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No goodwill for ‘unfair’ Toll, ordered to pay $400k to drivers

Toll ordered to pay almost $400,000 to nine sub-contractors after being found guilty of enforcing an unfair contract

By Brad Gardner | April 1, 2009

Industry heavyweight Toll Holdings has been ordered to pay almost $400,000 to nine sub-contractors after being found guilty of enforcing an unfair contract.

In a case brought against it by the Transport Workers’ Union (TWU), Toll was accused of failing to fulfill obligations stemming from its purchase of Brambles Transport in 1996.

The Industrial Court of NSW heard Brambles had in place an agreement allowing owner-drivers to sell their vehicles and positions, which is known as goodwill. When Toll bought the business in 1996, it issued a letter informing Brambles employees all benefits would be transferred over.

Toll, however, had an unwritten policy against goodwill clauses and refused to permit owner-drivers from selling their vehicles and work when it had them sign new contracts.

But Justice Conrad Staff ruled the carrier had a responsibility to the owner-drivers because it failed to inform them of its policy and did not produce written contracts to supersede the Brambles agreement.

“Toll unconscionably departed from the representation which it had made that the owner-drivers would enjoy the same conditions as they had with Brambles,” Staff says.

“In these circumstances, the owner-drivers should be compensated for what they were denied, that is, the right to sell their trucks with work in circumstances which were not lost to them.”

Describing Toll’s actions as “unfair” and to the “detriment” of those affected, Staff ordered any post-1996 contracts void and for the company to reimburse all nine owner-drivers.

Len Felice will receive $67,000 under the judgment, with another two owner-drivers paid $56,500 and $55,000 respectively. Four others will receive $40,000 or more.

The TWU called for a blanket payout of $75,000, but Staff ruled against this and also reserved a decision on interests and costs until April 20.

The Brambles agreement was forged in 1989 and was based on the proviso that selling machinery along with the promise of an income to owner-drivers generated a better return for the seller.

The court heard Felice had organised to sell his truck and work for $95,000 in January 2004. Felice wanted to leave the industry to care for his family after his wife died of cancer.

Toll, however, blocked the sale and also refused to employ Felice’s potential buyer if the sale went ahead. Felice was forced to leave Toll in July 2004 because of family responsibilities and only managed to sell his vehicle for $30,000.

Toll also tried to convince the court against awarding James Novack $25,000, who de-registered his company and became a Toll employee after the company refused his goodwill request.

Novack operated as the director and shareholder of Transco Holdings, which was de-registered in 2002. Toll argued the court could not award damages or vary a contract when one party was de-registered.

Its efforts failed, however, with Staff saying “the fact that a company is de-registered is no impediment to the making of an order with respect to Mr Novack”.

Despite Toll expressing doubt over its knowledge of the goodwill clause, Staff ruled the company was aware of it because it had access to Bramble’s contracts as part of the due diligence process.

“Furthermore, although the issue of goodwill was clearly a significant matter, Toll chose not to disclose its policy in respect of goodwill to the owner-drivers,” Staff says.

The court heard Toll had also received legal advice, which upheld the Brambles agreement.

“Toll maintained its position nonetheless,” Staff says.

This included attempts to have Novack sell his vehicle to Toll and then sign a release excluding the company from any goodwill liabilities.

Toll claimed the matter should have been dismissed by the court because none of the owner-drivers identified any unfairness in the contracts they signed.

The company also argued the goodwill clause did not relate to the work performed and therefore could not be remedied.

Staff refuted the claim, saying “just like a notice clause, or termination clause, it determines a benefit or a set of arrangements beneficially to owner-drivers to operate when their work comes to an end”.

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