Carr v Empirical Works Pty Ltd
[2019] FCCA 1114
•30 April 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CARR v EMPIRICAL WORKS PTY LTD & ANOR | [2019] FCCA 1114 |
| Catchwords: INDUSTRIAL LAW – Application alleging breaches to the Fair Work Act 2009 (Cth) and the Australian Consumer Law – whether the first and second respondents contravened s.31 of the Australian Consumer Law – whether the applicant’s employment was terminated for making an application to the Fair Work Commission – whether the first respondent breached the employment contract – cross-claim alleging breach under s.18 of the Australian Consumer Law – whether the applicant engaged in misleading and deceptive conduct during pre-employment negotiations – applications dismissed. |
| Legislation: Fair Work Act 2009 (Cth), ss.340, 341, 342, 360, 361, 545, 546 Competition and Consumer Act 2010 (Cth) Sch.2, ss.18, 31, 236 Trade Practices Act 1974 (Cth) s.52 |
| Cases cited: Carr v Empirical Works Pty Ltd & Anor [2017] FCCA 1813 State of Victoria (office of Public Prosecutions) v Grant [2014] FCAFC 184; (2014) 67 AILR 102-322; (2014) 246 IR 441 TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd [2008] NSWCA 9; (2008) 71 NSWLR 323 Stoelwinder v Southern Health Care Network [2000] FCA 444; (2000) 177 ALR 501; (2000) 97 IR 76 |
| Applicant: | PETER CARR |
| First Respondent: | EMPIRICAL WORKS PTY LTD |
| Second Respondent: | PAUL LIN |
| File Number: | SYG 549 of 2016 |
| Judgment of: | Judge Nicholls |
| Hearing date: | 3 December 2018 |
| Date of Last Submission: | 20 December 2018 |
| Delivered at: | Sydney |
| Delivered on: | 30 April 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Duc |
| Solicitors for the Applicant: | Duc Legal |
| Counsel for the Respondents: | Ms K Jones |
| Solicitors for the Respondents: | PCC Lawyers |
ORDERS
The application made on 9 March 2016 is dismissed.
The cross claim made on 2 May 2016 and as further amended is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 549 of 2016
| PETER CARR |
Applicant
And
| EMPIRICAL WORKS PTY LTD |
First Respondent
| PAUL LIN |
Second Respondent
REASONS FOR JUDGMENT
This is an application made on 9 March 2016 by Mr Peter Carr (“the applicant”) seeking declarations, compensation and pecuniary penalties pursuant to ss.340, 545 and 546 of the Fair Work Act 2009 (Cth) (“the FWA”), ss.31 and 236 of the Australian Consumer Law (“the ACL”), and for breach of contract, against Empirical Works Pty Ltd (“the first respondent”), (“Empirical Works”), and Mr Paul Lin (“the second respondent”), a director of the first respondent.
Before the Court
The parties first came before the Court on 30 March 2016. Both parties were represented. On that date, Mr Carr sought an extension of time within which to make a competent application under s.340 of the FWA. I granted that extension of time and made various orders for the progress of the matter, including that the matter proceed by way of pleadings and be sent for mediation.
Since the first court date, the parties have appeared before the Court at directions on several occasions. The events outlined below are relevant to the current proceedings.
On 13 April 2016 Mr Carr filed a Statement of Claim (“SOC”). On 2 May 2016 the respondents filed their Response to the SOC. This relevantly included a “Cross Claim” (discussed further below).
The mediation held on 9 August 2016 was unsuccessful.
On 7 December 2016 the respondents filed an Application in a Case (“the respondents’ AIC”) seeking leave to amend their Response. Further, on 13 March 2017 the applicant filed an Application in a Case (“the applicant’s AIC”) seeking to strike out the respondents’ cross-claim.
Both the respondents’ AIC and the applicant’s AIC were heard on 12 April 2017. On 4 August 2017, I handed down judgment and made orders which allowed the respondents’ AIC and dismissed the applicant’s AIC (Carr v Empirical Works Pty Ltd & Anor [2017] FCCA 1813).
The respondents filed an amended response on 22 August 2017.
The matter was set down for hearing on 3 December 2018. The applicant filed written submissions on 12 November 2018 and the respondents filed written submissions on 22 November 2018 and further written submissions on 13 December 2018.
The evidence before the Court is as follows:
a)The affidavit of Peter Carr, senior technology marketing and sales manager, made on 30 September 2016 (“first affidavit”).
b)The affidavit of Robert William Eastwood, digital designer, made on 11 November 2016.
c)The affidavit of Paul Lin, entrepreneur and chief executive officer, made on 11 November 2016.
d)The affidavit of Peter Carr, senior technology marketing and sales manager, made on 16 December 2016 (“second affidavit”).
e)Mr Carr’s employment contract with Empirical Works filed and tendered on 3 December 2018 (“RE1”).
f)A GHG Solutions ASIC Company Search document filed and tendered on 3 December 2018 (“RE2”).
g)An Empirical Works brochure filed and tendered on 3 December 2018 (“RE3”).
h)Various sections of the applicant’s Fair Work Application filed and tendered on 3 December 2018 (“RE4”).
The respondents have produced a bundle of relevant documents incorporating most of the documents (Respondent’s Court Book- “RCB”).
Mr Carr, Mr Eastwood and Mr Lin gave oral evidence at the final hearing.
Background
The parties’ positions differ in many respects regarding the factual circumstances which are said by Mr Carr to give rise to the alleged contraventions of the FWA, the ACL, and breach of contract. The following background is set out to provide some context to the allegations in the application, and are not necessarily findings of fact for the purposes of the consideration in this judgment.
Empirical Works was incorporated in March 2014, and was in the business of developing applications, specifically customised mobile applications, for business purposes. During the relevant period, Empirical Works was a small operation.
Mr Carr first made contact with the respondents on, or around, May 2015. He attended his first employment interview at Empirical Works on 29 May 2015. He attended a second interview on, or around, 11 June 2015, and a third interview on, or around, 19 June 2015. Mr Carr was interviewed by Mr Lin the director of Empirical Works. During these interviews, the parties exchanged information about each other.
Mr Carr was offered a contract of employment dated 1 July 2015, which he signed on 8 July 2015 ([57] of Mr Lin’s affidavit (CB 110)). He commenced work on 20 July 2015. The contract stated that Mr Carr’s position was as “Head of Business Development” (CB 63). His duties are set out at Annexure A to Mr Carr’s first affidavit (CB 64):
“Duties are to include:
· Sell Empirical Works products and services to potential clients
· Lead generation through cold calling as well as social media and traditional marketing
· Chase up leads and negotiating projects/contracts with clients
· Maintain non-technical communication with clients during projects
· Maintain business relationships as required with clients and potential clients
· Other duties as required to make sales”.
The contract included a salary of “$105,000 AUD + Super”. The “Sales Commission/Bonus Scheme” was set out as follows:
“1. Commission
a.Commission of 5% on the sale, for the initial sales up to the first $1,200,000 in a 12 month period
b.Commission of 8% on the sale, for subsequent sales above $1,200,000 in the same 12 month period
c.Unless otherwise notified to the employee, the 12 month period will reset and repeat at the end of each 12 months.
2. Starting Bonus
a. In the first 4 months of work, for each month, if the employee achieves a minimum of $70,000 sales within that calendar month, an additional bonus on top of the sales commission is rewarded:
i. 1st month (August 2015) bonus - $25,000
ii. 2nd month (September 2015) bonus - $20,000
iii. 3rd month (October 2015) bonus - $15,000
iv. 4th month (November 2015) bonus - $10,000”.
Mr Carr commenced employment with Empirical Works on 20 July 2015 on a full-time permanent basis ([58] of Mr Lin’s affidavit).
Mr Carr met his August sales target and was paid the relevant bonus ([77] of Mr Lin’s affidavit).
During September and October 2015, there was disagreement between the parties concerning the commission payment schedule, and the bonus payments. Commission payments were linked to sales made by Mr Carr.
In particular, the parties disagreed as to what time the commissions were earned by Mr Carr. The respondents claim that Mr Carr sought to “alter” the payment schedule such that he would receive the entire commission payment on receipt of the commencement fee in relation to the sale. Mr Carr’s request for such an alteration was said to be evident in an email to Mr Lin dated 10 September 2015 (Annexure PL-18 to Mr Lin’s affidavit at CB167):
“Hi Paul
…
Secondly, as we discussed, I am OK with your requests;1. To assist the company’s cash-flow, the commission payments for a project will not be based on the month in which the sale was made, but rather they will be based on the month when the commencement fee has been received (“Sale and Commencement Fee”), and paid on the 15th of the month following the month when the commencement fee is received;
…”.
Mr Lin sent the following response in an email dated 10 September 2015 (Annexure PL-19 to Mr Lin’s affidavit at CB 169):
“Hi Peter,
Yes – that’s somewhat correct. Some clarifications:
…
2. Bonus criteria – the only hard and fast rule is a signed contract, as it’s the only legally enforceable way for me to confirm that the project is real. There may be exceptions (such as last month, when the contract wasn’t ready, but I approved it anyway because the lack of contract wasn’t your fault, and the project itself has commenced), but they’re the exceptions rather than the rule, so they require approval on my part. Basically because I’m paying out of my own pocket prior to any commencement fee or signed contract, I need to be confident that that money will come later, and that confidence in confirmation will be different depending on the situation (you telling me Endeavour Dave saying “go ahead, we’ll pay you later but start today” is very different to you telling me a stranger I don’t know saying on the phone “go ahead and start in 3 months”). And those exceptions may be given, but you’ll need to check and confirm with me.
3. Commission – I’m sure we talked about this – it’s paid out on when each of the payments comes in, not just the commencement fee. So on a $100,000 project, if there are 2 payments (40% commencement, 60% end), then there are two commission payments:
1.Commission paid on commencement, when the first 40k arrives, on that 40k
2.Commission paid on final milestone, when the remaining 60k arrives, on that 60k
3.And the time period is in a calendar month if it is to be paid by the next pay day (15th).
4.So it’s not commission paid on the full 100k when the first 40k arrives.
4. For termination the situation is the same, as we can’t afford to pay out a commission on a 1 million dollar, 10 milestone sale in one batch up front, especially in an un-controlled situation where we didn’t plan for termination. The entirety of the sale and commissions on it will still be paid out, but again upon receipt of each of the payments. Again it’s something we can negotiate when it happens, if the situation is not that extreme we can make it work, but by default it’s when the money comes in.
Regards,
Paul…”
Further, the parties disagreed as to what particular month sales were to be allocated ([78] – [92] of Mr Lin’s affidavit). The respondents claim that Mr Carr sought to “count” sales made in October to his bonus for September 2015, such that he would meet the threshold for his September bonus ([85] – [87] of Mr Lin’s affidavit (CB 115)).
A bonus was not paid in September 2015. Mr Carr sent the following email to Mr Lin on 16 November 2015 (Annexure PL-27 to Mr Lin’s affidavit at CB 181):
“Hi Paul
I was expecting to receive my bonus on 15th, as you had previously agreed – I was wondering when you were planning to send this through?
cheers,
Peter”.
Mr Lin sent the following response by an email dated 16 November 2015 (Annexure PL-28 to Mr Lin’s affidavit (CB 182)):
“Hi Peter,
The bonus was not reached in September, as the sales of JSG and Buddy Online together does not exceed the set target. Moits was cancelled before any contract was signed or payments were made. Endeavour was moved to the next month as per your request.
Regards,
Paul…”
Also during September and October 2015, the respondents claim that Mr Carr had begun to treat other Empirical Works employees “harshly and disrespectfully”, had been “rude to clients”, and his sales performance had “completely stalled” ([93]–[112] of Mr Lin’s affidavit).
Mr Lin claims that he voiced these concerns about his behaviour and performance to Mr Carr in a meeting on 26 October 2015. Mr Carr allegedly did not respond to him, but rather “made a face [the second respondent] took to mean displeasure” ([113] of Mr Lin’s affidavit).
Immediately after this, also on 26 October 2015, Mr Lin contacted a recruitment agency to search for a replacement for the applicant. He sent the following email on that date (Annexure PL-31 of Mr Lin’s affidavit (CB 186)):
“Hi Liam, [the recruitment agent]
How are the sales guys coming along?
…
I think this is a more urgent matter than I had previously thought, and I would really like to hire someone in November.
Can you let me know how this is going, and whether we’re in a position to line up some interviews this week?
Regards,
Paul…”
On 23 November 2015, a “Fair Work Commission F8C Application” dated 19 November 2015 was received by Mr Lin. Later that day, Mr Lin sent the following text message to Mr Carr (Annexure PL-34 to Mr Lin’s affidavit (CB 189)):
“Hi Peter, due to some issues here in the office, I think it’s best you go on paid leave for a few days while the business sorts itself out, starting tomorrow.
Just a reminder that while you’re on leave, you’re still an employee of the company, and will still need to follow your contract and abide by all conditions within it, such as the confidentiality clauses.
We’ll let you know when to return to work once the situation here has sorted itself out.”
On 30 November 2015, Mr Lin sent the following email to Mr Carr terminating his employment (Annexure K to Mr Carr’s first affidavit):
“Hi Peter,
We are writing to you about your employment with us under your contract of employment dated 1 July 2015.
We have a number of concerns about your behaviour as our employee. These include:
1. You have failed to meet your sales targets for three months in a row;
2. You have been rude and aggressive towards clients;
3. You have been rude and uncommunicative towards other staff;
4. In order to achieve a sale, you try to minimise the real costs and achieve a low quotation, for example, by not communicating to potential clients the complexity of the process, or not communicating client requirements to us, or avoiding the communication of legal aspects of the sale (contract) to the client.
5. You do not communicate your movements to other team members or to your manager;
6. You attempt to alter the agreed bonus system by attempting to move or reclassify sales;
7. You refuse to follow company policies and refuse to follow reasonable directions, for example, about where you are to sit.
For these reasons, we do not see that the employment can continue. Accordingly, pursuant to clause 19(a) of your contract, we are giving notice of termination of your employment. Under clause 19(c) we will pay the one week’s notice prescribed by clause 19(a) in lieu of notice, and so your contract will end immediately.
We will also pay any other outstanding payments due to you. Accordingly, your employment will end today, effective immediately.
We would also like to remind you of your obligations of confidentiality under the contract, and also of the Post Employment Restraints under clause 22, both of which continue after your employment.
We regret that we have had to take this step, but do wish you well for your next endeavour.
Regards,
Paul…”
Allegations against the Respondents
Mr Carr makes the following allegations against the respondents in his SOC.
One, he alleges that the following representations about Empirical Works allegedly made during the pre-employment interviews constituted contraventions of s.31 of the ACL:
“…
Representation #1
9. The First Respondent represented to the Applicant (“Representation #1”) that the length of time the Second Respondent had been trading was six years.
…Representation #2
12. The Second Respondent represented to the Applicant (“Representation #2”) that the number of clients the First Respondent had numbered in the dozens.
…
Representation #3
15. The Second Respondent represented to the Applicant (“Representation #3”) that the number of clients the First Respondent had included Toyota and Coca-Cola.
…
Representation #4
18. The Second Respondent represented to the Applicant (“Representation #4”) that the number of satisfied clients the First Respondent had was many.
…
Representation #5
21. The Second Respondent represented to the Applicant (“Representation #5”) that the number of employees employed by the First Respondent was a dozen.
…
Representation #6
24. The Second Respondent represented to the Applicant (“Representation #6”) that the ownership of the original concept of the paper form to App form transformation was with the First Respondent.
…Representation #7
27. The Second Respondent represented to the Applicant (“Representation #7”) that the financial position of the First Respondent was healthy.
…
30. In reliance upon Representation #1 to #7 the Applicant agreed to commence employment with the First Respondent.
31. The Applicant, in reliance upon the Representations #1 to #7, declined an offer of employment with another company.”
Two, Mr Carr alleges that the respondents contravened s.340 of the FWA by taking adverse action against the applicant in dismissing him on the same day that he filed his Fair Work Application:
“…
40. On 15 November 2015 the Applicant filed an application form with the Fair Work Commission for a General Protections claim.
Particulars
Application to the Fair Work Commission dated 15 November 2015
41. The Applicant exercised a workplace right to make an application to the Fair Work Commission in the General Protections jurisdiction. The Applicant alleged various contraventions of the Fair Work Act.
Particulars
i. Breach of section 340
ii. Breach of section 343
iii. Breach of section 344
iv. Breach of section 345
42. On 23 November 2015 the Applicant was at his desk at the First Respondent’s office when the Second Respondent said in a loud and threatening voice that he had received the application from the Fair Work Commission.
Particulars
Statement by the Second Respondent at approximately 9.30am on 23 November 2015
43. Later that day the Second Respondent denied the Applicant access to emails, client files and the workplace. The Applicant could not perform his employment duties.
44. On 30 November 2015 the Applicant was terminated by email by the First Respondent on the grounds of poor performance.
Particulars
Email dated 30 November 2015 from the Second Respondent to the Applicant
45. The Applicant was dismissed from employment because of the making of an application to the Fair Work Commission relating to General Protections (the Contravention).
Particulars
i. The Applicant exercised a workplace right under section 340(1)(ii) of the Fair Work Act.
ii. The Applicant had a workplace right as he was able to make a complaint or inquiry in relation to his employment.
iii. The complaint or inquiry concerned the non-payment of salary and bonuses by the First Respondent.
46. The Second Respondent was involved in the Contravention.
47. By operation of s.550 of the FW Act the Second Respondent is taken to have engaged in the Contravention.
Particulars
i. The Second Respondent received a copy of the Fair Work Commission application filed by the Applicant.
ii. The Second Respondent upon receipt used a threatening tone to the Applicant.
iii. The Second Respondent sent the email to the Applicant terminating his employment.”
Three, Mr Carr alleges in his SOC that Empirical Works breached the terms of the employment contract by failing to pay his salary, commission and bonuses in accordance with the contract. Mr Carr withdrew his further claim against Mr Lin in relation to breach of contract, (at [53] of his SOC), seemingly on the basis that Mr Lin was not a party to the contract between Mr Carr and Empirical Works.
The cross-claim
The respondents’ cross-claim is set out in the following terms ([51]–[52] and [56]–[57] of the amended Response):
“51 On or about 20 July 2015, the Cross-Respondent entered into an employment contract with the Cross-Applicant.
52 Prior to entering into this employment contract, the Cross-Respondent made representations (Representations) to the Cross-Applicant as follows:
…
56 By making the Representations, and each of them, the Cross-Respondent engaged in conduct that was misleading and deceptive or likely to mislead or deceive in contravention clause 18 of the Australian Consumer Law contrary to the Representations (Contraventions) in that:
a. The Cross-Respondent did not have over 10 years experience in B2B solution sales;
b. The Cross-Respondent had not been an employee at Maximumm.
c. The Cross-Respondent had not been working as an employee for the past 6 years;
d. The Cross-Respondent had been self-employed for the past 6 years;
e. Maximumm did not have 8 employees;
f. The Cross-Respondent had not achieved sales of $2million per annum in the past financial year;
g. The Cross-Respondent had no connections that resulted in sales for the Cross-Applicant;
h. The Cross-Respondent could only convert inbound sales leads;
i. The Cross-Respondent had no sales or proposals as a result of outbound sales leads or cold calls;
j. The Cross-Respondent did not identify any new business opportunities;
k. The Cross-Respondent did not have sufficient experience or technical knowledge to present proposals;
l. The Cross-Respondent did not achieve targets;
m. The Cross-Respondent was not a highly-skilled and successful salesperson.
Loss and Damage by the Contraventions
57 By the contraventions of section 18 of the Australian Consumer Law pleaded above and each of them, the Cross-Applicant has suffered loss and damage.
Particulars
i.The Cross-Applicant incurred a recruitment fee of $45,781.32.”
[Errors in the original.]
[Underlining has been removed for ease of reading.]
At the hearing, in explanation of the cross-claim, counsel for the respondents drew attention to the fact that s.18 did not fall within Part 3.2 of the ACL, which deals with consumer protection and specifically refers to consumer as a narrow category. Rather, it was argued that s.18 is a general prohibition, which applies to all persons. Further, it was argued that the Court must look at the object of the consumer law, which includes the object of promoting business.
Counsel for the respondents also argued that there is no requirement that the “in trade or commerce” must be that of the person making the representations, and that pre-employment negotiations are capable of being found to be “in trade or commerce”.
Relevant legislation
Section 340 of the FWA is set out as follows:
“(1) A person must not take adverse action against another person:
(a)because the other person:
(i)has a workplace right; or
(ii)has, or has not, exercised a workplace right; or
(iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b)to prevent the exercise of a workplace right by the other person.
Note: This subsection is a civil remedy provision (see Part 4-1).
(2)A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.”
Section 31 of the ACL is set out as follows:
“A person must not, in relation to employment that is to be, or may be, offered by the person or by another person, engage in conduct that is liable to mislead persons seeking the employment as to:
(a) the availability, nature, terms or conditions of the employment; or
(b) any other matter relating to the employment.
Section 18 of the ACL is in the following terms:
“(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).”
As set out above there are four issues for consideration and determination in this matter. One, Mr Carr’s claim that the respondents contravened s.340 of the FWA. Two, Mr Carr’s claim of a breach of contract. Three, Mr Carr’s claim that the respondents breached s.31 of the ACL. Four, the respondents’ cross-claim that Mr Carr breached s.18 of the ACL.
As also set out above the relevant period in relation to the disputed events begins in May 2015 when Mr Carr was first interviewed by Mr Lin and ends in November 2015 when his employment was terminated.
What emerged from the affidavit evidence filed in these proceedings, and then in particular the cross-examinations that were conducted of three of the deponents, is the significant dispute between the parties as to the relevant facts as against each of the issues above, and how they are to be determined.
Mr Carr’s position was that the evidence of Mr Lin (in particular in relation to the issue of termination of employment) should not be believed. The basis for this appeared to be that his evidence was generally implausible given other evidence before the Court.
The respondents submit that Mr Carr’s evidence, in cross examination, was variously argumentative, inconsistent and evasive. In contrast the evidence of Mr Lin and Mr Eastwood was said to be consistent with contemporaneous records and to be preferred.
Whose evidence is to be preferred in relation to each of the issues for consideration is addressed in relation to those issues below.
The General Protection Claim
With relevance to the claims in this case, s.340 of the FWA provides that a person must not take adverse action against another because that person has exercised a workplace right (s.340(1)(a)(ii)).
In the current case Mr Carr claims that his employment with Empirical Works was terminated by Mr Lin because Mr Carr made a complaint to the Fair Work Commission (“FWC”) on 19 November 2015 about aspects of his employment situation.
The respondents do not dispute that the application (complaint) to the FWC came within the definition of the meaning of a workplace right as set out at s.341(1)(c)(i) of the FWA. The dispute between the parties centred on whether his employment was terminated because of the complaint.
In this context the respondents also accept that for there to be a breach of s.340 of the FWA it is sufficient, in the current circumstances, if Mr Carr’s employment was terminated in circumstances where the complaint was only one of the reasons for the adverse action, this is the termination of employment with reference to s.360 of the FWA).
Mr Carr seeks a declaration that Empirical Works has contravened s.340 of the FWA by taking adverse action against him. He alleges that Empirical Works (through Mr Lin) took adverse action against him as that phrase is explained in s.342(1) of the FWA. In particular that his employer (Empirical Works) dismissed him from his employment. (Item 1(a) of s.342(1) of the FWA).
Further that Empirical Works did this in circumstances where he exercised a workplace right. He claims that his complaint to the FWC was such an exercise with reference to s.341(1)(c)(i) in the current circumstances.
He also claims that Empirical Works took the adverse action (the termination of employment) because he exercised a workplace right (the complaint). Although I note that this need not be the sole reason, but one of a number of reasons that motivated the adverse action.
In the current circumstances it is also important to note, as the respondents submit, the following matters.
One, Mr Carr must be able to establish the objective facts giving rise to the claim that the termination of employment (adverse action) was taken by Empirical Works because of, or in part because of, his having made the complaint (the exercise of a workplace right).
Two, if he is able to do this then the onus is on Empirical Works to prove that the reason for the dismissal from employment was other than for the making of the complaint (s.361 of the FWA).
In short, the respondents submit that the termination of employment did fall within the definition of “adverse action”. However they deny that Mr Carr’s employment was terminated because of his having made the complaint.
The respondents say that the reason for the dismissal was because Mr Carr’s performance and behaviour were not compatible with ongoing employment.
The issue for the Court therefore is why was the “adverse action” taken by Empirical Works?
The focus of Mr Carr’s claim is the concentration of the following events in, essentially, a one week period which when viewed in light of the coincidence of the events within that short timescale, he says establishes the factual basis of his claim.
On 19 November 2015 Mr Carr made his complaint (filed an application) with the FWC ([83] of Mr Carr’s first affidavit).
This complaint arose out of discussions between Mr Carr and Mr Lin in September 2015 which led to what Mr Carr says was a failure to pay him salary or commission. By early October 2015 Mr Lin refused to continue these discussions. Mr Carr says he was threatened by Mr Lin that if the issue was raised again his employment was at risk.
On 23 November 2015, apparently sometime in the morning Mr Carr says he was seated at his desk when he heard Mr Lin loudly state that he had received notice of the complaint from the FWC.
Mr Carr’s evidence was:
“84. On 23 November 2015, I understand the Second Respondent received my F8C form from the Fair Work Commission. The Second Respondent’s desk was about two metres from my desk. The Second Respondent shouted at me “seriously Peter, Fair Work Commission”. The Second Respondent then walked over to my desk and said:
Mr Lin: “Do you really want to go down this path with the Fair Work Commission”.
I said: “Paul, you have blatantly refused to discuss my reduced and delayed pay, so I can’t see any other way forward other than to ask an independent arbitrator to help us to resolve the matter”.
Mr Carr asserts that later on that same day he was unable to perform his usual employment duties because Mr Lin had arranged to deny him access to work emails, files, and client contact details.
Mr Carr’s evidence as to subsequent events on that day is as follows:
“86. When I got home around 6pm, I received a text message from the Second Respondent saying “Hi Peter, due to some issues here in the office, I think it’s best you go on paid leave for a few days while the business sorts itself out, starting tomorrow.”.
87. I replied “I have an important meeting with Jax tomorrow at 2 pm. This deal has been months in the making..I should attend the meeting…I don’t need to come into the office”.
88. The Second Respondent then texted “I’d rather you not work on anything while you’re on leave..I’ll take care of Jax..please do not contact them, or any other clients for that matter, while you are on leave…I hope you can obey these explicit instructions”.”
It was also Mr Carr’s evidence that the next communication he received from Mr Lin was an email telling him his employment had been terminated (see [89] and annexure K of Mr Carr’s first affidavit).
The email is in the following terms:
“Hi Peter,
We are writing to you about your employment with us under your contract of employment dated 1 July 2015.
We have a number of concerns about your behaviour as our employee. These include:
1. You have failed to meet your sales targets for three months in a row,
2. You have been rude and aggressive towards clients;
3. You have been rude and uncommunicative towards other staff;
4. In order to achieve a sale, you try to minimise the real costs and achieve a low quotation, for example, by not communicating to potential clients the complexity of the process, or not communicating client requirements to us, or avoiding the communication of legal aspects of the sale (contract) to the client.
5. You do not communicate your movements to other team members or to your manager;
6. You attempt to alter the agreed bonus system by attempting to move or reclassify sales;
7. You refuse to follow company policies and refuse to follow reasonable directions, for example, about where you are to sit.
For these reasons, we do not see that the employment can continue. Accordingly, pursuant to clause 19(a) of your contract, we are giving notice of termination of your employment. Under clause 19(c) we will pay the one week’s notice prescribed by clause 19(a) in lieu of notice, and so your contract will end immediately.
We will also pay any other outstanding payments due to you. Accordingly, your employment will end today, effective immediately.
We would also like to remind you of your obligations of confidentiality under the contract, and also of the Post Employment Restraints under clause 22, both of which continue after your employment.
We regret that we have had to take this step, but do wish you well for your next endeavour.
Regards,
Paul…”
The respondents’ position is that the only reasons for the termination of employment were the various performance issues with Mr Carr’s work which had been identified earlier to Mr Carr. These issues included the following.
One, when Mr Carr commenced work he was given what were described as “inbound leads” (Mr Lin’s affidavit at [62]). That is, inquiries from prospective customers generated by Empirical Works’ webpage and telephone calls. Further, he was also given contact details for some existing clients.
In August 2015 Mr Carr converted some of these leads into sales. However, his sales performance declined over September to October 2015 (Mr Lin’s affidavit at [64]-[65]).
Before the Court the respondent sought to illustrate this “decline” by comparing sales made against the expectation of sales to be achieved as at the time of commencing employment.
The respondents asserted in submissions that they understood that at the commencement of employment Mr Carr had stated that he could achieve about $1.5 million in sales over the coming year. In the first three months of employment (noting that he was given existing “leads”) he achieved sales of just over $200,000. As a pro rata of a full year, this equated to about $800,000, well short of $1.5 million.
Two, Mr Carr disputed the timing of when commissions were “earned” by him and their payment. That is, was the commission on a sale payable to him at the time the sale was made or on receipt of the actual revenue from the client.
It was Mr Lin’s evidence that on “sizeable” projects payments would be made in instalments and that it was “standard practice” in the industry for commissions to be paid to the salesperson when the various instalments were paid ([72] of Mr Lin’s affidavit).
Mr Lin submits that was the agreement with Mr Carr on commencement of his employment. Yet during the period of employment Mr Carr “changed” his position on how he wanted the commission to be paid. He gives evidence of six such changes. The last being around 1 October 2015 ([73]-[75] of Mr Lin’s affidavit).
The respondents’ argument was that this was disruptive to a harmonious working relationship.
Three, in a similar vein Mr Lin also gave evidence about what he said were disagreements about bonus payments ([77]-[92] of Mr Lin’s affidavit). The disagreements commenced around 20 September 2015 when Mr Carr sought a bonus payment on a proposed sale to Endeavour Energy before the sale had been finalised. The bonus was nonetheless paid. Yet Mr Carr then sought for this sale to be noted as one in October (rather than September) so as to count towards his October “milestone”. This also was agreed to by Mr Lin.
The disagreement about bonus payments also involved a claimed sale to “Moits” (see also below in relation to the breach of contract issue). Mr Carr wanted to claim the sale for the September period, even though no sale had been confirmed.
Mr Lin’s evidence is at [81]–[86] of his affidavit:
“81. In September, the Applicant had also claimed that he had a confirmed sale from Moits. This sale he claimed pushed him over his September milestone and he was entitled to his bonus payment for this period.
82. I was aware the Applicant had presented the Moits Proposal but I had not seen any documentation from Moits confirming the sale or the agreed amount of the project. I said to the Applicant words to the effect’ I need a signed contract from the client before the sale can count towards a monthly milestone. This isn’t an existing client that we trust and have worked with, like Endeavour Energy.’
83. Moits did not confirm the sale or sign an agreement to proceed with the project. On 2 October 2015, I emailed the Applicant asking for confirmation of the client’s agreement so that I could finalise the bonus and commission payments. This email is annexed and marked PL-24 (page 78). This confirmation or evidence of agreement was never provided to me. I did not include the Moits sale in the September figures because I had not received confirmation that it was finalised.
84. On 21 October 2015, I emailed Joe, the contact at Moits, with our agreement and commencement fee invoice. This email is annexed and marked PL-24(page 78). This is the first piece of official paperwork concerning the deal that Moits received. On 29 October 2015, I received confirmation from Moits that they were not proceeding with the project.
85. The Applicant kept track of his sales on a CRM Spreadsheet using GoogleDocs (the Sales Spreadsheet). The Sales Spreadsheet was not an official company record, it was not what I relied on, it was a document that the Applicant had created to record his sales figures and track his progress. Google Docs records a separate version of the spreadsheet for each revision. On 28 October 2015 his Google Docs spreadsheet indicated that a sale of $54,750 has been made to Moits in September, and a sale of $29,500 had been made to Endeavour Energy in October. The 28 October 2015 revision of this document is annexed and marked PL-25 (page 79).
86. On 6 November 2015, after we had received confirmation from Moits that it was not going ahead, the Applicant made a further revision of the Sales Spreadsheet, moving the Endeavour Energy Sale back to September, to make it appear as if the $70,000 target had been reached. This revision of the Sales Spreadsheet is annexed and marked PL-26 (page 80).”
Four, the respondents also submitted (based on Mr Lin’s evidence and generally corroborated by Mr Eastwood) that in the first 3 to 4 weeks of his employment Mr Carr appeared to work “well with the team”. However by mid-August, he became aggressive, disrespectful, “dismissive” and “demanding” of Mr Eastwood and the only other employee (see Mr Lin’s affidavit at [93]-[94]). It is to be noted in this context as set out above that Empirical Works was a small firm, the principal being Mr Lin and two other employees at the time Mr Carr commenced his employment.
Further, their evidence was that Mr Carr blamed the other two employees for not being able to make sales. Both employees made complaints to Mr Lin about Mr Carr, commencing from the first week in September 2015.
Mr Carr’s behaviour was also said to be disrespectful and argumentative with customers. In one instance (regarding a customer, Sumo Salad) Mr Lin gave evidence that he made daily calls to this business and was “deliberately rude to the receptionist” (Mr Lin’s affidavit at [101]–[[104]). Mr Lin described the conduct as “harassment”. With another customer (Buddy Online) Mr Carr’s aggressive conduct was such that that business failed to respond to Mr Lin’s attempts to contact them.
Five, Mr Lin’s evidence was that the decision to terminate Mr Carr’s employment was made by at least 26 October 2015. The circumstances leading to this were said to be as follows.
Given the matters set out above concerning Mr Carr’s sales performance and conduct, (including Mr Carr’s long absences from work) Mr Lin convened a meeting on 23 October 2015 with the two other employees to discuss Mr Carr’s performance “given that his [employment] probationary period was nearly at an end”. Mr Lin has put into evidence his notes for that meeting ([111] of Mr Lin’s affidavit and Annexure PL–29 at CB183–CB184 and also see CB185). The notes reveal that seven separate performance issues were identified. The “outcomes” are in the following terms:
“…If he misses another month of sales, then it’ll be three months (one quarter) where he has failed to achieve his sales targets. If this occurs, or if his ethics and general attitude towards the team, clients and myself does not improve, then he will need to be replaced by a salesperson based on these issues.
Immediately, we will contract the recruiter and initiate the process for the replacement salesperson, so the option is ready for us by the end of November.”
Mr Lin’s evidence (at [112] of his affidavit) is that on 26 October 2015 he relayed the “findings” about the performance issues verbally to Mr Carr in the office in the presence of the other two employees (see further below).
Mr Carr denies this conversation took place (at [3] of his second affidavit) (see further below).
In his affidavit evidence Mr Eastwood (one of the other two employees) confirmed that the meeting of 23 October 2015 had taken place and that Mr Carr’s performance was discussed (at [33] of his affidavit). His affidavit evidence corroborates Mr Lin’s account (see further below).
Mr Lin also gave evidence that on 26 October 2015 he contacted a recruitment agent to find a “replacement” for Mr Carr, as he expected that it was “likely” that there would be no improvement with Mr Carr’s performance (see [114] of Mr Lin’s affidavit and the annexed emails with the recruitment agent PL-31 at CB 186, PL-32 at CB 187 and PL-33 at CB 188.
In the week of 16 November 2015 Mr Lin conducted interviews for the “replacement personnel”. He could not find anyone suitable (at [116] and [117] of Mr Lin’s affidavit).
Mr Lin’s evidence on the decision to terminate Mr Carr’s employment is that by mid November 2015 he made the decision to terminate Mr Carr’s employment with effect by 26 November 2015. He asserts this was consistent with the one month timeframe he had earlier given Mr Carr (at [118] of Mr Lin’s affidavit).
The decision to terminate the employment was made in circumstances where Mr Carr “had also failed to convert any of the fresh inbound leads into sales since 1 October 2015” (at [119] of Mr Lin’s affidavit).
In all therefore the respondents’ position is that by the time of receiving notice of the complaint to the FWC on 23 November 2015, the decision to terminate Mr Carr’s employment had already been made, and the complaint therefore was not a part of the reason for that decision. There is no evidence (nor does Mr Carr assert) that Mr Lin knew of the complaint before receiving the notice of the complaint.
As set out above Mr Carr denies that Mr Lin had any discussions with him on 26 October 2015. His factual scenario is as follows.
On 19 November 2015 he filed the complaint with the FWC. On 23 November 2015 Mr Lin received notice of this from the FWC (see [83] and [84] of Mr Carr’s first affidavit). His affidavit evidence is:
“84. On 23 November 2015, I understand the Second Respondent received my F8C form from the Fair Work Commission. The Second Respondent’s desk was about two metres from my desk.
…85. The Second Respondent then stormed off back to his desk. A short time later access to my email was cut off and access to my files was cut off. My access to all my client contact details was also cut off. About an hour later, when I was leaving the office to go home, in order to get clarification on this, I said to the Second Respondent:
Me: “Is there anything you wanted to say to me, Paul?”
The Second Respondent replied in a querying tone “See you tomorrow?”
86. When I got home around 6pm, I received a text message from the Second Respondent saying “Hi Peter, due to some issues here in the office, I think it’s best you go on paid leave for a few days while the business sorts itself out, starting tomorrow.”.
87. I replied “I have an important meeting with Jax tomorrow at 2pm. This deal has been months in the making..I should attend the meeting...I don’t need to come into the office”.
88. The Second Respondent then texted “I’d rather you not work on anything while you’re on leave..I’ll take care of Jax..please do not contact them, or any other clients for that matter, while you are on leave…I hope you can obey these explicit instructions”.
89. The next communication I received from the First Respondent was an email terminating my employment with the First Respondent, with the name of the Second Respondent as the signee. Attached hereto and marked Annexure K is the letter of termination.”
For the reasons that follow I find that the respondents did not contravene s.340 of the FWA. That is, the termination of Mr Carr’s employment was not, even in part, because of his complaint to the FWC.
Plainly the parties disagree about a number of key issues relevant to the disposition of this claim. In submissions before the Court Mr Carr emphasised that the issue is to be resolved by determining who is the more credible as between Mr Carr and Mr Lin.
The respondents submitted that in determining the answer to the question posed now by Mr Carr’s application, regard should be had to what was said by Justices Tracy and Buchanan in State of Victoria (office of Public Prosecutions) v Grant [2014] FCAFC 184 at [32]:
“32. As the trial judge recognised the leading authority on the operation of ss 360 and 361 of the Fair Work Act in the context of Part 3-1 of that Act (which includes s 351) is Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; (2012) 248 CLR 500. The principles which informed this decision were recently reaffirmed by a majority of the High Court in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41. Relevantly, these authorities establish that: The central question to be determined is one of fact. It is: “Why was the adverse action taken?”
That question is to be answered having regard to all the facts established in the proceeding.
The Court is concerned to determine the actual reason or reasons which motivated the decision-maker. The Court is not required to determine whether some proscribed reason had subconsciously influenced the decision-maker. Nor should such an enquiry be made.
It will be “extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer.”
Even if the decision-maker gives evidence that he or she acted solely for nonproscribed reasons other evidence (including contradictory evidence given by the decision-maker) may render such assertions unreliable.
If, however, the decision-maker’s testimony is accepted as reliable it will be capable of discharging the burden imposed on the employer by s 361.
Barclay at 517 (French CJ and Crennan J); 542 (Gummow and Hayne JJ); 545-6 (Heydon J) and CFMEU at [19]-[22] (French CJ and Kiefel J); [85]-[89] (Gageler J).”
The immediate question therefore is was Mr Lin’s evidence credible, or was it rendered unreliable by other evidence, or even contradictions in his own evidence.
Mr Carr now submits that Mr Lin should not be believed as to why he terminated Mr Carr’s employment. The argument was that Mr Lin was “frustrated” by Mr Carr.
In his affidavit evidence Mr Carr denies most of the allegations about his performance and conduct made by Mr Lin (see Mr Carr’s second affidavit at [7]). While he agrees to having a conversation quoted by Mr Lin concerning Sumo Salad (at [8] of the Mr Carr’s second affidavit and [101] – [104] of Mr Lin’s affidavit) he asserts his part of the conversation was in the nature of a “joke”.
In any event the submission was that Mr Lin was frustrated by what Mr Carr now submits were allegations about him and that Mr Lin was annoyed with him which led to his being “very annoyed” when he received notice of the FWC complaint which therefore was at least one of the reasons for the termination of employment.
Mr Carr’s submission was that Mr Lin should not be believed when he now seeks to “downplay” the situation (as at the time of the notice of the complaint) by saying that he had already decided to terminate Mr Carr’s employment.
Whatever the detail of the sales targets, commission and bonus payments, and whether Mr Carr’s or Mr Lin’s “position” on these was the “correct” view, Mr Carr’s submissions now are that, as a fact, Mr Lin was annoyed at him for these reasons at the time he received the notice of the FWC complaint.
Irrespective therefore of whether Mr Lin was “justified” or not, the fact remains that in his mind he did have concerns about Mr Carr’s performance in relation to these matters.
In his submissions to the Court Mr Carr submitted that Mr Lin’s answers to questions in cross examination were “long” and “rambling” notwithstanding the specificity of the question asked. Further, that he “would invent information and evidence” in Court.
I do not agree with this submission as it relates to the cross-examination of Mr Lin on the matters of Mr Carr’s sales performance, bonus and commission payments. For example, his explanation of bonus and commission payments being linked to receipt of revenue from payments by customers by instalments was clear and responsive.
I find that these matters were of concern to Mr Lin at a time prior to receiving the FWC complaint.
The situation is similar with concerns about Mr Carr’s relationship with his two fellow employees. Mr Eastwood’s evidence in cross-examination was clear that he was consistently pressured and harassed by Mr Carr to perform tasks that were not part of his “responsibility”. He reported this to Mr Lin.
Mr Eastwood’s cross-examination and affidavit evidence corroborate Mr Lin’s evidence of his concerns with Mr Carr’s workplace conduct.
In his affidavit evidence Mr Carr made a “blanket” denial of the matters raised by Mr Lin in his affidavit concerning his workplace conduct.
However, in cross examination it was not squarely put to Mr Lin that these concerns were “inventions” on his part as was generally said to be the case in submissions about Mr Lin’s evidence.
As set out above in his affidavit Mr Carr denied the assertions concerning his workplace conduct as it related to the other employees.
What is of immediate note however is that while in his submissions he criticised Mr Lin’s responses, (which I do not accept) his own responses to questions in cross examination about work conduct revealed those very characteristics of which he criticised Mr Lin.
For example the following is informative:
“Ms Jones [the respondents’ counsel]:…No. Okay. Now, you would agree with me that in sales it’s important to be polite and respectful, wouldn’t you?
Mr Carr: Amongst other things.
Ms Jones: Is that a yes, Mr Carr?
Mr Carr: I think the question isn’t complete.
Ms Jones: You would agree with me that in sales two of the important things to be are polite and respectful?
Mr Carr: It really depends on what school of sales training you’ve been to.
Ms Jones: Is that a no, Mr Carr?
Mr Carr: It’s a “it depends”. If you’re saying in every situation you must always be polite and respectful in sales, I would have to say no.
Ms Jones: Okay. And you shouldn’t be rude to prospective clients, should you?
Mr Carr: Same answer. It depends on what school of sales you’ve been to. If you want a definitive yes or no, not in every situation. There are situations in sales where that can be a sales technique.
Ms Jones: So your evidence is that it’s acceptable to be rude to prospective clients in certain situations?
Mr Carr: For some people – not that I would employ that technique myself.
Ms Jones: You can’t really know how a person is going to react to a joke that you make, can you?
Mr Carr: If you’re a – an experienced salesperson, I think you are able to make a reasonable guess how somebody is going to respond to a joke.
Ms Jones: So you can make a reasonable guess, but you can’t know, can you?
Mr Carr: That’s the – that’s the challenge of being a salesperson.
Ms Jones: Is that a yes or a no, Mr Carr? You cannot know how a person is going to react to your jokes?
Mr Carr: You cannot – you can certainly have an opinion about how they’re going to react to your jokes that you believe is the case.
Ms Jones: But you don’t know, do you?
Mr Carr: Well, the building could be hit by a plane just after you’ve asked the question. You cannot know with absolute certainty. If you’re an experienced salesperson and you’ve done it a thousand times before, you’ve got a very good reason for believing that you know how they’re going to respond.
Ms Jones: And someone may take offence to something that you meant as a joke?
Mr Carr: They may
Ms Jones: Right. And making jokes about a person’s name may not always be well received?
Mr Carr: That’s true.”
[This transcript excerpt has been re-formatted for ease of reference.]
What remains is that Mr Lin’s evidence is to be accepted, as corroborated by Mr Eastwood, that there were concerns about Mr Carr’s workplace conduct (as to timing see below).
As set out above Mr Lin gave evidence that on 23 October 2015 he met with two of his other employees (this included Mr Eastwood) to discuss the concerns with Mr Carr.
In his affidavit evidence Mr Carr makes no reference to this meeting. As he confirmed in cross examination he was not present at any such meeting and therefore was unable to say whether or not it took place or what was discussed.
What remains therefore is Mr Lin’s evidence that there had been such a meeting and his contemporaneous notes of what had been discussed and decided by him at that time.
That account of the meeting is corroborated by Mr Eastwood (see his affidavit at [33]). Further, in his evidence Mr Lin annexed a “screenshot” of part of the first page of his notes from the meeting. (“Probation 3 Month Review Notes” annexed to Mr Lin’s affidavit at PL–30 at CB185 also see PL–29 at CB183-CB184). This reveals on its face that the document was last modified on 23 October 2015.
On the evidence I find that Mr Lin did discuss Mr Carr’s performance with the two other employees on 23 October 2015, and as a result drafted the document setting out these concerns.
It is important to note that for current purposes this document is further evidence that as at 23 October 2015 (that is well before the date of the notice of the complaint to the FWC) Mr Lin had serious concerns about Mr Carr’s work performance and conduct.
The “outcomes” part of this document reveals that at that time Mr Lin had formed the view that Mr Carr should be replaced:
“Will monitor the situation for another month. While some of the issues (teamwork, quoting) may be fixed through process and more detailed quoting documents from us, the salesperson ultimately needs to make sales, and he’s not doing that.
In addition I require a salesperson that’s ethical, that will treat people and agreements (between us and him, between the us and the client) with respect, and currently Peter does not fulfil these requirements.
This is dragging down team morale, and I do not want his unethical behaviour to influence other members of the team and our culture.
If he misses another month of sales, then it’ll be three months (one quarter) where he has failed to achieve his sales targets. If this occurs, or if his ethics and general attitude towards the team, clients and myself does not improve, then he will need to be replaced by a salesperson based on these issues.
Immediately, we will contact the recruiter and initiate the process for the replacement salesperson, so the option is ready for us by the end of November.”
[Error in the original.]
What emerges therefore is at 23 October 2015 Mr Lin made the conditional decision to terminate Mr Carr’s employment, but that was contingent on him not improving his performance.
The fact that Mr Lin decided to “[i]mmediately” contact the recruiter and initiate the process for the replacement, when read in context of the concerns expressed in the document, provide the basis to say that Mr Lin had made the decision to terminate Mr Carr’s employment (see further below). Particularly as he thought it unlikely that Mr Carr’s performance would improve.
Further, Mr Eastwood’s evidence is, (in context with reference to the meeting of 23 October 2015), that it was not his decision to dismiss Mr Carr. The clear implication being that a decision (contingent upon a failure to improve his performance) had been made at the meeting by Mr Lin.
There is a dispute between the parties as to whether Mr Lin conveyed his concerns to Mr Carr on 26 October 2015 or told him about the contingent decision he had made.
Mr Lin’s evidence is that he “relayed” the “findings” of the meeting to Mr Carr on 26 October 2015. His evidence is that Mr Eastwood and the other employee were present. Mr Lin’s evidence is that Mr Carr made no response, but took Mr Carr’s facial expression to indicate displeasure (at [112]-[113] of Mr Lin’s affidavit).
Mr Carr denies that any such meeting took place (at [3] of his second affidavit).
Mr Eastwood’s affidavit evidence made no reference to the claimed events of 26 October 2015. However, in response to questioning in cross-examination Mr Eastwood gave evidence that there was a “meeting the following week” (23 October 2015 was a Friday, and 26 October 2015 was a Monday) and that Mr Lin went through the concerns that had been discussed “the Friday before”.
This was supported by Mr Carr’s own statements in his complaint to the FWC. The date of this document is 19 November 2015 (“RE4”). While Mr Carr made reference to what he said were misrepresentations made to him (see below in relation to the ACL issue), under the heading of “Coercion, Undue influence or pressure” he makes references to his “dismissal”, and “making me fearful that my employment might be terminated at any time”.
This fear is said to emanate from the respondent’s failure to “pay me a significant portion of my wages”, and from Mr Lin’s use of “threatening language” towards him.
There is no claim now by Mr Carr that the respondents failed to pay his “wages”. This however, may be a reference to the amounts he said he was owed by way of commission and bonus payments. If that is the case then while the evidence of both Mr Carr and Mr Lin reveals disputes about these matters, there is nothing in the evidence to indicate a basis for Mr Carr to have feared termination of employment as at that time.
It was Mr Carr’s own evidence that between 10 September 2015 and 1 October 2015 “good progress was being made” in relation to one matter which he said “would allow the First Respondent to delay paying my commissions”.
While he described an email from Mr Lin on 1 October 2015 as being “very aggressive” there is no reasonable basis to say that at that time, and in that email, Mr Lin gave cause for Mr Carr to fear dismissal.
The email is at annexure H to Mr Carr’s first affidavit (at CB 86). Its terms can be described as terse and displaying frustration at what was said to be Mr Carr’s persistent changes as to how he wanted the commission to be paid.
Mr Lin cannot be said to be threatening or indicating dismissal such that Mr Carr was fearful of it when he states:
“But regardless, as a sign of good faith for the last time. I’ll approve…”, in context, what Mr Carr requested.
In particular, while terse in tone, the words “…from this point onwards…” would indicate (as at 1 October 2015) some ongoing employment role for Mr Carr.
In relation to the use of “threatening language” by Mr Lin, said by Mr Carr to be on “other issues and occasions” there is nothing in Mr Carr’s evidence now to satisfactorily support such a claim. Other than on the occasion which Mr Carr says occurred on, or about, 16 November 2015, when Mr Lin is said to have shouted at him that he did not make a particular sale (see [80]–[81] of Mr Carr’s first affidavit).
Mr Carr’s reference at [82] (of his first affidavit) to having “earlier received numerous threats” from Mr Lin were, in context, apparently about the “pay dispute”.
The immediate concern is not necessarily whether Mr Lin made those “threats” or conducted himself in the way alleged, or even if Mr Carr was “justified” in making his complaint to the FWC.
The question is if the conversation of 26 October 2015 did not take place as Mr Carr now asserts, then on what basis did he, as at 19 November 2015, form the fear that his employment would be terminated.
In the absence of any reasonable explanation from Mr Carr now, and in light of the evidence, the only reasonable available basis for the formulation of that fear was that the conversation of 26 October 2015 had taken place. As Mr Lin asserts in his evidence, and as corroborated in cross-examination by Mr Eastwood. In all I find the conversation did take place.
Before the Court Mr Carr argued that Mr Lin’s conduct on 23 November 2015 when he received the notice of the complaint to the FWC, and following, is indicative of Mr Lin dismissing him from employment because of that complaint.
In essence that conduct was said to be that Mr Lin “stormed” out of his office and directed him to take leave, not contact customers and that his emails and access to files was “cut off”. His evidence was that:
“84. On 23 November 2015, I understand the Second Respondent received my F8C form from the Fair Work Commission. The Second Respondent’s desk was about two metres from my desk. The Second Respondent shouted at me “seriously Peter, Fair Work Commission”. The Second Respondent then walked over to my desk and said:
Mr Lin: “Do you really want to go down this path with the Fair Work Commission”.
I said: “Paul, you have blatantly refused to discuss my reduced and delayed pay, so I can’t see any other way forward than to ask an independent arbitrator to help us to resolve the matter”.
85. The Second Respondent then stormed off back to his desk. A short time later access to my emails was cut off and access to my files was cut off. My access to all my client contact details was also cut off. About an hour later, when I was leaving the office to go home, in order to get clarification on this, I said to the Second Respondent:
Me: “Is there anything you want to say to me, Paul?”
The Second Respondent replied in a querying tone “See you tomorrow?”
Mr Lin denies the conversation as alleged by Mr Carr. Mr Lin’s evidence is that he received the notice on 23 November 2015 and that towards the end of that day Mr Carr approached him and the following was said:
“121. …The Applicant: Do you want to tell me anything?
Me: No.”
Mr Carr alleges that his emails being “cut off” was indicative of his employment being terminated because Mr Lin received the notification of the FWC complaint. Mr Lin denies that he “cut off” Mr Carr’s email access. Even if Mr Lin did “cut off” the emails, I find that to be consistent with his previous decision to terminate Mr Carr’s employment.
Mr Lin sent a text message to Mr Carr later on 23 November 2013. Part of that message is in the following terms (Annexure PL-34 to Mr Lin’s affidavit at CB 189):
“We’ll let you know when to return to work once the situation here has sorted itself out.”
Mr Carr now argues that given this reference to “return to work” no decision had been made as at that date of the text message, but that that decision occurred later and postdated the receipt of the complaint notice. Thus providing a basis to say that the complaint was, at least, a part of the reason for termination of his employment.
Mr Lin’s evidence was that by mid-November, that is at the time he interviewed for a replacement (for Mr Carr), on or around 16 November 2015, there had been no improvement in Mr Carr’s work performance (he “had not made a single sale since” the meeting on 26 October 2015). It was at that point, that is before 23 November 2015, that he made the decision to terminate the employment.
This of course leaves the text message of 23 November 2015 with the reference to “return to work”. Mr Carr’s submission is that this is evidence that as at 23 November 2015 no decision to terminate employment had been made.
Mr Lin’s evidence and the respondents’ submissions were to the effect that the decision had been made but that he wanted to obtain legal advice, given the existence of the complaint, and what effect it may have on the implementation of the decision to terminate.
Plainly Mr Carr was not in a position to give evidence as to what was in Mr Lin’s mind as at mid-November 2015. In cross-examination Mr Lin was not directly questioned about his evidence (at [118] of his affidavit) that he made the decision to terminate on about 16 November 2015. He gave consistent evidence in cross-examination that the decision to terminate Mr Carr’s employment had been made before the receipt of the FWC complaint (for example see transcript page154, line 15):
“Mr Duc: Reasons you thought would be adequate and that would pass muster if challenged by Mr Carr?
Mr Lin: No. The decision – the decision to terminate Mr Carr was already made – it – without the – without any of this, without the Fair Work Commission notice, and Mr Carr would have been given his original deadline of the 26th to the twenty – 27 October to 26 November, so Mr Carr would have been terminated end of 26th or the morning of 27th if he didn’t show up in the evening, because Mr Carr was away a lot.”
[This transcript excerpt has been re-formatted for ease of reference.]
There is no reason not to accept that evidence.
It is consistent in Mr Lin’s evidence that his frustration with Mr Carr began with his disputes about payment of commission and bonuses. But by September the concerns extended to his sales performance which decreased over time. These issues and the concerns over Mr Carr’s conduct towards the other employees (which is corroborated by Mr Eastwood) and concerns over relations with customers, led to the meeting of 23 October 2016.
On the evidence it is clear that at the time (23 October 2016) Mr Lin made a decision that Mr Carr’s employment should cease in a month unless there was some improvement in performance and conduct.
There is no evidence that Mr Carr’s sales performance improved in the period after 23 October 2015. To the contrary the evidence is that it further deteriorated. By mid-November therefore, it is plausible that Mr Lin made the decision that he says he made at that time given that circumstance.
I accept that Mr Lin told Mr Carr of the concerns and the potential consequences, on 26 October 2015. I accept Mr Lin’s evidence that at the time of making the decision (on about 26 October 2015) he believed it was appropriate to give Mr Carr a month (from 26 October 2015) before terminating his employment.
In all I find that Mr Carr’s employment was not terminated for reason of his having made a complaint, but because of the concerns as subsequently expressed in the letter of termination. The decision to terminate the employment was made on or around 16 November 2015 and certainly by 20 November 2015. This is before Mr Lin received the notice of the complaint. The respondents therefore did not subject Mr Carr to the contravention of s.340 of the FWA as alleged. That part of the application to the Court is to be dismissed.
The Claimed Contract Breach
In his SOC Mr Carr also claims that the respondents failed to pay him “salary or commission/bonus” and that this was in breach of the contract of employment (at [38] of the SOC).
The particulars to this complaint as expressed in the SOC assert that as at 20 August 2015 Mr Lin told Mr Carr that he could not afford to pay “the salary” and sought further time to do so. No further details of substance are pleaded.
Mr Carr’s written submissions focus on the alleged failure of the respondents on what is said to be the non-payment of commission (as set out in the contract). The submission is that the contract provided for payment of commission at the rate of 5% for sales up to 1.2 million dollars in a 12 month period, and 8% for sales over that amount in the same period.
The submissions assert a breach of contract because Mr Carr achieved sales that would have earned commission amounting to $20,000 and this was not paid. How this was calculated and on what basis, is not made clear in submissions. I agree with the respondent’s submissions that Mr Carr submissions were “opaque” on this point.
Mr Carr’s affidavit evidence makes various references to discussions with Mr Lin about the payment of commission (see [39]–[49] of his first affidavit). Again it is unclear as to the exact nature of the basis for the complaint.
For his part Mr Lin denies that the conversations referred to by Mr Carr ever took place (see [137] of Mr Lin’s affidavit).
However it appears from both affidavits (see Mr Lin’s affidavit at [71]–[76]) the issue concerns disagreement about how the commission payments were to be made, and the timing of such payments.
It is not necessary to go into great detail about the above. In his final submissions, Mr Carr submitted that the breach of contract claim, as it “has fallen out of the evidence” concerns the payment of commission on one sale, described in submissions as the “Moits payment”. The submission was that a sale had been made by Mr Carr but that no payment of commission was made to him for this sale and this was in breach of contract.
The significant, if not insurmountable, difficulty for Mr Carr in this regard is that there is nothing in the SOC, submissions, or his evidence, to identify exactly what term of the contract he says has been breached, let alone evidence to explain the breach.
In his final submissions before the Court Mr Carr submitted that the contract did not deal with the issue of when payments for commission were to be made or the conditions for such payment. At best the terms of the contract make reference to a “sale”.
Plainly on the evidence Mr Carr and Mr Lin disagree about whether a “sale” was made to Moits. Mr Lin’s evidence is that Mr Carr attempted to negotiate a sale to Moits during September/October but this “was never converted into a successful sale” (see [67] of Mr Lin’s affidavit).
Mr Lin’s evidence was that no commission relating to Moits was included in the “September figures” because although he had asked Mr Carr for confirmation that the sale had been completed, he did not receive any such confirmation (see Mr Lin’s affidavit at [83]). Further Mr Lin’s evidence is that he received confirmation on 29 October 2015 from Moits “that they were not proceeding with the project” (and therefore note the sale - see [84] of Mr Lin’s affidavit).
It is clear that on the evidence Mr Lin and Mr Carr had disagreements about the payment of commission generally. This was one of the factors that Mr Lin perceived to be unsatisfactory about Mr Carr’s conduct, and a source of concern for Mr Carr in relation to Mr Lin.
But what remains for current purposes is, that as Mr Carr agreed in evidence, and consistent with his final submissions, there was no term in the contract requiring payment of commission by any particular date. Whatever discussions subsequently took place between Mr Carr and Mr Lin (concerning sales and the timing of the payment of commission) cannot be said to have resulted in any agreement to amend the terms of the contract of employment. That is sufficient to decline to make the declaration of a breach of contract as sought by Mr Carr.
The ACL Claims
The third suite of claims made by Mr Carr is encapsulated by his application for a declaration that both respondents contravened clause 31 of Schedule Two of the ACL (“section 31”). In particular that they engaged in conduct that was liable to mislead Mr Carr in seeking employment with Empirical Works.
Mr Carr’s SOC sets out seven representations which were said to be misleading (see [33] above) and on which he says he relied to agree to employment with Empirical Works, and which led to his declining an offer of employment with another company which resulted in loss to him.
In essence Mr Carr’s argument was that Mr Lin, at interviews preceding the appointment, “over-sold the job” (with Empirical Works), to Mr Carr. That is, the misrepresentations concerning the breadth and range of Empirical Works customers, its financial position and turnover and number of employees were not true. I note that while in his SOC Mr Carr alleges Mr Lin made the representations at the interview, it appeared that the representations were also said to have been made in a brochure given to him at the interview.
In any event for current purposes the following may be said.
One, for the purposes of Mr Carr’s claims under the ACL (relying on s.31) there was no dispute between the parties that statements made by Mr Lin and Empirical Works during employment negotiations could fall within the definition of “in trade and commerce” for the purposes of the ACL.
Two, the respondents now argue that the pleadings (in the SOC) are confused and themselves misleading, for example, as to who made the representations, and are deficient in detail as to how the representations were made. In particular, and for example, whether express or implied. As a general observation I agree with the respondents (see further below).
Three, it must also be said that a fair degree of relevant detail on which Mr Carr ultimately relies in relation to the ACL claim is certainly not in his affidavit, but emerged orally before the Court.
In this light I also note that references in Mr Carr’s affidavit to such matters as: “…Mr Lin arrived, and entered the room, saying “Hi, I am Paul Lin, sorry I am late”, do not really provide relevant detail about the representations actually made (see [7], of his first affidavit also see [4]).
Four, it must be said that Mr Carr’s SOC is brief as to the representations said to have been made to him, to the point that it is absent much detail on which he subsequently sought to rely.
The real difficulty however, is that Mr Carr was unable to satisfactorily explain in cross-examination whether his affidavit evidence on which he obviously relied to make out the assertions in the SOC, contained all relevant detail, or even all matters he considered important, so that his case could be made out.
Mr Carr’s explanation was that the combined length of the interviews he attended with the respondents was over eight hours, and therefore he could not put all the detail in his affidavit. This presents a difficulty in that the Court can only proceed on the evidence actually provided (noting of course he was able to include matters of trivial character in his affidavit – see [180] above and [241] below).
At best Mr Carr agreed that the affidavit contained the “key points” on which he relied and no “key points” were omitted.
Five, the immediate questions therefore are whether representations as alleged by Mr Carr were made, and when viewed objectively, were they liable to mislead in relation to the proposed employment.
In his SOC Mr Carr asserts that at a series of interviews (meetings) with Mr Lin on 29 May 2015, 11 June 2015 and 19 June 2015, the “first respondent” (Empirical Works) represented to him that the “second respondent” (Mr Lin) had been trading for six years.
This is illustrative of the difficulty in considering much of Mr Carr’s case. The SOC alleges that the first respondent (Empirical Works) represented that the second respondent (Mr Lin) had been trading for six years (at [9] of the SOC).
Without satisfactory explanation in his submissions Mr Carr asserts that, in context, it appears Mr Lin represented that Empirical Works had been trading for six years.
Further difficulty is that Mr Carr’s submissions did not satisfactorily explain, with the required precision, what exact representation he says was made to him.
In any event it may be that Mr Carr seeks to rely on his evidence that Mr Lin told him amongst other things:
“…I returned to Australia and started Empirical Works six years ago” (at [7] of his first affidavit).
In his evidence Mr Lin explained that “[i]n 2009, I [he] returned to Australia to start Buuna Pty Ltd” (at [6] of his affidavit). It is clear that Buuna, was in the business of creating mobile phone “apps” (a “start-up travel App” – see [11] of Mr Lin’s affidavit). Empirical Works was a company “started” by Mr Lin to market directly to “enterprise clients” (at [12] of Mr Lin’s affidavit). That is, Mr Lin’s evidence was that Empirical Works evolved with a specific focus from the work done by Buuna (at [12] of his affidavit).
Mr Eastwood corroborated Mr Lin’s account (see Mr Eastwood’s affidavit at [2]–[7]). Neither Mr Lin’s, nor Mr Eastwood’s account, was weakened in cross-examination.
In any event it is clear that on Mr Carr’s own evidence what Mr Lin was representing to him is that since he returned to Australia he had six years experience in the type of work that Empirical Works engaged in. Mr Carr’s attempt now to give a different meaning to what Mr Lin said is not reasonably available to him.
Further, even if this were not the case Mr Carr has not satisfactorily explained how this misrepresentation led to the loss he otherwise asserts in relying on Mr Lin’s representation.
I pause to note that, ironically, perhaps Mr Carr’s claim as expressed in the SOC had it right. That is, the representation was that Mr Lin (the second respondent) had been “trading” for six years.
Mr Lin’s evidence was that he did not make this statement as alleged. His evidence is that he made clear to Mr Carr that Empirical Works had its origins in Buuna. There was no reason following cross examination other than in general terms proffered by Mr Carr in submissions, to not accept Mr Lin’s evidence. In any event as set out above even on Mr Carr’s version the claimed misrepresentation is not made out. Representation #1 does not assist Mr Carr’s case.
The second representation is set out at [12] – [14] of the SOC. The assertion is that Mr Lin represented to him that the number of Empirical Works “clients” was in the dozens. Mr Carr’s SOC asserts that this misrepresented to him that Empirical Works had a “healthy client base”.
Mr Carr’s written submissions again appear to be inconsistent with his SOC. At [14] the submissions assert that the second representation was that Empirical Works had “dozens of clients”, but also referred to the number of “employees”. In any event the complaint is that when he commenced work Mr Carr found there were no clients. The matter of the number of employees appears to be relevant to representation #5 (see further below).
Again what the Court is left with is a failure to satisfactorily link this claim to the evidence. It may be however, that this is a reference to another part of [7] of Mr Carr’s first affidavit:
“…Mr Lin laughed out loud and said “oh no, no, no, no..we are one of the leading mobile app companies in Australia…we have dozens of clients, including some large brands”.
Mr Lin also denies in his evidence that he made this statement to Mr Carr. Mr Carr’s explanation in his evidence was that he was always careful to draw a distinction between “clients” (as such) and the end users of the products Empirical Works marketed.
Mr Lin was cross-examined on the matter of “clients”, noting that representations #3 and #4 are also concerned with aspects of Empirical Works’ client base.
In his evidence Mr Carr stated that at the interview Mr Lin handed him a brochure about Empirical Works, and pointed to a part of the brochure that listed “around 20 well known global and Australian brands, including Coca Cola and Toyota” (the brochure is at “RE3”). Further, he made certain statements to the effect that he could contact these clients.
In cross examination Mr Lin denied making any such statements and denied that he gave any brochure to Mr Carr at the interview.
In examination in reply Mr Lin explained that the brochure was an old brochure of Empirical Works that was left in the working area of the business premises. He was clear that he did not give Mr Carr the brochure as part of the interview process.
It was Mr Carr’s evidence in cross-examination that the claim concerning the “well known” brands was made in the brochure which was given to him by Mr Lin at the interview.
However, as it was confirmed in cross examination the part of the brochure which Mr Carr said he relied upon contained a heading: “Clients and Projects”, which was accompanied by a series of commercial “logos”. When put to him he agreed that there was nothing in the brochure to distinguish which logos represented “clients”, or “projects” in which Empirical Works was involved.
Both Mr Lin and Mr Eastwood gave evidence about how Empirical Works, and Buuna before it, conducted its business. For current purposes Mr Eastwood’s evidence which corroborates that of Mr Lin is that Buuna did not perform work directly for clients, but worked on high end projects for large companies through agencies. This focus changed with the change from Buuna to Empirical Works.
In this historical and transitional context the references to clients or projects (as in the brochure) was important.
In the six year history therefore of Buuna and Empirical Works, and even in the period focused only on Empirical Works, Empirical Works did have “clients” in the sense of entities for whom work was done. In any event there is no reason not to accept Mr Lin’s and Mr Eastwood’s evidence that there were clients in the sense now proposed by Mr Carr.
It is difficult to accept Mr Carr’s submission that there were “no clients” of Empirical Works when he commenced work with the company. I note in any event his own evidence later qualifies this by stating that there were “almost no clients” (at [36] of Mr Carr’s first affidavit).
Given that Empirical Works had a principal and two other employees, I prefer Mr Lin’s and Mr Eastwood’s evidence that Empirical Works did have “clients” at the time Mr Carr commenced work. After all, Mr Carr’s work when he commenced with Empirical Works focused on “clients” referred to him by his employer. On this basis claimed representation #2 is not made out.
Representation #3 is that Mr Lin represented to Mr Carr that Toyota and Coca-Cola were amongst Empirical Works’ “clients”. Mr Carr asserts they were not clients. Mr Carr says that this representation was made during the interviews with Mr Lin.
Again however, the lack of particularity in the SOC and Mr Carr’s submissions, makes it difficult to deal with this claim.
There is nothing on Mr Carr’s evidence concerning what he says occurred at the three interviews that any specific oral reference was made to Coca-Cola or Toyota. While the evidence makes reference to Endeavour Energy and Boral nothing is said about the other two companies which are the specific focus of representation #3 in the SOC.
If (although not clear) this is part of the brochure representation then that is dealt with above. For the remainder the lack of evidence in support of the claim in the SOC and the lack of satisfactory explanation means that the allegation in the SOC cannot be accepted.
Representation #4 in the SOC asserts that in meetings with Mr Lin he represented that Empirical Works had many “satisfied clients” (see at [18] of SOC).
Some care needs to be taken here in understanding what is alleged in the SOC. This is because while the SOC at [18] is focused on what was said to be the number of satisfied clients, the SOC at [20] asserts that Mr Carr was misled as to Empirical Works “success…in business”, and then that he was misled into thinking Empirical Works “had a healthy client base and was a long term employment prospect”.
This again fails to be established given the lack of evidence. There is nothing in the evidence to which Mr Carr was able to point to indicate that Empirical Works did not have many satisfied clients. Unlike the FWA claim as discussed above, here the onus rests with Mr Carr to establish that that was the case.
There is no reference in Mr Carr’s affidavit evidence as to the basis for the assertion that there were many unsatisfied clients. It became clear, in cross-examination as with the “no clients” claim Mr Carr relied on mere assertion for this claim. This also is therefore not made out.
Representation #5 asserts that Mr Lin told Mr Carr that Empirical Works had a dozen employees. Mr Carr’s SOC asserts that Empirical Works only employed three people. The representation was misleading therefore, because it was misleading as to the success of the business. That is, that it had a dozen employees that serviced many clients.
Mr Carr’s evidence is that Mr Lin made this representation (the dozen employees) at the first interview.
Mr Lin denies that he made this statement. His evidence is that at the second and third interviews it was made clear that Mr Carr had met “everyone”. That is Mr Lin, Mr Eastwood, and the one other employee (see in particular Mr Lin’s affidavit at [39]–[40], and [47]–[48] for the references to a “small business”).
This particular dispute between the parties relies on the respective evidence that the representation was made, or not made.
What weighs in the respondents favour however is that, on his own evidence, Mr Carr attended at the premises of Empirical Works on three separate occasions, and on each occasion for some time. There is no evidence from him that he saw any other employees there (other than the two who attended at the second and third interview). There is no evidence from Mr Carr that he was told there was any other site for Empirical Works business.
At its highest Mr Carr’s evidence is that when he first attended at Empirical Works premises he saw “around 15 desks” ([6] of his first affidavit). However, he also says they were “arrayed in close proximity to each other, with three clusters of 4 desks facing inward to one another”. This is consistent with Mr Lin’s and Mr Eastwood’s evidence of a small office. These three “clusters” of desks would reasonably indicate three workers (Mr Lin and the other two employees).
I accept the respondents’ submissions that Mr Carr from his own observation would have seen, over a number of hours, the size of the office and the number of employees. Representation #5 is not made out.
Representation #6 is said in the SOC to be that Mr Lin represented that Empirical Works had ownership of “the original concept of the paper form to App form transformation”. Again the SOC makes general reference to the interviews with Mr Lin. The assertion is that Empirical Works did not own this concept, and he was misled into thinking there was a “healthy client base and was a long term employment prospect”.
Mr Carr’s written submissions do no more than in essence repeat what was in the SOC. The oral submissions did not satisfactorily address this matter. At best, I understood it was subsumed in the general proposition that Mr Lin misrepresented the “health” and prospects of Empirical Works, in the same way alleged as with the client base and employees representations.
At best it would appear that initially Mr Carr sought to rely on his evidence that at the first interview:
“Mr Lin said: “Well, I have a very unique new idea that I think is going to be a game changer. The idea is that we approach large enterprises who still use paper forms for most of their work, and we help them to transform those paper forms to mobile apps. I call this idea ‘paper form to app transformation’ … we did this for Boral.”
It must be said that even on the most flexible reading of this that there is no express statement of ownership by Empirical Works or Mr Lin of this idea.
However, there was no dispute that subsequently in answer to a request for further and better particulars in these proceedings Mr Carr confirmed that the representation was implied. That is, that this statement when viewed in context contained an explanation by Mr Lin that Empirical Works’ business strategy was to assist large businesses to transform paper forms to mobile apps and that Mr Lin did not state that this strategy did not originate from Empirical Works. That is, that it was implied that he did.
Mr Lin denies that he said that Empirical Works, or he, had intellectual property ownership in this concept.
The evidence otherwise before the Court is that the paper form to mobile app concerns the development of an app that digitally transforms a paper form to an electronic version of that same form.
Once that is understood, then Mr Lin’s statement, as is reported by Mr Carr, if it were made, is no more than an explanation of the process that as he subsequently explained, Empirical Works had done for Boral.
Even the words “a very unique new idea” do not imply ownership of property. The focus of the statement is on the process implemented by Empirical Works and provided to its clients. The idea may have been “new”, but this does not, reasonably imply Mr Lin or Empirical Works owned the concept.
In any event before the Court Mr Carr’s submissions made no answer to the respondents’ submissions that characterise the claimed understanding of the representation (if it was made) by Mr Carr as being the equivalent of stating that a concept such as “social media” (which I understood to be a broad description of various electronic conversation mechanisms used for social interaction) can be owned.
In short, the representation (if made) could not reasonably be understood as saying that Empirical Works or Mr Lin “owned” the concept. I agree. Mr Carr has now sought to characterise Mr Lin’s statement (if it was made) as implying ownership, or proprietorial rights, in this concept. The statement (as reported by Mr Carr) should be understood in light of what the statement plainly says. That is Mr Lin used an idea as the business model for Empirical Works. This complaint also is not made out.
Representation #7 in the SOC is described as being that Mr Lin represented the financial position of Empirical Works as being “healthy”, when that was not the case. The “particulars” in the SOC appear to be that Mr Lin misled him into thinking that Empirical Works was successful in business and had a healthy financial base.
The written submissions do not advance the understanding of this claim. The oral submissions were at a level of generality that did not assist in understanding this particular matter. At best Mr Carr’s explanation in submissions is that Mr Lin represented to him the matters as identified in the SOC and that he was misled as a consequence.
In this circumstance it is not for this Court (as I have attempted to do with the other representations which had a modicum of specificity) to trawl through the evidence to explain and make out Mr Carr’s case for him. That with respect was the task for his legal representatives. To be fair to the representatives it may be they were faced with a difficult task given the character of Mr Carr’s evidence. That is, as revealed by his affidavits, replete with fine detail on matters of no relevance and lacking in detail on matters specifically pleaded in the SOC.
For example, Mr Carr’s description of the premises of Empirical Works on the occasion of his first interview. It is difficult to see what relevance the fact that there “…were science fiction and fantasy figurines, mostly around 50cm’s high, and quite a few Star Wars space ship models…” had to any of the matters pleaded in the SOC.
In all therefore, the application for the declaration sought by Mr Carr pursuant to the claims under the ACL is to be refused.
Conclusion: The Application to the Court
In all given the matters set out above the application to the Court in its entirety is to be dismissed. I will make the appropriate order. That still leaves the respondents cross-claim to consider.
The Cross-Claim
By their cross-claim the respondents argue that Mr Carr made representations that, for the purposes of s.18 of the ACL, were misleading and deceptive in a number of ways. He is said to have done this during “pre-employment” negotiations. The respondents claim that they relied on these representations, and Empirical Works decided to employ Mr Carr and incurred certain loss which would not have occurred had the representations not been made.
The respondents’ cross-claim was first raised by way of the Response filed in these proceedings on 2 May 2016 ([49]–[50] of the first response.) On 7 December 2016 the respondents filed an Application in a Case seeking leave to amend the Response by way of striking out these paragraphs, and to substitute certain other paragraphs providing, in essence, a more detailed pleading of the cross-claim as described above.
On 13 March 2017 Mr Carr filed an Application in a Case seeking to strike out the cross-claim as originally made (noting that the respondents’ application in a Case to amend had not yet been heard).
Both Applications in the Case were heard together. The disposition of the Applications in a Case was the subject of the judgment in Carr v Empirical Works& Anor [2017] FCCA 1813.
For current purposes I note that the respondents’ Application in a Case was allowed. Mr Carr’s Application in a Case was dismissed. The amended cross-claim was set down for hearing at the same time as Mr Carr’s substantive application was to be heard.
The immediate issue concerns the legislative, and broader legal, foundation for the respondents’ cross-claim. The respondents’ argument is as follows.
One, s.18(1) of the ACL provides that “[a] person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” The submission is that s.18 applies to all “persons” whether individuals or corporations. Mr Carr is such a “person”.
Two, s.18 is not found in Part 3.2 of the ACL which is concerned with “Consumer transactions”. It is found in Part 2.1 which is concerned with “Misleading and deceptive conduct”, and in particular is a part of chapter 2 of the ACL which sets out “General protections”. I understood this submission to argue that as a “general protection” the question of misleading or deceptive conduct had a broader, or more “general” application than simply consumer transactions.
Three, as set out in s.18, to fall within s.18 the “persons” deceptive or misleading conduct must have been done “in trade or commerce”.
Four, the respondents rely on TCN Channel Nine Pty Ltd v Ilvariy Pty Ltd [2008] NSWCA 9 (“TCN”) at [49] for the proposition that there is no requirement that the “in trade or commerce” must be that of the person making the representation.
At [49] of TCN the Court stated:
“49 The communications, directed as they purported to be for the sole purpose of acquiring the services of the respondents as builders, bore the requisite trading or commercial character. (See Concrete Constructions and Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCAFC 240; (2004) 139 FCR 330 esp at [52] and at [44] approving Dowsett J in Hearn v O’Rourke at [28].)”
Five, the respondents also rely on Stoelwinder v Southern Health CareNetwork [2000] FCA 444 (“Stoelwinder”) at [6] for the proposition that pre-employment negotiations come within the provisions of s.18:
“6.For my own part, I would not regard negotiations for a contract of employment as an “internal” matter in the sense discussed by the High Court in Concrete Constructions. Before a contract of employment is made the prospective employee is not a part of the corporate enterprise and communications between the corporation and the prospective employee are not an aspect of the internal affairs of the corporation. Nor would I regard in any different way discussions concerning the variation of a contract of employment. Negotiations for the variation of a contract are not properly characterised as communications with an employee in the course of his or her employment. I would regard all such communications, that is communications relating to the making or variation of a contract of employment to be prima facie “in trade or commerce” because in most cases a contract of employment “is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character”, to adopt the language of the High Court.”
Six, the respondents also submitted that at the relevant time (that is at the time of the pre-employment negotiations) Mr Carr was a director of a competing business.
It must be said that in relation to this latter point the respondents did not satisfactorily explain how it assisted their cross-claim. If for no other reason I cannot see how it assisted, specifically, the argument above given that Mr Carr did not participate in the pre-employment negotiations as a director of a company, but rather as a prospective employee.
Seven, the claimed representations are set out at [30] of the respondent’s submissions:
“During the interviews, Mr Carr made a number of express representations about his experience and his current role. These representations included that he:
a. was currently employed at Maximumm, a company with eight employees, as a sales director;9
b. delivered all of the sales for Maximumm;10
c. had an annual sales target of $1.5 million, but he had exceeded that in the previous financial year making $2 million in sales;11
d. had over 10 years’ experience in business to business (B2B) solution sales;
e. had been a sales director for six years;12
f. had experience in technical sales;13
g. had experience working with, and selling to, large multi-national companies;14
h. would be able to source sales leads independently;
i. had close business connections that would result in sales for Empirical Works.15”
[Footnotes omitted.]
Eight, Empirical Works relied on these representations in offering Mr Carr an employment position. Mr Carr accepted the offer and commenced work with Empirical Works.
Empirical Works paid a fee to the recruitment agent who arranged the recruitment. The recruitment fee was $45,781.32. The representations were false in a number of ways. The recruitment would not have taken place if Mr Carr had not made these representations. The recruitment fee would not have been incurred.
Mr Carr’s pre-hearing written submissions made no reference to the cross-claim even though the cross-claim was a part of the amended Response to the substantive proceedings, and had been, in part, the subject of the Court’s earlier judgment.
Mr Carr’s oral submissions at the conclusion of the hearing did make reference to the cross-claim. In essence, and bearing in mind earlier submissions made to the Court in relation to the respective Applications in a Case (see the relevant paragraphs above) the response to the cross-claim was as follows.
One, Mr Carr was not acting “in trade or commerce” when providing a resume and answering the respondents’ questions, at an interview, in relation to his experience. This is because a prospective employee is not subject to the ACL. There has never been any “decided case at intermediate court level” that found that an employee was subject to the ACL. That is, the respondents’ argument is a “novel” argument (see the earlier judgment at [40]-[41]).
Two, if the Court now were to make such a finding it would have “grave” consequences for employees if they could be “sued” by an employer “for exaggerating…their experience”.
Three, the “purpose” of the ACL is consumer protection. In this light the question that may be posed is whether an employer who is actively looking to hire employees, is engaged in a consumer activity such that the “protection” of the ACL may apply. That is, apply to a person or corporation engaged in a consumer activity.
Four, in the current case Mr Lin conducted no further investigation or enquiry concerning Mr Carr’s employment in relation to any of the matters on which he now says he relied in offering employment to Mr Carr on behalf of Empirical Works.
In essence, and as was made clear in oral submissions, the primary argument raised by Mr Carr against the cross-claim is that “the legislation is not even engaged because of the fact that employers do not need and should not have the protection of the legislation under the Australian Consumer Law”(transcript page 165 line 3-5). I have quoted from the transcript of the hearing before the Court to ensure that Mr Carr’s argument is not misunderstood.
It is clear that this argument is a statement about legal policy rather than engaging with the terms and structure of the legislation, as the respondents have attempted to do. Nor does it say anything about the authorities to which the respondents have referred.
In this light also, I note that Mr Carr’s submissions have not sought to engage with the evidence on which the respondents rely. There is no evidence from Mr Carr seeking to address Mr Lin’s evidence in support of the cross-claim. The lack of submission, let alone lack of evidence in reply, leaves Mr Carr’s response to the cross-claim in an exposed position. There is nothing therefore, in an evidentiary context to challenge Mr Lin’s evidence about relying on the representations, the misleading nature, and the loss suffered.
This then leaves the central question of whether s.18(1) of the ACL encompasses the circumstances presented by the respondents’ cross-claim.
As set out above the respondents rely on Stoelwinder. The respondents argue that pre-employment negotiations, as in the current case, were found in that case to be “in trade or commerce”.
Respectfully, a number of features of Stoelwinder need to be noted. One, the paragraph on which the respondents now rely was obiter. (“I would not regard…”). This is not fatal to the respondents’ argument given that it is the opinion of a superior Court Judge, and therefore to be given appropriate weight.
Two, however that case involved s.52 of the Trade Practices Act 1974 (Cth). While the “common” element with this case is the phrase “in trade and commerce”, the ACL presents a different statutory context (see further below).
The respondents also referred to TCN. In that case the proposition relied on now by the respondents arose from circumstances involving the procurement of services of certain builders. That was the basis on which the link to: “in trade and commerce” arose. This says nothing about pre-employment negotiations.
In my view the resolution to this dispute can be found in the ACL itself. The basis for the respondents’ cross-claim is said to be found in s.18 of the ACL. However, the circumstances on which the respondents rely cannot be ignored.
Those circumstances and the submissions in explanation, focused on what is said to be the misleading and deceptive conduct of Mr Carr, albeit in pre-employment negotiations.
The term “in trade or commerce” as it appears in s.18 is not defined in the Act. The respondents submitted that its ambit is wide enough to encompass pre-employment negotiations. However, it is to be noted that the concept of misleading conduct in relation to, amongst other things, pre-employment negotiations is specifically addressed in s.31 of the ACL.
While s.31 does not refer to deceptive conduct, as does s.18, nonetheless misleading conduct is a common element. In s.31 the prohibition on misleading conduct in relation to pre-employment negotiations is placed on the employer, and not, also, and conversely, on the employee.
That is the legislature has made (to use Mr Carr’s term) a “policy” decision that in circumstances of pre-employment negotiations the employer is not offered the same protection as a prospective employee. Whatever the “policy” should be, for current purposes that is the “policy” reflected in s.31.
Therefore what presents is as follows. Section 31 is a part of the Act dealing with “Specific protections”. The “Specific protection” in s.31 is for the benefit of a prospective employee and not a prospective employer. While it may have been open to the legislature to have given the same protection to a prospective employer, it did not.
As opposed to this, and what remains, is that s.18, on which the respondents rely, is a “General protection” available in circumstances involving “in trade or commerce”.
The general application of s.18 and the focus on the broad and undefined concept of “in trade or commerce” must be understood with reference to the current circumstances, as lacking the specificity of s.31 which is focused precisely on pre-employment negotiations.
It is the case that s.31 talks only of misleading conduct while s.18 refers to misleading and deceptive conduct. However, the respondents’ cross-claim relies on misleading conduct said to have been made by Mr Carr in pre-employment negotiations in a situation where, in specifically addressing such conduct in pre-employment negotiations, the legislature has decided not to impose that prohibition on the prospective employee, in this case Mr Carr.
The respondents have not satisfactorily addressed this important facet of the legislation even though they otherwise relied on the “construction” (of the ACL) argument to make out their case.
In these circumstances the cross-claim is to be refused.
Conclusion
For the reasons set out above both the substantive application, and the cross-claim, are to be dismissed. I will make the appropriate orders.
I certify that the preceding two hundred and eighty-six (286) paragraphs are a true copy of the reasons for judgment of Judge Nicholls
Date: 30 April 2019
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