Van Dongen v Sims Metal Management Ltd [2016] WAIRC 327: Claims of Unconscionable Conduct Dismissed by Tribunal
Friday 15 July 2016 @ 10.07 a.m. | Industrial Law | Trade & Commerce
The WA Road Freight Tribunal (the Tribunal) has recently dismissed claims made by five owner-drivers, that in relation to the request for a tender for the provision of scrap metal cartage services, the hirer engaged in unconscionable conduct and failed to negotiate in good faith.
The Tribunal found that in seeking to reduce the cost of transport services, the hirer was simply seeking to act in accordance with its commercial interests. The applicants were in no different position to all of the owner-drivers who were seeking contracts through the tender process.
History of the Case
The Applicants (Richard Van Dongen as Trustee for the F.R.A.C Family Trust, T/A L and R Cartage Contractors; Graeme Smith, T/A Maranatha Transport; Van Dongen Haulage Pty Ltd; Chang Transport and Scrap Metal Pty Ltd; Lark Hill Transport Pty Ltd) allege that the claims (as originally commenced) maintained that Sims Metal Management Ltd (the Respondent) (Sims) breached the owner-driver contracts between it and the applicants by failing to provide reasonable notice of termination of the contracts.
Furthermore, the applicants alleged that Sims (in relation to the request for a tender for the provision of scrap metal cartage services), engaged in unconscionable conduct under s 30 of the Owner-Drivers (Contracts and Disputes) Act 2007 (WA) and failed to negotiate in good faith as required by s 6 of the Owner-Drivers (Contracts and Disputes) (Code of Conduct) Regulations 2010 (WA). The applicants originally sought damages for the wrongful termination of the owner-driver contracts and additionally, damages for the alleged unconscionable conduct and failure to negotiate in good faith.
Background to the Tender Process
The history of the tender process, which is outlined at [paras 3 and 4] of the judgment reads:
“… In brief, the applicants maintained that they have engaged in the provision of services as owner-drivers to Sims for many years, generally carting scrap metal to wharves for shipment overseas. In April 2015, Sims invited the applicants to submit tenders for the provision of services in the cartage of scrap metal. The applicants did so in about May 2015. The applicants were then advised that their tenders were not successful. Revised further tenders for services were submitted by the applicants to Sims in June 2015. It was contended that following some advice from Sims to at least one of the applicants, a further revision of the tenders by reducing rates by 10% was submitted. However, ultimately, the applicants were not successful in securing ongoing work … As a result of these events, the applicants contended that Sims acted unconscionably. The unconscionable conduct was said to be by reason of the fact that the applicants had been providing services to Sims over many years and Sims had misused its bargaining power in forcing the applicants to reduce their rates. It was further contended in this regard, that Sims, in forcing the applicants to reduce their rates in the tender process, exerted undue pressure and engaged in unfair tactics as the rates required by Sims were not safe and sustainable rates, and were not rates at which the services could be provided, whilst meeting legal requirements.”
The Alleged Accusations
The applicants allege [at para 5] that Sims breached its obligation of good faith in relation to negotiations for the variation and/or renewal of the owner-driver contracts, as in effect, Sims required the applicants to bid against themselves in the tender process.
Furthermore, Sims refused and/or failed to enter into meaningful negotiations with the applicants in relation to the tenders, whilst engaging in such discussions with other parties. This was a further basis on which the applicants alleged Sims’ conduct was unconscionable and unfair.
Conclusion
In his summing up, Commissioner Kenner dismissed the application submitted by the applicants, stating [at para 69]:
“… I am not persuaded that Sims engaged in unconscionable conduct or contravened its obligation to negotiate in good faith. I do not consider that Sims’ approach to the applicants’ tenders demonstrated ‘serious misconduct’ or conduct involving some ‘moral fault’ or ‘overwhelmingly unreasonable behaviour’. "
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Sources:
Road Freight Tribunal dismisses claims alleging unconscionable conduct and failure to negotiate in good faith - WA IRC
