Day v Hutcheon
[2014] QIRC 84
•16 May 2014
QUEENSLAND INDUSTRIAL RELATIONS COMMISSION
| CITATION: | Day v Hutcheon [2014] QIRC 084 | |||||
| PARTIES: | Graeme Noel Day | |||||
| (applicant) | ||||||
| v | ||||||
| Bruce Eric Hutcheon | ||||||
| (respondent) | ||||||
| CASE NO: | B/2010/36 | |||||
| PROCEEDING: |
| |||||
| superannuation contributions, etc | ||||||
| DELIVERED ON: | 16 May 2014 | |||||
| HEARING DATE: | 13 February 2014 | |||||
| MEMBER: | Deputy President O'Connor | |||||
| ORDER: | The application is dismissed. | |||||
CATCHWORDS: | INDUSTRIAL LAW - UNPAID WAGES - AGREEMENT AS TO THE PROVISION OF SUPERVISED LEGAL PRACTICE - Whether the agreement was a contract of employment - Whether any wages or superannuation contributions were payable under the contract - Where the evidence was that, in consideration of the respondent employing the applicant for at least two years, the applicant agreed to meet the shortfall in the firm's operating expenses - Where the respondent agreed that the applicant would be reimbursed for operating costs once there was a surplus of earnings or income over expenses - | |||||
CASES: | Industrial Relations Act 1999, s 278, sch 5 Legal Profession Act 2007, ss 53, 56, sch 2 | |||||
| Labaj v Lollo Plumbing Pty Ltd (2004) 175 QGIG 444 Tweddell v Ehle Pty Ltd (1993) 142 QGIG 397 | ||||||
| APPEARANCES: | The applicant in person. Mr S. J. English for the respondent, directly | |||||
| instructed. | ||||||
| Decision |
[1] This is an application by Graeme Noel Day ("the applicant") pursuant to s 278(1) of the Industrial Relations Act 1999 ("the Act") seeking an order for payment of unpaid wages and superannuation contributions from Bruce Eric Hutcheon ("the respondent").
[2] The applicant's claim is for the total sum of $19, 456.98, covering the period from 1 April 2009 to 4 November 2009. That sum is particularised in the application as follows:
(a) Unpaid wages: $17, 293.78; (b) Pro rata payment of annual leave including leave loading: $1, 595.00 (c) Wages in lieu of notice of dismissal: $568.20; and (d) Unpaid superannuation contributions at 9%: $1, 751.13.
[3] It is not in dispute between the parties that the "engagement" which is the subject of this application was not covered by an award or industry agreement during the period from 1 April 2009 to 4 November 2009.
[4] The application filed on 29 October 2010 sets out the agreement between the parties:
"The agreement between the applicant and respondent was:
(a)
In consideration of the respondent employing the applicant for at least two years, the applicant agreed to meet the shortfall in the operating expenses of the firm to the extent that its billable earnings was less than its income. This agreement enabled the firm to operate by meeting its operating expenses which included the purchase of office equipment and the payment of secretary's wages, rent and other general operating expenses.
(b)
The respondent agreed that the applicant would be paid monies owing at the time there was a surplus of earnings or income over expenses.
(c)
The respondent agreed to employ the applicant for such time as was necessary for the applicant to gain accreditation and gain a practising certificate as a principal and not as an employed solicitor under the supervision of a principal."
Background
[5] The respondent was admitted as a solicitor of the Supreme Court of Queensland in 1981. He was engaged in full-time legal practice until 30 June 2003, and maintained a practising certificate for approximately two years after that in order to provide legal services to some of his long-standing clients who had supported his practice over many years.
[6] The applicant and respondent first met through their respective wives, who both worked at St Hilda's Anglican School at Southport.
[7] Sometime in early 2009 or late 2008, the applicant asked the respondent to consider going back into practice. According to the respondent, the applicant "induced" him to return to practice so that he could attain his principal's practising certificate:
"Mr Day induced me to return to practice by representing to me that if I agreed to be the Principal of a Legal Practice until such time as he held a Principal's Practicing Certificate he would:-
(a)
Timely undertake a Practice Management Course so that he could obtain a Principal's Practicing Certificate.
(b) Source office premises for me to conduct a Legal Practice. (c)
Work in the Legal Practice until such time as he could obtain a Principal's Practicing Certificate.
(d)
Assume control of the Legal Practice when he obtained his Principal's Practicing Certificate and I would retire therefrom. No money would change hands.
(e)
Fund the Legal Practice until it was self funding or until he obtained his Principal's Practicing Certificate and assume control of the Legal Practice which ever first occurred.
(f)
Bring to the Practice substantial work including that of his Company as he was 'sick and tired' of paying Gold Coast Solicitors to undertake work on its behalf.
(g)
Bring to the Practice work from his friends and business associates which would keep the Practice 'very busy'.
(h) Consent to the Business Name of 'Day & Hutcheon Lawyers' being
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registered and my trading there under until the event in (d)."
[8] On 23 January 2009, the respondent lodged an application for registration of the
business name "Day & Hutcheon Lawyers" with the Department of Justice and
2
Attorney-General. Premises were obtained at Chevron Island and a commercial
3
lease entered into on 27 February 2009. The legal practice commenced on 1 April 2009. The relevant statutory provisions [9] Section 278 of the Act relevantly provides:
"(1) An application may be made to the commission for an order for payment of—
(a) an employee's unpaid wages; or (b) an apprentice's unpaid tool allowance under section 138; or (c)
remuneration lost by an apprentice or trainee because the employer has contravened section 391(2); or
(d)
contributions to the approved superannuation fund payable for an eligible employee that are unpaid; or
(e)
remuneration unpaid because a person contravened an order mentioned in section 140A(1).
(2) An application can not be made to the commission if the total amount
claimed under subsection (1) is more than $50000.… (8) On hearing the application, the commission or magistrate—
(a) must order the employer to pay the employee— (i) the amount the commission or magistrate finds to be payable and unpaid to the employee within the 6 years before the date of the application; and
(ii) an amount the commission or magistrate considers appropriate, based on the return that would have accrued in relation to the contributions had it been properly paid to the approved superannuation fund; and
(b) may make an order for the payment despite an express or implied provision of an agreement to the contrary; and (c) may order the payment to be made on the terms the commission or magistrate considers appropriate."
[10] "Wages" is defined in sch 5 of the Act to mean:
"(a) an amount payable to an employee for—
(i) work performed, or to be performed, by the employee; or (ii) a public holiday; or (iii) leave the employee is entitled to; or (iv) termination of employment; or (b) a salary; or (c)
an amount payable from wages for the employee, with the employee's written consent."
Onus of proof
[11] The onus of proof rests with the applicant to demonstrate, on the balance of probabilities, that wages are due under a contract of employment. In Labaj v Lollo Plumbing Pty Ltd, Commissioner Asbury concluded:
"[A]n applicant under s. 278 of the Act must establish that wages are due and
payable under a contract of employment. An employee whose employment is
covered by an industrial instrument may establish the minimum terms of a
contract of employment by reference to the terms of the industrial instrument.
Such an employee may also rely on s. 135 of the Act, and by establishing that
a contract of employment is inconsistent with the terms of an applicable award
and provides for employment conditions less favourable to the employee than
the award, may recover amounts unpaid and due under that award. An
employee whose employment is not covered by an industrial instrument must
demonstrate that wages due under a contract of employment are unpaid and,
where the terms of the contract of employment are in dispute, must establish
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those terms on the balance of probabilities."
The evidence as to the nature of the agreement
[12] The applicant's evidence was that he commenced legal work with Day & Hutcheon Lawyers on 1 April 2009. He was admitted as a legal practitioner in Queensland sometime in 2007 and subsequently applied to the Queensland Law Society for a restricted employee practising certificate.
[13] Section 53(2)(b) of the Legal Profession Act 2007 ("LPA") provides that a regulatory authority may impose a condition on a practising certificate limiting the holder to "supervised legal practice", which is defined in sch 2 to mean:
"legal practice by a person who is an Australian legal practitioner–
(a) as an employee of a law practice if–
(i) at least 1 partner, legal practitioner director or other employee of the law practice is an Australian legal practitioner who holds an unrestricted practising certificate; and (ii) the person engages in legal practice under the supervision of an Australian legal practitioner mentioned in subparagraph (i); or
(b) as a partner in a law firm if–
(i) at least 1 other partner is an Australian legal practitioner who holds an unrestricted practising certificate; and (ii) the person engages in legal practice under the supervision of an Australian legal practitioner mentioned in subparagraph (i); or
(c) in a capacity approved under the administration rules."
[14] Section 56 of the LPA goes on to provide that "[i]t is a condition of a local practising certificate for a solicitor that the certificate holder must engage in supervised legal practice" until certain conditions and time limits have elapsed.
[15] The applicant intended to undertake his practice management course and complete his two years of supervised legal practice in order to obtain an unrestricted practising certificate. To do so, the applicant had to engage in legal practice under the supervision of a legal practitioner who held an unrestricted practising certificate.
[16] What was in existence between the parties was a contract, the terms of which are essentially set out in paragraph 7 of the application filed on 29 October 2010.
[17] What the applicant agreed to do was to "bankroll" the respondent in exchange for two years of "supervised legal practice" with the intent of gaining an unrestricted practising certificate.
[18] The applicant gave the following evidence in relation to the nature of the agreement between him and the respondent:
"DEPUTY PRESIDENT: So was it – was it the case, Mr Day, that effectively
Mr Hutcheon was the vehicle for you to get that experience that you needed?--
-Correct. Correct.And was it – it's the case that throughout your time with the business, there
wasn't sufficient professional fees and earnings to be either repaid or receive
an income?---No. It was still in its formative development.
Yes?---The business.
And it was your understanding, between yourself and Mr Hutcheon, that that would be the basis that you'd be employed under? So when things became profitable - - -?---When - - -
- - - you'd be repaid and receive an income?---Correct.
But through – whilst you were there it never reached that level of income to allow you – it was almost just enough to cover costs and pay your other
employees; is that correct?---Well, it paid for one employee, Ms Brixey. And it didn't cover the operating expenses so from month to month I would make a contribution depending upon what the shortfall was.
But the arrangement was, with Mr Hutcheon, that he would be your supervisor for your period that you needed to be under supervised legal practise?--- Correct. Correct."
[19] In my view, what was in the contemplation of the applicant and respondent at the time of entering into the agreement was not the formation of a contract of employment but rather an arrangement whereby the respondent would provide to the applicant a period of two years supervised legal practice in return for meeting the outgoing expenses associated with the operation of the legal practice.
[20] In his evidence before the Commission, the applicant made clear what his understanding was in relation to the nature of the agreement:
"Well, the understanding was, was it not, that you wanted a practice when you received an unconditional practising certificate?---What I wanted was two years' experience."
[21] The evidence adduced during the hearing does not support a conclusion that once the practice became profitable then the applicant would be paid his wages and superannuation entitlements in arrears. I accept that under the arrangement entered into by the applicant and respondent the operating expenses - which included the purchase of office equipment and the payment of secretary's wages, rent and other general operating expenses - would be reimbursed to the applicant once the practice became profitable.
[22] The applicant gave the following evidence in relation to remuneration payable under the agreement:
"That is correct. So you were to receive no remuneration whatsoever - - -?--- No, no, no. The prospect was that we would be able to generate sufficient funds to have a surplus and be paid. We weren't there for our health, we were there to make money.
But you have sworn there that you would not receive – sorry – you would not
'receive an income'?---Until - - -
Yes?--- - - - there were funds available.
Right. So whilst you were at Day & Hutcheon were any funds available to pay your wages?---No.
No. And that was the agreement?---Yes.
Yes?---No – well, I don't know about agreement, that was the understanding."
[23] I do not accept that it was the intention of the parties at the time of entering into the arrangement that the applicant would be paid wages during the period of his supervised legal practice.
[24] The evidence before the Commission was that no discussions took place at the time of entering into the agreement in relation to wages. Indeed, no discussions took place between the applicant and respondent in relation to the quantum of any wages that might be payable to the applicant.
[25] In support of that conclusion I refer to the following evidence given by the applicant:
"DEPUTY PRESIDENT: But you never – you never agreed on a figure or a - -
-?---A specific figure.
Either weekly or otherwise in terms - - -?---No.
- - - of wages?---No. No. The discussion never got to that point. It was an agreement or an understanding on the principle that that's what we were working towards.
Because you weren't going to draw on it until such time as it became
financial?---Correct. My – my agreement was that I would bankroll the
establishment and development of the business to the point where it would be
able to reward us appropriately.
But to serve you the benefit of having that supervised practise certificate?---
Correct."
[26] The applicant gave the following evidence in relation to the quantum of his claim:
"In which affidavit have you sworn what the remuneration was to be, how it – and how it was to be calculated?---But – look, there is no affidavit in relation
to that. The precise amount was not discussed. It was never discussed.
So how do you arrive at the amounts in your application?---I think the calculations are quite clear in the application and it was based on what I understood to be the bare minimum for a legal clerk or a law clerk, and that's the basis of the claim.
So it's on your understanding of what you thought you should - - -?---No.
- - - have been paid?---No. It's the minimum which a law clerk, and bearing in mind I'm a qualified lawyer, what a law clerk would be paid as a minimum. And that's the basis of the claim.
Where did you get – where did you get that information from?---In talking to
other lawyers in terms of what they were paying their law clerks."
[27] The applicant did not submit any independent evidence to support the quantification of the claim other than to say that he had reached the figure after discussions he had had with other solicitors on the Gold Coast and by reference to the Queensland Law Society Survey Report 2010 which was not admitted into evidence.
[28] What was evident during the hearing of this application was the level of acrimony that existed between the parties. The relationship between the applicant and respondent broke down in early November 2009 and reached a point where police were called to the practice premises following an altercation.
[29] Following advice from the Queensland Law Society, a termination letter was forwarded to the respondent on 5 November 2010.
[30] The applicant argued before the Commission that, as a consequence of the agreement being terminated on 5 November 2010 (prior to the completion of his period of supervised practice), he was denied the prospective benefit of the business being viable:
"But also the investment that I had made in that 219 days, I was denied the prospective benefit of the business being viable. I mean, there's a value
attached to that. It was denied me by my unceremonious exit and just – I
mean, all of the documentation, quite clearly, states that I'm an employee. He's confirmed it with the Queensland Law Society. It's legally required. He's confirmed that that was the relationship."
[31] Section 278 does not afford the applicant an opportunity to pursue the respondent
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for breach of contract. In Tweddell v Ehle Pty Ltd, Moynihan P considered the provisions of the then Industrial Relations Act 1990 providing for recovery of wages "due and payable to an employee, or payable on account of the employee and unpaid", with "wages" defined as "moneys payable to an employee in respect of work performed or to be performed". His Honour held:
"For wages to be due and payable they must have been earned by work
done in accordance with the contract of employment. The claim in this case is
really a claim for the loss of an opportunity to earn wages in the future, the
loss being due, on the appellant's case, to the respondent's wrongful
repudiation of the contract before performance became due; i.e. it is an action
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for breach of contract."
[32] Section 278(8)(b) permits the Commission to make an order for payment despite an express or implied provision of an agreement to the contrary. Noting this discretion, the applicant sought its exercise "in answer to the claim that any benefit to the Applicant was conditional on reaching a fee income sufficient to repay advance made."
[33] The applicant did not, however, advance any compelling reason why the discretion under s 278(8)(b) should be exercised.
[34] I am not convinced on the evidence before the Commission that a contract of employment existed between the parties. The evidence supports a conclusion that what was in the minds of the parties at the time of making the agreement was that the respondent would provide supervision of the applicant as required by the LPA until such time as he could obtain an unrestricted certificate.
[35] The applicant has not discharged the onus of establishing that wages are payable under a contract of employment. Accordingly, his application must fail.
Order
[36] The application is dismissed.
1
Exhibit 17.
2
Exhibit 3.
3
Exhibit 4.
4
(2004) 175 QGIG 444, 447.
5
(1993) 142 QGIG 397.
6
Ibid.
2