Barron v Technological Resources Pty Ltd
[2012] FMCA 818
•19 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARRON v TECHNOLOGICAL RESOURCES PTY LTD | [2012] FMCA 818 |
| INDUSTRIAL LAW – Summary dismissal – strike out – defective allegations in pleading addressing privity and representations – arguable case for trial on both points – need for amended pleading. |
| Fair Work Act 2009 (Cth), ss.44, 357, 369, 371, 544, 545 Workplace Relations Act 1996 (Cth), s.900 |
| Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 Fair Work Ombudsman v Maclean Bay Pty Ltd [2012] FCA 10 Hartnett v Aardvark Security Services Pty Ltd (1998) 85 IR 315 Leggett and Anor v Aardvark Security Services Pty Ltd [2000] NSWIRComm 188 Spencer v Commonwealth of Australia (2010) 241 CLR 118 |
| Applicant: | BRUCE BARRON |
| Respondent: | TECHNOLOGICAL RESOURCES PTY LTD |
| File Number: | BRG 108 of 2012 |
| Judgment of: | Burnett FM |
| Hearing date: | 27 June 2012 |
| Date of Last Submission: | 27 June 2012 |
| Delivered at: | Brisbane |
| Delivered on: | 19 September 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr J. Murdoch SC and Mr D. Kent |
| Solicitors for the Applicant: | Holding Redlich Lawyers |
| Counsel for the Respondent: | Mr J. West QC and Mr A. Duffy |
| Solicitors for the Respondent: | Freehills |
ORDERS
Direct that the applicant file an amended Particulars of Part G – Contraventions Alleged on or before17 October 2012.
Subject to any other order being sought within seven (7) days of today’s date, direct that the costs of and incidental to the application be the respondent’s costs in the cause.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 108 of 2012
| BRUCE BARRON |
Applicant
And
| TECHNOLOGICAL RESOURCES PTY LTD |
Respondent
REASONS FOR JUDGMENT
Technological Resources Pty Ltd (TRPL) seeks orders for summary dismissal or the permanent staying of proceedings brought against it by the applicant, Bruce Barron. Alternatively, it seeks orders that the applicant’s particulars of the application be struck out so far as they concern the applicant’s claim for relief of the alleged contravention of s.357 of the Fair Work Act 2009 (Cth) (FW Act) and for consequential orders.
Barron’s claim against TRPL is for damages for breach of contract of employment or compensation in respect of contraventions of s.44 FW Act and s.357 FW Act pursuant to s.545 FW Act. The thrust of TRPL’s complaint concerns the cause of action pleaded in respect of the alleged breach of s.357. Section 357 relevantly provides:
“Misrepresenting employment as independent contracting arrangement
(1) A person (the employer) that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services under which the individual performs, or would perform, work as an independent contractor.
(2) Subsection (1) does not apply if the employer proves that, when the representation was made, the employer:
(a) did not know; and
(b) was not reckless as to whether;
the contract was a contract of employment rather than a contract for services.”
Relevantly, Barron alleges in his claim that:
a)He had been engaged by entities within the Rio Tinto Group since September 2004 to act in a number of management roles (paragraph 2);
b)He was the sole director of Eremina Pty Ltd (Eremina) which he incorporated solely for the purpose of ensuring that he was remunerated for his services to the Rio Tinto Group (paragraph 3);
c)Eremina entered into various agreements between Rio Tinto Group companies including TRPL from 9 September 2004 for the provision of various professional services (paragraph 4);
d)Although Eremina was the contracting party, the “contract” contemplated the provision of service by Barron as a natural person separate from Eremina (paragraph 5);
e)Barron was directed to and did for work other groups within TRPL as part of the Rio Tinto Group rather than “performing the services contemplated by the first contract” (paragraph 6);
f)In June 2009, whilst still performing duties pursuant to the third contract concluded between Eremina and a Rio Tinto entity, the applicant was appointed to the role of “Manager, Global Projects – Rio Tinto Procurement” and subsequently to the additional role of “Acting Leader - Global Travel,” roles in which he continued until receiving notice of termination of his employment on 20 July 2010.
During the course of the agreements between Eremina and Rio Tinto group companies, Barron remained in fact an employee of the respondent or another Rio Tinto Group company (paragraph 13) by reason of the factors enumerated at paragraphs 13(a) to 13(n).
It was contended that in the circumstances the intention of the parties was for there to be a direct employment relationship between the applicant and the Rio Tinto Group, including the respondent (paragraph 14) and that as a result the applicant was an employee of TRPL (paragraph 15).
In his particulars, Barron alleges at paragraph 16:
“The Respondent thus misrepresented to the Applicant, in contravention of s.357 of the Fair Work Act 2009 (Cth), that the various contracts outlined above were contracts for services under which the Applicant performed work as an independent contractor, whereas in truth he was an employee.”
Summary Dismissal
TRPL contends that Barron’s misrepresentation case is such that it has no reasonable prospect of success and that in the circumstances the claim is frivolous or vexatious or otherwise an abuse of process and that it should be summarily dismissed or permanently stayed.
The principles to be applied in such an application are summarised by the observations of French CJ and Gummow J in Spencer v Commonwealth of Australia (2010) 241 CLR 118, where at [25] their Honours observed:
“Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this court, the court hearing the application under s.31A could justifiably conclude that the proceedings had no reasonable prospect of success.”
TRPL acknowledges that the applicant’s evidence ought be accepted at its highest for the purpose of this application. It contends that in order to make out a contravention of s.357 FW Act it is not enough for a claimant to demonstrate that the relationship between him and the alleged employer was one of employment. Needless to say, without that characteristic the claim must fail. It contends however that even if it is assumed that Barron can show that the true relationship was one of employment, the contravention of s.357 FW Act requires in addition that the alleged employer must have misrepresented to the individual that the relevant contract which was or was to be entered into was a contract for services rather than one of service. It contended that the relevant elements to establish the cause of action are as follows:
a)TRPL must, in truth, be the employer (or proposed employer) of Barron (that is that there is or will be a relationship of employer/employee between Barron as the individual claimant and TRPL);
b)The respondent must have made a representation;
c)The misrepresentation must have been made to the individual, who in this case is Barron;
d)The representation must have been that the contract under which Barron would perform work was a contract of services; and
e)That the representation must have been false in that the contract was in truth a contract of employment of the individual, that is a contract of service.
TRPL contends that Barron was never an employee of any of the Rio Tinto companies but rather an employee of Eremina. It contends that in the present case what is alleged is that there were a series of contracts between a company, Eremina and either TRPL or another Rio Tinto company. Significantly however there is no contract alleged at any time between Barron, the individual, and the respondent, or any other Rio Tinto company. It was contended that the difficulty was compounded by later transactions whereby the original contract was contended to have been rolled over in circumstances where there appear to have been no discussions or negotiations in respect of those rollovers or extensions. It contended that Barron does not allege anywhere that Eremina entered into the contracts that it did with any other intention than to provide the services that it contracted to provide. Barron does not swear to any intention to deceive, for example, the taxation authorities, by entering into such contracts, and accordingly it contends that the contracts could not in any sense be considered to be sham arrangements.
TRPL’s complaints include that the nature of the contracts alleged against it are unclear, particularly concerning the intention of the parties. It contends for instance that it is not clear, when pleading the intention of the parties in paragraph 14 of the pleading, who it is that Barron is making allegations in respect of. Is it for instance Barron and TRPL, or is it Eremina, or any of a number of the other Rio Tinto entities who were involved in the transactions?
Irrespective of the outcome of this application, this is plainly a matter which needs to be attended to, if not in any other way, at least by the provision of particulars.
TRPL then observe of Barron’s pleaded case that the mere fact that he was in truth an employee is not of itself enough to make out a case that the respondent must have made a misrepresentation about that matter.
TRPL particularly alleges that there is no pleaded allegation that anything said constituted a representation for the purposes of s.357 FW Act. It submitted that the contracts themselves are not said to have conveyed any representation to the applicant and that, even if they had, all that would have been conveyed would have been something about the nature of the contractual relationship that the respondent was prepared to enter into with Eremina. It contended such a statement of contention would not be a representation in any relevant sense and certainly not a representation prescribed by s.357 FW Act.
It alleges that not only is there no alleged evidence of any representation but, given the timing of the various contracts, that any causes of action arising out of such misrepresentations if made would be statute barred. It follows on TRPL’s contention that the claim under s.357 FW Act must fail.
Contract of Employment
Although the respondent’s attack is multifactorial, its focal point is directed to the issues of privity and the representation. A plain reading of s.357 directs enquiry to an examination of whether or not an employer “that employs, or proposes to employ, an individual must not represent to the individual that the contract … is a contract for services … as an independent contractor.”
On the issue of privity, Barron contended that there existed an employment relationship notwithstanding the presence of a personal services company between the putative employer and putative employee, and that the reality of the situation ought be recognised. It was conceded that this matter has not been the subject of express consideration in the context of s.357 of FW Act. However, it was submitted that the matter has been similarly determined elsewhere in the employment context. See Hartnett v Aardvark Security Services Pty Ltd (1998) 85 IR 315 and Leggett and Anor v Aardvark Security Services Pty Ltd [2000] NSWIRComm 188.
For Barron it was submitted that the decisions in Hartnett and Leggett (supra) suggest by implication that such arrangements can give rise to a contravention of s.357 FW Act. Accordingly, it contends that the law is unsettled and that the matter should be permitted to proceed to trial; Spencer v Commonwealth of Australia (supra) 132 at [25].
Both Hartnett and Leggett concerned the employment arrangements of a company, Aardvark Security Services Pty Ltd, and a related entity, Combined Area Response Services Pty Ltd (CARS). From a review of the facts in Hartnett, it can be seen that the arrangement in question was one that transitioned from a standard employer/employee employment contract to an independent contractor arrangement. In Hartnett, the employee adopted a business name and later he incorporated a special purpose vehicle to contract with Aardvark Security, and later CARS. However, the only question alive in Hartnett’s case was whether Hartnett was an employee or independent contractor. In considering that issue, Wilcox J observed at page 317:
“It is obvious that those associated with Aardvark Security Services thought that there was some advantage to them in erecting a façade of an independent contractor relationship and, for reasons which escape me, having the independent contractors incorporate themselves; but this cannot effect the reality of the situation.”
The decision in Leggett does not add to this matter but illustrates the point in the context of different legislation seeking remedies in respect of unfair contracting.
That approach was contended for here. The decisions are significant insofar as the Court in Hartnett and the Commission in Leggett did not appear to be troubled by issues of strict privity. From the absence of discussion it appeared to be accepted that the interposition of the corporate third parties was as much evidence of the sham nature of the transactions as the actual employment circumstances themselves. By implication, the intervening contracts appear to have been avoided, although the basis for that conclusion is unclear from the judgments.
TRPL contended that in fact what is alleged in this case is that there are a series of contracts between Eremina and either the respondent, TRPL, or other Rio Tinto companies. Importantly, it that contends there is no contract alleged at any time between the individual claimant and the respondent or between him or any other Rio Tinto company. A close examination of the pleading bears this out. However, for Barron it is contended that the view of Wilcox J in Hartnett requires consideration of “the reality of the situation.” While that may be the result, I think that it is reasonable that the respondent be informed of the legal reasoning that begets that result. The pleading should reveal that process as stated in Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 by Mason CJ and Gaudron J:
“The function of pleadings is to state with sufficient clarity the case that must be met … In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision.”
TRPL contends that dicta from authority dealing with the repealed legislation, provided for under s.900 of the Workplace Relations Act 1996 (Cth) (WR Act), supports the contention that the fact of incorporation of an intermediate contracting vehicle would avoid contravention of s.357 FW Act. This serves to highlight the reasonably arguable point of difference between the positions of each party.
Plainly, if issues of privity between Barron and TRPL can be resolved to produce a contractual employer/employee relationship between them, the first obstacle of employment is hurdled. There is significant room for analysis and debate concerning the legal position which follows the facts in a case such as this and, in my view, the applicant has more than a fanciful prospect of success on the issue. That matter of itself would warrant trial.
Representations
However, the prospect of an employer/employee relationship addresses only one element of an alleged contravention of s.357 FW Act. The next issue raised by TRPL concerns whether, for the purpose of s.357 FW Act, there is alleged an actionable representation. As was submitted for the respondent, a contravention of s.357 FW Act requires “that the alleged employer must have misrepresented that the relevant contract which was, or was to be, entered into, was a contract for services rather than one of service.”
TRPL says that it made representations to Eremina and entered into a contract with it. On that basis, Barron is alleged to be a stranger to the legal relationship between it and Eremina.
The difficulty identified with addressing the underlying contractual relationship informs, in my view, the respondent’s significant complaint concerning the actionable representation. In its submissions, the respondent refers to the only allegation of misrepresentation alleged by Barron which is found at paragraph 16 of the statement of claim stated earlier.
From that allegation, the respondent says that the applicant’s pleaded case is that the mere fact that he was in truth an employee is alleged to be enough to make out the case that the respondent made an actionable misrepresentation to him. That is, when viewed with the benefit of hindsight, there was an engagement of the applicant personally and that such an engagement can be seen to be one of employment. Accordingly, even though there is no evidence of it and no specific allegation of it, there must have been a misrepresentation about that matter.
The respondent contends that there is simply no warrant for such a case on any reading of s.357 FW Act.
Furthermore, the respondent contends that the evidence in the affidavit material as it presently stands provides no assistance to the applicant’s case on alleged misrepresentation. For instance, in Barron’s affidavit it can be seen at paragraph 3 that there is an allegation that Mr Antal (an officer of Energy Resources of Australia Ltd at the time but not alleged to be a servant or agent of the respondent) relevantly said to the applicant “If you take the project manager role, it will just be a contract offer” and “Doesn’t make much difference, mate. Just set up a company so you can invoice us and I will get the team to do up a contract.”
It appears from a reading of s.357 FW Act that the employment of terms such as “proposes to employ” takes the section beyond the transaction or arrangement under immediate consideration. The object of the phrase is “an individual.” The analysis must commence from this premise then progress forward to consider the actual arrangement, however it may be structured. The section addresses this by addressing the question of the representation to the individual. That is that the “contract of employment under which [he/she] is, or would be, employed by the employer.” Arguably, this calls for consideration of the structure of the arrangement which in turn calls for a close consideration of what is meant by “contract of employment” in that context. It appears that representations about that matter must be at the heart of any proceedings.
The present difficulty is that the cause of action as presently pleaded does not articulate this or any other contention by alleging facts in a manner that reasonably discloses the basis of the action. The applicant contends it needs do no more than rely upon the contract: Fair Work Ombudsman v Maclean Bay Pty Ltd [2012] FCA 10 at [93]. While that authority illustrates a court’s willingness to adopt that approach, it did not disclose the legal reasoning behind that outcome.
It is not inconceivable that an action can be pleaded to reasonably allege a claim pursuant to s.357 FW Act. Whether the claim ultimately succeeds or fails is a matter for trial.
With respect to the applicant, I agree with the respondent’s criticism that the pleading does require review. The bare facts contained within the affidavits filed by the applicant in support of its cause of action appear to provide a basis for an arguable cause of action. As to whether they are of themselves sufficient is a matter yet to be resolved. However, the cause of action sought to be advanced as expressed in argument is not presently adequately addressed in the pleadings. I have identified a number of deficiencies earlier.
Limitation issues
Concerning the limitation period provided at s.544 FW Act, Barron contends that that period does not apply to the general protections applications (such as the misrepresentation action). Section 371(2) provides that the s.544 time limit is only displaced in respect of applications requiring a certificate under s.369 of the Act, that is for a contravention involving dismissal. It contends that as a misrepresentation action requires no such certificate before proceedings can be commenced, the six year limit at s.544 applies and events prior to 6 February 2006 fall outside the relevant limitation period for Barron’s cause of action. It contends however that there is no statutory or common law prohibition against leading evidence of events occurring outside the limitation period in a proceeding subject to the usual relevant considerations. In this instance, it is contended that the circumstantial case may be mounted giving rise to inferences to be drawn from facts within the limitation period, thereby making the evidence more comprehensible within a broader factual matrix. Even if the evidence is prima facie relevant, no doubt broader issues will arise for instance whether or not the evidence is otherwise admissible under the coincidence rule. In any event, these are matters best left to be argued at trial.
Conclusion
I have come to the view that the applicant does have an arguable case. There are deficiencies in the pleading which require attention. The respondent is entitled to have an understanding of both the facts and the legal basis of the action suited against it. That is presently lacking. In my view, the most appropriate course is for the applicant to amend or re-plead the cause of action addressing those factors which have been identified as a criticism of it in the course of the debate between the parties in this application.
Orders
Direct that the applicant file an amended Particulars of Part G – Contraventions Alleged on or before 17 October 2012.
Subject to any other order being sought within seven (7) days of today’s date, direct that the costs of and incidental to the application be the respondent’s costs in the cause.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 19 September 2012
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