Blake v Sitefate Pty Ltd and and Impulse Transportation Group and Jackson v Airwarm Pty Ltd and Impulse Transportation Group and McCarthy v Impulse Airlines Pty Ltd
[1997] IRCA 67
•14 March 1997
DECISION NO:67/97
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - applicants employed as airline pilots - whether employed by holding company or its subsidiary - indicia of employment - UNFAIR DISMISSAL - reinstatement impracticable - compensation
Workplace Relations Act 1996 SS 170 DC, 170 DE, 170 EA, 170 EDA, 170 EE.
Stevens v Brodribb Sawmilling Company Pty Limited 160 CLR
Vabu Pty Limited v Commissioner of Taxation, (unreported, Court of Appeal, New South Wales, 6 September 1996)
Mersey Docks and Harbour Board v Coggins & Griffith [1947] AC 1
BLAKE & ANOR V SITEFATE PTY LIMITED AND
IMPULSE TRANSPORTATION GROUP
VI95/1383, VI95/1384
JACKSON & ANOR V AIRWARM PTY LIMITED AND
IMPULSE TRANSPORTATION GROUP
VI95/1385, VI95/1386
McCARTHY & ANOR V IMPULSE AIRLINES PTY LIMITED
VI96/1663
Before: Tomlinson JR
Place: Sydney
Date: 14 March 1997
THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
VI95/1385, VI/95 1386
BETWEEN:
PAUL H JACKSON Applicant
AND
AIRWARM PTY LIMITED AND IMPULSE TRANSPORTATION GROUP
Respondent
BEFORE: Tomlinson JR
PLACE: Sydney
DATE: 14 March 1997
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The respondents Airwarm Pty Limited and Air Transportation Group Pty Limited are jointly and severally to pay to the applicant Paul Jackson the sum of $23,700 by way of compensation within 4 weeks of the date of this judgment, subject to the parties agreeing as to the appropriate arrangements for income tax.
Note: Settlement and Entry of Orders is dealt with in Order 36 of the Federal Court Rules.
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
VI95/ 1383, VI/95 1384
BETWEEN:
CHUCK C BLAKE & ANOR
Applicant
AND
SITEFATE PTY LIMITED AND IMPULSE TRANSPORTATION GROUP
Respondent
BEFORE: Tomlinson JR
PLACE: Sydney
DATE: 14 March 1997
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The respondents Air Transportation Group Pty Limited and Sitefate Pty Limited are jointly and severally to pay to the applicant Chuck Blake the sum of $15,400 compensation within 4 weeks of the date of this Judgment subject to the appropriate arrangements being made for the deduction of income tax.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
VI96/1663
BETWEEN:
BRIAN McCARTHY & ANOR
Applicant
AND
IMPULSE TRANSPORTATION GROUP
Respondent
BEFORE: Tomlinson JR
PLACE: Sydney
DATE: 14 March 1997
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The respondent Impulse Airlines Pty Limited shall pay to the applicant Brian McCarthy the sum of $19,656.000 within 4 weeks of the date of this Judgment subject to the appropriate arrangements for income tax being made between the parties.
Note: Settlement and Entry of Orders is dealt with by Order 36 of the Federal Court Rules
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
IN THE MATTERS OF
BLAKE & ANOR V SITEFATE PTY LIMITED AND
IMPULSE TRANSPORTATION GROUP
VI95/1383, VI95/1384
JACKSON & ANOR V AIRWARM PTY LIMITED AND
IMPULSE TRANSPORTATION GROUP
VI95/1385, VI95/1386
McCARTHY & ANOR V IMPULSE AIRLINES PTY LIMITED
VI96/1663
REASONS FOR DECISION
BEFORE: TOMLINSON JR
PLACE: SYDNEY
DATE: 14 MARCH 1997
These are three applications for relief under the Workplace Relations Act 1996 (“the ACT”) formerly the Industrial Relations Act 1988. At the outset leave was granted that the matters be heard together as the facts relevant to Captain Jackson (“Jackson”) and First Officer Blake (“Blake”) were intertwined with the facts of Captain McCarthy (“McCarthy”) and that time would be saved and complexity avoided if the matters were heard together. Mr Reitano on behalf of the applicants alleged that the Court would need to determine the true nature of the relationship between his clients and the respondent in that it was alleged the applicants entered into contractual relations with Air Transportation Group Pty Limited which was known as Impulse Transportation Group Pty Limited at the relevant time. In reply Mr Menzies Q.C. on behalf of the respondent said his client was not the employer of any of the applicants and that the issue of employment should be determined by an examination of the totality of the relationship between the parties.
In resisting these applications the respondents called no evidence. Mr Reitano submitted that once the issues of employment were determined there was then no evidence that would discharge the respondents’ onus of demonstrating either the existence of procedural fairness under S 170DC of the Act or of a valid reason for the terminations under s 170DE(1). Further, there was no evidence of that any of the applicants were given the required period of notice or payment in lieu of such notice in accordance with s 170DB of the Act.
Jackson submitted he was employed by both Air Transportation Group Pty Limited (formerly Impulse Transportation Group Pty Limited) and Airwarm Pty Limited. Blake submitted he also was employed both by Air Transportation Group Pty Limited (formerly Impulse Transportation Group) and Sitefate Pty Limited. McCarthy submitted Impulse Airlines was his employer. Airwarm Pty Limited and Sitefate Pty Limited appeared initially but were then unrepresented at the hearing. Those parties had adequate notice of the proceedings and the applicants pressed their applications in so far as those two entities were concerned.
Jackson told the Court he had been a pilot for some 30 years and that he was currently employed as an aviation instructor with Qantas and that he began that employment on 13 July 1995. The affidavit of Paul Jackson was marked as exhibit 2. In 1994, whilst flying for Singapore Airlines in Singapore, Jackson became aware that Impulse Airlines was looking for pilots. Accordingly he wrote to Captain David Ramsay of Impulse, who he understood to be a “check and training” captain employed by Impulse. Subsequently Jackson attended an interview in Sydney conducted by the Deputy Chief Pilot of Impulse Captain Steve Jolly (“Jolly”), as well as Captain Nicole Brown (“Brown”), and First Officer Richard Nockles (“Nockles”).
At the end of that interview Jackson was told he would be contacted again shortly. Another interview then took place when Jackson met Captain Miles, (“Miles”) who offered him congratulations and told him that he was “gaining the position.” Miles showed Jackson around the Impulse base and showed him the relevant Operations Manuals for the aircraft. That manual is approved by the Civil Aviation Authority and states specifically how the aircraft ought to be operated, in both normal and abnormal conditions. Such a manual also contains check lists, being a series of items that must be accomplished at various stages of the flight in order to conduct the flight safely. Miles then told Jackson details of his proposed induction course into the company. There was no evidence that Miles lacked the authority to bind Impulse Transportation Group to a contract of employment.
At the induction course Jackson and a number of other new pilots were addressed by the general manager of Impulse, Mr Wayne Lofgren (“Lofgren”). Lofgren outlined the history of Impulse, and that of its chief executive officer, Mr Gerry McGowan. Jackson said that amongst other things, Lofgren stated that Impulse did not own any property, and that “it could fold its tent tomorrow”. During a subsequent engineering training course run by Captain Bonner (“Bonner”) , also a check and training pilot of Impulse, Jackson was addressed Miles (and others), and provided inter alia with a contract to sign. The contract was with Airwarm Pty Limited (“Airwarm”). Jackson was concerned and spoke to Bonner, who told Jackson that he was employed by Impulse, and that the contract was a “normal arrangement” and “not to worry about it.”
A “Share Issue Agreement” marked exhibit D was dated 28 November 1994 was also presented to Jacskon that provided:
“The Shareholder (Jackson) is, or is to become, a shareholder
in the Company (Airwarm)..the parties acknowledge that the
shares(s) issued, or to be issued, to the Shareholder are, or
will be, issued on the basis set out in this Agreement..Prior
to entering into a formal Shareholders Agreement the partiesagree to be bound by the terms of this Agreement.”
Jackson agreed that although the share issue document signed by him acknowledged he had received shares it was his evidence of the applicant that he never received shares, never paid for shares and never received a share certificate. Further that he considered the share agreement he signed “to be a nonsense.” Jackson stated that he had not previously been involved in a situation where he was offered shares in a company which provided services for flying.
Jackson said that at about this time he received a letter from Airwarm dated 31 October 1994, signed by Regan and Miles who were described as director and secretary of Airwarm, and referring Jackson as a “shareholder” in Airwarm. The letter allegedly said the applicant was entitled to profits, presumably as a shareholder. The applicant said he did not respond to the letter as he had discussed the issue with Bonner at his induction and was told that it was a “ normal procedure."
It was the evidence of Jackson that the Chief Pilot of Impulse, John Pickett, had overall supervisory responsibility over his training. The court heard that it is the personal responsibility of a Chief Pilot to ensure that all statutory regulations and legal requirements are met and complied with. Jackson commenced flying in December 1994. At all times up until termination he was required to wear an Impulse uniform. He was required to carry a Federal Airports Corporation identification card that identified him as an Impulse Airlines Pilot. The Beechcraft 1900 aeroplanes the applicant flew had the words “Impulse Airlines” painted on the sides. When reporting for work the applicant reported to that part of the airport which was identified as Impulse Airlines.
In cross examination the applicant agreed that from time to time Impulse would seek crews to be supplied for its aircraft and that a crewing roster would be made up by Airwarm and that that crewing roster would be then supplied to Impulse. However, if Jackson was unable to fly for some personal reason he would contact Impulse and not Airwarm. On Friday 13 January 1995 the applicant attended a meeting in the officer of the Manager, Group Operations of Impulse, Mr Sean Mandile (“Mandile”), at Sydney Airport. Miles and Captain Regan (“Regan”) were present. Regan said words to the effect that “there has been a downturn in business - your services are no longer required - as a contractor you are terminated forthwith.”
The applicant stated there were no complaints about his performance, and that Regan explained that has he was the last pilot to be employed he was to be the first pilot to be put off. The applicant was told that even if there was an upturn in business he would not be re-employed. Regan said words to the effect that he “did not bring his cheque book with him and that he would have another meeting in a couple of weeks time and then (sic) would arrange for the applicant to be paid.” The applicant was requested to return his Operations Manual.
The applicant stated that he was not aware of any lessening in the number of hours he was flying and further, not long after he was terminated First Officer Fleming was promoted to a position of Captain on the Beechcraft 1900. The applicant was unemployed for 6 months.
Exhibit 4 was a document that contained a diagram of the Impulse Group. The document was headed Organisation Chart and showed the Chief executive Officer to be Gerry McGowan and Lofgren to be the General Manager. The Manager of Group Operations was Sean Mandile. A dotted line and an unbroken line showed that Sitefate Pty Limited, Airwarm Pty Limited, Check and Training Staff and the Fleet Manager of the BE1900 (Beechcraft aeroplane), including Maurie McBain and David Ramsay came ultimately under the control of Lofgren. The evidence of First Officer Chuck Blake was that the diagram was placed and kept in the Operations Manual of the Beechcraft 1900 aeroplane.
Exhibit E was a document entitled “Training Cost Agreement” which was an agreement whereby Jackson would, if called upon, pay certain fees as a training fee. The exhibit had been signed by Jackson at the induction. In the words of the applicant:
“ (the exhibit) covers the company in the event of me resigning
before such time as they would have actually regained the cost of
my training.”
In cross examination Jackson stated that he agreed with Bonner at the training programme to use his best endeavours to ensure that the company, Airwarm, operated in a vigorous, efficient and profitable manner. Further, Jackson agreed that “on paper” he had entered into an agreement with Airwarm, and that he made contributions to a superannuation fund via Pegg and Associates set up for Airwarm. Exhibit G was a photocopy of a pay slip of the applicant showing the applicant was paid through Airwarm. Marked as exhibit H was the Australian Taxation Office’s Employment Declaration Form signed by the applicant, showing Jackson to be employed by Airwarm. There was no evidence as to when Section B, the Employer details, of that form was completed.
Exhibit F was a letter dated 9 August 1995 from Pegg and Associates to Jackson. That letter stated inter alia:
“Enclosed please find group certificate covering your period
of service with Airwarm Pty Limited during the financial
year ended 30 June, 1995.
We further wish to advise that we are currently holding a
superannuation benefit of $355.37, relating to your period
of service with Ariwarm Pty Limited, in the Pegg & Associates
Superannuation Fund..”
The Court heard from Blake whose affidavit was marked as exhibit 3. That affidavit revealed the applicant had some 26 years flying experience and that in 1992 he wrote to the respondents seeking employment. An interview took place with the respondent at its office at Silverwater with the then Chief Pilot Captain Maurie McBain. In June 1993 a further interview took place at the office of Impulse then located at Miranda. A third interview took place at the office of Impulse which by then was located at Sydney Airport and the applicant was interviewed by Regan. Subsequently the applicant attended a meeting at Sydney Airport with Captains Regan, Ramsey and Nicole Brown. During that interview the applicant said he was aware that Impulse had “pilot companies”. At the conclusion of that meeting, the applicant was taken to see the then Chief Pilot, John Pickett, of Impulse, and he was interviewed by that person alone. No further mention was made of company structure.
The applicant Blake stated that he was made an offer of employment by Regan and that he understood that he was being employed by Impulse. On the day he reported for duty, he attended an engineering course at the Impulse office conducted by Bonner. At that time he too was provided with an Operations Manual, admitted into evidence as exhibit 5. The title page of the exhibit bears the words “Impulse Airlines Pty Limited - Operations Manual - copy no. 86.” At the bottom right hand corner there appears “Impulse Transportation Group Pty Limited A.C.N. 002 682 733.”
During a break in the Training Course the applicant Blake was addressed by McCarthy, and a contract was circulated. It was the evidence of the applicant that of the 6 contracts circulated to the group of recruits, 5 were for First Officers to be employed by Sitefate Pty Limited and 1 was for a Captain to be employed by Airwarm Pty Limited. The applicant signed his contract. The applicant signed the documents before he sighted the Operations Manual and the organisation chart, as it was his intention to gain employment there and then. On Sunday 16 October 1994 Blake commenced line flying under the supervision of an Impulse Training Captain, Greg Miles, from whom he also received his endorsement to fly the Beechcraft 1900, an employee of Impulse. Blake was provided with Impulse uniforms, and a FAC security card identifying him as an Impulse Airlines pilot. Again the planes had “Impulse” painted on the side and all the directions the applicant received were from Impulse.
Blake began to prepare flight rosters for the First Officers which in initially were prepared by Miles. In addition to assisting with the rosters, Blake also assisted with the making of overnight accommodation arrangements, and to that end the schedule he prepared was headed “Sitefate.” In cross examination Blake stated that check and training pilots who were only employed by Impulse were also rostered for general duty to fly aeroplanes as were pilots employed by Sitefate and Airwarm. Additionally, Impulse pilots would fly alongside Sitefate pilots performing check and training duties. At the time the applicant was preparing the rosters, the respondent employed 11 First Officers and the applicant calculated that in order to meet legal roster requirements, the respondent would need to employ 13.5. In cross examination Blake said that in order to comply with the CAA requirements, the roster would have to be changed to increase the number of pilots. CAA 48 refers to duty pilot limitations, and Blake said that that standard was infringed a number of times. Despite the fact that Impulse allegedly had approached the Department of Civil Aviation on a number of occasions to vary CAA48, the initial rosterings by Miles were still in contravention. Concessions to CAA48 form part of the Operations Manual.
The applicant said on several occasions he explained the situation to two Sitefate directors, Mr Steve Pearce and Ms Gabby Skinner, who said they would talk to the respondents. In cross examination it was put to the applicant that he did not raise his concerns with directors of Impulse in the first instance. The applicant said he raised the matters with Mr Pearce and Ms Skinner “out of courtesy.”Subsequently the applicant explained the problem to Mandile, the Operations Manager of Impulse. Blake stated that Sitefate allegedly made no allowance for sick leave or holidays in preparing work loads, and that when that matter was raised with Mr Pearce, the answer was that after 12 months the pilots left Sitefate and moved onto Airwarm and the problem apparently thereby was resolved. In the words of the applicant “any accrued annual leave just when out the window when a pilot left Sitefate to rejoin the other company.” That evidence was uncontroverted.
On 25 January 1995 Blake was handed a letter dated 19 January 1995 (marked “A” in the affidavit of the applicant) addressed to the directors of Sitefate on a letterhead of Impulse, and signed by Sean Mandile, as Manager Group Operations that stated inter alia:
“In accordance with item 3.6 of our agreement dated
24 August 1994, I request First Officer Chuck Blake not
perform flight Crew Services effective forthwith.
Please arrange for company operations manuals and
company uniforms to be returned to the Chief Pilot’s
Office within seven days.”
Blake thereupon asked Mr Pearce for a copy of his duties, and he stated that Mr Pearce replied “upon legal advice ..he was not allowed to let me have a copy..”
Shortly thereafter the applicant attended a meeting with Mr Mandile in his office. Present were Mr Pearce, Ms Skinner, and Captain McBain. At that meeting Mandile told the applicant that he “did not fit into the company image.”
Blake said after that he had a conversation with Captain Pickett who said he knew the applicant had been terminated. The applicant remained unemployed for some 2 months. In cross examination the applicant agreed that he signed a “Training Cost Agreement”, (marked as exhibit K) and that he had inserted his Tax File Number into the document. Further, Blake stated that he signed a Shareholder Details form (marked exhibit L). The Court heard evidence of a list of shareholder duties that he signed on the day in question, being “Use best endeavours to ensure that the standards, affairs and operations of the company, that is to say, Sitefate Proprietary Limited, are conducted in a vigorous, efficient and profitable manner” and that that list was given back to the respondent and that he had not sighted it since.
It was put to the applicant in cross examination that when he signed the agreement he “treated that agreement as a nothing and (he) had no intention whatsoever of complying with that undertaking, is that right?” However, it has to be remembered that when Blake sighted the agreement that was the first time he had notice of Sitefate Pty Limited, and that no-one had come forward and introduced themselves as being part of that organisation nor explained the link between Blake’s application for employment and the documents he was being asked to sign. Had the company conducted itself differently weight would have of necessity been accorded to the question and the answer. In cross examination Blake said that at the time he did not know that McCarthy was a director of Sitefate. Marked as exhibit M was a pay slip of the applicant, headed “Sitefate Pty Ltd Contractors Pay Slip.”
The Court heard from McCarthy whose affidavit was admitted into evidence as exhibit 7. The applicant McCarthy sought orders against Impulse Pty Limited rather than Air Transportation group Pty Limited, as there was evidence that Airtransportation Group sold interest in flying aeroplanes to Impulse during 1995. McCarthy’s affidavit revealed that he first commenced employment with the respondent in August 1992 initially as a First Officer on the B1900 aircraft. When he commenced flying the applicant wore an Impulse uniform, and wore an FAC badge that identified him as an Impulse pilot. The aircraft the applicant flew had the word “Impulse” painted on the side. From time to time the applicant received memos from Impulse. When the applicant checked to the line it was done with Impulse. The applicant said he believed his salary came via Aircruise Control directly from Impulse. The applicant became aware that the name of his employer had changed, although he stated he always flew for the respondent.
McCarthy said he helped prepare the Operations Manuals, and then deliver them to the Captain who was running the ground school for new recruits. McCarthy stated that he first met Nockles in 1993 when Nockles was flying Chieftain Aircraft for Oxley Airlines. In 1993 Impulse Airlines took over Oxley Airlines. “On paper” the applicant said on or about 31 January 1994 he became a director of Sitefate and also a shareholder. At that time he was flying the Beechcraft 1900. The applicant McCarthy and Brown were appointed as directors to replace Miles and Regan.
The applicant said that he played a part in effecting a contract was signed between Sitefate and Impulse - marked as exhibit O was a copy of a document entitled Agreement For Flight Crew Services Beechcraft 1900 First Officers. Paragraph 3.6 of exhibit O states:
“Impulse reserves the right to provide written notice to
FO1900 requesting that a particular pilot or pilots
not perform the flight crew services. FO1900 shall
use all reasonable endeavours to comply with any
such request.”
The applicant told the Court that in the initial stages it was made clear to recruits that the final arbiter as to who flew and who did not fly was the Chief Pilot, and that at all times the Chief Pilot was an employee of Impulse. Further, he had that right under statutory obligations regardless of contractual power. It was the evidence of McCarthy that while he was flying the Beechcraft 1900 he was receiving his income from Sitefate. During that time he was a director of Sitefate. Sitefate would invoice Impulse for payment for pilot salaries and those monies were paid out in the form of income to members of a trust, the Sitefate trust. McCarthy, his family, and other pilots were members of the Sitefate trust. Impulse had no input as to how the funds were to be distributed.
After he left B1900 McCarthy began flying the Jetstream 41. At that time he became a director of Savcog Pty Limited (“Savcog”). It was the evidence of McCarthy that Savcog had a five year contract with Impulse. Marked as exhibit P was the Agreement between Savcog and Impulse Airways for the provision of flight Crew Services of J41 First Officers. McCarthy said Savcog also had a trust, and that his children were also members of that trust. Again moneys came via Impulse upon the presentation of invoices. A dispute arose and Impulse stopped using Jetstream 41 aircraft in or about June 1995.
McCarthy attended a meeting on 16 and 17 January 1995 to look at all the various companies - at that time he said he signed a memorandum as a representative of Savcog as that was the only choice allowed to him at the time. Gerry McGowan and Lofgren were present. Nockles took the proposals, to form a single corporation called Aircruise Control Pty Limited, to Impulse. On 31 July 1995 Air Transportation sold its interest to Impulse Airlines Pty Limited. Then Aircruise Control came into being some 10 months later, with Nockles as a director. In early November 1995 the applicant was approached by Nockles, and conversations took place at the Impulse base at Mascot. Subsequently the applicant received a letter dated 9 November 1995 on the letter head of Air Crews Control Pty Limited (“ACC”) that stated:
“In confirmation of our recent discussions, Air crews Control Pty
Limited does not employ pilots. Every pilot is a principal of
business in that he/she owns units in The Air Crews Control Unit
Trust. Many pilots also hold a share in Air Crews Control PtyLimited, the trustee of the Trust.”
Blake attended a meeting of pilots held at the officers of the respondent at Sydney Airport. He was then provided with a Document Checklist which indicated the documents he must sign before he could commence employment. The applicant and the other pilots requested copies of the documents they had just signed. The request was refused. The reason given was that the respondent was “ having problems with the Pilots Federation in the Commission” The applicant said he subsequently obtained copies of the documents from Nockles.
On 15 Mach 1996 the applicant attempted to fax a list of the names and addresses of pilots who flew for the respondent to the Australian Federation of Air Pilots, of which he was a member. Later that day the applicant was asked to attend a meeting in the office of Bill Newton. At that meeting the applicant was asked to answer allegations of breach of confidentiality and related conduct. The applicant indicated that he would not speak to the meeting without representation and further that he objected to the meeting being tape recorded. The meeting adjourned. Subsequently the applicant received a letter from Aircruise Control (“ACC”) dated 15 March 1996 indicating that he had been suspended. In cross examination the applicant stated he personally had never actually received a document advising that he had been terminated.
Mr Menzies stated the applicants had proceeded against the wrong defendant, and to that end the court heard evidence from Richard Arthur Schmidt. In an affidavit dated 10 November 1995 filed in the Jackson proceedings, prepared for the purpose of transferring the subject proceedings to Sydney, Mr Schmidt deposed:
“1. I am the solicitor for Air Transportation Group Pty Limited, ACN 002 682 733 (“Air Transportation”), formerly known as Impulse Transportation Group. The said Air Transportation Group Pty Limited is one of the Respondents in VI95/1386 ...
2. I have had the conduct of this matter on behalf of Air Transportation and have been on the Court record in that capacity since the inception of the proceedings...
3. I make this Affidavit on the basis of my on my own knowledge based on my involvement with the affairs of Air Transportation in respect
of all matters to which I refer in this Affidavit.
4. Air Transportation formerly ran an airline under the company name of Impulse Airlines Pty Limited. That company did not employ any line pilots but entered into a contract with pilots providing companies Airwarm Pty Limited and others...”.
5. In June 1993 a dispute developed between the Australian Federation of Air Pilots, Air Transportation, Airwarm Pty Limited and other pilot providing companies as to who was in fact and law the employer of the line pilots who actually flew the Impulse aircraft. Air Transportation contended that it had no employment relationship with the line pilots.
6. The issue referred to above together with related issues as to whether Airwarm Pty Limited employed any line pilots was submitted to arbitration before Commissioner Palmer of the Australian Industrial Relations Commission in matters C31179 and 50087 of 1993. Commissioner Palmer heard evidence over a period of approximately 2 years and on 5 September 1995 gave a decision which seems to state that both Air Transportation and Airwarm Pty Limited are both the employers of the said line pilots. Now produced and shown to me marked with the letters “RAS 1” is a true copy of a said decision...”
In his evidence in chief Mr Schmidt stated “the affidavit was put together very quickly to explain the big picture. The language was somewhat loose in referring to “run by” but I believe totally consistent with it was run was a subsidiary. Air Transportation is a holding company. Impulse Airlines Proprietary Limited, then, was a subsidiary - there is nothing more complicated than that.”
Exhibit C was a copy of the contract between Airwarm and Impulse. Mr Schmidt said a similar contract existed between Sitefate Proprietary Limited and Impulse Airlines Proprietary Limited. In cross examination Mr Schmidt the affidavit was prepared for the purpose of giving evidence in the Melbourne branch of the Industrial Relations Court and that as the affidavit was prepared in a hurry, the language used being more of “a commentary.” The witness agreed that nowhere in his affidavit is it stated that the one was the holding company of the other, and that the “purpose of the affidavit was not to try and explain a corporate structure”.
Mr Schmidt agreed that by reason of the relationship the holding company had control of the subsidiary company. Further, that the solicitor for the applicants had prior to the hearing of the applications before the Court, served a copy of his affidavit on Mr Schmidt. Mr Schmidt only gave his affidavit superficial attention and told the Court that the fact that it had been served back on him by the applicants’ solicitor during correspondence paid to the hearing did not indicate to him that it had assumed greater relevance.
Mr Schmidt agreed that at the time in question he knew that Air Transportation Group Proprietary Limited and Impulse Airlines Proprietary Limited shared a registered office and that they had common directors. Further, that holding and subsidiary companies can enter into agreements, either oral or written, as to the conducting of business enterprises. Mr Schmidt however denied the suggestion that the words in paragraph 4 of his affidavit were much more consistent with the notion that there existed such an agreement than the understanding he conveyed in his earlier evidence as to the relationship between the two companies.
Mr Reitano argued that Mr Schmidts’s attempt to detract from the evidence deposed to in his affidavit should be ignored - and that that document contained an explanation of the true picture, as supported by the Operations Manual. The Operations Manual it was argued makes it clear that the Air Transportation Group Pty Limited had a lot to do with the running of Impulse Airlines Pty Limited and that support and corroboration is thereby provided for the fact that Air Transportation Group Pty Limited ran an airline under another name. Additionally that conclusion was supported by the organisation chart (exhibit 4), where it is shown that Sitefate Pty Limited and Airwarm Pty Limited are each described as forming part of the organisation in the Air Transportation Group Limited.
In Stevens v Brodribb Sawmilling Company Pty Limited (1985-1896-160 CLR 16, His Honour Mr Justice Mason stated:
“The approach of this Court has been to regard it (control) merely as one of a number of indiciai which must be considered in the determination of that question: Queensland Stations Pty Limited v Federal Commissioner of Taxation; Zuijs’ Case; Federal Commissioner of Taxation v Barrett; Marshall v Whittaker’s Building Supply Company. Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision for holidays, the deduction of income and the delegation of work by the putative employee.”
His Honour went on at page 28-29 to hold:
The traditional formulation, though attended with some complications in its application to a diverse range of factual circumstances, nevertheless has had a long history of judicial acceptance, True it is that criticism have been made of it. It is said that a test which places emphasis on control is more suited to the social conditions of earlier times in which a person engaging another to perform work could and did exercise closer and more direct supervision than is possible today. And it is said that in modern post-industrial society, technological developments have meant that a person so engage do often exercise a degree of skill and expertise inconsistent with the retention of effective control by the person who engages him. All this may be readily acknowledged but the common law has been sufficiently flexible to adapt to changing social conditions by sifting the emphasis in the control test form the actual exercise of control to the right to exercise it, “so far as there is scope for it” even if it be “only in incidental or co-lateral matters: Zuijs v Wirth Bros Pty Limited. Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered.”
The applicant submitted that other relevant factors which concern the question of the true nature of the relationship were discussed in Vabu Pty Limited v Commissioner of Taxation (unreported, 6 September 1996, NSW Court of Appeal). That case dealt with taxation and whether a company’s couriers were employees or independent contractors. The uncontested facts were that when each courier wished to join the company he was first interviewed: if having been interviewed he accepted an offer he signed various documents. Meagher JA stated:
While it is almost never an easy task to decide whether a given person is an employee or an independent contractor, there is no doubt what the legal tests are. The old test of “control” is now superseded by something more flexible. This made clear by the judgment of Mason CJ in Stevens v Brodribb Sawmilling Co Pyt Limited (1986) 160 CLR 16, and in the earlier judgment of Dixon J in Queensland Stations Pty Limited v Federal Commissioner of Taxation (1954)70 CLR 539.
Learned senior counsel for the respondent, Mr Trew Q.C., stressed in the
course of his submission that the couriers were employees, that the company always retained a considerable measure of control over the couriers. Thus, the documents to which I have referred provide that operatives are to be neat and tidy, are to wear uniforms provided by the Company, are to replace their vehicles when the Company considers them to be unsatisfactory, to observe a starting time, to work a prescribed number of hours, not to use foul language on the telephones. They must accept work allocated to them by the Company, and take no more leave than is permitted. The cumulative effect of these conditions certainly gives the Company a deal of control over its courier. However, a man may supervise others without becoming their employer.
And there are several considerations which make me think that on balance the couriers are not employees. In the first place, they supply their own vehicles (be they bicycles, motorbikes, cars, utilities or vans). They have to bear the expense of providing for and maintaining these vehicles: they pay for running repairs, petrol, insurance and registration. The couriers’ expenses are very considerable. Again, to quote McKenna J in Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance (1968) 2QB at 526:
‘the ownership of the assets, the chance of profit and the risk of
loss in the business of carriage are his and not the company’s’
a consideration which points to the couriers being independent
contractors...
Another indicium is that the couriers have to provide themselves with
their own street directories, telephone books, trolley ropes, blankets
and tarpaulins.
Another, very important, indicium is that the couriers receive no wage or
salary...
Although this part of the case is hardly without difficulty, on the whole I am disposed to conclude that at common law the couriers must be classified as independent contractors.”
In dealing with Stevens v Brodribb Sheller JA said:
The significant factors in that case were that the persons engaged provided and maintained their own equipment, set their own hours of work and received payments, not in the form of fixed salary or wages, but in amounts determined by reference to the volume of timber which they had been involved in delivering, through the use of their equipment, to the sawmill...There was no basis for inferring an intention that the bush boss should have authority to direct the appellants, Stevens and Gray, in the management and control of their equipment which they were using for the purpose of delivering timber to the mill. At 26 Mason J said that the power to delegate is an important factor in deciding whether a worker is a servant or an independent contractor...
At 36- 37 Wilson and Dawson JJ said .. None of these (other indicia) leads
to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance. However an attempt to list relevant matters may mislead because they are no more than guides. The ultimate question will be always whether a person is acting a s the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.”
In dealing with the matters before the Court it is considered preferable to look at the totality of the relationship between the parties rather than to go through a check list of indicia in order to determine whether or not there exists at law an employment relationship. However with regard to the mode of remuneration Mr Menzies argued none of the pilots were paid a salary by Impulse and that they received payment from companies of which they were shareholders. It is noted that the applicants although they might have signed share agreements, the evidence was that payment was never made for shares, share certificates were never received, and there is no evidence that enables a determination to be made that the applicants received a share of the profits. There is merit in the argument that although the identity of the employer may be in doubt because of the nature of the arrangements between the parties, the category of the applicant’s employment is not. I discount the suggestion the applicants were ever shareholders.
The respondent argued that it was not a significant indicator of the nature of the relationship that the applicants wore Impulse uniforms, and that the aircraft were all provided and maintained by Impulse. In that regard the respondent referred to the counter assistants employed by McDonalds. I agree with the submission of the applicants that such provision of uniforms and equipment by the respondents points in the direction of employment as those facts identify the applicants with the business of, and as being part of the business of Impulse.
The evidence showed the Chief Pilot determined who would fly and who would not. The rosters may have been made up by another entity, but it was the responsibility of each of the applicants to report for duty at Impulse, or to notify Impulse that they were unable to fly. The Chief Pilot was put in place by Impulse. The primary concern of Impulse was to fly aeroplanes and statutory compliance for that primary concern fell to Impulse. The applicants were not party to any decision to divest Impulse of ancillary chores relating to rosters, overnight schedules, pay arrangements, provision for holidays, or superannuation etc and no evidence was presented to the Court for the reasons behind those decisions to divest Impulse of those chores. I agree with the submission of the applicant that for operational purposes the pilots were employees of Impulse. See Mersey Docks and Harbour Board v Coggins & Griffith [1947] AC 1.
However, it cannot be argued the applicants were totally ignorant of the existence the pilot providing company. There was no evidence as to what may have occurred if any of the applicants at the time of signing contracts with the pilot providing companies had sought time in which to obtain legal advice. There was no evidence that after the contracts were entered into that any of the applicants expressed concern that they may in fact not be employees of Impulse. To the contrary, the applicants accepted the information, sketchy though it was, as provided by Impulse representatives in the beginning and did nothing further to ascertain the exact position. It is not appropriate to deal with the situation on the basis that the existence of a pilot providing company falls into the category of “sham”. Jackson entered into a share issue agreement and a training costs agreement with Airwarm, and he accepted payslips from Airwarm and he was aware of the contract between Airwarm and Impulse. Blake was aware of the contractual position between the two entities and at the time he accepted the position. In fairness it can only be concluded that Jackson and Blake had varying facets of their employment organised by different entities, and that they knew this.
McCarthy’s position is a little different. From time to time he became a director of various companies and certainly had more administrative input into the corporate structure of the organisation. However, it is my view that those activities did not alter his primary status of being an employee of Air Transportation, and subsequently Impulse. The respondent argued the pilots themselves were not required to fly for Impulse exclusively nor were they restricted in any way from flying with whosoever they chose. A finding cannot be made supporting that assertion as first there was no evidence that the applicants did fly for others whilst flying for Impulse and secondly there was strong evidence that the rosters prepared were capable of fully utilising the applicants as there were insufficient pilot numbers to satisfy the legal requirements. (Evidence of Blake). It can be concluded because of their rosters were incapable of flying for other organisations.
Most significant is the degree of control. Regan and Pickett were Chief Pilots, bearing the overall regulatory responsibilities of quality control, check and training on behalf of Impulse. It can be concluded the relevant government authorities had the Chief Pilots if Impulse, whoever they were at any given time, recorded as being personally responsible for the overall supervision of all pilots who flew Impulse planes in Impulse uniforms. The respondent argued that the agreement between the pilot-providing companies and Impulse included an agreement that the pilot-providing companies would ensure compliance with appropriate legislation and regulations. It cannot be concluded that the existence of such an agreement would relieve the Chief Pilot of Impulse from personal responsibility in the eyes of an enforcing agency should a breach arise. Further, Annexure C of exhibit 1 contained evidence of various memoranda that were sent to Jackson and other pilots by Impulse. The memoranda were not sent to the pilot providing companies. The Operations Manual was issued in the name of Impulse and a requirement was in place that the applicants comply with it. It is a finding of this Court that the picture was accurately represented by the words the solicitor on behalf of Air Transportation Group Pty Limited who deposed that “Air Transportation Group formerly ran an airline under the company name of Impulse Airlines.”
It is a finding of this Court that at the time of termination of his contract of employment Paul Jackson was an employee of Airwarm Pty Limited and the Air Transportation Group Pty Limited, further that Chuck Blake was an employee of Sitefate Pty Limited and the Air Transportation Group Pty Limited and that Brian McCarthy was an employee of Impulse Airlines Pty Limited.
In his submissions on behalf of the applicants Mr Reitano made detailed submissions as to remedy and stated the applicants accepted that reinstatement is impracticable. Those submissions were provided to the respondent. In his submissions in reply on behalf of the applicants Mr Reitano stated as Impulse has chosen to make no submissions concerning valid reason for termination and remedy the Court should accept the primary submissions of the applicants upon these questions and make the Orders sought. Jackson and McCarthy were unemployed for a period of 6 months and Blake for a period of approximately two months. Blake referred to a career setback as he had lost the opportunity to become a captain on an aircraft and he was now working with the Air Ambulance. That fact is taken into account in measuring the compensation payable to him. I agree with the submissions of Mr Reitano and make the following orders:
ORDERS
The respondents Airwarm Pty Limited and Air Transportation Group Pty Limited are jointly and severally pay to the applicant Paul Jackson the sum of $23,700 by way of compensation within 1 month of the date of this judgment, subject to the parties agreeing as to the appropriate arrangements for income tax.
The respondents Air Transportation Group Pty Limited and Sitefate Pty Limited are jointly and severally to pay to the applicant Chuck Blake the sum of $15,400 compensation within 4 weeks of the date of this Judgment subject to the appropriate arrangements for income tax.
The respondent Impulse Airlines Pty Limited shall pay to the applicant Brian McCarthy the sum of $19,656.000 within 4 weeks of the date of this Judgment subject to the appropriate arrangements for income tax being made between the parties.
I certify that this and the preceding (22) twenty two pages
are a true copy of the reasons for decision of
Judicial Registrar Tomlinson JR as recorded in the transcript
and revised by the Judicial Registrar.
Associate: Catherine O'Connor
Dated: 11 March 1997
APPEARANCES
Applicants
Counsel: Mr Robert Reitano
Instructed by: Messrs R L Whyburn
& AssociatesRespondent
Counsel: Mr. Paul Menzies Q.C.
Instructed by: Messrs Bull Son &
Schmidt
0