Allen v Integrated Property Investments - [2003] FMCA 136

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ALLEN v INTEGRATED PROPERTY INVESTMENTS & ANOR

[2003] FMCA 136

TRADE PRACTICES – misleading and deceptive conduct – employment contract – no misleading and deceptive conduct – implied term for reasonable notice – reasonable notice not given.

Trade Practices Act1966 S53B

Applicant:

TERESA ALLEN

First Respondent:

INTEGRATED PROPERTY INVESTMENTS

Second Respondent:

MICHAEL WILSON

File No:

MZ 411 of 2002

Delivered on:

11 April 2003

Delivered at:

Melbourne

Hearing dates:

24 & 25 March 2003

Judgment of:

Phipps FM

REPRESENTATION

Counsel for the Applicant:

Mr Lethlean

Solicitors for the Applicant:

Kelly & Chapman

Counsel for the Respondents:

Mr Burns

Solicitors for the Respondents:

Christopher Bunnett

ORDERS

That the first respondent pay the applicant the sum of $3619.08.
That the claim against the second respondent is dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ 411 of 2002

TERESA ALLEN

Applicant

And

INTEGRATED PROPERTY INVESTMENTS

First Respondent

And

MICHAEL WILSON

Second Respondent

REASONS FOR JUDGMENT

Introduction

The applicant was employed by the first respondent firstly as a Commission Agent selling property and then subsequently as a Business Development Manager. Her employment as an agent commenced in September 1999. The first respondent's business is selling investment properties as an estate.
The applicant was first employed as a commission agent under an agency agreement dated 27 September 1999. Under that agreement, she was paid a salary of $500 per week to be clawed back from commission on sales. Commission was 3 percent when the lead was supplied by the first respondent and 5 percent on sales generated from her own sources. The agreement contained a term that it could be terminated by either party giving seven days notice.
The first respondent's method of business was to contact intermediaries such as accountants, financial advisers, insurance agents and finance brokers and through them seek to attain potential purchasers of the investment properties. Much of this contact with intermediaries was done by what was described as cold calling, telephoning or visiting the offices of potential intermediaries without there being any prior introduction or contact. This was the way the applicant sought to make sales when she commenced employment.
On 10 July 2000, the applicant was employed by the first respondent in the new position of Business Development Manager. Instead of commission she was paid a salary of $50,000 per year. In addition, she was paid 8 percent superannuation, 50 cents per km for her car and reimbursement of telephone expenses. She was to receive $500 commission on sales. The written employment agreement contains no provision as to notice and no provision as to the duration of the employment.
The first respondent is managed by its two directors. They are Mr Wilson, the second respondent, who is Managing Director and Mr Williams who is responsible for sales.
The applicant's employment was terminated on 13 October 2000 and she was paid one weeks pay in lieu of notice and her accrued entitlements. She claims that it was an oral term of her employment that it was for a period of two years. Alternatively, she claims that it was represented to her that her employment would be for two years, that she relied upon this in entering into the agreement and that she has suffered loss by not having the representation fulfilled.

The Evidence

The applicant said that by July 2000 she had not made sufficient sales to cover her expenses. She had made seven sales, but one property had been withdrawn and one had not proceeded because finance was not obtained. The commissions from the other five were about $19,000. She had decided to move to Queensland and had placed her home with an estate agent for sale. She has two children and is separated from their father. She had been receiving $1,000 per month child support but it had been reduced to $150. As well, Family Court orders existed in relation to the father's contact with the children. She had applied to the Family Court for permission to move to Queensland with the children.
She said that Mr Williams knew all of this. From about November 1999 until June 2000 she had a personal and intimate relationship with Mr Williams. Consequently, she said that Mr Williams knew of her personal circumstances. Mr Williams knew of her financial difficulty. At one stage, she said he lent her money so that she could pay repair bills on her car. Mr Williams also knew that her car was unreliable because of frequent break downs.
In her employment she reported principally to Mr Williams. She says that she telephoned him on 5th July 2000 and told him that she had decided to relinquish her position. She said that later on the same day Mr Williams telephoned her and said he was shocked by her decision. She said that he had told her that he and Mr Wilson did not wish to lose her and asked her to do nothing drastic until he and Mr Wilson had returned on Monday 10 July 2000 from a business trip to Brisbane.
She said that on 9 July 2000 she was telephoned by Mr Williams and a meeting was arranged for eleven o'clock the next day at the office in Notting Hill. At that meeting she attended with Mr Williams and Mr Wilson. She said Mr Wilson told her that he had intended offering her the position of Business Development Manager for sometime but had been too busy with other matters. He then proposed employment at $50,000 per year, working 9.00am to 5.00pm with no more evening work and no more weekend work. She would be dealing with intermediaries only, no longer giving presentations to clients.
She asked for a contract in writing and a letter was produced. Initially she said she signed it the same day, but when shown her original acknowledgement of the letter she agreed that it was dated 11 July 2000 and that she must have signed it on that day. That letter, unlike the July 2000 employment agreement, contained no provision for notice. It set out the position, the commencement date, salary, superannuation, bonus, motor vehicle allowance and mobile phone reimbursement.
The applicant said that at the conclusion of the meeting Mr Wilson took her by the hand and put his other hand over the top of her hand; said that he knew she had had some difficulties and he wanted a two year commitment. She said that without the promise of a two year appointment she would not have taken the position but continued on with her plans to move to Queensland. She would not have committed herself to the purchase of a new car which she did shortly after.
The applicant's evidence described the work she did. She said she asked for a job description and confirmation that it was a two year appointment but neither came. She gave evidence of abuse at meetings with Mr Wilson and of being told by Mr Williams on 13 October 2000 that her position was terminated.
The evidence of Mr Wilson and Mr Williams was different in key respects. Mr Williams said that when telephoned by the applicant in the middle of July 2000 he did not express any disappointment. However, when he discussed her intended resignation with Mr Wilson, Mr Wilson suggested that she be employed in a marketing role. Both Mr Wilson and Mr Williams considered that the applicant was good at making contacts with intermediaries. She lacked an ability to close sales. The task of building contacts with intermediaries had been Mr Williams’ and it was considered that someone should be employed to assist in this task. Mr Williams said he had put a considerable amount of time into training the applicant and did not want to lose the benefit of that.
They said that at the meeting on 10 July 2000 the applicant was told that she would be employed for a three-month trial period. Both denied that Mr Wilson had said that he wanted a commitment for two years. Both denied that Mr Wilson had said anything about the applicant's personal circumstances. Mr Wilson said he knew nothing of her personal circumstances and Mr Williams said that he knew she was separated and that was all.
Both denied that there had been abuse of the applicant by Mr Wilson. Both denied that the applicant had sought to have in writing that she was employed for two years. Mr Williams did acknowledge that he had written out a job description. They said that the applicant's employment was terminated after three months because her work had not generated any sales.

The claim

The applicant's contractual claim was based firstly on the alleged expression in oral terms that the contract was for a two-year duration. Alternatively she claimed on an implied term of reasonable notice. Her claim under the Trade Practices Act 1974 was based upon section 53B It provides:
A corporation shall not, in relation to employment that is to be, or may be, offered by the corporation or by another person, engage in conduct that is liable to mislead persons seeking the employment as to the availability, nature, terms or conditions of, or any other matter relating to, the employment.
The claim against the second respondent, Mr Wilson, alleged that he was involved in the breach of section 53B within the meaning of section 75B.
The damages claimed, both for breach of contract and under section 82 of the Trade Practices Act were for the balance of two years salary less an amount of $14,077 she earned while employed as an Estate Agent by Stamford Allen for three months from March to May of 2001.

Discussion

The key issue in determining liability is what was said at the meeting on the 10th July 2000. If Mr Wilson did say to the applicant that he wanted a commitment for two years there is a factual basis for alleging a contractual term of two years or for alleging misleading and deceptive conduct.
I consider that the probabilities are against the applicant's version. Both Mr Wilson and Mr Williams are successful in their business. The success of the business depends upon selling real estate and so earning commissions. Mr Williams gave evidence of ending the employment of commission agents on many occasions. His evidence was that you are not making money if you are not making sales.
Plainly, the applicant would be of use to the business in a new position only if her activities were leading to the sale of properties. She had worked for a period of nine months as a selling agent but without much success. She did have a skill which Mr Wilson and Mr Williams thought their business could use, but I think it improbable that Mr Wilson would have committed the business to two years of employment at $50,000 a year plus the other expenses. While the applicant did have training and was good at making contacts she was being put into a new position after being only partially successful in another. She was appointed to do work previously done by Mr. Williams. It was not work that required a lengthy course of training. It was not essential to the first respondent’s business that the applicant and she alone be employed. It is unlikely to the extent of being improbable that a person such as Mr Wilson would make a two year commitment in these circumstances.
I consider that the applicant has overstated her importance to the firm. Her evidence of apology by Mr Wilson for not offering her the job earlier seems improbable. Mr Wilson's nature and his background in the business of selling real estate makes it unlikely that he would have regarded the applicant in such a way that upon her giving notice of termination he would apologise to her for not offering a permanent job earlier. I consider that Mr Wilson would only be offering the job if he thought it was in his business interests to do so, not out of any concern for the applicant.
The other aspect of the applicant's evidence which I think is improbable is her statement that Mr Wilson said that he knew of her personal difficulties, that is, the need for her to apply to the Family Court to relocate to Queensland and her difficulties with child support. In her period as a Commission Agent the applicant worked from home and was not often in the office. Mr William’s practice was to have frequent meetings with the agents but generally at coffee shops because he and the agents were on the road. Mr Wilson had little to do with the applicant, and certainly not in circumstances where her personal difficulties would have been discussed.
The applicant's claim that Mr Williams knew of her difficulties is based on her period of personal and intimate relationship with him. Mr Wilson did not know of this until about six months ago when he questioned Mr Williams after a conference with the barrister acting for both respondents in the proceedings. Mr Williams had not revealed his relationship to Mr Wilson. It would be most unlikely that he would have told Mr Wilson of the applicant's personal circumstances when he did not tell him about the relationship. Neither Mr Wilson nor Mr Williams gave the impression of people who would discuss the family law difficulties of an employee such as the applicant.
This is sufficient to deal with the applicant's claim. I do not need to deal with the incidents which the applicant says took place during her employment. But overall, I consider that the applicant has overstated her case. I think that she has exaggerated the behaviour of Mr Wilson in the meetings she described. Ms O’Loughlin, a member of the office staff for a period of six years, gave evidence. She said that the office was small. She was employed as Office Manager and was always there. She had not heard any of the incidents which the applicant described. She said that while Mr Wilson could get gruff he did not swear at people in the office. This evidence and my impression of Mr Wilson leads me to the conclusion that the applicant has embellished her evidence. Mr Wilson denied any gruffness or raising of his voice. This may be partly a matter of interpretation but overall, I prefer the evidence given on behalf of the respondents to that of the applicant.
I think it unlikely that Mr Williams and Mr Wilson referred to a three month trial period. The applicant said that she would not have taken the job if that was so because on the strength of being appointed to the position she took her house off the market, discontinued the Family Court proceedings and purchased a new car on hire purchase. She used the letter of the 10th July 2000 appointing her to the position to obtain finance from Ford credit. I consider that the applicant considered that she had a permanent job and gave little, if any, thought to how long it might last. Mr Wilson and Mr Williams may have had a trial period in their own minds, but did not put it to the applicant. I consider that if they had it would have been put into the letter of offer of appointment which was prepared immediately after the meeting.
Even if there was a statement about a two year period as alleged by the applicant, or a reference to a three-month trial period as alleged by the respondents, I do not consider that either statement would have become a term of the contract of employment. Immediately after the conversation the letter dated 10 July 2000 was prepared and the written acceptance by the applicant dated 11 July 2000 was signed by the applicant. A two year period and a three-month trial period are significant matters. If they had been agreed as alleged, then I consider that they would have been included in the written document. The parties to the employment agreement, the applicant and the respondents, clearly both intended that there be a written employment of contract. That being so, they must have intended that the significant terms of the contract, other than those commonly implied into such agreements, would have been incorporated. They were not. I think the circumstances were such that both parties intended their agreement to be embodied in the letter and the acceptance. That being the case, even if the conversations as alleged took place, they did not become part of the contract. There was a contract in writing, not a partly written and partly oral contract.
The applicant's claim under the Trade Practices Act depends upon establishing that she was told on the 10th of July 2000 that she had two years employment. The finding that she was not means this claim fails.
That leaves the alternative claim of reasonable notice. Counsel for each party accepted that an employment contract such as this contains an implied term and that it is terminable by either party on reasonable notice when there is no expressed term about notice.
The first respondent says reasonable notice is seven days. That was what was in the original contract said and it should be applied in the second contract. I think that is more a reason for considering that seven days is not reasonable notice. Surrounding circumstances are to be taken into account in interpreting a contract. Part of the surrounding circumstances are the employment arrangements between applicant and first respondent in the period immediately preceding the contract for Business Development Manager. That was an agreement where the remuneration was commission based and where the applicant worked largely from home. The new position was remunerated by a salary and she was based in the office even though she spent a considerable amount of time away from the office on interviews and presentations. It is understandable that a commission based contract, where the measure of performance is sales made, should be terminable on short notice. If the employee is not making sales the whole basis for employment does not exist. Consequently, provision for termination on short notice is understandable.
The difference in work to be done by the applicant in her new position was a matter of contention. The respondents and Mr Williams said that basically the work had not changed except that the applicant was no longer responsible for presentations and interviews with clients and closing sales. Otherwise, she continued as before cold calling and seeking leads to intermediaries. The applicant saw her job as more management based. Whatever the change, it was a different job with the applicant commencing each day at the office. Her work was not related solely to the pursuit of individual sales but the building up of contacts for all of the selling staff of the first respondent. Given the nature of the work and the absence of specific provision for notice, a period greater than the seven days is reasonable.
I consider that an implied term of one-months notice is reasonable in the circumstances.
That makes damages as follows:
One months salary – $4166.60 less $961.60 paid               $    3,205.06
Superannuation at 8 percent  $       256.40
Additional accrued annual leave  $       157.62
Total  $    3,619.08
Strictly speaking, the superannuation should be paid to a superannuation fund. This is not possible. Ordering it to be paid direct to be applicant produces a different taxation result, but the amount involved is so small that the difficulty of calculation can safely be ignored.

Conclusion

The result is an order that the first respondent pay the applicant the sum of $3,619.08. The application against the second respondent depended solely on the misleading and deceptive conduct claim against the first respondent under section 53B of the Trade Practices Act. It fails and so the claim against the second respondent is dismissed.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Phipps FM

Associate: Kwong S

Date: 11 April 2003