed‑Up’ Rate’(Pass‑through grossed‑up rate).

41      The applicant contends that as a casual bus driver, he should have been paid an hourly rate equivalent to the Pass-through grossed-up rate.

42      Also relevant is an undated information sheet the PTA issued entitled ‘Pass Through of Drivers, Bus Aides and Bus Wardens Wages’. This document was attached to a copy of the applicant’s amended application and was accepted into evidence by agreement as Exhibit A2 (PTA Information Sheet).

43      The relevant parts of the PTA Information Sheet that were referred to during the hearing are extracted below.

Comparative wages table

44      To get a sense of the difference in the parties’ positions in this matter, it is helpful to set this out in a comparative wages table (comparative wages table).

45      The information that is contained in the comparative wages table was taken from three sources. The award rates were obtained from reported decisions of the Fair Work Commission. The pass-through rates were taken from the Evergreen Payment Sheets.

46      The Respondent’s rates that are set out in the comparative wages table, were taken from the various documents the applicant signed that appear at pages 53, 54, 56, 58 and 59 of Exhibit A1.

47      To provide a true comparison, the award rates in the comparative wages table include the 25% loading that is payable pursuant to cl 11 of the Award (Casual Employees).

The respondent’s correspondence with the PTA

48      To provide the context in which this matter was referred to the Commission it is useful to refer to correspondence between the PTA and the respondent.

49      This correspondence, like the PTA Information Sheet was accepted into evidence by agreement. It was also referred to during Mr Doolan’s evidence and in the submissions, Mr King made on the respondent’s behalf.

50      In order, the first piece of correspondence is a letter Mr Doolan sent to the PTA on 10 August 2015 (respondent’s August 2015 letter). This was sent in response to an email that John Bailly from the School Bus Services Section of the PTA (Bailly) sent to the respondent on 3 August 2015.

51      While a copy of the email from Mr Bailly that preceded the respondent’s August 2015 letter was not produced, it became clear during Mr Doolan’s evidence that this letter was prepared in response to a complaint the PTA had received about the rates of pay the respondent was paying its drivers.

52      A copy of the respondent’s August 2015 letter is extracted below;

53      The second letter the respondent referred to is the correspondence Mr Doolan sent to Bailly at the PTA on 15 September 2015 (the respondent’s September 2015 letter).

54      Like the respondent’s August 2015 letter, this correspondence was sent in response to an email from Bailly dated 7 September 2015 in which he asked the respondent to provide further information on the wages the respondent was paying its drivers. A copy of this letter is extracted below;

55      In response to the respondents’ August 2015 and September 2015 letters, Mr Bailly from the PTA sent the following reply (PTA’s October 2015 letter).

56      Although the respondent’s August 2015 and September 2015 letters were not specifically prepared in response to a compliant the applicant made, the respondent says that when read together with the PTA’s October 2015 letter, the correspondence as a whole confirms the respondent has not breached an obligation under the Evergreen Contract to pay the pass-through rate.

57      A copy of the PTA’s October 2015 letter is extracted below;

The applicant’s correspondence with the PTA

58      On 30 November 2020, the applicant sent a letter to Mr Bailly at the PTA which was tendered and admitted into evidence as Exhibit R5. A copy of Exhibit R5 is extracted below.

59      It is clear from exhibit R5, the applicant had written to the PTA seeking advice on whether he should be receiving the pass-through rate.

60      On 8 March 2021 Mr Bailly from the PTA responded to the letter from the applicant (The PTA’s March 2021 letter). A copy of this letter is also extracted.

The applicant’s evidence in chief

61      The applicant’s evidence in chief was led by counsel from Fogliani Lawyers; Milo Bronleigh (Bronleigh).

62      The applicant who is 69, gave evidence that he first started working for the respondent in or around 2014. The applicant said he came to be employed by the respondent after transitioning from employment as a school principal with the Education Department of WA.

63      The applicant said that at the time he commenced employment he was aged 60 and nearing retirement. He said he was offered employment by Ms Gemma Hoff, who he knew from his work as a school principal.

64      The applicant said there were no negotiations regarding the rate of pay that would apply. He said that under the arrangement he reached with Ms Hoff, it was agreed he would drive buses for two days per week on Thursdays and Fridays. He said he did this while he continued to work as a deputy principal at Withers Primary School, the other three days per week.

65      The applicant was referred to the 2016 employment letter. The applicant said it was an example of a letter employees were ‘given to sign every twelve months or so, with different pay rates year to year’. He said Ms Currie‑Gamon whose name appears on the 2016 employment letter was one of his previous managers.

66      When referred to the second paragraph of the 2016 employment letter, which reads, ‘employment is to be on a casual basis commencing on 23 May 2014,’ the applicant confirmed he commenced working for the respondent on this date.

67      The applicant said he was initially employed to work as a bus driver on the Boyanup‑Elgin route, picking up primary school children in the mornings outside Boyanup to take them to the Boyanup Primary School and in the afternoons picking them up and dropping them home (Boyanup run). The applicant said that he was assigned to the Boyanup run for approximately six months.

68      In addition to driving duties on the Boyanup run, the applicant said he performed some school bus charter work. He said that he stopped working on the Boyanup run at the end of 2014. Following this, the applicant was moved over to the Bunbury‑Yabberup run (Bunbury‑Yabberup run).

69      Mr Bronleigh referred the applicant to page 838 of Exhibit A1, which is the first page of a bundle of ‘Driver Booking Summaries’. The applicant explained the Driver Booking Summaries provided a description of the work he performed for the respondent, including information on the routes he drove in the mornings and afternoons as well as charter runs for swimming lessons and other school excursions.

70      The applicant described the Driver Booking Summaries as a record of what he had been doing from the commencement of his employment with the respondent in 2014.

71      The applicant gave evidence that he continued to work as a bus driver on the Bunbury‑Yabberup run, during 2015. He said that in or around 2016, he transferred to the Collie‑72 run, to transport students to/from Collie Senior High School to a TAFE centre in Bunbury (Collie‑72 run).

72      The applicant said that when he transferred from the Bunbury‑Yabberup run to the Collie‑72 run, there were no negotiations regarding his pay for the change in route. He went on to explain that in or around July each year, a letter setting out drivers' pay rates, was provided to drivers to sign.

73      The applicant gave evidence that in or around 2016, he retired from full-time teaching, and that he continued to work as a bus driver on the Collie‑72 run, two days per week on Thursdays and Fridays. Following his retirement, the applicant said he also picked up work with the respondent as a bus driver on Mondays, Tuesdays and Wednesdays on the Adam Road-Stratham route.

74      The applicant stated that in April 2017, he went to Melbourne on holidays. While he was away, the applicant said he received a telephone call from Ms Currie‑Gamon, who asked him to return early from his holidays in Melbourne, as the business was short of bus drivers.

75      The applicant said that when he returned from Melbourne, he was assigned work as a bus driver on a series of different routes, including from Myalup to Collie and the BSC route.

76      The applicant said that in or around November 2017, Ms Currie‑Gamon asked him to move across to the BSC Route five days per week. The applicant said that when he was moved across to this route, there were no discussions about changing his rate of pay.

77      The applicant gave evidence describing his daily work schedule. He said his work on the BSC route started with him driving a bus from the Bunbury depot to Boyanup at around 6.30 am in the morning, then to Elgin, and on to Capel-Stratham. He said at the time there were six schools in Bunbury that he transported children to. He said most of these children attended private schools.

78      The applicant said his work schedule required him to work a minimum of 2.5 hours in the morning to take the children to school and 2.5 hours in the afternoon to take the same children home. The applicant said that between his mornings and afternoons on the BSC Route, he performed charter work.

79      The applicant gave evidence that in 2018, Ms Currie‑Gamon asked him to work on a new route; the Harvey‑Wattleup run. He said that after setting up this run, he was moved back to the BSC Route. The applicant gave evidence that until 2020, he continued to drive the BSC route five days per week.

80      The applicant said that in or around 2020, he agreed to share his work on the BSC Route with another bus driver, Kevin Woodward. He said it was agreed Mr Woodward would work on the BSC Route two days per week, while the applicant would continue to work three days per week. He said that this arrangement has not changed.

81      The applicant was referred to page 831 of exhibit A1 of this document. This document is an employment agreement between the applicant and the respondent commencing in July 2017 (2017 employment agreement).

82      The applicant confirmed that he signed the 2017 employment agreement on 26 July 2017. He also accepted his hourly rate of pay under this agreement was $28.56 per hour.

83      The applicant was then referred to page 833 of Exhibit A1. Although not signed, the applicant accepted he was a party to this document which is dated Monday, 9 November 2020 (2020 employment agreement) He also confirmed that his hourly rate of pay under this agreement, was $30.97 per hour.

84      The applicant said the pay rate in the 2020 employment agreement was not the result of any negotiations between himself and the respondent. Mr Bronleigh then took the applicant to page 837 of Exhibit A1, which is a letter to the applicant from the respondent, titled Variation to Contract of Employment dated 12 July 2022 (2022 contract variation).

85      The applicant confirmed his hourly rate of pay under the 2022 contract variation was $34.61. The applicant gave evidence that there were no negotiations before he signed this document. He also said that he was working on the BSC Route when he signed the 2022 contract variation.

86      The applicant continues to work as a bus driver on the BSC Route. He does this work on Mondays, Tuesdays and Wednesdays. The applicant gave evidence that his current rate of pay is $36.05 per hour and that he continues to work on a casual basis.

The applicant’s cross-examination

87      Mr King cross-examined the applicant about his evidence in chief. Mr King challenged the applicant about his evidence that there were no discussions before changes were made to his rates of pay. Under cross examination, the applicant agreed to a suggestion from Mr King that there were no discussions about pay because ‘it was agreed in writing’ [Transcript at p 30].

88      The applicant accepted that he was not aware of the contractual arrangements between the PTA and the respondent for the BSC route when he was first employed as a bus driver. The applicant said he did not become aware of the Evergreen Contract until eight years after commencing employment with the respondent [Transcript at p 32].

89      The applicant said the first time he became aware of the Evergreen Contract was during discussions with a representative from Transport Edge. The applicant said this happened after he commenced work on the BSC Route [Transcript at p 33].

90      The applicant confirmed that even after he became aware the Evergreen Contract applied to the BSC route, he had still signed letters varying his rates of pay. He admitted that despite signing these letters, he still considered that he should receive the pass-through rate. [Transcript at p 33]

91      Under cross-examination, the applicant admitted that he had considered, agreed and signed off on his wage rate, even after becoming aware that a higher pass-through rate applied under the Evergreen Contract [Transcript at p 35].

92      During questioning from Mr King, the applicant agreed that the letters he signed, were similar to those that other drivers who worked in the Bunbury depot had signed. The applicant said he had no understanding of the Evergreen Contract when he first started on the BSC run [Transcript at p 36 & 38].

93      Mr King cross-examined the applicant about the contents of his original Form 1 application to the Commission. Whilst it was clear the applicant was not across the detail of this document, which was prepared by his representatives, none of the answers he gave were inconsistent with his evidence-in-chief regarding his employment arrangements with the respondent.

94      The applicant agreed in cross‑examination that he signed the 2022 contract variation, despite knowing his hourly wage would be less than the pass-through rate. He also agreed the rate of pay he received was inconsistent with the pass‑through rate [Transcript at pp 39 – 40].

95      Under cross‑examination, the applicant said he was quite happy with what he had been paid over the last ten years of employment with the respondent as he had agreed to it. He also accepted that ‘the existing contracts of employment’ he signed were ‘workable’ and that he was ‘happy to work under them’ [Transcript at p 40].

96      Mr King challenged the applicant on why he had continued to sign variations to his contract of employment even after he became aware of the pass-through rates under the Evergreen Contract. The applicant said he had no outlet at the time to dispute the difference in pay rates [Transcript at p 41].

97      When cross‑examined about the terms of the Evergreen Contract, the applicant accepted that he had never read clauses relating to the pass‑through rates [Transcript at p 45].

Mr Doolan's evidence in chief

98      Mr Doolan was called to give evidence for the respondent. He said the applicant was employed by the respondent, under terms and conditions that were set out in writing.

99      Prompted by Mr King, Mr Doolan gave evidence that the 2016 employment letter was a ‘letter of offer’. This is despite Mr Doolan acknowledging the applicant’s start date was in 2014. Following this, Mr King referred Mr Doolan to the 2017 employment agreement. Mr Doolan confirmed the applicant had signed this document [Transcript at pp 67 – 68].

100   Mr Doolan gave evidence about the Evergreen Contract. He said the first iteration of the Evergreen Contract was in 2013. Mr Doolan said the Evergreen Contract was the result of a collaboration between industry and the PTA, to acknowledge an existing set of school bus runs across regional and metropolitan Western Australia and to reflect the practice of ongoing contracts in those areas [Transcript at p 71].

101   Mr Doolan said the terms of the Evergreen Contract were negotiated with the whole industry. He said Bus WA represented its members in negotiations, including the respondent. Mr Doolan said a panel of experts appointed by the Minister for Transport was also involved in the negotiations [Transcript at p 71].

102   Mr King referred Mr Doolan to page 755 of the court book, which is Schedule 13 of the Evergreen Contract. Mr Doolan said this provided a history of the variations to the Evergreen Contract. He said Schedule 13 shows the Evergreen Contract was first reached between the PTA and Hoff School Bus Services Pty Ltd (that was later acquired by the respondent) for the BSC Route on 19 January 2004.

103   Mr Doolan gave evidence about what was included in the price the respondent offered to secure the Evergreen Contract. Mr Doolan said that in broad terms the price covered a variety of components, including wages, administration, management costs and vehicle maintenance.

104   Mr King asked Mr Doolan whether he was familiar with cl 9.12 of the Evergreen Contract, to which Mr Doolan said, "Yes." Mr King then asked Mr Doolan:

If Mr Watkins had ever said to you in 2014, 2016 or at any time thereafter that this clause should form a part of his contract of employment what you have said? [Transcript at p 73].

105   Mr Doolan responded in the following way;

Ah I would have said that it’s got nothing to do with him because it’s a contract between myself and the PTA. [Transcript at p 73].

106   Mr King then asked Mr Doolan whether he had ever written to the PTA about the respondent’s application of cl 9.12, for the purposes of ensuring he had a complete understanding of the way in which the clause was intended to operate.

107   Mr Doolan gave evidence he had received numerous enquiries over the life of the contract from drivers who were expecting to receive the full pass-through rate. Mr Doolan said the respondent had never made a ‘windfall gain or profit’ under the Evergreen Contract because of the way it had applied cl 9.12 [Transcript at p 73].

108   Mr King then referred Mr Doolan to the respondent’s August 2015 and September 2015 letters. Mr Doolan said he sent to these letters to the PTA regarding the remuneration the respondent paid to its drivers under the Evergreen Contract [Transcript at pp 73 – 74].

109   Mr Doolan gave evidence about the ‘blended rate’ the respondent paid its drivers. Mr Doolan commenced his explanation by saying that Evergreen Contract hours were a smaller part of the respondent’s business. He then went on to say;

If you had four drivers on an award rate and one on an Evergreen rate, you could roll that evergreen rate over across the five drivers across the week to achieve a blended rate in effect [Transcript at p 75].

110   Mr Doolan explained that to reach a blended rate, the respondent forecast the number of hours the drivers performed on each route, by reference to what was done in the previous 12 months and what it expected would be done in the year ahead [Transcript at p 75].

111   He said the respondent then added up the total number of hours the company expected a driver would perform on each route, multiplied that amount by the applicable hourly rate under the contract to arrive at total each driver would be paid per annum for each contract.

112   Mr Doolan said that after arriving at this total, the respondent then added the totals together for each contract and divided the combined sum by the total number of working hours to be performed which resulted in a ‘blended hourly rate’ [Transcript at pp 78 – 80].

113   Mr Doolan gave evidence that the respondent’s practice of paying blended rates was investigated by the PTA on multiple occasions over a long period of time. He said he believed the respondent had complied with the requirement of the Evergreen Contract not to make a ‘windfall gain’ because the PTA had not raised a different view about the respondent’s practice of paying blended rates [Transcript at p 77].

114   Mr Doolan gave evidence the applicant was paid a blended rate when he was performing charter work.

Mr Doolan cross-examined

115   On the second day of the hearing, Cory Fogliani (Fogliani) appeared for the applicant. He cross-examined Mr Doolan.

116   Mr Doolan confirmed the respondent employs the applicant as a casual bus driver. Mr Doolan also confirmed the applicant performs work on the BSC Route and the respondent provides services under the Evergreen Contract [Transcript at p 88].

117   Mr Fogliani then asked Mr Doolan a series of questions about the Evergreen Payment Sheets. Mr Doolan agreed that Mr Watkins drives a bus that is ‘over 25 seats’. He commenced this line of questioning by referring Mr Doolan to the Evergreen Payments Sheet that commences from July 2018, which appears on page of Exhibit A1.

118   Mr Fogliani took Mr Doolan to the two rates of pay for drivers in this role; the pass-through base rate of $32.84 and the pass-through grossed-up rate of $39.81. When asked if he understood this meant that drivers on the BSC Route should be paid the pass-through base rate, Mr Doolan responded by saying; ‘No I don’t’ [Transcript at p 90].

119   Mr Fogliani then questioned Mr Doolan about the pass-through grossed up rate. Mr Fogliani asked if the grossed-up rate of $39.81 is to cover for things such as annual leave, sick leave and long service leave. Mr Doolan answered;

Ah, no it doesn’t. Not – I’m not sure of the question but no (indistinct) [Transcript at p 90].

120   In a subsequent question, Mr Doolan agreed with Mr Fogliani that for casual employees, the pass‑through grossed‑up rate, was to cover the 25% loading and that this explained the difference between the pass-through base rate and the pass-through grossed-up rate [Transcript at p 90].

121   Mr Fogliani repeated the questions he posed to Mr Doolan regarding his understanding of how the pass‑through base and grossed‑up rates the Evergreen Payment Sheets for 2019, 2020, 2021 and 2022 were to be applied. Mr Doolan repeated his previous answer [Transcript at pp 90 – 94].

122   Mr Fogliani then referred Mr Doolan to the PTA Information Sheet. In response to a series of questions in which Mr Fogliani probed the respondent’s use of payments received under the Evergreen Contract to subsidise its wages bill in other parts of the respondent’s business, Mr Doolan denied the respondent was receiving a windfall gain [Transcript at p 97].

123   He also said the PTA had approved ATG’s practice of paying drivers a ‘blended rate’ [Transcript at p 97].

124   While Mr Doolan denied the payments the respondent received under the Evergreen Contract were used as a subsidy, he conceded as much in the following exchange;

Fogliani, Mr: But the effect is the Public Transport Authority gives you money under the Evergreen Contract to cover the wages of the drivers that are working on the Bunbury-Stratham-Capel Route, and you divvy that money up between all of your drivers regardless of whether they're working on the Bunbury-Stratham-Capel Route, or not?---

Doolan, Mr: Yes [Transcript at p 98].

125   Mr Fogliani asked Mr Doolan about the 2016 employment letter. Mr Doolan said he thought it was produced to record Mr Watkin’s start date, to calculate his entitlement to long service leave [Transcript at p 116].

Amended Evergreen Contract

126   During his cross examination, Mr Doolan revealed that on 1 July 2023, the PTA had agreed with the respondent to make changes to the Evergreen Contract, specifically to cl 9.12 (Amended Evergreen Contract).

127   Although relevant to the proceedings, the Amended Evergreen Contract was not disclosed prior to the hearing. After Mr Fogliani was given an opportunity to review the Amended Evergreen Contract, it was admitted into evidence and marked as Exhibit R4.

128   While the potential effect of the issuance of the Amended Evergreen Contract was touched upon in the applicant’s closing submissions, it is not necessary to set out the amendments that were made to the original Evergreen Contract. The effect of the Amended Evergreen Contract upon the claim is something I will return to later in the decision.

Observations about the witnesses

129   In this case, the applicant presented as an honest, straight forward and reliable witness. While I do not consider that Mr Doolan was an unreliable witness, I do note that much of Mr Doolan’s evidence in chief was elicited by leading questions, which Mr Fogliani made numerous objections to.

130   Mr Doolan was at times evasive and contradictory in his answers. I suspect this is because he was being careful to ensure he did not make concessions that could undermine the respondent’s view of its obligations regarding the payment of pass-through rates.

131   I also suspect Mr Doolan was being careful to ensure the respondent would, for the purposes of arguments in other forums, be able to maintain that it has not breached its obligations under cl 9.12 of the Evergreen Contract.

Commission's role in a Denied Contractual Benefit Claim

132   As I stated in the jurisdictional decision, an employee's right to make a denied contractual benefit claim arises under s 29(1)(b)(ii) of the IR Act.

133   It is useful to re-state to what Acting Senior Commissioner Scott (as she then was) in Triantopoulos v Shell Company of Australia Ltd [2011] WAIRC 00004 at [58] said regarding the function of the Commission in a denied contractual benefit claim:

(a) The Commission's jurisdiction is to deal with an industrial matter which includes the power to compel by order, the performance of a benefit under a contract of employment (Cool or Cosy at [73]).

(b) The Commission has power by the combined effects of s 23(1) and s 29(1)(b)(ii) … to enforce the payment of entitlements (Cool or Cosy, per Heenan J [64] and ''… is empowered to make a monetary order, in the nature of damages to deal with the industrial matter before it'' … for beach of the employment contract [73]. This is ''… to give effect to common law entitlements on application by an employee under s 29(1)(b)(ii).''

(c) The benefit claimed is contractual and exists independent of the provisions of the IR Act (Cool or Cosy per Heenan J [60]).

(d) It is an enforcement of legal rights involving the exercise of judicial power (Saldanha per Ritter AP [122].

(e) A claim under s 29(1)(b)(ii) would be determined upon common law principles (Saldanha per Ritter AP [73], the process being the same as that for the enforcement in courts of appropriate jurisdiction – the Commission must decide:

(i) What the terms of the contract were;

(ii) Whether or not they have been complied with and in doing so, the Commission is exercising a judicial function (Saldanha per Ritter AP [80 – 81]).

134   Scott A/SC in Triantopoulos noted, the task of the Commission, in a denied contractual benefits claim, is to identify the terms of the contract using common law principles, whether those terms are expressed, incorporated or implied; a process otherwise known as determining the construction of the contract.

135   It is clear, that once the Commission has identified the terms that apply to the task, then turns to deciding whether an employer has breached one or any of those terms, to exercise a discretion as to what, if any, relief should issue.

Principles to be applied when interpreting contracts

136   The relevant principles to be applied when interpreting a contract of employment were described in Brett Arthur King v Griffin Coal Mining Company Pty Ltd [2017] WAIRC 00102, 97 WAIG 527 (King v Griffin Coal), where Senior Commissioner Kenner (as he then was) at [10] noted that the interpretation of a contract, like any other instrument is a ‘text-based activity.’

137   At [11] the Senior Commissioner in King v Griffin Coal set out the relevant principles the Court of Appeal summarised in Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 at [42] that are to be applied.

138   These principles were recently restated by Quinlan CJ in Mak Industrial Water Solutions Pty Ltd v Doherty (No 2) [2023] WASC 279 at [53]. They relevantly include by way of summary:

(a) The construction of a contract involves a determination of the meaning of the words of the contract by reference to its text, context and purpose. The starting point for the proper construction of a clause is the language used in the clause. In particular, one starts by identifying the possible meanings that the words chosen by the parties can bear.

(b) Ascertaining the meaning of terms in an instrument requires a determination of what a reasonable person would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract, and the commercial purpose or objects to be secured by the contract. The instrument must be read as a whole.

139   When construing a written contract, the rights and liabilities of the parties must always be construed by reference to the text of the contract, its context and purpose. Ascertaining the common intention of the parties is paramount; see The Contract of Employment – Mark Irving 2nd edition 2019 (Irving) at [7.6] referring to Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 325 ALR 188 at [46], [47] see also at [113] per Kiefel and Keane JJ.

140   By this, the terms of a contract are taken to mean what they would convey to a reasonable person, not what the parties understood or intended the terms to mean; see Irving at [7.6] referring to Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 325 ALR 188 at [51] and [108] and  Electricity Generation Corp v Woodside Energy Ltd (2014) 251 CLR 640; 306 ALR 25 at [35].

141   While the case in King v Griffin Coal has some application in the present matter, it did not deal with the identification of implied terms, which is in issue here.

Identifying implied terms

142   The process of identifying and interpreting the terms in the construction of a contract also includes identifying implied terms. On this, the type of term which Mr Watkins, says is implied is best described as a term implied in fact.

143   Terms implied in fact are unwritten terms based on the presumed or imputed intention of the parties, rather than their actual intention; see Irving at [7.39]. As Mason J stated in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] 149 CLR 337 (Codelfa) at 346:

 [A term implied in fact is] one which it is presumed that the parties would have agreed upon had they turned their minds to it – it is not a term that they have actually agreed. Thus … the deficiency in the expression of the consensual agreement is caused by the failure of the parties to direct their minds to a particular eventuality and to make explicit provision for it.

144   The question of whether a term is implied must be assessed by reference to the time at which the contract was formed or when the contract was varied. This assessment cannot be made with the benefit of hindsight, provided by particular facts which have subsequently become controversial; Irving at [7.30].

145   Terms implied in fact, are tailored to the parties' particular arrangements and circumstances. The existence of a term implied in fact, is acutely sensitive to the factual and legal matrix in which the parties form their contract; Irving at [7.39] referring to Byrne v Australian Airlines Ltd (1995) (Byrne) 185 CLR 410 at 448.

146   When determining whether a term is implied, the proper approach is to first ascertain the express terms of the contract, including any implicit terms that may be inferred in the construction of the express terms. The Commission must then attempt to discern the terms, if any, that are implied in the contract as a matter of the presumed or imputed intention of the parties; see Irving at [7.39] referring to Byrne at p 442.

Test to be applied

147   The ultimate question the Commission is required to answer when deciding whether a term is implied, is to ask what would have been intended by a reasonable person in the position of the contracting parties.

148   To answer this question, the Commission is required to apply the five-limbed test that was established in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] 180 CLR 266 (BP Westernport) at 283:

 … for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

149   Before applying this test, it is necessary to provide a summary of the parties' submissions.

Applicant's submissions

150   In his outline of closing submissions, Mr Fogliani submitted that it was an implied term of the applicant’s contract of employment the respondent would pay him the Pass‑through grossed‑up rate when he was working on the BSC Route (implied term).

151   It was submitted that the respondent has denied the applicant a benefit under the implied term by paying him a rate of pay that is less than the Pass‑through grossed‑up rate.

152   Mr Fogliani contended the employment contract between the applicant and the respondent is best described as either informal or partly informal. He provided an analysis of the evidence, which he argued supported a finding which I have extracted below:

(a) The employment contract was created on 23 May 2014 by way of a verbal offer of employment by ATG's Ms Gemma Hoff and a verbal acceptance of that offer by Mr Watkins. The original contract was wholly implied with none of the terms reduced to writing.

(b) Mr Doolan's evidence was to the effect that the start of Mr Watkins' employment with ATG and the absence of a written contract was as follows: "Whether Mr Watkins, cos he was on a very informal nature while he was transitioning in his evidence yesterday, didn't get one, I can't say."

(c) On around 3 November 2016, Mr Watkins signed a letter confirming when his employment started (23 May 2014) and that he was originally subject to a 6‑month probation and that his current base rate of pay was $27.65 gross per hour plus superannuation. Mr Doolan's evidence about this letter was as follows:

Fogliani, Mr: But this letter postdated the start of the employment relationship between ATG and Mr Watkins by over two - two-and-a-half years roughly?---

Doolan, Mr: Well, that's what it says in the – I – I'm unsure – when I saw this yesterday – I'm unsure whether we're just acknowledging his start date for long service leave provisions or whether we – I – I think that would be the intention of why that was done.

 ATG's evidence, in that regard, supports a finding that the 3 November 2016 letter was not of a contractual nature.

(d) There were no discussions about pay between Mr Watkins and ATG either at the start of the relationship or throughout the relationship.

(e) There were annual pay review documents signed by Mr Watkins on the following dates:

i. 26 July 2017;

ii. 9 August 2018;

3. 22 July 2019;

iv. 17 November 2020;

v. 21 July 2021; and

vi. 3 August 2022.

(f) In relation to the annual pay review documents, Mr Watkins' evidence was that once per year:

i. he would get a text from 'the boss' with a time limit to sign the annual pay review letter; and

ii. ATG 'herded [its staff] in like cattle' to sign the annual pay review letters; and

iii. He signed those documents because he was worried that he would not have a job if he did not sign.

(g) And Mr Doolan's evidence in response to the reference to ATG herding its staff in like cattle to sign the annual pay review letters was: "Ah, as part of our proposal, um, we encourage the drivers to renew their details as often as – on an annual basis, yes."

153   Mr Fogliani submitted the implied term became a part of Mr Watkin’s employment contract by way of a contract variation when he agreed in 2017 to start working on the BSC run.

154   After providing his analysis of the evidence, Mr Fogliani’s submissions were then directed to the application of the five limbed test in BP Westernport.

Element 1: The implied term is reasonable and equitable

Background information which forms part of the objective factual matrix

155   Mr Fogliani submitted that it is uncontroversial the respondent has an Evergreen contract with the PTA that requires the respondent to pay the pass-through rates to its employees for driving buses on the BSC Route.

156   He submitted the Evergreen Contract was a deal the respondent made with the PTA. Through that deal, the respondent is entrusted with public money that is intended to be passed on by the respondent to its employees, while they work on the BSC Route.

157   Mr Fogliani submitted the rates to be paid to bus drivers on the BSC Route under the Evergreen Contract are set out in the Evergreen Payment Sheets. Mr Fogliani submitted there are two rates that apply. The first is the ' Evergreen base rate' and the second is the 'Evergreen grossed-up rate'. Mr Fogliani submitted it was Mr Doolan's evidence that the 'grossed‑up' rate was to cover the 25% casual loading on the base rate, plus long service leave.

158   In his submissions, Mr Fogliani also referred to the PTA Information Sheet, which he said makes it clear the respondent was not to pay its employees at the rates of pay contained in federal or state awards, or at rates negotiated between the respondent and its employees but at the rates contained in the Evergreen Contract. Mr Fogliani submitted this was to avoid the respondent making a profit or windfall gain by holding back some of the hourly base rate or grossed up rate.

159   Mr Fogliani submitted that although Mr Doolan in cross examination emphatically denied it, the effect of the respondent’s ‘blended rate’ approach is that it makes a windfall gain from the drivers' wages under the Evergreen Contract. That windfall gain he submitted was the result of the respondent using money that was supposed to be paid to the bus drivers on the BSC Route, which the respondent used to subsidise its wider wages bill.

Why the implied term is reasonable and equitable

160   Mr Fogliani submitted that it is reasonable and equitable the contract between the applicant and the respondent contains an implied term the respondent would pay the pass-through rates in the Evergreen Contract to Mr Watkins when he worked on the BSC Route.

161   He submitted the 'officious bystander' would consider such a term forming part of the employment contract between the applicant and the respondent as nothing less than reasonable and equitable given the promises made the respondent made in the Evergreen Contract.

162   Mr Fogliani argued that to find otherwise, would result in an unreasonable and inequitable position whereby the respondent could pocket public funds that were objectively intended to be passed on to the applicant for his labour. The absence of the implied term from the employment contract would allow the respondent to make a windfall gain from the applicant’s labour in circumstances where the respondent had made a contractual promise to the PTA not to do so.

163   Mr Fogliani submitted that a reasonable person in the position of the contracting parties would have intended there to be a term implied in the applicant’s contract of employment when he agreed to start working the BSC Route, that required the respondent to pay the applicant the pass-through rate while he was working on that route.

Element 2: The implied term is necessary to give business efficacy to the contract

164   In relation to the second element, Mr Fogliani submitted the purpose of the applicant’s employment was to carry out a public function; to operate school buses to transport children to and from their regional schools. It was a function that was ultimately performed for the benefit of the PTA and the public at large. Mr Fogliani submitted the respondent was the medium between the PTA and the end labour that would perform the work.

165   Mr Fogliani submitted there was never a discussion between the applicant and the respondent about how much the respondent would pay him for driving on the BSC Route. He also submitted there was no need for these discussions either. In his submissions, Mr Fogliani contended that this was because the respondent had entered an Evergreen Contract with the PTA that set out the rates of pay the respondent was required to pay the applicant while he was working on the BSC Route.

166   It was submitted that to give business efficacy to the contract between the applicant and the respondent, there must be an implied obligation on the respondent to pay the pass-through rate to the applicant while he was performing the public function of transporting students on the BSC Route.

167   Mr Fogliani submitted the applicant’s employment as a casual bus driver is intrinsically linked to the existence of the Evergreen Contract. Mr Fogliani submitted that if the Evergreen Contract ceased, it would inevitably result in the applicant’s role of driving buses on the BSC Route becoming redundant.

168   In his submissions, Mr Fogliani contended the period from when the applicant started operating the BSC Route until around 1 July 2023, the employment contract between the applicant and the respondent could not operate effectively without an implied term relating to the pass-through rates. Without this term, the respondent would have been at the commercial risk of contravening and potentially losing the Evergreen Contract and the whole employment relationship between the applicant and the respondent would have been placed in potential jeopardy.

169   Mr Fogliani submitted the risk to the respondent was subsequently nullified in around 1 July 2023, when the respondent and the PTA made the Amended Evergreen Contract that enabled the respondent to use its 'blended wages' model.

Element 3: The implied term is so obvious that it goes without saying

170   In his submissions, Mr Fogliani confirmed the applicant does not seek to offend the concept of privity of contract. He submitted the applicant was not coming to the Commission seeking to enforce the contract between the respondent and the PTA. Mr Fogliani submitted the applicant accepts that he has no capacity to do that. Rather, the applicant has made the claim to enforce the terms of his employment contract with the respondent.

171   Notwithstanding this, Mr Fogliani submitted that it would be an odd circumstance if the respondent could:

(a) enter a binding contract whereby it promises the PTA that it would pay the applicant a particular rate of pay while he is operating on the BSC Route;

(b) collect public funds from the PTA that are intended to be passed on to the applicant; and

(c) the applicant and the respondent could separately contract for some rate of pay that is less than the pass-through rate.

172   On this basis, Mr Fogliani submitted that it seems so obvious it goes without saying, that if the respondent wanted to, enter into a casual contract with the applicant, where each shift is a separate period of engagement, the applicant’s employment contract would contain a term guaranteeing the applicant would be paid the pass-through rate for work on the BSC Route.

Element 4: The term must be capable of clear expression

173   Mr Fogliani submitted the implied term can be clearly expressed. He submitted there is nothing uncertain or unclear about a term requiring the respondent to pay the applicant the pass-through rates in the Evergreen Contract whenever the applicant was working on the BSC Route.

174   It was submitted that as a matter of practicality, the respondent would be receiving the pass-through rate from the PTA to pass on to the applicant.

Element 5: The term must not be contrary to any express term of the contract

175   Mr Fogliani submitted the fact the applicant is employed as a casual bus driver is significant.  He submitted on each occasion the respondent engaged the applicant to work on the BSC Route, it was pursuant to a separate contract of employment.

176   It was submitted these separate contracts were not whittled down into writing on each occasion the applicant worked for the respondent. They were almost wholly implied by the conduct of the parties.

177   Mr Fogliani submitted there were no express terms of the contract, written or otherwise, to the effect the applicant was not entitled to be paid the pass-through rate while working on the BSC Route.

Respondent's submissions

178   Mr King on the respondent’s behalf, submitted the Commission was required to decide two key issues, according to the evidence and the submissions of the parties:

(a) Was cl 9.12 of the Evergreen Contract an implied term of the contract of employment between the applicant and the respondent?

(b) If so, was cl 9.12 breached by the respondent?

179   Referring to the 2020 employment agreement, Mr King submitted the applicant’s current contract of employment is wholly in writing.  He submitted the wage rate in this contract was varied in writing;

a. on 19 July 2021 by an increase to $32.50 [see Exhibit A1 at page 54], later varied again in writing

b. on 12 July 2022 by an increase to $34.61 [see Exhibit A1 at page 837];

c. on 20 July 2023 to the current wage rate of $36.05 per hour [Exhibit R1].

180   It was submitted the applicant’s signed written contract of employment covers the field on his terms and conditions, including his wage rate, which the applicant knows is different to the pass-through rate.

181   Mr King submitted the applicant when giving evidence had agreed that his current contract of employment has business efficacy without implying cl 9.12 of the Evergreen Contract. He also submitted the applicant had accepted that his current contract of employment was fair and equitable without importing cl 9.12 of the Evergreen Contract.

182   Mr King argued the applicant had conceded that in the event cl 9.12 was found to be an implied term, the respondent would not be in breach so long as it did not make a windfall gain.

183   It was submitted the PTA and the applicant on the evidence, had accepted the respondent did not make a windfall gain because the applicant was paid above the base rate and the respondent had and continues to distribute any pass-through wages equally across its workforce in the Bunbury depot.

184   Mr King submitted there was no foundation at law or in fact to imply cl 9.13 into the applicant's contract of employment for at least four cogent reasons:

First, the applicant admitted he knew nothing of clause 9.12 until he joined Transport Edge and had still not read it until it was shown to him in the witness box. Mr King submitted this was strong evidence the contractual implication is not obvious.

(a) Second, the applicant's contract is in writing, the wage position is complete and it is conceded that it has business efficacy without the addition of clause 9.12.

(b) Third, it is apparent the current contract of employment between the applicant and the respondent is fair, reasonable, and equitable without the addition of clause 9.12 and is arguably unfair to other workers if it is implied.

(c) Fourth, clause 9.12 as an implied term is inconsistent with the other current provisions of the contract of employment.

185   Mr King submitted the High Court of Australia had recently determined in Hobart International Airport Pty Ltd v Clarence City Council [2022] HCA 5 (Hobart Airport case) that the doctrine of privity of contract remains intact as a settled and fundamental rule of law in Australia.

186   Relying upon the ‘doctrine of privity’ Mr King submitted the applicant was seeking to enforce a contract between the respondent and the PTA to which the applicant was not a party.

Business efficacy

187   On the issue of business efficacy, Mr King submitted that although the applicant has at all times, been employed on a casual basis, it was under a written contract of employment. To this end, Mr King submitted the applicant’s initial contract (the 2016 employment letter) was in writing, and confirms the applicant commenced employment on 23 June 2014.

188   Mr King submitted the 2016 employment letter was overtaken by complete and later iterations of the contract of employment, each of which were signed and dated by both parties.

189   Mr King submitted the applicant’s current contract of employment is comprised of the 2020 employment agreement that has been varied in writing three times with changes to the applicant’s rate of pay.

190   Relying upon judgements including, Codelfa and BP Westernport, Mr King submitted the fact the applicant is a signatory to a written contract of employment provides a complete answer to the case.

Not fair or equitable

191   Mr King submitted cl 9.12 should not be implied into the applicant’s contract of employment because it would be inequitable to do so and unfair under normal workplace considerations.

192   In support of this argument, Mr King referred to an email exchange between the applicant and the respondent’s Chief Operating Officer Murray Goosen at pp 413‑415 of Exhibit A1.

193   Mr King submitted that after Mr Goosen explained in an email the use of blended wage rates worked at the Bunbury depot meant all drivers receive equal wages for equal work, the applicant had agreed to abandon his claim.

194   Referring to the PTA’s October 2015 letter Mr King submitted the respondent receives no windfall by not passing on the whole of the pass-through rate to the applicant, because the respondent redistributes it across the whole of the workforce.

Inconsistency

195   Mr King submitted cl 9.12 of the Evergreen Contract is inconsistent with the applicant’s current contract of employment. He said this is because the two contain different rates of pay and hence, are inconsistent with the other.

196   Further Mr King submitted the Evergreen Contract is not a contract of employment but an industry services contract between the State Government as purchaser and the respondent as supplier. He submitted the pass-through wage is a contractual obligation between the respondent and the PTA and is not a direct condition of the applicant’s employment.

197   Mr King submitted the applicant’s contract of employment is entire. He submitted that implying a term would negate the contract because cl 9.12 of the Evergreen Contract is inconsistent with and contradicts the payment regime under the applicant’s contract of employment.

198   It was submitted that even if cl 9.12 of the Evergreen Contract was implied into the applicant’s contract of employment, no breach of the implied term has been demonstrated.

199   Mr King submitted there is evidence from the PTA (the PTA’s October 2015 letter) that no windfall gain has occurred because the pass-through element has been utilised by the respondent to provide blended rates for the benefit of all drivers across the Bunbury depot.

200   It was also submitted there was a difference in the term the applicant claimed was implied in his amended application to the term referred to in Mr Fogliani’s closing submissions. Mr King submitted this tends to demonstrate suggests the implied term is not sufficiently clear to be implied in law.

Consideration – the applicant’s contract of employment

201   Before I can decide the issues the subject of the claim, it is necessary to make some findings about the contractual relationship between the applicant and the respondent.

202   I accept that in the period from 23 May 2014, at least until the applicant signed the 2016 employment letter that he was engaged on an informal or partly informal basis.

203   On this, the applicant’s evidence that he was hired following a discussion he had with Gemma Hoff in 2014 was not challenged. There was no documentary evidence that established the applicant had a written contract of employment in the period from when the applicant commenced, until he signed the 2016 employment letter.

204   There is little doubt the 2016 employment letter was an attempt to commit the terms of the applicant’s contract of employment to writing, with both retrospective and prospective effect.

205   While Mr Fogliani contended the 2016 employment letter was not contractual in nature, it is reasonable to find that by endorsing it with his signature, the applicant confirmed his agreement to the terms of his employment.

206   Even if I am wrong about this, there is little doubt the situation changed on 26 July 2017 when the applicant signed the 2017 employment agreement. Following this, the applicant continued to sign letters updating his hourly rates of pay as well as the 2020 employment agreement.

207   I accept that this evidence supports a conclusion the applicant’s employment after he signed the 2016 employment letter, was pursuant to the terms of a written contract of employment, thereby formalising his contractual relationship with the respondent.

208   While the various written instruments the applicant signed by are no means comprehensive, they do specify the wage rate that is to be paid per hour, which is an essential term of the applicant’s contract employment. This finding is significant and is a point to which I will return.

The implied term in issue

209   It is important to provide some clarity on the term the applicant says is implied in his contract of employment. This is because the issue of whether the term is both obvious and capable of clear expression must be addressed when dealing with the test from BP Westernport.

210   The term the applicant contends is implied in his contract of employment, is payment at the ‘pass-through grossed-up rate’ for each hour he works as a bus driver on the BSC Route.

211   For the respondent, Mr King contended the applicant had claimed cl 9.12 of the Evergreen Contract was an implied term of his contract of employment. Although this was never the applicant’s case, Mr King proceeded to present his client’s response to the claim on this basis.

212   The applicant’s representatives have never suggested cl 9.12 of the Evergreen Contract is an implied term of his contract of employment. Rather the applicant claims the implied term arises from the respondent’s obligation to the PTA under the Evergreen Contract.

The respondent and the Evergreen Contract

213   If the purpose of cl 9.12 of the Evergreen Contract was to provide a means by which drivers would be paid the pass-through rate for work on the route to which the Evergreen Contract applies, it is apparent from the evidence that this provision has failed to achieve this task.

214   I make this observation because there is no dispute the applicant who drives a bus on the BSC Route, to which the Evergreen Contract applies has never received the pass-through grossed-up rate. In addition, and as the comparative wages table reveals, although the applicant’s hourly rate is above the Award, it is also less than the pass-through base rate.

215   The reason for this was explained in Mr Doolan’s evidence. The money the respondent has received under the Evergreen Contract to pay pass-through rates has been and continues to be utilised, to provide for uniform wage rates across the Bunbury Depot.

216   This practice, which the respondent has described as its ‘blended wages model’ was and continues to be applied, regardless of the route a driver (and this includes the applicant) works.

The applicant and the Evergreen Contract

217   To determine whether there is an implied term to pay the pass-through rate, I have for the purpose of providing context to the contractual relationship between the applicant and the respondent, paid some attention to what the applicant knew about the Evergreen Contract.

218   In this matter, it is clear the reason the parties did not turn their minds to a term requiring the pass-through rate to be paid to the applicant is because the applicant did not know anything about the Evergreen Contract.

219   It is reasonable to find that the applicant at least until late 2020 or early 2021 when he first spoke to a representative from Transport Edge, was unaware of the existence of the Evergreen Contract or that the respondent, was receiving payment from the PTA, for pass-through rates; see [Transcript p 45].

220   I accept the applicant was not familiar with cl 9.12 of the Evergreen Contract or any of its other terms. The extent of his knowledge is what he gleaned from the Evergreen Payment Sheets and the PTA Information Sheet, copies of which were provided to him by Transport Edge at or around the same time.

221   From the answers Mr Doolan gave in evidence, that I summarised in paragraphs 104-105 above, it is unlikely the respondent would have made the applicant or any other bus driver aware of the existence of the terms of Evergreen Contract.

222   I also doubt the respondent would have made any of its bus drivers aware of what the pass-through rates on any routes to which an Evergreen Contract applied were either. This much was also clear from Mr Doolan’s evidence.

223   I make these observations for the reason that while it is open to find, the applicant voluntarily agreed to the hourly rates he has been receiving throughout his employment, it cannot be said at least until late 2020 or early 2021 that he did so with knowledge of the Evergreen Contract or that he was knowingly consenting to being paid less than the pass-through rate.

224   By the middle of 2021, after Transport Edge provided the claimant with Evergreen Payment Sheets and the PTA Information Sheet, it is reasonable to conclude the claimant would have been aware the pass-through rate was higher than the hourly rate he was being paid.

225   I also accept that when the applicant signed a letter varying his contract of employment on 19 July 2021 [see Exhibit A1 page 54] he would have been aware he was agreeing to accept a rate of pay that was less than the pass-through rate.

226   Inherent in Mr King’s submissions was the suggestion that by signing the 2016 employment letter, the 2017 and 2020 employment agreements and other letters to vary his hourly rate of pay, the applicant had endorsed the respondent’s ‘blended wages model.’

227   This submission, even with the evidence of the letter Mr Doolan sent to drivers about its blended wages model [see Exhibit A1 at page 835] is somewhat of a stretch. The more plausible explanation for accepting a wage that was less than the pass-through rate is the one the applicant, who works a casual bus driver, in a regional town gave;

I signed this…because where do you go if you don’t sign it?... I want to continue with ATG and I wanted to continue with ATG back in 2020 or whenever… Where do you go if you don’t sign this? Do you have a job the next day because you’re not …going to sign it. So that’s why [Transcript at p 63].

228   In other words, I am more inclined to conclude that each time the respondent provided the applicant with a different or updated rate of pay it was presented to him on a take it or leave it basis.

Application of the BP Westernport test

1. Is the term necessary to make the contract effective?

229   To succeed in this matter, the Commission must be satisfied the implied term is necessary to make the contract effective. In applying this limb from the BP Westernport test, it would be more than an oversight not to acknowledge the parallels between this matter and the decision in Byrne.

230   The case in Byrne, involved two baggage handlers, who were dismissed from their employment. The applicants in Byrne claimed that a provision from an applicable industry award that stated ‘the termination of employment shall not be harsh, unjust or unreasonable,’ was implied in their contracts of employment: Irving at [7.45].

231   At the time, a breach of an award clause may have resulted in the imposition of a nominal monetary penalty against their employer, but no damages could be awarded for the breach. The applicants alleged their dismissals were harsh and unfair. On this basis, they claimed their employer had breached the implied term, for which they sued for damages: Irving at [7.45]. 

232   Applying the test in BP Westernport the High Court in Byrne at 423, declined to accept the term should be implied, stating;

Plainly, the fact the inclusion of such a term would, if it were breached, support an action for damages by the employee is no ground for saying that the term is necessary for the reasonable or effective operation of the contract. The contract is capable of operating reasonably and effectively in the absence of such a term and in the presence of an award provision offering limited remedies in the event of a breach.

233   The difficulty the decision in Byrne has presented for parties seeking to imply contractual benefits in employment contracts since, is that although an implied term may be clearly expressed, it is unlikely particularly where the parties’ contract has been reduced to writing, that it will be accepted as necessary; Irving at [7.45] and see for example Dellys v Elderslie Finance Corporation Ltd [2002] WASCA 161 and Griggs v Norris Group of Companies (2006) 94 SASR 126 (Griggs).

234   The evidence in this matter is that even after signing a written contract of employment, the applicant has been able to perform his duties as a bus driver regardless of whether or not it was on a route to which a pass-through rate applied. This was the case after he commenced working on the BSC Route in or around July 2018.

235   Therefore, and while I accept implying a term would ensure the applicant receives the pass-through rate, a finding as such under this limb of BP Westernport would likely be contrary to the majority decision, of the High Court in Byrne that I am required to follow. This is a significant obstacle to the resolution of the matter in the claimant’s favour.

2. Is the term reasonable and equitable?

236   I am required to consider whether it would be reasonable and equitable to imply a term that requires the respondent to pay the applicant the pass-through rate.

237   While Mr Fogliani submitted that I should take the view the implied term was justified on the basis the respondent had made a ‘windfall gain’ by using the money received to pass-through rates to subsidise its blended wages model, Mr King maintained the respondent had not done anything in breach of cl 9.12 of the Evergreen Contract.

238   In my view Mr Fogliani’s submission that an 'officious bystander' would consider an implied term requiring the respondent to pay the applicant the pass-through rate as nothing less than reasonable and equitable given the promises the respondent made in the Evergreen Contract, would have significant merit if was established the respondent had breached cl 9.12.

239   Despite the evidence about how the respondent has used the payments it has received to pay the pass-through rates, I am not without further evidence prepared to find the respondent has breached cl 9.12 of the Evergreen Contract.

240   There are three reasons for this. Firstly, the issue of whether the respondent has breached cl 9.12 of the Evergreen Contract is not a matter I have the jurisdiction to decide. The applicant is not a party to the Evergreen Contract. That contract is between the respondent and the PTA, with the responsibility to enforce the obligations that apply to the respondent, falling within the PTA’s remit.

241   The Commission when hearing a denied contractual benefits claim does not have the same accrued jurisdiction a Court has to make declaratory findings about a contract to which the applicant is not a party as in the Hobart Airport case.

242   Secondly, the evidence about the respondent’s compliance or otherwise with cl 9.12 of the Evergreen Contract is not conclusive. While the respondent claims the PTA’s October 2015 letter confirms the respondent is not making a windfall gain in breach of cl 9.12, the contents of the PTA Information Sheet and the PTA’s March 2021 letter suggest otherwise.

243   Thirdly, no one from the PTA was called by either party to give evidence in relation to the respondent’s compliance or otherwise with the Evergreen Contract. Noting that either party could have called a witness from the PTA in support of its position, I am unable to reach a concluded view on whether cl 9.12 of the Evergreen Contract was breached.

244   In the circumstances I am not, under this limb of BP Westernport, prepared to find that there is an implied term to pay the pass-through rate.

3. Can the implied term be clearly expressed?

245   It is my view the implied term in the present matter like the term at issue in Byrne, is simple and can be clearly expressed.

246   Also similar is the fact the implied term in the present case, can be attributed to an instrument that was developed from negotiations that were conducted at an industry level.

247   Ultimately though, and what the case in Byrne demonstrates is that while an implied term might satisfy this limb of the BP Westernport test unless it is necessary, it is unlikely the term will be implied.

4. Is the term consistent with the express terms of the contract?

248   Noting my finding the applicant has a written contract of employment that contains an essential term on the hourly rate to be paid per hour, regardless of the route he works, an implied term that compels the respondent to pay the pass-through rate would be inconsistent with the express terms of his contract of employment; see Griggs at [27].

249   While I accept the wages term in the applicant’s contract of employment, requires the respondent as a minimum, to pay the applicant the rate specified in the contract, there is nevertheless, nothing in the applicant’s contract of employment that would prevent the respondent from paying the pass-through rate.

250   It is also trite that the applicant’s rate of pay under his contract of employment as it currently applies, cannot be reduced without agreement between the parties either.

251   In effect, this means the applicant’s rate of pay would, as a minimum, need to be maintained, even where it may be found the respondent’s use of the money the PTA paid for pass-through rates to subsidise its ‘blended wages model’ was not permitted under the Evergreen Contract.

5. Is the implied term so obvious that it goes without saying?

252   Noting the difficulty that I would have in finding there is an implied term to pay the applicant the pass-through rate under the first two limbs of the BP Westernport test, I make no finding that it is so obvious that it goes without saying that a term to this effect should be implied.

253   That said, I have concluded that if a term was to be implied, it could be clearly expressed, which if the other limbs of the BP Westernport test were met, would likely result in a finding the implied term is so obvious it goes without saying; see Irving at [7.47].

Conclusion

254   For all the reasons outlined in the preceding paragraphs, I have determined there is no implied term in the applicant’s contract of employment to pay the pass-through rate. Accordingly, I am required to make an order dismissing the application.

255   It should not however be assumed that I consider the applicant should not receive the pass-through rate. What my decision confirms is that if there is an obligation for the applicant to receive the pass-through rate, then legally, it is a matter that must be resolved directly, between the PTA and the respondent.

256   If there is a requirement for a contractor to pay pass through rates to an employee under a contract with the PTA to which the employee is not a party, without the inclusion of express terms to pay the pass-through rates in the employee’s contract of employment or a registered industrial instrument, there is, in the absence of any action by the PTA to enforce that contract, no guarantee the pass-through rates will be passed on in full to the intended recipient.

257   In relation to this, there are matters that emerged from the evidence that cannot be ignored. Firstly, it is apparent the applicant made the application because of what appears in the PTA Information Sheet and the response he received in the PTA’s March 2021 letter.

258   While Mr Bailly in the PTA’s March 2021 letter (albeit with some qualification) suggests the applicant should have been receiving the pass-through rate, he stated the PTA did not have the resources to investigate the matter. This, in my view, is concerning.

259   The provision of school bus services is an important community service, particularly in regional areas of Western Australia. Significant public funds are committed to providing these services, in the expectation the respondent will provide them to the standard agreed.

260   Where, as in this case, complaints are raised regarding the wages employees are being paid under a government contract, requiring the contractor to pay employees a specific rate of pay for work on the routes to which the contract applies, it is incumbent upon the PTA to properly investigate and if necessary, to address these matters.

261   It is not in the interests of the applicant, the respondent or the public, for these matters to be left unresolved, particularly where the respondent also claims to have received advice from the PTA that it is complying with its contractual obligations.

262   In his closing submissions, Mr Fogliani made the concession that recent amendments to cl 19.2 that are contained in the Amended Evergreen Contract now appear to permit the respondent’s use of its ‘blended wages model’.

263   If this submission is correct (and I make no finding on this), then even if the applicant was, pursuant to the Evergreen Contract, previously entitled to receive payment of the pass-through rate in full, any underpayment will be confined to a fixed period between July 2018 and July 2023.

264   Having now highlighted these matters, I would therefore recommend the PTA take urgent steps to review whether the requirement under the Evergreen Contract, to pay a pass-through rate has been breached, so that the matters giving rise to this application, may be resolved.