FEDERAL CIRCUIT COURT OF AUSTRALIA
| COOTE v MAINLINE ACCESS PTY LTD & ANOR (No.2) | [2018] FCCA 2892 |
| Catchwords: INDUSTRIAL LAW – Claims for contraventions of various other provisions of the Work Act 2009 (Cth) – whether employer contravened provisions – whether sole director and shareholder of employer was involved in contraventions. |
| Legislation: Building and Construction General On-Site Award 2010 |
| Cases cited: ACE Insurance Ltd v Trifunovski (No.2) (2012) 215 IR 206 |
| Applicant: | MARK COOTE |
| First Respondent: | MAINLINE ACCESS PTY LTD ACN 146 159 346 |
| Second Respondent: | SHAUN WHELAN |
| File Number: | SYG 1493 of 2016 |
| Judgment of: | Judge Manousaridis |
| Hearing dates: | 25 September 2017, 26 September 2017, 27 September 2017 |
| Date of Last Submission: | 4 October 2017 |
| Delivered at: | Sydney |
| Delivered on: | 12 October 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms L Saunders |
| Solicitors for the Applicant: | John F Morrissey & Co |
| Counsel for the Respondents: | Mr G Boyce |
| Solicitors for the Respondents: | Marrawah Law Pty Ltd |
ORDERS
The matter be listed for further directions.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1493 of 2016
| MARK COOTE |
Applicant
And
| MAINLINE ACCESS PTY LTD ACN 146 159 346 |
First Respondent
| SHAUN WHELAN |
Second Respondent
REASONS FOR JUDGMENT
(As Corrected)
Introduction
In this proceeding the applicant, Mr Coote, claims the first respondent (Mainline Access) failed to pay him amounts to which he became entitled because he performed work as an employee of Mainline Access from 18 March 2014 to 14 April 2015 (relevant period). The amounts Mr Coote claims Mainline Access failed to pay are wages of $71,808 for work performed in ordinary time, wages of $56,610 for work performed in overtime, $11,353.45 for superannuation, and $11,714 for accrued annual leave.[1]
[1] Applicant’s Outline of Submissions, [2]. Counsel for the applicant handed up at the hearing a document headed “Calculations” which contains amounts based on alternative assumptions.
The amounts Mr Coote claims Mainline Access owes him are calculated on the basis of two premises. The first premise is two agreements Mr Coote alleges he made with Mainline Access. The first is an agreement made on about 18 March 2014 under which Mainline Access agreed to engage Mr Coote as a contractor at the rate of $42.50 an hour. The second agreement is one alleged to have been made in late March or early April 2014 under which Mainline Access agreed Mr Coote would return to being an employee but would continue to be paid at the rate of $42.50 an hour together with superannuation.[2]
[2] This is not reflected in the points of claim. It does reflect, however, the evidence Mr Coote led at the hearing, and in particular the evidence contained in his affidavit of 4 June 2017, at [5]-[6]
A second premise on which Mr Coote relies is that, although Mr Coote and Mainline Access may have considered Mr Coote was engaged as a contractor, the correct legal characterisation of the relationship between Mr Coote and Mainline Access throughout the relevant period is that of employment, and that Mr Coote’s employment was covered by the Manufacturing and Associated Industries Award 2010 (MAI Award). The consequence of this premise, Mr Coote submits, is that the terms of the MAI Award apply to the employment relationship between Mr Coote and Mainline Access on the basis that the relevant hourly wage rate is the $42.50 stipulated in the agreements Mr Coote says he made with Mainline Access, and not the minimum wage rates provided for by the MAI Award; and to the extent it has failed to make payments to Mr Coote under the MAI Award calculated at the rate of $42.50, Mainline Access contravened s.45 of the Fair Work Act 2009 (Cth) (FW Act), and the second respondent, Mr Whelan, was a person involved in those contraventions.[3]
[3] Section 45 of the FW Act provides: “A person must not contravene a term of a modern award.”
Mr Coote also alleges that Mainline Access contravened:
a)S.44 of the FW Act by failing to pay to Mr Coote accrued but untaken annual leave, contrary to s.90 of the FW Act;
b)s.323 of the FW Act by deducting amounts from wages that were payable to Mr Coote in circumstances where the exception provided for by s.324 of the FW Act did not apply;
c)s.535 of the FW Act by failing to keep records of the kind prescribed by the regulations; and
d)s.536 of the FW Act by failing to provide to Mr Coote a payslip within one working day of paying an amount to Mr Coote in relation to the performance of work,
and that Mr Whelan was involved in Mainline Access’s contraventions of these provisions of the FW Act.[4]
[4] In the statement of claim the applicant also alleges Mainline Access contravened s.357 of the FW Act. That claim does not appear to have been pressed at the hearing. If I am incorrect in this I will give Mr Coot an opportunity to make further submissions.
The respondents answer Mr Coote’s claims as follows.
a)The respondents accept that in around March 2014 Mainline Access and Mr Coote agreed that Mr Coote would be engaged as a contractor. The respondents contend, however, that Mr Coote was engaged at the rate of $42, not $42.50, per hour; and that this rate was inclusive of a percentage for superannuation.
b)The respondents dispute that Mainline Access and Mr Coote agreed Mr Coote would go back to being an employee.
c)The respondents accept that although Mainline Access and Mr Coote agreed Mainline Access would engage Mr Coote as a contractor, the correct legal characterisation of the relationship between Mr Coote and Mainline Access throughout the relevant period is that of employment; but that the Building and Construction General On-Site Award 2010 (Building Award), rather than the MAI Award, applied to Mr Coote’s employment.
d)The consequences of (c) are that the agreement which provided for Mainline Alliance paying Mr Coote $42 per hour is unenforceable, and the amounts for which Mr Coote is entitled to be paid for the work he performed during the relevant period are to be calculated by applying the rates provided for in the Building Award or any other applicable award.
e)The respondents accept that during the relevant period Mr Coote performed work for Mainline Access for which he has not been paid; but they claim there are significantly fewer hours for which he was not paid than Mr Coote claims.
f)The respondents do not contend that Mainline Access paid any annual leave, or that Mainline Access kept records as it was required to keep under s.535 of the FW Act, or that Mainline Access provided payslips to Mr Coote as it was required to do by s.536 of the FW Act, or that Mainline Access did not deduct amounts from wages owing to Mr Coote.
g)Mr Whelan accepts that to the extent it is found Mainline Access contravened any provision of the FW Act, Mr Whelan would be a person involved in such contravention.
In addition, Mainline Access has filed a cross-claim in which it claims amounts Mr Coote charged to a credit card or credit cards held by Mainline Access.[5]
[5] The cross claim also includes a claim based on the failure by Mr Coote to pay an amount under an alleged agreement for the contribution of an amount towards the payment of rent. That claim was not pressed at the hearing – T113.20
Arrangement of reasons
These reasons are arranged as follows:
a)First, I will set out the history of the relationship between Mr Coote and Mainline Access during the relevant period. In that section of my reasons I will set out the evidence relevant to the agreement or agreements Mr Coote and Mainline Access made, and make findings on what was agreed. Unless otherwise stated or suggested by the context, unqualified statements of fact that I set out in that section of my reasons are to be taken as findings of the facts stated.
b)Second, I will set out the evidence relevant to the hours and the days on which Mr Coote worked during the relevant period, and make findings about the hours and days on which Mr Coote worked.
c)Third, I will consider which, if any, of the MAI Award or the Building Award applied to Mr Coote’s employment with Mainline Access.
d)Fourth, I will consider in three separate sections the amounts to which Mr Coote became entitled to be paid, given the findings I make of the hours and days on which Mr Coote performed work, and the award that applied to his employment.
e)Fifth, I will consider Mr Coote’s claims based on the alleged contraventions by Mainline Access of s.323, s.535, and s.536 of the FW Act.
f)Sixth, I will consider the cross claim.
g)Finally I will restate my principal findings.
Events during relevant period
During the relevant period Mainline Access was in the business of supplying industrial rope services.[6] Mr Whelan was the sole director and shareholder of Mainline Access.
[6] S Whelan affidavit, [6]
January 2014 to 18 March 2014 – Mr Coote engaged as employee
In early 2014 Mr Coote began working as a casual employee with Mainline Access at the rate of $35 per hour.[7] Throughout his employment with Mainline Access Mr Coote worked as a rope access specialist and foreman. He used ropes to access elevated areas on commercial and residential buildings to carry out a number of tasks. Those tasks included industrial and residential painting, rendering, brickwork, window replacements, gutter installations, and safety inspections. Mr Coote frequently supervised other employees of Mainline Access.[8]
[7] M Coote affidavit, 10.06.2016, [2]; S Whelan affidavit, [9], [10]
[8] M Coote affidavit, 10.06.2016, [4]
18 March 2014 – agreement to engage Mr Coote as contractor
According to Mr Coote, on about 18 March 2014 Mr Whelan contacted him and asked whether Mr Coote wished to become a contractor. In his affidavit of 10 June 2016 Mr Coote deposes as follows:[9]
On or about 18 March 2014, Mr Whelan approached me and asked me whether I would like to obtain an Australian Business Number (ABN) and work as an independent contractor.
He said he would pay me $42.50 an hour plus superannuation. He said I would be paid bonuses if I finished assigned tasks early, and would otherwise be paid for the total number of hours that I worked. He did not specify what those bonus payments would be or how they were to be calculated.
I said I already had an ABN. I said that I was happy to work under that arrangement. I was pleased that I would be getting an increased rate of pay.
We proceeded to talk about other things associated with the business, such as buying a new company car and a series of upcoming jobs.
[9] M Coote affidavit, 10.06.2016, [22] – [25]
In his affidavit of 4 June 2017 Mr Coote deposes as follows:[10]
On or about the 18th of March, [Mr Whelan] contacted me and asked whether I wished to become a contractor. He said ‘I will pay you $42.50 an hour plus superannuation’. In this regard I refer to paragraph 23 of my affidavit sworn on 8 [sic] June 2016
[10] M Coote affidavit, 04.06.2017, [5]
In his affidavit of 16 August 2017 Mr Coote says he had a conversation with Mr Whelan to the following effect:[11]
Mr Whelan:I’ll pay you $42.50 an hour and if jobs come under I’ll pay you a bonus and if they don’t, I will still pay you the hourly rate.
Mr Coote:Yeah. That sounds great.
[11] M Coote affidavit, 16.08.2017, [36]
In the same affidavit Mr Coote says that “[s]uperannuation was not discussed”; but he “understood that superannuation was on top of” his hourly rate.[12] Under cross-examination Mr Coote confirmed that superannuation was not discussed and said that, like every other job he had, he was under the impression that superannuation would be paid on top.[13]
[12] M Coote affidavit, 16.08.2017, [37]
[13] T29.5
Mr Whelan agrees he had a conversation with Mr Coote on 18 March 2014 about Mr Coote becoming a contractor. His account of the conversation, however, differs from Mr Coote’s accounts. According to Mr Whelan a conversation to the following effect occurred:[14]
Mr Coote:I want to work on ABN. I want to make more money. I’ve been a contractor before so I know how to do it. If you make me a contractor from the start then I can get the tax back that you have withheld so far.
Mr Whelan:I would prefer to pay you wages. If you want to be a contractor, our arrangements need to change and you are going to invoice me and go down that track.
Mr Coote:It’s not a problem, Make me a subcontractor. I might be able to get a bit of work from someone else as well this way. I really need more money right now. Can you change me to a contractor from the beginning and pay me the tax you took out of my wages.
Mr Whelan:Ok, I will help out.
[14] S Whelan affidavit, [18]
There is in evidence the result of a search of the Australian Bureau Register in relation to an ABN number issued to Mr Coote which is recorded as having been cancelled on 21 November 2011 but reactivated on 17 February 2014.[15] There is also in evidence a tax invoice dated 4 April 2014 issued by Mr Coote to Mainline Access claiming payment of $3,502.[16] That amount is described as “PAYG Withholding Tax owing” for the period 13 January 2014 to 17 March 2014. The invoice specifies for each week during the period 12 January 2014 to 17 March 2014 amounts said to be wages and amounts said to be “PAYG”. There is also evidence that an amount of $3,502 was transferred into Mr Coote’s bank account on 4 April 2014, the bank statement describing the transaction as “DEPOSIT Mainline Access Mainline INV001”.[17]
[15] Exhibit SW-1, page 10
[16] Exhibit SW-1, page 25
[17] M Coote affidavit, 4.06.2017, [13], Annexure “MC7”
In cross-examination Mr Coote was taken to this invoice and was asked whether he had created it. Mr Coote’s initial answer was “No. The first two, I did create, but they didn’t look like this”.[18] The “first two” I find was intended to be a reference to the invoice dated 4 April 2014 and another invoice also dated 4 April 2014 which claimed payment for $3,849.62.[19] That invoice related to 101 hours’ worth of work for the period 17 March 2014 to 31 March 2014 calculated at the rate of $42 per hour (which amounted to $4,242) less $392.39 which was described as “Super as per agreement 9.25%”. Mr Coote could offer no explanation why Mainline Access would refund tax to Mr Coote when the “agreement only started from 18 March 2014”.[20] Mr Coote said he could not recall being paid $3,500 and $3,800 twice on 4 April 2014.[21] After Mr Coote was taken to his bank statements which showed the deposit of $3,582 on 4 April 2014 and $4,242 on 17 April 2014, Mr Coote said he remembered a brief conversation with Mr Whelan during which Mr Whelan said because Mr Coote “was on ABN, he was going to refund my tax”.[22] Later in cross-examination Mr Coote said that he had obtained an ABN “so I could go work on another company that I had previously worked for”;[23] that he mentioned this to Mr Coote in response to which Mr Whelan agreed to pay Mr Coote $42.50 an hour, apologised to Mr Coote, said he has “got all this remedial work coming up”, and that “I will pay you bonuses on the work if it comes under”.[24]
[18] T25.10
[19] Exhibit SW-1, page 26
[20] T24.35
[21] T25.15
[22] T40.
[23] T30.25
[24] T30.35
I prefer Mr Whelan’s account of the conversation of 18 March 2014 to that given by Mr Coote. The principal reason is that Mr Coote’s accounts of the conversation do not, but Mr Whelan’s account does, explain the fact that Mr Coote issued an invoice dated 4 April 2014 that claimed payment of the tax Mainline Access had withheld from the wages it had paid Mr Coote from 13 January 2014 to 17 March 2014, and that Mainline Access paid this amount on 4 April 2014. There is no reason on the evidence before me that explains why Mr Coote or any other person issued this invoice, and Mainline Access paid it, other than, as Mr Whelan has deposed, Mr Coote’s having requested that this be done, and Mr Whelan agreeing to do it. Mr Whelan’s account, but not Mr Coote’s accounts, also explains what occurred after the conversation. On Mr Whelan’s account there was a discussion that if Mr Coote were to be engaged as a contractor Mr Coote would have to issue invoices. That, at least on the evidence of Mr Whelan, is what occurred. On Mr Coote’s account of the conversation, nothing was discussed about Mr Coote’s issuing invoices, or about the procedures that would be followed now that Mr Coote was to be engaged as a contractor.
Given I have preferred Mr Whelan’s account of the conversation of 18 March 2014 to that of Mr Coote, I am not prepared to find that Mr Coote and Mr Whelan agreed that Mr Coote would be paid at the rate of $42.50 an hour. I also do not accept the evidence Mr Coote gave under cross-examination that he had obtained an ABN so he could work for another company he had previously worked for, and that he mentioned that to Mr Whelan in response to which Mr Whelan agreed to pay Mr Coote $42.50 an hour; and I do not because it is not consistent with the conversation to which he deposes in his affidavit of 10 June 2016. Nor do I accept the evidence Mr Coote gave in cross-examination that Mr Whelan said words to the effect that now that Mr Coote was going on ABN he was going to refund Mr Coote’s tax. As I have already found, there was no reason on the evidence before me, other than Mr Coote’s having so requested, for Mainline Access agreeing to refund tax it had withheld from M Coote’s wages before 18 March 2014.
Agreement to revert as employee?
According to Mr Coote, after his conversation with Mr Whelan on 18 March 2014 he worked “as a contractor for a few weeks”; he continued to submit timesheets to Mainland Access; he “never submitted an invoice”, and he was “not paid for the full amount of the work [he] did as contractor”.[25] Mr Coote then says that at “the end of March and early April 2014” he had a conversation with Mr Whelan to the following effect:[26]
Mr Coote:I haven’t been paid as a contractor. I’m not happy about that. I’ll just go back to being an employee. You have to pay me $42.50 plus super. I’ll just going to continue sending the employee timesheets as I’ve always done.
Mr Whelan:It’s up to you
[25] M Coote affidavit, 04.06.2017, [6]
[26] M Coote affidavit, 04.06.2017, [7]
I do not accept Mr Coote’s evidence. First, although all of the time sheets Mr Coote submitted are not in evidence, there is in evidence a sufficient number on the basis of which it is reasonable to infer each time sheet covered a fortnight, and during the relevant period Mr Coote submitted completed time sheets every fortnight.[27] One of the timesheets that is in evidence covers the period 17 March 2014 to 30 March 2014 and is signed by Mr Coote and dated 31 March 2014. Assuming Mr Coote submitted the timesheet on the day he signed it, and he submitted another timesheet two weeks later, by the time Mr Coote says he had the conversation with Mr Whelan (“the end of March and early April 2014”), Mr Coote either had not submitted a timesheet – in which case there was no amount that could have been owing to Mr Coote - or, at most, Mr Coote had submitted one timesheet which had not been immediately paid. Thus, it cannot be the case, as Mr Coote deposes, that by the time he says he agreed with Mr Whelan that he would again become an employee he had continued to submit timesheets to Mainland Access which had not been paid or had not been paid in full. At most, there was one time sheet that had not been paid by early April 2014.
[27] Exhibit SW-1, pages 26-38
Second, there is in evidence twelve invoices that were purportedly issued by Mr Coote to Mainline Access over the period 4 April 2014 to 15 October 2014.[28] Each of the invoices is in the same form, numbered, and divided into four columns. The first column is headed “Description”, the second “Rate($)”, the third “Hours”, and the fourth “Amount”. In each of the invoices the rate is stated to be $42.00; and in each of the invoices there is a deduction described as “Less Super as per agreement 9.25%”. Many of the invoices contain other deductions, and I will return to these later. On the first line of the column headed “Amount” there is included an amount (Gross Amount) arrived at by multiplying the number of hours listed in the column headed “hours” by $42, being the amount included in the column headed “Rate($)”. There is then included in the “Amounts” column amounts for superannuation and, in many cases, other amounts. These are deducted from the Gross Amount leaving an amount that is inserted next to the words “total payable”. Mr Coote accepts that Mainline Access paid each of the amounts identified in each of the invoices as “total payable”; [29] and in any event there is in evidence Mr Coote’s bank statements which record the deposit of the amounts stated in the invoices using the description “DEPOSIT Mainline Access Mainline INV. . .” noting the number of the relevant invoice.[30]
[28] Exhibit SW-1, pages 26-37
[29] M Coote affidavit, 04.06.2017, [10]
[30] M Coote affidavit, 04.06.2017,
Mr Coote says he did not issue the invoices, and he does not know who created them.[31] In his affidavit of 10 June 2014 Mr Coote says that up to October 2014 he was paid an hourly rate, and he would submit a fortnightly employee time sheet to Mr Whelan.[32] In his affidavit of 7 June 2017 Mr Coote says for the period he worked at Mainline Access he always submitted a timesheet;[33] and although, as I have already noted, Mr Coote accepts the amounts payable stated in the invoices had been paid into his account, he says he “never received any particulars of documents . . . as to how those amounts were calculated”.[34] Under cross-examination, when asked whether Mr Coote checked his pay, Mr Coote said he “got very sick in the stomach very quickly about my pay”.[35]
[31] M Coote affidavit, 16.08.2017, [39]
[32] M Coote affidavit, 10.06.2016, [8], [27]
[33] M Coote affidavit, 04.06.2017, [11]
[34] M Coote affidavit, 04.06.2017, [13]
[35] T89.45
Mr Whelan has given evidence of how the invoices were prepared:[36]
From the start Mark [Coote] struggled with the paperwork. He didn’t send me invoices and didn’t know how to make them. Eventually what happened was that every so often Mark would come in and sit with me at my computer. We would work through his timesheets for each week together, agree on how many hours he did each day. Then either I or my bookkeeper, would create an invoice from Mark to Mainline which I would pay.
[36] Affidavit of S Whelan 24.07.2017, [22]
Mr Whelan exhibited to his affidavit a number of the timesheets he says Mr Coote provided to him which he has been able to locate. The timesheets he has been able recover were those Mr Whelan says he had sent by email to his bookkeeper.[37] The hours recorded in the time sheets that are in evidence that relate to the period covered by the invoices to a large extent coincide with the hours recorded in the invoices. Mr Whelan also gave the following evidence:[38]
[Mr Coote] did not make regular requests for invoices. He would go for a long time without talking to me about making an invoice or getting paid. . . . Every so often he would suddenly decide that he wanted to invoice Mainline and we would sit down and create an invoice then pay him.
[37] Affidavit of S Whelan 24.07.2017, [23]; exhibit SW-1, pages 11-24
[38] Affidavit of S Whelan 24.07.2017, [25]
I accept Mr Coote’s evidence that throughout the relevant period he prepared and submitted every fortnight timesheets for work he performed the previous fortnight; and I accept Mr Whelan’s evidence that he prepared the invoices in response to and on the basis of timesheets Mr Coote provided to him. There is no evidence Mr Whelan provided a copy of the invoices to Mr Coote; and I accept Mr Coote’s evidence that Mr Whelan did not provide a copy of the invoices to Mr Coote. I do not accept Mr Whelan’s evidence to the extent he suggests he did not prepare the invoices until such time as he was specifically requested to do so by Mr Coote. I find that or shortly after 4 April 2014 when the first two invoices were issued Mr Whelan assumed responsibility for preparing the invoices, and that Mr Whelan understood that Mr Coote’s submitting a timesheet constituted a request by Mr Coote that he be paid an amount for the hours recorded in the timesheets.
I do not accept Mr Coote’s evidence to the extent he intended to convey that he did not read his bank statements or make any inquiries of his bank to see if he had been paid, or he did but he was unaware of the meaning of the words “DEPOSIT Mainline Access Mainline INV. . .” that appeared in his bank statements in relation to payments made by Mainline Access. I find that from time to time throughout the relevant period Mr Coote looked at his bank statements, at the very least to determine whether he had been paid by Mainline Access. I base that finding on two matters. One is a generalisation that most people who expect to receive payment by direct deposit into their bank account would regularly make inquiries of their bank account to determine whether the expected payment has been made. Second, Mr Coote in his affidavit states that he was paid less than the amounts he believes he ought to have been paid. That implies that Mr Coote was aware of the amounts that Mainline Access deposited into Mr Coote’s bank account and, therefore, he would have acquainted himself with the descriptions recorded in his bank statement of the deposits Mainline Access made, namely, “DEPOSIT Mainline Access Mainline INV. . .”. That, in turn, would have indicated to Mr Coote that he was being paid against invoices and, therefore, he was being paid as a contractor. In those circumstances, if in truth Mr Coote had the conversation he says he had with Mr Whelan in late March or early April 2014 that he would go back to being an employee, it is reasonable to expect that on Mr Coote’s becoming aware that he was being paid against invoices Mr Coote would have said or communicated something to Mr Whelan to the effect that he was an employee, not a contractor, and repeat what he says he told Mr Whelan in the conversation of late March or early April 2014. There is no evidence that Mr Coote again told Mr Whelan that he was an employee, not a contractor; and that he did not do so indicates Mr Coote did not have a conversation with Mr Whelan that he would become an employee again.
Agreement about rate
The only evidence of a conversation or communication between Mr Coote and Mr Whelan where the rate at which Mr Coote would be engaged is discussed is the evidence given by Mr Coote which I have not accepted. There is, therefore, no evidence before me that I am satisfied I should accept of any express agreement about the rate at which Mr Coote was employed as a contractor. That, however, does not mean that it is impossible to find Mr Coote and Mainline Access made an agreement about rates. As McHugh JA said in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd:[39]
. . . a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words. . . . The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract. . . .
[39] (1988) 5 BPR [97326] at page 8
This approach was restated by Emmett AJA in Hawcroft General Trading Co Pty Ltd v Hawcroft:[40]
…a contract may be inferred from the acts and conduct of the parties if the conduct, viewed in the light of the surrounding circumstances, shows a tacit understanding or agreement and is capable of establishing all the essential elements of an express contract. However, anterior promises should not be inferred for conduct that represents no more than an adjustment of the relationship of the parties in the light of changing circumstances. The question is whether, in all the circumstances, it can be inferred that mutual assent has been manifested. That depends upon what a reasonable person in the position of the parties would think as to whether there was a concluded bargain.
[40] [2017] NSWCA 91 at [137]
The question, then, is whether in the circumstances of this case a reasonable person in the position of Mr Coote and Mr Whelan would think that Mr Coote and Mr Whelan had agreed on the rate at which Mr Coote would be engaged as a contractor. In my opinion, a reasonable person in the position of the parties would conclude that Mr Coote would be paid at the rate of $42 per hour. The basis of that conclusion is the course of dealing between Mr Coote and Mainline Access. As I have already noted, Mr Coote prepared and submitted time sheets to Mainline Access; on the basis of time sheets Mr Coote submitted Mainline Access prepared invoices that recorded the time Mr Coote claimed he worked and applied an hourly rate of $42 to that work to arrive at the Gross Amount; from the Gross Amount there was deducted 9.25% of the Gross Amount for superannuation; and, in some cases, after making other deductions, Mainline Access paid into Mr Coote’s bank account the amounts stated in the invoices to be “amounts payable”, and the amounts so paid were described in Mr Coote’s bank account as “DEPOSIT Mainline Access Mainline INV. . .”. On the basis of this course of dealing a reasonable person in the position of Mr Coote and Mr Whelan would conclude that Mr Coote and Mainline Access agreed that Mr Coote would be paid at the rate of $42 per hour, and that a percentage of that amount, being the percentage required by law, would be deducted by Mainline Access and paid into a superannuation fund for Mr Coote’s benefit. As I note below, the relevant law is that provided for by the Superannuation Guarantee (Administration) Act 1992 (Cth) (SG Act).[41]
[41] For ease of expression I will refer to the SG Act in the present tense, it being recognised that I am concerned with the SG Act as it applied during the relevant period.
I find, therefore, that by 17 April 2014, when Mainline Access paid $4,242 into Mr Coote’s bank account the amount claimed in the invoice dated 4 April 2014 for work performed during 17 March to 31 March 2014, Mr Coote and Mainline Access agreed that Mr Coote would be paid amounts calculated by applying the hourly rate of $42, and that a percentage of the amounts, reflecting the percentage provided for by the SG Act, would be deducted by Mainline Access and paid into a superannuation fund for Mr Coote’s benefit (March Agreement).
The period up to October 2014
According to Mr Coote, between 18 March 2014 and October 2014 he continued to submit fortnightly timesheets to Mr Whelan, and Mr Whelan paid Mr Coote “an hourly rate in accordance with these timesheets”.[42] Mr Coote also says, however, that during this period his pay “was generally late and was below the amount that we agreed on 18 March 2014 for the hours specified on the employee timesheets that I submitted to Mr Whelan”.[43] By this I understand Mr Coote to claim that he was not paid at the rate of $42.50 plus superannuation.
[42] M Coote affidavit, 10.06.2016, [27]
[43] M Coote affidavit, 10.06.2016, [28]
Period between October 2014 and 7 April 2015
According to Mr Coote, in October 2014 he began to notice he was not being paid at all. That is so “despite working at least 40 hours per week consistently”.[44] He says he requested Mr Whelan to pay him, but that was met with the response that the business was going through a difficult period, that it would be difficult to pay Mr Coote, but that Mr Coote should trust Mr Whelan.[45] Mr Coote recalls that in around late October or early November 2014 he had a conversation with Mr Whelan to the following effect:[46]
Mr Coote:I’m not being paid. You have not paid me properly since I started.
Mr Whelan:I’ve got a lot of court cases. I’m collecting some money.
Mr Coote:You’ve just spent $10,000 on tools. Why can’t you pay me?
Mr Whelan:I’ll try and work this out. I’ll have to speak to my accountant, Josh brown. I’ll work it out with him
[44] M Coote affidavit, 10.06.2016, [30]
[45] M Coote affidavit, 10.06.2016, [30]
[46] M Coote affidavit, 04.06.2017, [15]
According to Mr Coote, Mr Whelan then stormed off in a very aggressive manner, but the following day said to Mr Coote words to the following effect:[47]
I’m sorry for the outburst and yelling yesterday. Look mate. You’ll just have to trust me. I’ll work it out. I know what I’m doing.
[47] M Coote affidavit, 04.06.2017, [15]
Mr Coote further deposes to two conversations he had with Mr Whelan in which Mr Coote said he did not have money for food. In the first of the two conversations Mr Whelan gave Mr Coote $50; and in the second conversation Mr Whelan said he would take Mr Coote to lunch.[48] Mr Coote also deposes that Mr Whelan “would give me small amounts of money such as $50 or $100 from his pocket”.[49]
[48] M Coote affidavit, 04.06.2017, [17]
[49] M Coote affidavit, 04.06.2017, [17]
April 2015 – the end of Mr Coote’s employment with Mainline Access
In his affidavit of 10 June 2016 Mr Coote says he resigned from Mainline Access in August 2015. It is common ground, however, that this is incorrect. It is accepted that in April 2015 Mr Coote commenced employment with a company called Remedial Technologies Australia Pty Limited. There is in evidence a payslip issued by that company to Mr Coote for a pay period commencing on Monday 12 April 2015.[50] I find, therefore, that Mr Coote ended his employment with Mainline Access by Friday, 10 April 2015.
[50] Exhibit A
Amounts paid to Mr Coote
It is common ground, and I accept, that Mainline Access paid to Mr Coote the following amounts:
Date
Amount
24/01/2014
$1,809
16/01/2014
$1,186.50
24/01/2014
$1,809.75
7/02/2014
$2,001.75
17/02/2014
$2,126.00
4/03/2014
$2,356.00
18/03/2014
$2,600.00
4/04/2014
$3,502.00
17/04/2014
$4,242.00
8/05/2014
$2,522.00
5/06/2014
$1,288.80
26/06/2014
$3,125.43
14/07/2014
$2,000.00
23/07/2014
$1,511.98
5/08/2014
$2,394.89
18/08/2014
$1,516.01
2/09/2014
$2,515.59
16/09/2014
$2,086.01
3/10/2014
$3,013.96
15/10/2014
$1,908.63
18/12/2014
$2,500.00
24/12/2014
$900.00
12/01/2015
$1,000.00
27/01/2015
$500.00
TOTAL:
$48,607.30
Hours and days on which Mr Coote worked
The hours and days on which Mr Coote claims he worked from 14 March 2014 to 14 April 2015 are stated in a document titled “Calculations” that was provided to my chambers after the hearing, and which is an updated version of the document counsel for Mr Coote handed up to me at the hearing.[51] It assumes Mr Coote worked at least 38 hours every week. The basis of that assumption is the following paragraph from Mr Whelan’s affidavit.[52]
Based on Mainline’s records Mark and Grant Coote both worked roughly average 38 hour weeks. Sometimes they worked a little more and sometimes a little less.
[51] I have in chambers marked as MFI3 the “Calculations” document that was provided to my chambers
[52] Affidavit of S Whelan 24.07.2017, [57]
The “Calculations” document also contains three alternative calculations based on Mr Coote having worked an average of 12 hours, 8 hours, and 5 hours overtime per week.
There are a number of items of evidence that are relevant to assessing the number of hours Mr Coote worked during the relevant period, and the days on which he worked. The first are the time sheets and the invoices to which I have already referred. There is also what Mr Coote has described as his “Rope Access Logbook” which Mr Coote completed for the purpose of acquiring qualifications as a rope access technician.[53] In addition there is evidence given by Mr Coote and his brother, Mr Grant Coote. In his affidavit of 10 June 2016 Mr Coote deposed as follows:[54]
Generally, I worked at least 40 hours per week for mainline, however I frequently worked in excess of 40 hours a week. I estimate that I worked approximately 50 hours per week in May 2014, approximately 60 hours a week in June 2014 and approximately 70 hours per week between July and December 2014. These are an estimate of hours I worked to the best of my recollection. I cannot confirm these hours accurately as I was not provided with payslips and employment records . . .
[53] M Coote affidavit, 04.06.2017, [8]; Annexure “MC6”
[54] M Coote affidavit, 10.06.2016 [7],
According to Mr Grant Coote, from early 2014 to September 2015 he worked with Mr Coote “every shift”; he and Mr Coote would “usually work 40 to 50 hours a week from Monday to Friday with most Saturdays”.[55]
[55] G Coote affidavit, [12]
In my opinion, the best evidence of the hours Mr Coote worked is the time sheets he completed and submitted. These were documents Mr Coote completed which he knew would form the basis of the calculation of the amount he would be paid for the work he did. There is every reason to find that Mr Coote intended to record as accurately as possible in those documents the hours he worked, and I so find.
As I have already noted, the time sheets that are in evidence are not complete, but there is a sufficient number of them from which it may reasonably be inferred that the time recorded in those documents is representative of the work Mr Coote performed throughout the relevant period. The time sheets record work performed in the weeks ending 23 February 2014 and 2 March 2014,[56] 23 March 2014 and 30 March 2014,[57] 29 June 2014 and 6 July 2014,[58] 13 July 2014 and 21 July 2014,[59] 26 July 2014 and 2 August 2014,[60] 10 August 2014 and 17 August 2014,[61] 24 August 2014 and 31 August 2014,[62] 19 October 2014 and 26 October 2014,[63] and 21 February 2015 and 28 February 2015.[64] The hours recorded on those time sheets, and the days for which they were recorded, are as follows:
[56] Exhibit SW-1, page 12
[57] Exhibit SW-1, page 13
[58] Exhibit SW-1, page 13
[59] Exhibit SW-1, page 15
[60] Exhibit SW-1, page 16
[61] Exhibit SW-1, page 17
[62] Exhibit SW-1, page 18
[63] Exhibit SW-1, page 19
[64] Exhibit SW-1, page 20. There are a time sheets at pages 21, 23 and 24. They appear to be incomplete and/or are not dated, and it is not clear for what weeks they have been completed. For those reasons I disregard them.
Day of week
Hours recorded
Total
Average
Mondays
4
4
8
8
8
8
7.5
8
8.5
8.5
9.5
9.5
8.5
0
8
8.5
10
8.5
135
7.5
Tuesdays
4
8
10
10
8
8
7.5
7.5
8.5
8.5
9.5
7.5
8.5
7
11
4
9
5
141.50
7.86
Wednesdays
8
8
0
5
8
8
7.5
7.5
8.5
8.5
9
9
7
7
8
8.5
7
8
132.5
7.36
Thursdays
8
8
8
8
8
8
8
7.5
8.5
8.5
8.5
7.5
8
8
6
8.5
8
6
141
7.83
Fridays
10
8
8
8
8
8
7.5
7.5
8.5
8.5
8.5
7.5
8.5
4
0
8.5
8
8
135
7.5
Saturdays
4
0
0
8
0
0
6
0
6.5
0
0
0
0
0
0
0
0
7
31.50
1.75
Sundays
0
8
8
12
0
0
0
0
0
0
0
0
0
0
0
0
0
0
28
1.55
TOTAL
41.35
The times recorded in the time sheets do not support the estimates Mr Coote and Mr Grant Coote give in their affidavits. The time sheets for July 2014 and August 2014, for example, do not show Mr Coote worked anywhere near the 70 hours a week Mr Coote claims he worked during those months. For the weeks ending on 13 July and 20 July 2014 the time sheet records hours totalling 44 hours and 38 hours respectively;[65] for the weeks ending 26 July 2014 and 2 August 2014 the time sheet records hours totalling 49 hours and 42.5 hours respectively;[66] and for the weeks ending 10 and 17 August 2014 the time sheet records hours totalling 45 hours and 42 hours.[67]
[65] Exhibit SW-1, page 15
[66] Exhibit SW-1, page 16
[67] Exhibit SW-1, page 16
Given that I find the time sheets to be the most reliable evidence of the hours Mr Coote work during the period the time sheets cover, I find that Mr Coote did work the hours stated in those time sheets. I also find that the time sheets may reasonably be regarded as representative of the hours Mr Coote worked from 18 March 2014 to 10 April 2015 (the assessment period) so that, during that period, Mr Coote worked on average 41.35 hour s a week, 31/3 hours of which he worked on the weekends. Given the assessment period is 55 weeks and 4 days, the total hours I find Mr Coote performed during that period is 2,297.82 hours, of which 181.34 hours of work was performed on the weekends.
Award coverage
I have already noted that Mr Coote worked as a rope access specialist and foreman in the course of which he used ropes to access elevated areas on commercial and residential buildings to carry out a number of tasks; and that those tasks included industrial and residential painting, rendering, brickwork, window replacements, gutter installations, and safety inspections.[68] In his affidavit of 4 June 2017 Mr Coote further described the tasks he performed. These include cleaning buildings, installing air conditioning systems, ground cleaning, and testing anchors at buildings. Counsel for Mr Coote submits that these tasks fall within the coverage provided for by cl.4.1 of the MAI Award, which provides:
This award covers employers throughout Australia of employees in the Manufacturing and Associated Industries and Occupations who are covered by the classifications in this award and those employees.
[68] M Coote affidavit, 10.06.2016, [4]
The expression “Manufacturing and Associated Industries” is defined extensively in cl.4.9 to mean:
(a)the following industries and parts of industries:
(i)the manufacture, making, assembly, processing, treatment, fabrication and preparation of:
· the products, structures, articles, parts or components set out in clause 4.10; or
· the materials or substances set out in clause 4.10; or
· any products, structures, articles, parts or components made from, or containing, the materials or substances set out in clause 4.10
(ii)the coating, painting, colouring, varnishing, japanning, lacquering, enamelling, porcelain enamelling, oxidising, glazing, galvanising, electroplating, gilding, bronzing, engraving, cleaning, polishing, tanning, dyeing, treatment and finishing of any of the items referred to in clause 4.9(a)(i).
(iii)the repair, refurbishment, reconditioning, maintenance, installation, testing and fault finding of:
· any of the items referred to in clause4.9(a)(i); or
· floor covering; or
· plant, equipment and buildings (including power supply) in the industries and parts of industries referred to in clauses 4.9(a)(i) and (ii); or
· plant, equipment and buildings (including power supply) in any other industry.
(iv)mechanical and electrical engineering.
(v)space tracking.
(vi)farriery (other than in the racing industry).
(vii)bottle merchants.
(viii)the printing and processing of photographs from film.
(ix)every operation, process, duty and function carried on or performed in or in connection with or incidental to any of the foregoing industries, parts of industries or occupations.
(x)handling, sorting, packing, despatching, distribution and transport in connection with any of the foregoing industries or parts of industries.
Counsel for Mainline Access submits that the tasks Mr Coote performed fall within the coverage provided for by cl.4.1 of the Building Award, which is as follows:
This industry award covers employers throughout Australia in the on-site building, engineering and civil construction industry and their employees in the classifications within Schedule B – Classification Definitions to the exclusion of any other modern award.
In my opinion, the MAI Award, not the Building Award, covered Mainline Alliance and Mr Coote. The tasks Mr Coote describes may fairly be characterised as the repair or maintenance of buildings. There is nothing in the evidence before me that suggests that any of his work occurred on building sites.
Mr Coote’s entitlements - hours worked
What, then, is the consequence of Mr Coote being covered by the MAI Award? According to counsel for Mr Coote the MAI Award applies on the assumption that the relevant wage rate is the rate agreed under the March Agreement (Agreed Rate), and not the minimum wage rates provided for by the MAI Award. According to counsel for the respondents, on the other hand, the consequence of Mr Coote’s being covered by any award is that the Agreed Rate is irrelevant; and that the amount Mr Coote is entitled to recover is to be calculated by the rate or rates provided for by the award that applies to Mr Coote’s employment. The basis of that submission is that the Agreed Rate was an essential term of an agreement that was “wrongly agreed to at law”, and was “wrongly characterised by the parties as a contract for services”.
In my opinion none of these submissions is correct.
Is Mr Coote entitled to be paid under the MAI Award at the rate of $42?
Counsel for Mr Coote does not explain the mechanism by which the Agreed Rate is the rate that is to be applied under the MAI Award. Counsel does not identify any term of the MAI Award to the effect that the terms of the MAI Award are capable of applying not only to the rates stated in the MAI Award, but also to different rates that may be agreed between an employee and employer; and there is nothing in the MAI Award that could suggest that the MAI Award can apply to different rates agreed by an employer and an employee that are not specified in the MAI Award. In those circumstances the Agreed Rate is not a rate that is capable of being applied by force of the MAI Award. That, in turn, means that any failure by Mainline Access to pay an amount calculated by reference to the Agreed Rate does not constitute a contravention by Mainline Access of the MAI Award, and, therefore, does not constitute a contravention by it of s.45 of the FW Act.
Nor is there anything to suggest that a reasonable person in the position of Mr Coote and Mr Whelan at the time the March Agreement was made would have considered Mr Coote and Mr Whelan to have agreed to incorporate into their agreement any term of the MAI Award or of any other award. That means that the terms of the MAI Award do not apply as terms of the March Agreement to the Agreed Rate.
These conclusions, however, do not necessarily mean that Mr Coote has no legal right to recover an amount for work he performed calculated on the basis of the Agreed Rate. He may be able to do so on the strength of the March Agreement. That this may be so is supported by the judgment of Anderson J in James Turner Roofing Pty Ltd v Peters.[69] In that case an employee whose employment was covered by an award was engaged at a flat hourly rate that exceeded the rates provided for by the award. It was intended that the employee would be engaged as a contractor. The employer paid the employee amounts as agreed but it did not pay any extra amounts for overtime or for time worked on weekends or public holidays. The employee commenced proceedings claiming the employer failed to comply with a number of provisions of the award; and the employee did so on the basis that the relevant wage rate was not that which was provided by the award, but the higher rate that was agreed between the employer and employee. Anderson J held it was not open to the employee to claim that the amounts owing to him under the award were to be calculated by reference to the agreed rate. His Honour said:[70]
I note that the “total amount of $18,992.78” is arrived at not by reference to the hourly rates prescribed in the award but by reference to the higher rate agreed between the parties and actually paid to the appellant for the hours which he worked. For myself, I can see no basis upon which the amount due upon enforcement of an award can be calculated by reference to an hourly rate which is not the rate prescribed in the award. This is not to say that an employer and an employee may not enter into an over-award agreement, ie an agreement, express or implied, most of the content of which is supplied by the terms of the award but with agreed additions. There is no reason why parties cannot contract by reference to the terms and conditions of an award. So for example, an employer might offer employment expressly or impliedly on the basis that the employee is to receive all of the benefits of the award save that instead of the ordinary hourly base rate prescribed by the award, a higher base rate will be paid. But then the employee who complains of a breach of the obligation to pay at the higher rate is not seeking to enforce the award but is seeking to enforce the agreement . . . . The failure to pay at the agreed rate would be a breach of the agreement, not a breach of the award.
[69] [2003] WASCA 28 Scott J “generally agreed” ([52]) and Parker J concurred ([68]) with Anderson J’s reasons.
[70] [2003] WASCA 18, [13]
The question then is whether it is open to Mr Coote to claim payment for the hours he worked by relying on the March Agreement.
Is Mr Coote entitled to claim payment under the March Agreement?
As I have already noted counsel for the respondents contends it is not open to Mr Coote to claim payment at the Agreed Rate because the March Agreement was “wrongly agreed to at law”, and was “wrongly characterised by the parties as a contract for services”. Counsel for the respondents does not explain, however, why or how the parties’ mischaracterising their contract has this consequence.
It may be that counsel relies on unstated factual assumptions to the effect that Mr Coote and Mr Whelan entered into the March Agreement on the basis of a fundamental mutual mistake; and that had they correctly characterised the contract they entered into as one of employment they would not have agreed that Mr Coote would be engaged at the Agreed Rate, but would have instead agreed that Mr Coote would be engaged at the rate or rates provided for by the award that applied to his employment. There is nothing in the evidence before me, however, that is capable of supporting findings in terms of such assumptions. But even if there were such evidence, counsel for the respondents does not submit that the parties’ mutual mistake prevented a contract of employment from coming into effect, or that such mutual mistake is now available as a ground for rescinding the contract of employment that did come into effect. On the contrary, counsel’s contention that the Building Award covers the relationship between Mr Coote and Mainline Access is predicated on their being a contract of employment in the first place, for otherwise the Building Award (or any other award) could not apply to Mr Coote’s employment; and the March Agreement is the only contract of employment I have found was on foot during the relevant period.
Perhaps counsel for the respondents relies on no more than the inconsistency between the rates provided for by the Building Award (or any other award) and the Agreed Rate. That by itself, however, is no reason for denying legal effect to the Agreed Rate. Courts have for many years recognised that contracts of employment that provide for different rates from those provided for by an award are compatible with the award. The questions that arise where a contract of employment provides for different rates or for different obligations from those provided for by an applicable award is whether and if so in what circumstances payments made under the contract of employment may be treated as discharging obligations that have accrued under the applicable award. And the courts have approached that problem by applying the principles of appropriation of payment, or by applying principles that are analogous to those principles.[71]
[71] Sometimes the cases use the expression “set off” rather than appropriation. As Anderson J noted in James Turner Roofing Pty Ltd v Peters ([2003] WASCA 28, at [18]), however: “It should be recognised at the outset that the term “set off” is used loosely in this area of industrial law. Strictly speaking it is a misuse of the term. The right of set off is a common law right to plead a debt due from the claimant as a defence to his claim and in partial satisfaction or extinction of it. The right arises at common law only where there are mutual debts between claimant and defendant. . . . . In the area of law with which we are dealing there is no question of mutual debts between employer and employee. The term “set off” is conveniently used merely to denote a defence by the employer to the effect that the payments which he actually made to the employee were sufficient to discharge all of his obligations. That is not really a claim of set off. It involves no allegation of mutual indebtedness.”
The principles of appropriation of payment are engaged where a debtor who owes one creditor two or more debts pays to the creditor an amount that is insufficient to discharge in full the debts. The question that arises in those circumstances, and which it is the purpose of the principles of appropriation to answer, is which of the two or more debts is the payment to be regarded as having discharged. The principles were conveniently stated by Lockhart J in Re Walsh; Ex Parte Deputy Commissioner of Taxation:[72]
A debtor who owes two debts to a creditor is entitled to appropriate a payment which he makes to his creditor to one debt rather than to the other. If he omits to do so, the creditor may make the appropriation. If neither makes any appropriation, the law appropriates the payment to the earlier debt. If there is specific appropriation by the debtor cadit quaestio. In the absence of a specific appropriation it is a question of fact whether there was any appropriation by the debtor. To constitute an appropriation there must be more than an intention to appropriate by the debtor. I respectfully adopt the following passage from the judgment of Greene LJ in Leeson v Leeson [1936] 2 KB 156 at 162–3:—
When, however, he does not notify the creditor of his intention, and when the circumstances are such that the creditor receives the payment merely in satisfaction of the debts and the payment is not more appropriate to the payment of the one debt than to that of the other the creditor is entitled to make the appropriation. When it is said that there need not be an express appropriation of a payment, but that the appropriation can be inferred, that does not mean that appropriation of a payment can be inferred from some undisclosed intention in the mind of the debtor. It is to be inferred from the circumstances of the case as known to both parties. Any other view might lead to injustice, as the creditor's right to appropriate a payment would be defeated. When the matter is examined upon principle it will be found that an undisclosed intention in the mind of the debtor is not sufficient to support an appropriation. If authority is needed for that proposition it can be found in the judgment of Lush J in Parker v Guinness 27 Times LR 129 at 130 where he said: ‘What is to be considered is this. Is the true inference to be drawn from all the circumstances of the case that the debtor paid the moneys generally on account, leaving the creditor to apply them as he thought fit, or is the true inference that he paid them on account of special portions of the debt for the purpose and with a view to wipe these out of the account? His undisclosed intention so to do would, of course, not benefit him. It is what he did in fact, and not what he meant to do that is to be regarded.’ A debtor's undisclosed intention to appropriate a payment to one of two debts owed by him to a creditor cannot benefit him.
[72] (1982) 42 ALR 727 at pages 728-729. See also the cases referred to by Judge Dowdy in The Owners - Strata Plan No 14120 v McCarthy [2016] FCCA 1583 at [39]-[47]
There are at least three features of awards and contracts of employment that have suggested to courts the relevance of the principles of appropriation where an employer pays an amount under a contract of employment in circumstances where an award applies.
a)One feature is that, at least in most cases, an award will provide that the same amount of work will result in the employer becoming liable to pay different amounts depending on when the work was performed. Thus many awards provide for the payment of different rates depending on whether work is performed in ordinary time, in overtime, during the weekend, or on public holidays. And an award may provide for a number of additional obligations, such as the payment for leave. The courts have treated the liabilities that accrue on an employer to pay the different amounts under an award as distinct obligations – in effect as separate debts. Questions of appropriation of payments arise, therefore, where an employer pays an amount that is insufficient to discharge in full two or more of such distinct obligations.
b)A second feature of awards and contracts of employment that have suggested to courts the relevance of the principles of appropriation is that the one set of facts may give rise to obligations under both the award and the contract of employment. Where that occurs the employer’s payment in discharge of the contractual obligation is taken to be a discharge of the obligation that has accrued under the award to the extent of the payment. Where, however, the amount an employer is required to pay under the contract exceeds the amount payable under the award, the employer’s paying that amount is only available to be applied to discharge the liability under the contract and the liability that accrues under the award under the same set of facts; the amount by which the contractual liability exceeds an employer’s liability under the award is not, when paid, available to be appropriated by the employer to discharge any other liability the employer may have under the award.
c)A third feature is present where the contract of employment provides for the accrual of an obligation that is not provided for by the applicable award. Here an employer’s payment in discharge of such obligation is not available to be applied to discharge any liability the employer may have under an award.
What I have said in the preceding paragraph reflects my understanding of the relevant authorities, and in particular the Full Federal Court’s judgment in Poletti v Ecob.[73] In that case,[74] a penalty was claimed against an employer on the ground the employer breached an award. One of the breaches alleged was that the employer failed to pay the employee overtime. The employer and employee agreed on the rates the employee would be paid without reference to the award that applied to them. The employer paid the employee partly in cash. The award provided for payment for overtime. The employee did work overtime and was entitled to be paid the rates provided for under the award. An issue that arose was “the manner in which amounts which had been paid in cash” to the employee “should be credited to the various obligations under the award”.[75] The employer submitted he was entitled to aggregate all of the amounts due under the award and set off these amounts against the total of the amounts the employer actually paid.
[73] [1989] FCA 492 (Keely, Gray and Ryan JJ)
[74] I here repeat what I said in Director of The Fair Work Building Industry Inspectorate v Baulderstone Pty Ltd & Ors [2014] FCCA 721, at [227]-[235]
[75] Poletti v Ecob (1989) 91 ALR 381 at page 390
The employer relied on the reasons for judgment of the plurality in Ray v Radano,[76] a decision of the Industrial Commission of New South Wales. The Full Federal Court determined the employer’s claim after it paid careful attention to the reasons of judgment of the plurality in Ray v Radano, and the reasons of Sheldon J in that case. To understand what the Full Federal Court decided in Poletti, it will be necessary to review the reasons for judgment in Ray v Radano.
[76] [1967] AR (NSW) 471. The majority were Richards and Sheely JJ who delivered joint reasons.
In Ray v Radano the majority held that where an employer, under an agreement not made by reference to an applicable award, paid an amount on account of wages at a rate higher than the amount provided for by the award, but did not pay overtime as required by the award, the employer was entitled to credit against his liability to pay overtime the above-award wages the employer paid the employee. The majority explained what this practically meant with the following illustration:[77]
For the purposes of illustration let us imagine the following hypothetical case: a worker under his contract of service was promised $60 for 40 hours’ work per week when the appropriate award fixed the price or rate for 40 hours work per week at $40; the worker worked 46 hours in a particular week but was still paid his usual wage of $60. In such a case the worker, if he so desired, would be entitled to bring an action in a civil court to recover for the extra five hours worked in the week in question, but he would not be entitled to obtain an order under s 92 unless the amount which would have been due to him under the award exceeded $60.
[77] [1967] AR (NSW) 471 at page 475
The plurality in Ray v Radano was of the view that the position would be otherwise if the contract provided for the payment for some other purposes not covered by the applicable award, say, fares or a uniform allowance. Here, the plurality said that the amounts paid for these purposes could not be taken into account “in determining the correct balance due to” the employee for wages.[78]
[78] [1967] AR (NSW) 471 at page 475
Sheldon J, however, took a different approach. In his Honour’s view, no payment made on account of a promise beyond that provided in the award – what Sheldon J described as an “extra-award payment” or a payment made for “a promise extraneous to the award obligation” – could be set off against the employer’s obligations under the award.[79]
To put it in more concrete terms, if the award rate for 40 hours’ work is $40 with overtime payable in addition but the employer agrees to pay a uniform allowance of $5 per week, it is common ground that it is no answer to a claim under s 92 for $40 ordinary time and $5 overtime worked to show that in fact $45 went into the employee’s pocket. If this is so, I regard it as equally no answer if he got $45 only because the employer agreed to pay him that amount for no more than 40 hours’ work. In each case, as I see it, the employer cannot allocate to one subject matter what he has already paid in pursuance [to] a promise related to another subject matter.
[79] [1967] AR (NSW) 471 at page 478
Sheldon J, referring to the example of the majority, also said:[80]
I regard it as a departure from the provisions of s 92 and, indeed, a contradiction in terms if an amount ($20 in the illustration) promised and paid as an excess over one part of the award entitlement can be used as if it had been a payment in fulfilment of another part of the award obligation. This involves re-allocating an amount promised to, and earned by the complainant, in respect of subject A (40 hours’ work) to meet a claim in respect of subject (B) (five hours overtime). This would be striking a false balance, not a true one, under s 92, because it is not a balance between the ‘price or rate’ fixed by the award and payment made in respect thereto. It also involves, as I see it, a repudiation of the contract in order to reduce the balance due under the award. So, in essence, my view is that because s 92 restricts what can be claimed to the award obligation, set-offs must also be restricted to payments which are referable, expressly or by implication, to the award obligation. If a complainant cannot enhance his claim under s 92 because of private contract, neither can a respondent use private contract to reduce it.
[80] [1967] AR (NSW) 471 at page 479
The Full Federal Court in Poletti also referred to the decision of the Industrial Commission of New South Wales in Pacific Publications Pty Ltd v Cantlon.[81] In that case, the question was whether a payment which the employer had described as a “special gratuity” could be set off against the award obligation of the employer to pay redundancy. The Commission upheld the Industrial Magistrate’s decision that it could not. In a passage quoted by the Full Federal Court in Poletti, the Commission said:[82]
The company clearly appropriated the payment, at the time of making it, as a ‘special gratuity’ in the special circumstances of the retrenchments then occurring and not as a payment in respect of any obligation which had arisen or might arise under cl 12.
[81] (1983) 4 IR 415
[82] Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415 at 421
The Full Federal Court in Poletti concluded that “it is appropriate that this court should apply the principles discussed by Sheldon J in Ray v Radano and by the Industrial Commission in Pacific Publications”.[83] Before the Full Court so found, it said the following about the judgment of Sheldon J in Ray v Radano and of the Commission in Pacific Publications:[84]
It is to be noted that there are two separate situations dealt with in the passage from the judgment of Sheldon J which has been quoted and in the reasoning of the Commission in Pacific Publications. The first situation is that in which the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award entitlements. In that situation, the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments. The second situation is that in which there are outstanding award entitlements, and a sum of money is paid by the employer to the employee. If that sum is designated by the employer as being for a purpose other than the satisfaction of the award entitlements, the employer cannot afterwards claim to have satisfied the award entitlements by means of the payment. The former situation is a question of contract. The latter situation is an application of the common law rules governing payments by a debtor to a creditor. In the absence of a contractual obligation to pay and apply moneys to a particular obligation, where a debtor has more than one obligation to a creditor, it is open to the debtor, either before or at the time of making a payment, to appropriate it to a particular obligation. If no such appropriation is made, then the creditor may apply the payment to whatever obligation or obligations he or she wishes . . . .
[83] Poletti v Ecob (1989) 91 ALR 381 at page 394
[84] Poletti v Ecob (1989) 91 ALR 381 at page 393
Poletti and other cases were referred to by Perram J in ACE Insurance Ltd v Trifunovski (No 2) where his Honour noted that those authorities “establish two propositions”, namely:[85]
(a) if by the contract between the parties they have agreed that a payment will be made over and above an award payment or that a payment will be made that is extraneous to an award payment then the employer is prevented from claiming that the payment made pursuant to the contract may be set up as a discharge of its obligation under the award; and
(b) if in a situation of outstanding award entitlements an employer pays an employee a sum of money and designates it as being for a purpose other than the award payment the employer may not later claim that it has paid the award entitlement.
[85] (2012) 215 IR 206 at 214 ([25])
For these reasons, therefore, the Agreed Rate is not legally irrelevant. Although the Agreed Rate is not a term of the MAI Award or of any other award, the Agreed Rate is a term of a binding contract, namely, the March Agreement; and Mainline Access’s failure to pay Mr Coote at the rate of $42 an hour is not a contravention of the MIA Award, and therefore, a contravention of s.45 of the FW Act, but a breach of the March Agreement. That means that Mr Coote has a right to recover from Mainline Access an amount for the work he performed calculated on the basis of the Agreed Rate, not by action under s.545 of the FW Act, but by an action for debt or breach of contract.
Before I leave this part of my reasons, I should note that counsel for the respondents has directed my attention to the judgment of the Full Federal Court in Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspector.[86] The principal question in that case was whether the employer could raise for the first time on appeal the question of whether it was entitled to set off against liabilities the employer had under an award amounts the employer paid under contracts of employment. Relevant to that question was whether the Director, Office of the Fair Work Building Industry Inspector (Director) would be prejudiced because, had the question the employer wished raise on appeal been raised at the trial, the Director might have explored whether there was evidence available to contest the asserted set-off the employer wished to raise on appeal. To answer that question, North and Bromberg JJ (who delivered a joint judgment) and, to a lesser extent, White J reviewed the authorities concerning the manner in which payments made by an employer are to be taken into account in “claims for amounts due under industrial awards or instruments”.[87] In that context North and Bromberg JJ referred to the judgment of Anderson J in James Turner Roofing, after which their Honours said as follows:[88]
Neither Linkhill or [sic] the Director contended that the principles articulated in Poletti v Ecob and ANZ v FSU and the other authorities discussed in these reasons were inapplicable because they were developed in circumstances where the parties succeeded in creating the employment relationship which, subjectively, they intended to make. Given that the purpose or intent of the parties in relation to a particular payment is central to the application of those principles, it may be that the principles do not translate well to a situation where the parties have created a relationship different to that which, subjectively, they had set out to make. Those principles may not apply to the circumstances in which the parties did not intend to provide for award entitlements at all because they did not advert to or had disavowed the relevance of such entitlements.
However, both the proper interpretation of James Turner Roofing, and the question whether the principles established in Poletti v Ecob and ANZ v FSU and the other authorities discussed in these reasons apply in the case of a failed attempt to create a contract for services may be left for another day.
There are two observations that may be made about Linkhill. The first is that Linkhill concerned the question of how payments made under a contract of employment are to be taken into account in determining whether an employer has discharged obligations under an award. The case is not relevant to whether an employee is entitled to sue on the contract of employment based on terms that are not provided for by any applicable award, or on rates that are above those provided for in the applicable award.
The second observation is that, with respect, it is not apparent why North and Bromberg JJ were of the opinion that the principles considered in Poletti do not translate well to a situation where the parties have created a relationship different to that which, subjectively, they had set out to make, only because the parties did not intend to provide for award entitlements at all because they did not advert to or had disavowed the relevance of such entitlements. In Poletti rates were agreed by the parties without reference to the award that applied to the employer and employee. Further, whether or not a contract has come into being, and whether such contract is one of employment, is a question that is determined objectively, that is, without reference to the parties’ subjective beliefs about the nature of the transaction they have entered into. The principles of appropriation, whether they rely on agreement, or the specification by the debtor of the debt to which a payment is to be appropriated, or the acts of the creditor after the creditor receives payment, are at least to a large extent also determined objectively without reference to the parties’ subjective intentions. That is apparent from the statement of the relevant principles by Lockhart J in Re Walsh which I reproduced above.
Outcome
As currently framed Mr Coote’s case is entirely predicated on Mainline Access being liable under the MAI Award to pay Mr Coote at the Agreed Rate. I have concluded, however, that Mr Coote is not entitled to succeed on this basis. Mr Coote, therefore, has or may have two options.
One is to maintain an action under s.545 of the FW Act for breach by Mainline Access of the MAI Award. If Mr Coote chooses to maintain such action, however, the amounts to which he will be entitled are to be ascertained by applying to the hours which I have found Mr Coote worked, and the days on which he worked, the rates provided for by the MAI Award; and then determine which of the obligations that accrued on Mr Coote’s having performed the work were discharged by the amounts Mainline Access paid Mr Coote. That is to be determined by applying the principles discussed in Poletti and the general principles of appropriation of payments as stated by Lockhart J in Re Walsh. Under those principles each payment Mainline Access paid is to be appropriated to the liabilities that accrued under the MAI Award on Mr Coote’s performing work. Given Mr Coote would have performed work in ordinary hours before he performed work in overtime hours, each of the amounts Mainline Access paid should first be appropriated to the liability Mainline Access incurred under the MAI Award for work performed in ordinary hours, and then to the liability it incurred for work performed in overtime hours. If any given payment for the work Mr Coote performed exceeded the liability Mainline Access had under the MAI Award to pay for the work Mr Coote performed, the excess of the amount Mainline Access paid is not available to be appropriated by it against any other liability Mainline Access has to Mr Coote under the MAI Award.
A second option available to Mr Coote is for him to seek to maintain a claim based on an entitlement to being paid at the Agreed Rate. Such claim, however, would be based, not on s.545 of the FW Act for contravention by Mainline Access of the MAI Award and, therefore, s.45 of the FW Act, but on the March Agreement.
These two options do not appear to be alternative and inconsistent rights which engage the principle of election of remedies;[89] and in principle Mr Coote should be able to maintain and obtain judgment both under s.545 of the FW Act and under the March Agreement, it being borne in mind that the principle against double recovery would be available to ensure that Mr Coote recovers no more than his actual loss, the limit of that loss being the amounts he is entitled to recover under the March Agreement.[90]
[89] See O’Connor v SP Bray Ltd [1936] NSWStRp 14;(1936) 36 SR (NSW) 248, at page 257
[90] As for the principle against double recovery see Baxter v Obacelo Pty Ltd [2001] HCA 66
Mr Coote’s entitlements - superannuation
In his points of claim Mr Coote alleges that Mainline Access contravened s.45 of the FW Act by failing to pay superannuation. Although not stated, Mr Coote must be relying on cl.35(2) of the MAI Award which provides:
An employer must make such superannuation contributions to a superannuation fund for the benefit of an employee as will avoid the employer being required to pay the superannuation guarantee charge under superannuation legislation with respect to that employee.
The “superannuation guarantee charge under superannuation legislation” referred to in this clause is that referred to in the SG Act..[91] Under s.16 of the SG Act an employer is required to pay a “superannuation guarantee charge imposed on an employer’s superannuation guarantee shortfall for a quarter”. The expression “superannuation guarantee charge” is defined in s.6 as the charge imposed by the Superannuation Guarantee Charge Act 1992 (Cth). An “employer’s superannuation guarantee shortfall for a quarter” is the amount calculated by the formula provided for by s.19 of the SG Act. That amount is calculated by applying the “charge percentage” to the total salary or wages paid to an employee for the quarter. The charge percentage for the years commencing 1 July 2014 and 1 July 2015 is 9.5%. Under s.27 of the SG Act an employer is not required to take into account when calculating the “charge percentage” provided for by s.19 of the SG Act the salary or wages paid to an employee if that employee is paid less than $450 in a calendar month. The liability to pay the superannuation guarantee charge accrues in the circumstances specified in s.46 of the SG Act. The liability to pay the superannuation guarantee charge, however, may be avoided by the employer making contributions to superannuation funds as provided for by s.22 or s.23 of the SG Act. Payments made under those provisions reduce the “charge percentage” provided for by s.19 of the SG Act.
[91] For ease of expression I will refer to the SG Act in the present tense, it being recognised that I am concerned with the SG Act as it applied during the relevant period.
Mr Coote’s case assumes that the superannuation contribution is to be calculated on the assumption that Mr Coote’s salary was based on his being paid at the Agreed Rate. Given I have found that the terms of the MAI Award do not apply to the Agreed Rate, but apply to the rates the MAI itself provides for, it follows the cl.35.2 applies to the rates the MAI provides for. Thus, the amount of Mainline Access’s liability under cl.35.2 of the MAI Award is to be determined by applying 9.25% up to 30 June 2014 and 9.5% up to the day Mr Coote’s employment with Mainline Access ended to the rate or rates at which Mr Coote ought to have been paid under the MAI Award. Given that I have also found that Mr Coote is entitled under the March Agreement to be paid at the Agreed Rate, it also follows that Mr Coote is entitled to the superannuation contribution provided for by the March Agreement. I have found that under the March Agreement, Mainline Access agreed to pay Mr Coote at the hourly rate of $42 inclusive of an amount for superannuation at the rate provided for by the SG Act, such amount to be calculated by applying to $42 the percentage provided for by s.19 of the SG Act. That percentage was 9.25% up to 30 June 2014 and 9.5% for the remainder of the assessment period.
Mr Whelan agreed in cross-examination that no superannuation was paid in relation to Mr Coote’s employment.[92] That means that Mainline Access contravened cl.35.2 of the MAI Award and breached the March Agreement.
[92] T195.45
Mr Coote’s entitlements – annual leave
In his points of claim Mr Coote claims Mainline Access failed to pay to Mr Coote annual leave as required by s.90 of the FW Act.
Under s.87(1)(a) of the FW Act an employee is entitled to four weeks of paid annual leave for each year of service with his or her employer. Subsection 87(2) of the FW Act provides that an employee’s entitlement to be paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours, and accumulates from year to year. Section 90 of the FW Act provides as follows:
(1)If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.
(2)If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.
These provisions apply to the actual wage that has been agreed between an employer and employee. That means that Mr Coote’s entitlement to being paid for leave that he has accrued but not taken is to be determined on the assumption that he had been engaged to work at the Agreed Rate.
There is no express evidence from Mr Coote that he did not take any annual leave, or that he was not paid for any untaken annual leave that had accrued by the time his employment ended. It is implicit in Mr Coote’s evidence of the hours he worked that he did not take any annual leave during his employment with Mainline Access, and I find that he did not take any annual leave. That means that as at 10 April 2015 when his employment with Mainline Access ended, Mr Coote was entitled under s.90(2) of the FW Act to untaken annual leave based on the period from which he commenced his employment until 10 April 2015. That amount would be calculated at the very least on the basis that up to 17 March 2014 he was being paid at the rate of $35 an hour and from 18 March 2014 he was being paid at the rate of $42 an hour.
There is no suggestion that Mr Coote was paid more than the amounts Mr Coote claims to have been paid. None of the amounts he was paid included amounts for annual leave; and the respondents do not claim Mr Coote was paid any amount for annual leave. I find, therefore, that, contrary to s.90(2) of the FW Act, Mainline Access failed to pay to Mr Coote untaken annual leave. Given that s.90 of the FW Act is a National Employment Standard within the meaning of s.61(3) of the FW Act, Mainline Access also contravened s.44 of the FW Act.
Mr Coote, however, claims a 17.5% loading. That claim is made under cl.41.5 of the MAI Award. Given I have found that the terms of the MAI Award do not apply to the Agreed Rate, but apply to the rates the MAI itself provides for, it follows the cl.41.5 applies to the rates the MAI provides for. Thus, the amount of Mainline Access’s liability under cl.41.5 of the MAI Award is to be determined by applying the loading to the wage rates provided for by the MAI Award.
Deductions
I have already noted that Mainline Access deducted from the Gross Amounts stated in each invoice it issued to Mr Coote an amount for superannuation and in relation to some of the invoices other amounts. In particular, Mainline Access deducted the following amounts:
Invoice Date
Description
Amount
04/04/2014[93]
Jade Apartments
$31.08
06/05/2014[94]
Less payment made 15/04/2014 (Appliance)
$900
Less payment made 2/5/2014 (Griff)
$2,200
Less payment made 16/04/2014 (credit card)
$1,694
26/05/2014[95]
Less payment made 15/04/2014 (Appliance)
$500
Less payment made (Griff)
$1,200
Less transactions of credit card
$1,040.63
Less transactions of credit card
$3,272.45
11/07/2014[96]
Less credit card transactions (“Note that only 50% of credit card transactions are deducted, this remaining balance needs to be taken out of next invoice ($1,002.78)”
$3,151.98
11/07/2014[97]
Less credit card transactions
$610.67
“Remaining balance needs to be taken out from last months CC transactions”
$1,002.78
05/08/2014[98]
Less credit card transactions
$883
“Rent taking out in advance Half only $1,350.00”
18/08.2014[99]
Bond
450
“Rent taking out in advance Half only $1,350.00”
$1,350
16/09/2014[100]
Borrowed rent
$600
Borrowed money
$630
03/10/2014[101]
Borrowed rent
$600
Borrowed money
$350
15/10/2014[102]
Borrowed rent
$600
Borrowed money
$350
[93] Exhibit SW-1, page 27
[94] Exhibit SW-1, page 28
[95] Exhibit SW-1, page 29
[96] Exhibit SW-1, page 31
[97] Exhibit SW-1, page 32
[98] Exhibit SW-1, page 33
[99] Exhibit SW-1, page 34
[100] Exhibit SW-1, page 35
[101] Exhibit SW-1, page 36
[102] Exhibit SW-1, page 37
Under s.323(1)(a) of the FW Act an employer must pay an employee amounts payable to the employee in relation to the performance of work in full. That is subject to s.324(1) of the FW Act which provides for a number of circumstances in which an employer may deduct an amount from an amount payable to an employee. There is no question that the deductions I have set out above do not fall within any of the circumstances specified in s.324. That in turn means that Mainline Access contravened s.323 of the FW Act by paying the amounts it did to Mr Coote after it made the deductions.
Payslips
Mr Coote has given evidence that Mainline Access did not provide him with any payslips.[103] I accept Mr Coote’s evidence on this point and find that Mainline Access failed to give to Mr Coote a pay slip within one working day of paying the amounts it paid to Mr Coote. Mainline Access, therefore, contravened s.536 of the FW Act on each occasion it failed to provide to Mr Coote a payslip.
[103] M Coote affidavit, 10.06.2016, [7]
Record keeping
Section 535 of the FW Act provides as follows:
(1)An employer must make, and keep for 7 years, employee records of the kind prescribed by the regulations in relation to each of its employees.
(2)The records must:
(a)if a form is prescribed by the regulations—be in that form; and
(b)include any information prescribed by the regulations.
(3)The regulations may provide for the inspection of those records.
The information that must be included in records an employer must keep under s.535(1) of the FW Act has been prescribed by the Fair Work Regulations 2009 (Cth). Relevant to this proceeding are reg.3.33(1), which requires the employer to specify in relation to an employee, among other things, the rate of remuneration of the employee, the gross and net amounts paid to the employee, any deductions made from the gross amount paid to the employee; and reg.3.34 which applies if a penalty rate or loading must be paid for overtime hours actually worked by an employee, and provides that in the case of such an employee the employer must record the number of overtime hours worked by the employee during each day, or when the employee started and ceased working overtime.
Given the respondents accept that Mainline Access agreed to engage Mr Coote as a contractor and deny Mainline Access entered into an agreement by which Mr Coote returned to being engaged as an employee, it is open to me to find, and I do find that Mainline Access did not make and keep records it was required to keep by s.535 of the FW Act and, therefore, by not making or keeping such records, it contravened s.535 of the FW Act.
Accessorial liability
Mr Whelan accepts that to the extent I find that Mainline Access contravened any of the provisions Mr Coote claims Mainline Access contravened, Mr Whelan was involved in those contraventions. Notwithstanding that concession, I consider it appropriate to consider whether the concession has been well made.
Whether or not Mr Whelan is liable for any of Mainline Access’s contraventions of the FW Act depends on whether the provisions of the FW Act that Mainline Access contravened are “civil remedy provisions” and, if so, whether Mr Whelan was “involved” in Mainline Access’s contraventions of those provisions. That follows from s.550(1) of the FW Act which provides that a “person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision”.
A person’s being “involved in” for the purposes of s.550(1) of the FW Act is defined in s.550(2) as follows:
A person is involved in a contravention of a civil remedy provision if, and only if, the person:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced the contravention, whether by threats or promises or otherwise; or
(c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
(d)has conspired with others to effect the contravention.
Section 550 of the FW Act is “drawn in terms very similar to those of s.75B” of what was known as the Trade Practices Act 1974 (Cth) (TPA) but of what is now the Competition and Consumer Act 2010 (Cth).[104] That means that authorities that have expounded and construed s.75B of the TPA are relevant to the meaning of s.550 of the FW Act; and it is the case that the Federal Court has expounded and construed s.550 of the FW Act by reference to what has been said about s.75B of the TPA.[105] In that context it has been held that “the proper construction of par.(c) requires a party to a contravention to be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention”.[106]
[104] Dowling v Kirk & 16 Ors [2007] FMCA 2106 at [24] (Cameron FM, as his Honour then was, speaking of s.728 of the Workplace Relations Act 1996 (Cth) being the equivalent provision of s.550 of the FW Act).
[105] See, for example, Fair Work Ombudsman v Grouped Property Services Pty Ltd [2016] FCA 1034 at [950] (Katzmann J)
[106] Yorke v Lucas (1985) 158 CLR 661, at page 670
Involvement in contravention of s.45 of the FW Act
The elements of a contravention of s.45 of the FW Act based on a failure to pay amounts under a modern award are: (a) the facts which gave rise to the liability to make the payment under the award; and (b) the non-payment of the amount, or the payment of an amount less than the amount, necessary to discharge the liability.
I have already found that Mr Coote submitted fortnightly timesheets to Mr Whelan, Mr Whelan prepared invoices in response, and, being the sole director and shareholder of Mainline, Mr Whelan paid Mr Coote the amounts stated in the invoices. In those circumstances, if Mr Coote maintains his action for non-payment of amounts under the MAI Award for hours worked and if, after the appropriation of the payments he received from Mainline Access there are amounts owing under the MAI Award, Mr Whelan will have been involved in Mainline Access’s breaches of the MAI Award and, therefore, contraventions of s.45 of the FW Act.
I have also found that Mainline Access did not pay any superannuation in relation to Mr Coote’s employment. Given that Mr Whelan was the sole director and shareholder of Mainline Access, and he was the person to whom Mr Coote provided his time sheets, and Mr Whelan created and paid invoices on the basis of the time sheets, I find that Mr Whelan was responsible for paying superannuation in relation to Mr Coote’s employment and was aware no superannuation was paid. Mr Whelan, therefore, was involved in Mainline Access’s contravention of cl.35.2 of the MAI Award and, therefore, s.45 of the FW Act.
Involvement in contravention of s.44 of the FW Act – annual leave
The elements of a contravention of s.44 of the FW Act based on a contravention of s.90(2) are an employee’s being in service and, for that reason, accruing under s.87(2) of the FW Act the annual leave provided for by s.87(1); the employment relationship ending; and, at the time the employment relationship ended, the applicant’s not having taken annual leave that had accrued. Given the findings I have already made, Mr Whelan was aware of the period for which Mr Coote was an employee, and he was aware that Mr Coote had not taken any annual leave and had not been paid any amount for annual leave. I find, therefore, that Mr Whelan was involved in Mainline Access’s contravention of s.90(2) of the FW Act and, therefore, s.44 of the FW Act.
Involvement in contravention of s.323
Given the findings I have already made I find that Mr Whelan was aware of the hours for which Mr Coote claimed payment, the rate at which he was entitled to be paid and, therefore, the amounts Mr Coote was required to be paid in full on each occasion Mr Coote submitted time sheets. Given also I have found that Mr Whelan prepared the invoices in response to timesheets Mr Coote provided, and those invoices record deductions from the Gross Amounts stated in each invoice, I find that Mr Whelan was involved in Mainline Access’s contraventions of s.323 of the FW Act.
Payslips and records
Given I have found that Mr Coote submitted timesheets to Mr Whelan, Mr Whelan prepared invoices in response to some of the timesheets, Mr Whelan did not provide a copy of the invoices to Mr Coote, and Mr Whelan was the sole director and shareholder of Mainline Access, I find that Mr Coote was aware that Mainline Access did not provide any payslip to Mr Coote within one day of Mr Coote’s being paid. Mr Whelan, therefore, was involved in Mainline Access’s contraventions of s.536 of the FW Act. I also find that Mr Whelan was aware that Mainline Access did not make or keep records as required by s.535 in relation to Mr Coote’s employment; and, for that reason, was involved in Mainline Access’s contraventions of s.535 of the FW Act.
Cross-claim
The cross claim relates to amounts Mr Coote is alleged to have charged to credit cards that had been issued to Mainline Access and which consequently were charged to an account Mainline Access held with the Commonwealth Bank of Australia. The cross claim alleges as follows:
a)In or about April 2014, by an agreement made between Mr Coote and Mainline Access, Mr Coote was supplied with access to two credit cards for use by Mr Coote in purchasing materials or related items “in respect of the jobs or services for or on behalf of” Mainline Access.[107]
b)The agreement referred to in (a) included a term that should Mr Coote incur any costs or make any charges to the credit cards that were his own personal costs, expenses, or borrowings, he would repay such money to Mainline Access.[108]
c)During the period from 31 July 2014 to 9 June 2015, in breach of the agreement referred to in (a) Mr Coote “incurred, borrowed or charged non-business and/or personal expenses or costs on or to [Mainline Access’s] credit cards in the amount of $25,117.72 and has not paid such monies back to” Mainline Access.[109] The particulars to this paragraph of the cross-claim states that “a spreadsheet can be provided identifying charges claimed by [Mainline Access] in breach of the” agreement referred to in (a).
[107] Statement of Cross Claim, [5]
[108] Statement of Cross Claim, [6]
[109] Statement of Cross Claim, [9]
Before I consider the cross claim, it will be necessary to set out the evidence; and I begin with the evidence of Mr Whelan. He deposes that Mr Coote had access to two credit cards that were linked to Mainline Access’s bank account, one of which “was for Mark’s main use” (card 7043). Mr Whelan says he and Mr Coote had a conversation in relation to the other card (card 6320) in which words to the following effect were spoken:[110]
Mr Coote:Can I put my stuff on the company credit card and you can deduct it from my payments.
Mr Whelan:Ok, but don’t go crazy on it.
[110] Affidavit of S Whelan 24.07.2017, [24]
Mr Whelan further deposes it was difficult for him to keep track of Mr Coote’s use of card 6320. Mr Whelan “would try to find all the private expenses and then deduct them from his invoice but I didn’t always get them all” because “I would see some more that I had missed”.[111] Mr Whelan prepared a table (Credit Card Schedule) which he says “shows all the private expenses which Mark charged to Mainline’s credit cards”.[112] The amounts are said to total $24,851.76.
[111] Affidavit of S Whelan 24.07.2017, [26]
[112] Affidavit of S Whelan 24.07.2017, [52], Exhibit SW-1, pages 44-50
Mr Coote accepts he had access to card 7043, but not to card 6320 or to any other credit card; and he says he returned card 7043 to Mr Whelan on 26 June 2014.[113] Mr Coote says he reviewed the Credit Card Schedule and identified those transactions which Mr Coote believes were his. These total $3,222.82.[114]
[113] M Coote affidavit, 16.08.2017, [27], [28]
[114] M Coote affidavit, 16.08.2017 [30]; annexure MC-8
Both Mr Whelan and Mr Coote were cross-examined about their evidence. Mr Coote was questioned about his understanding of the arrangement he had with Mr Whelan relating to his use of the credit card, but Mr Coote did not give any answer to that question, apart from saying that he first used the credit card when he went to Queensland in April 2014.[115] Mr Whelan was extensively cross-examined about particular items contained in the Credit Card Schedule. Mr Whelan accepted there was an additional card to cards 6320 and 7043 that was linked to the one bank account; that Mr Whelan had access to all three cards; that Mr Whelan used another card for personal transactions that was linked to a different bank account; that many of the transactions for which Mr Whelan used this personal card were similar to the transactions that appeared in the Credit Card Schedule; and that a number of the transactions recorded in the Credit Card Schedule should not have been included in that schedule.[116]
[115] T39.30
[116] T171-T172
I am not satisfied that the Credit Card Schedule is a reliable summary of transactions of a personal nature Mr Coote entered into using card 7043 or any other card used by Mainline Access. My not being satisfied is based the answers Mr Whelan gave in cross examination. Further, the objective evidence supports Mr Coote’s evidence. That evidence is to be found in the invoices that were issued in response to Mr Coote’s submission of time sheets. The invoices dated 6 May 2014, 26 May 2014, 11 July 2014 and 5 August 2014 contain deductions of amounts for credit card transactions; but the remaining invoices – these being the invoices dated 4 April 2014, 18 August 2014, 16 September 2014, 3 October 2014, and 15 October 2014 contain no deductions for credit card expenses. In these circumstances, I accept Mr Coote’s evidence that he charged to card 7043 personal transactions in amounts totalling $3,222.82.
After the hearing Mainline Access provided to my chambers a document titled “Respondents’ Schedule of Monies Owing”. It includes the amount of $7,429.91 which is described as “credit card expenditure noted in Applicant’s invoices not included in item 2.2”, that item being the $3,222.82 Mr Coote accepts constitute personal transactions. To the extent the $7,429.91 is the sum of amounts included in the Credit Card Schedule, and do not include amounts Mr Coote accepts constitute personal expenditure by him, I do not accept the amount represents any personal expenses Mr Coote charged to Mainline Access’s account. To the extent the $7,429.91 includes amounts that are not the subject of the Credit Card Schedule, I do not accept that Mr Coote is liable to pay any such amount. The basis of this conclusion is that the amounts are not the subject of the cross claim, and the evidence on which they appear to be based, namely, items included in invoices Mr Whelan created but did not provide to Mr Coote, is not sufficient to prove that any part of the $7,429.91 represents an amount Mr Coote owes to Mainline Access.
Principal findings
It would be convenient that I now set out my principal findings:
a)From early 2014 until 18 March 2014 Mr Coote was employed by Mainline Access as a casual employee at the rate of $35 per hour.
b)On 18 March 2014 Mr Coote and Mr Whelan intended to agree that Mr Coote would be engaged as a contractor.
c)By around 17 April 2014 Mr Coote and Mainline Access agreed that Mr Coote would be paid at the rate of $42 per hour less superannuation, with superannuation to be calculated as a percentage of $42 and to be deducted from the $42 hourly rate.
d)Although Mr Coote and Mr Whelan intended to agree that Mr Coote would be a contractor it is common ground that the relationship between Mr Coote and Mainline continued to be that of employment.
e)Mr Coote’s employment with Mainline Access was covered by the MAI Award.
f)Mr Coote ended his employment with Mainline on 10 April 2015.
g)From 18 March 2014 to 10 April 2015 (being the “assessment period” I defined earlier in these reasons) Mr Coote worked on average 41.35 hours a week, 31/3 hours of which he worked on the weekends. The total hours Mr Coote performed during that period, therefore, is 2,297.82 hours of which 181.34 hours of work was performed on the weekends.
h)Mainline Access paid to Mr Coote amounts totalling $36,527.30 for work Mr Coote performed during the assessment period.
i)To the extent the payments referred to in (h) did not discharge the amounts for which Mainline Access became liable under the MAI Award to pay to Mr Coote for the work he performed, Mainline Access contravened a term or terms of the MAI Award and, therefore, contravened s.45 of the FW Act.
j)Mainline Access did not make any superannuation payments in relation to Mr Coote. That, at the very least, constitutes a contravention of cl.35.2 of the MAI Award and, therefore, a contravention of s.45 of the FW Act.
k)Mr Coote accrued but took no annual leave for the period of his employment with Mainline Access, and Mainline Access paid no amount to Mr Coote in relation to the leave he accrued. Mainline Access, therefore, contravened s.90(2) of the FW Act and, consequently, s.44 of the FW Act.
l)Mainline Access deducted from the amounts that were due to Mr Coote amounts in addition to amounts for superannuation in circumstances where s.324 of the FW Act did not apply. Mainline Access, therefore, contravened s.323 of the FW Act.
m)Mainline did not provide Mr Coote with any payslips and it did not make or keep records it was required to keep pursuant to s.535 of the FW Act. Mainline Access, therefore, contravened s.535 and s.536 of the FW Act.
n)Mr Whelan was a person involved in Mainline Access’s contraventions of the FW Act.
o)Mr Coote is entitled to maintain an action under s.545 of the FW Act against Mainline Access and Mr Whelan (as a person involved in Mainline Access’s contraventions of the FW Act) to recover amounts for which Mainlined Access became liable to pay under the MAI Award and which it has not paid.
p)Concurrently with the right of action under s.545 of the FW Act, Mr Coote is entitled to maintain an action under the March Agreement against Mainline Access to recover amounts for which Mainlined Access became liable to pay under the March Agreement and which it has not paid.
q)The total amounts Mr Coote may be entitled to recover by the concurrent actions referred to in (o) and (p) is limited to the maximum loss Mr Coote has suffered, such loss being the amounts Mainline Access failed to pay to Mr Coote under the March Agreement.
r)Mr Coote charged to Mainline Access’ credit card personal expenses totalling $3,223.82.
Further progress
Given my findings I am not in a position to make any orders on the claims made in the proceeding. That is particularly so given my findings that although Mr Coote does not have a right to recover amounts under the MAI Award based on the Agreed Rate, he does have a right to recover under the March Agreement amounts calculated at that rate, and my finding that if Mr Coote is to maintain a claim under s.545 of the FW Act for the recovery of the amounts payable under the MAI Award, the amounts Mainline Access paid would need to be appropriated against the amounts owing under the MAI Award.
In these circumstances, the only order I propose to make is that the matter be listed for directions. The purpose of the directions hearing will be for the parties, after having an opportunity to consider these reasons, to inform me of what, if any, orders should be made having regard to the findings I have made, whether there are any outstanding issues I need to resolve before I can make final orders (again having regard to the findings I have already made), and to make directions in relation to penalties.
I certify that the preceding one hundred and twelve (112) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 9 November 2018
CORRECTION
In paragraph 110(h) the amount “42,125.27” has been replaced with “36,527.30”.
- AGLC
- Coote v Mainline Access Pty Ltd and Anor (No.2) [2018] FCCA 2892
- Case
- [2018] FCCA 2892
- Decision Date
CaseChat Overview and Summary
The court was required to determine several key legal issues. Firstly, it had to ascertain the correct method for calculating amounts payable under the award, specifically whether a higher agreed rate between employer and employee should be applied. Secondly, the court considered the legal effect of a mistaken intention to classify an employment relationship as an independent contractor arrangement on the recoverability of agreed rates. Thirdly, the court examined the possibility of an employee concurrently maintaining a contractual action to recover amounts based on an agreed rate, distinct from award entitlements. Finally, the court had to determine the extent of the sole director and shareholder's involvement in any contraventions of the *Fair Work Act 2009* (Cth) and relevant awards.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.