Frame and Tigne Pty Ltd (Civil Dispute)
[2012] ACAT 56
•16 August 2012
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
FRAME and TIGNE PTY LTD (Civil Dispute) [2012] ACAT 56
XD 386 of 2012
Catchwords: CIVIL DISPUTE – real estate sales person – employment arrangements: wages and commissions – the date of the Applicant ceasing to be in employment – exchange of contracts on the date of expiry of resignation notice – whether the Applicant is entitled to commission on the sale.
List of Legislation: ACT Civil and Administrative Act 2008
Magistrates Court Act 1930
Supreme Court Act 1933
List of Regulations: Court Procedures Rules 2006
ACAT Procedural Directions 2010 (No 1)
List of Texts/Papers: The Real Estate Industry Award 2010
Tribunal: Ms Elizabeth Symons, Presidential Member
Date of Orders: 16 August 2012
Date of Reasons for Decision: 16 August 2012
AUSTRALIAN CAPITAL TERRITORY ) XD386 of 2012
CIVIL & ADMINISTRATIVE TRIBUNAL )
BETWEEN:MICHAEL JOHN FRAME
Applicant
AND:
TIGNE PTY LTD
Respondent
TRIBUNAL: Ms Elizabeth Symons, Presidential Member
DATE:16 August 2012
ORDER
- The respondent is to pay the applicant the sum of $6,250 plus the filing fee of $123, plus the $12 charges and out of pocket expenses and interest from 31 August 2011 of $499.19 within 28 days.
………………………………..
Ms Elizabeth Symons
Presidential Member
REASONS FOR DECISION
Background
The Applicant, Michael John Frame, was employed by Maria Selleck Properties as a real estate sales person from 19 May 2010. The Respondent, Tigne Pty Ltd, trades under the business name of Maria Selleck Properties (MSP).
On 1 July 2011, the Applicant gave notice of his resignation to MSP “effective at the close of business Friday 8 July 2011.”
After the Applicant gave notice to MSP, MSP purported to terminate the Applicant’s employment on 1 July 2011 and paid him one week’s wages.
The parties did not have a written employment agreement until May 2011 when the Applicant, on 13 May 2011, signed his acceptance of an offer of employment set out in the Letter of Offer from MSP dated 11 May 2011.
The Applicant had negotiated the sale of 37 Cantamessa Avenue, Gungahlin (the Gungahlin property) before he gave notice of his resignation on 1 July 2011. Contracts for the sale of this property were exchanged on 8 July 2011. On or about 1 September 2011, the Applicant claimed $6,250 from MSP, being a half share of the commission of $12,500 for the sale of the Gungahlin property. MSP declined to pay the commission claimed by the Applicant ‘Because the property at 37 Cantamessa Avenue Gungahlin did not exchange prior to your (the applicant’s) departure from MSP, you are not entitled to receive payment for this property’.
The Applicant lodged a debt application for $6,250 against the Respondent on 22 March 2012. In this debt application, the Applicant also claimed the $123 fee he paid for commencing proceedings, $12 charges and out of pocket expenses and interest to be determined by the Tribunal in accordance with the Court Procedures Rules 2006.
The Respondent lodged a Response on 26 April 2012. A Conference was held on 31 May 2012. Orders were made at that conference setting the matter down for hearing on 17 July 2012 and requiring the parties to file and to give copies of any witness statements and any other material on which that party relied to the other party within a specified time frame. On 5 July 2012 the Respondent filed witness statements of Maria Selleck and Gordon Selleck and a copy of the Letter of Offer (contract of employment) between MSP and the Applicant; a copy of an email and the letter drafted by the Applicant and signed by Gordon Selleck dated 5 April 2011; a copy of ‘Mike Frame Commission Debit/Credit Progressive Record; and a copy of an email from Gordon Selleck to the Applicant dated 7 September 2011 with attached letter and spreadsheet and a copy of the Real Estate Industry Award 2010 (version as at 1 July 2011).
The Applicant filed a witness statement by Diane Frame on 6 July 2012 which was outside the time frame specified in the Orders. It was not relied upon at the hearing.
Applicant’s Contentions
The Applicant contends that:
· he was employed by the Respondent in May 2010 pursuant to an agreement, that was partly oral and partly in writing, as a commission agent;
· he received commission payments from the Respondent as part of his employment remuneration;
· he sourced the Gungahlin Property as it belonged to very good friends of his, met the buyers who had attended the house on an open day and he negotiated the sale at $625,000;
· he gave one week’s notice to the Respondent on 1 July 2011 which expired on 8 July 2011;
· contracts for the Gungahlin property exchanged on 8 July 2011; and
· consistently with the terms of his employment he was entitled to 50% of the commission payable on the Gungahlin property, after settlement on 31 August 2011.
Respondent’s Contentions
The Respondent contends that:
·the Applicant ceased to be an employee of the Respondent when his employment was terminated on 1 July 2011, after he had given notice, and he was paid one week’s pay;
·the terms and conditions of the applicant’s employment are as set out in the offer of employment dated 11 May 2011 and signed by the Applicant on 13 May 2011;
·the offer of employment accepted by the Applicant does not include payment of commission;
·the Applicant was paid incentive payments over and above his salary, not commission;
·the Applicant was not entitled to share in any commission received by the Respondent;
·contracts for the Gungahlin property exchanged on 8 July 2011 which was after the Applicant’s employment had been terminated and he had left the Respondent’s employ on 1 July 2011; and
·the Applicant is not entitled to the 50% commission he has claimed for the Gungahlin property.
The Hearing
The application was heard on 17 July 2012. The Applicant represented himself and gave evidence and was cross examined.
The Respondent authorised Mr Greg Schmidt, an Officer of the ACT & Region Chamber of Commerce and Industry, to represent it in these proceedings. Mrs Maria Selleck, Director of the Respondent, and Mr Gordon Selleck, Executive Manager of Maria Selleck Properties, gave evidence for the Respondent and were cross examined.
The Issues
The primary issue is whether the Applicant is entitled to be paid the Gungahlin property commission. This necessarily requires the Tribunal to determine the employment arrangement between the Applicant and the Respondent.
Consideration of the Issues
The Applicant worked for the Respondent as a Real Estate Agent from
19 May 2010. He was paid a base salary or fixed wage of $35,000 per annum which included a mobile phone allowance. He was also paid a motor vehicle allowance.The pay structure included an arrangement that the Applicant’s fixed wage was repaid to the Respondent from commissions earned on properties that the Applicant listed and sold. Relevantly, Document 6 in the Respondent’s Document Book entitled “Mike Frame Commission Debit/Credit Progressive Record from 3 June 2010 to 11 August 2011” and the Document entitled “Commission Breakdown for Mike Frame 19/05/10 – 01/07/11” detail how this was a carried out.
There does not appear to be a written record evidencing the nature of the employment arrangement, other than the Applicant’s pay slips and PAYG Summary and the Progressive Record referred to in the preceding paragraph, until some 11 months after the Applicant commenced employment with the Respondent.
On 5 April 2011, the Applicant emailed Maria Selleck requesting “either a copy of my contract or a letter stating how I am payed (sic) or how the commission works” as he was in the process of restructuring his finances and Suncorp required this documentation.
Mr Selleck said that on 5 April 2011 he signed a letter on MSP’s letterhead the contents of which had been drafted by the Applicant and emailed to him. This letter states:
To Whom It May Concern
Mike Frame has been employed on a full time basis by Maria Selleck Properties since 19 May 2010 as a registered salesperson, listing, selling and auctioning residential property.
The pay structure is that Mike is paid a fixed wage of $35,000 p.a. which is then repaid to the company by Mike from commissions earned on property that he lists and sells.
Mike has repaid his wages to date, as he has received commissions in excess of the amount received from the company.
The commission is determined by the % charged to the vendor between 2 & 3%, of which 50% goes directly to Maria Selleck Properties and the other 50% goes to Mike for properties that he has listed and sold.
For example – Property sold for $500,000 @ 2% commission equals 10,000 (50% to Maria Selleck Properties 50% to Mike Frame i.e. $5000 less GST less Tax.)
If you require any further clarification on the above information, please do not hesitate to contact me.
In his Witness Statement Mr Selleck stated that although he signed this letter, he was not comfortable with it and he would have worded the letter differently had the Applicant not pressed for such an urgent response. While he then states that the letter could lead a reader to reach conclusions that were somewhat different from the actual situation, he also states “Nevertheless, the draft letter was truthful, because at that time Mike was receiving the benefit of commission payments, albeit not through a formal contractual arrangement.”
It appears to the Tribunal that based on the evidence presented at the hearing, at this time, there was no formal contractual arrangement in the sense that the employment terms and conditions had not been reduced to writing and signed by both parties. As stated above, it appears that the oral arrangement was continuing, and this is what is set out in the letter signed by Mr Selleck on 5 April 2011.
On 11 May 2011, about one year after the Applicant commenced employment with the Respondent, he was provided with a Letter of Offer of employment (the Letter) as Sales Consultant with the Respondent. The Letter requested that the Applicant return a signed and dated copy of it by Friday 13 May 2011 to accept the offer of employment. The Applicant signed the Letter and dated it 13 May 2011.
The Respondent contends that the Letter is the complete statement of all employment related entitlements between the parties because clause 13 states that it constitutes the entire agreement between them. There is no reference in the Letter to the Applicant being entitled to commission on property sales. Clause 12 of the Letter deals with commission. It specifically states that any incentive based remuneration must be set out in Schedule B. There is no reference in Schedule B, or in Schedule E to which Schedule B refers, to the Applicant having any entitlement to commission payments.
The Applicant’s case is that he was always paid commission payments. It was part of his employment arrangement that he would repay the Respondent his fixed wage from these commission payments and this is what occurred in practice. Sometimes these were payments from Mrs Selleck’s own commission. He was always paid commission on the sales he had obtained as evidenced in the document headed “Mike Frame Commission Debit/Credit Progressive Record from 3 June 2010 to 11 August 2011” and in the document entitled “Commission Breakdown for Mike Frame 19/05/10 – 01/07/11”. He said the payment of commission to him continued after he signed the Letter on 13 May 2011 and, indeed, after he was paid a week’s wage and asked to leave when he tendered his resignation on 1 July 2011.
Mr Selleck confirms this in his witness statement where he states “Despite being under no obligation to do so, Maria Selleck Properties made further payments of commission to Mr Frame after his departure in respect of property sales that he had achieved or that he had made a substantial contribution to prior to ceasing employment on 1 July 2011.”
It appears to the Tribunal that the Respondent chose not to treat the Letter as the entire agreement between itself and the Applicant. While it is clear that the Letter did not provide for the Applicant to be paid commission, the fact is that between 11 May 2011 and 30 June 2011 he was paid commission on his own listings on 12 May 2011, 20 May 2011 and 17 June 2011. He was also paid a share of Mrs Selleck’s commissions on 20 June 2011 and 24 June 2011.
Mr Selleck gives the following explanation of the commission payments in his witness statement:
… Mike was given the benefit of commission payments on properties that he sold for our agency, even though he was not entitled to commission under his contract. On some occasions Mike was “gifted” up to half of Maria’s commission on property sales, even though his involvement in the sale was minimal. These commission payments were calculated on a notional basis, and Mike was given the benefit of a payment when his notional commission earnings exceeded the amount of his base earnings.
The payments of commission by Maria Selleck Properties to Mike Frame were made on a purely discretionary basis, not because of any legal obligation. Under Mike’s contract he is clearly a salaried employee, not entitled to any payment of commission. However, our agency made the payments to Mike to provide incentive to him to develop his sales skills.
The question for the Tribunal is whether the payment of commission to the Applicant was a discretionary payment as opposed to the Applicant having an entitlement to commission payments as part of his employment with the Respondent.
While it is, no doubt, true that the Respondent wanted the Applicant to develop his sales skills and now seeks to explain the payments as discretionary incentive payments designed to achieve this end, the fact is that the Respondent paid commission payments to the Applicant throughout his period of employment irrespective of the contractual arrangements in the Letter. Indeed, it was a fundamental part of the remuneration arrangement that the Applicant was required to repay his fixed wage to the Respondent from the commission payments. Further, the commission payments are shown in the Applicant’s pay slips.
Having considered all of the evidence, the Tribunal finds that neither party treated the Letter as “the entire agreement”. Payments of commission continued to be made to the Applicant after he signed the Letter and the Respondent continued to offset the commission payments against the fixed wages which the Respondent had paid to the Applicant. The employment agreement set out in the letter signed by Mr Selleck on 5 April 2011 continued and the Tribunal so finds. To the extent that it is necessary to do so, the Tribunal is also satisfied that this written document complies with clause 15 of the Real Estate Industry Award 2010.
The Gungahlin property commission
The Tribunal next considered the evidence in relation to the commission for the Gungahlin property. It is not in dispute, and the Tribunal finds, that contracts were exchanged on 8 July 2011 and the commission for this sale was $12,500.
The Applicant is claiming a 50% share of the commission for the Gungahlin property on the basis that the contracts were exchanged on 8 July 2011, which was the last day of his period of employment pursuant to his resignation tendered on 1 July 2011.
Mrs Selleck stated in her witness statement that while a number of commission payments were made to the Applicant after he ceased employment, these commission payments were for properties where the exchange of contracts occurred prior to the Applicant’s departure on 1 July 2011.
Mrs Selleck said that no commission payment has been made to the Applicant for the Gungahlin property as “exchange of contracts on this property did not occur prior to the termination of Mike’s employment...Mike’s involvement in the sale of that property was insufficient for him to be considered to have ‘earned’ any commission, even under the most favourable interpretation”.
Given the Tribunal’s finding that the employment arrangement was as set out in the letter signed by Mr Selleck on 5 April 2011, it would appear that the Applicant is entitled to his share of the Gungahlin property commission if he was an employee of the Respondent on 8 July 2011.
It is therefore necessary for the Tribunal to look at the evidence in relation to the Applicant’s ceasing to be employed by the Respondent.
When did the Applicant cease to be employed by the Respondent?
It is not in dispute, and the Tribunal finds, that the Applicant tendered his resignation to Mrs Selleck on the morning of 1 July 2011 and in that resignation he gave one week’s notice of his departure on 8 July 2011.
Mrs Selleck stated in her witness statement –
“It is usual practice in the Real Estate industry to immediately finalise a person’s employment when the employee advised their intention to resign….I advised Mike that his services were not required further and that he should prepare to leave the office that afternoon and not return.
I was greatly disappointed in this outcome given the extensive training that we had provided to Mr Frame and the significant outlay of time and money that had been expended for his benefit. Nevertheless, I decided that I would continue to honour our unwritten understanding that Mike would be gifted commission payments in respect of property sales that had progressed to a certain point prior to him leaving our company and joining a rival company. …”
The Applicant’s evidence was that after he gave his written notice of resignation to Mrs Selleck she asked him to leave the office for some time. When he returned about two and half hours later, Mrs Selleck asked him to hand over his keys and to vacate the building. The Respondent paid him his wage for the one week notice period which expired on 8 July 2011. He received the last commission payment from the Respondent on 10 August 2011.
Mrs Selleck set out in her witness statement that she was following the usual practice in the real estate industry by paying out the one week’s notice on
1 July 2011, rather than have the Applicant work out his notice. The Tribunal notes that such a situation is included in the Real Estate Industry Award 2010 (clause 17.3).However, at the hearing, it appeared to the Tribunal that Mrs Selleck was asserting that she had reason to terminate the Applicant’s employment on 1 July 2011 bringing the Respondent’s obligations to the Applicant to an immediate end.
In response to a question from the Tribunal, in relation to ‘the reason’ for summarily terminating the Applicant’s employment, Mrs Selleck said that she had grounds to immediately dismiss the Applicant after he had given his notice of resignation, because he had not complied with the business’s Key Performance Indicators. Mrs Selleck did not provide any evidence of alleged serious misconduct by the Applicant, such as theft or fraud, which might explain her belief. While it appears that there may have been some discussion about Key Performance Indicators at some time, Mrs Selleck did not provide evidence of any verbal or written warnings the Respondent had given to the Applicant in relation to his conduct, or his capacity to do the job, which could have resulted in his dismissal.
The Tribunal notes that both Mr Selleck and Mrs Selleck said in their witness statements and in their evidence, that they were very disappointed in the Applicant as they had invested in him heavily. They had taken him at his word believing that he was making a long term commitment to their business when he started working with them. They nurtured and encouraged him, expecting him to be with them “for the long haul”. They said they would not have invested the money in him if they knew it was going to flop at the end of 12 months. They were very unhappy with the outcome.
However, while the Tribunal accepts that Mr and Mrs Selleck were very unhappy, the Tribunal was not satisfied from the evidence that there were grounds for the Applicant’s immediate termination or summary dismissal which would have brought the employment relationship to an end on 1 July 2011.
Having considered all of the evidence, it appears to the Tribunal that the Respondent ‘cashed out’ the notice period in the Applicant’s resignation and paid the Applicant one week’s wage on 1 July 2011 which, as Mrs Selleck said, makes sense in the Real Estate Industry. However, the question that must then be asked is when did the employment arrangement between the applicant and the respondent end? Did it end on 1 July 2011 or did it end on 8 July 2011, being the end of the notice period?
Clause 11.2 of the Real Estate Industry Award 2010 provides that an employer may elect to pay an employee one week’s pay instead of notice when an employee gives one week’s notice to terminate employment. Clause 17 deals with matters relating to commission, bonus or incentive payments. Clause 17.2 requires an employer to account to an employee in writing for such payments when they become due and payable. The Respondent complied with this clause in relation to the commission payments for all properties other than the Gungahlin property.
Clause 17.3(a)(i) is relevant. The Tribunal is satisfied that there was a legally enforceable contract for the sale of the Gungahlin property on 8 July 2011. The Tribunal is also satisfied, after considering the evidence, that the Respondent having received the Applicant’s notice, asked him to waive the notice period and the Applicant agreed. The Tribunal finds that the commission for the sale of the Gungahlin property was paid to the Respondent (clause 17.3(a)(ii)) and has been cleared (clause 17.3(a)(iii)). Relevantly clause 17.3(b) states:
Unless the written agreement specifies otherwise, the portion of the commission referred to in clause 17.3(A) must be the same amount as that with which the employee would have been entitled to be credited if employment had continued.
This sub clause is unambiguous. Had the notice period not been waived, the Applicant’s employment would have continued to the close of business 8 July 2011 and he would, therefore, be entitled to be paid his share of the commission for the Gungahlin property as there was a legally enforceable contract before the cessation of his employment.
Conclusion
Having regard to the evidence and the submissions put to it, the Tribunal concludes that the Applicant’s employment with the Respondent ended on 8 July 2011 and he is, therefore, entitled to be paid the commission claimed of $6,250. The Respondent is required to pay the sum of $6,250 to the Applicant.
The Applicant has claimed the payment of his filing fee of $123 and the charges and out of pocket expenses of $12. Section 48 of the ACT Civil and Administrative Act 2008 (“ACAT Act”) refers to costs of proceedings subsection 48(1) provides:
48 (1) The parties to an application must bear their own costs unless this
Act otherwise provides or the tribunal otherwise orders.
Section 48(2)(a) of the ACAT Act states:
48 (2) However—
(a) if the tribunal decides an application in favour of the
applicant—the tribunal may order the other party to pay the
applicant the filing fee for the application; ....
The Applicant is entitled to the payment of his filing fee in accordance with section 48(2)(a) of the ACAT Act.
The Tribunal notes that there is no specific reference to ‘charges and out of pocket expenses’ in section 48(2) of the ACAT Act. Therefore, the Tribunal has considered the basis of this Tribunal’s jurisdiction to determine whether the Tribunal has power to order another party to pay charges and out of pocket expenses.
For a civil matter the Tribunal’s jurisdiction is said to be that of the Magistrates Court under Part 4.2 of the Magistrates Court Act 1930, and section 258 of that Act gives the Magistrates Court power to grant any relief, redress or remedy that the Supreme Court might in a similar action in that court. The Supreme Court under subsection 20(1)(a) of the Supreme Court Act1933 has all original and appellate jurisdiction necessary to do justice. Rule 1721 of the Court Procedures Rules2006 states that the costs of a proceeding are in the discretion of the Court and rule 1700 states the costs of a proceeding include costs of necessary steps prior to instituting litigation.
The Tribunal is satisfied that the charges or out of pocket expenses claimed of $12, for the ASIC company extract search of the Respondent is the cost of a necessary step prior to instituting litigation. The Tribunal has discretion to order such costs and in this matter does so in order to do justice.
The Applicant has also claimed interest under the provisions of the ACAT Procedural Directions 2010 (No 1) – Direction 31 which reads as follows:
31. Claim for interest (CPR 3740)
31.1 This direction does not apply to an application under the Common
Boundaries Act 1981.
31.2 This direction applies if interest up to the day of judgment is claimed in an application—
31.2.1 under a contractual agreement between the parties to the
proceeding; or
31.2.2 for a debt or liquidated amount.
31.3 The claim for interest—
31.3.1 must state the period or periods for which interest is claimed;
and
31.3.2 must state the amount or amounts for which interest is claimed;
and31.3.3 may state the rate or rates at which interest is claimed.
31.4 If a rate is not claimed under sub-direction 31.3.3, the rate is taken to be the rate applying, from time to time, under schedule 2, part 2.1 (Interest up to judgment) of the Court Procedures Rules 2006.
The Applicant has claimed interest from 8 July 2011. The Tribunal notes that the Applicant always knew that he would not be entitled to receive the commission until the sale of the Gungahlin property had occurred and the Tribunal finds accordingly. The sale occurred on 31 August 2011. This is the earliest date from which the Applicant would become entitled to the commission on this property. The Tribunal is satisfied that the Applicant is entitled to interest calculated in accordance with the Court Procedures Rules 2006 from 31 August 2011 to date of $499.19.
Consequently the Tribunal will make orders pursuant to section 61 of the ACAT Act that the Respondent pay to the Applicant, within 28 days, $6,250 plus fee of $125 plus $12 charges and interest of $499.19 in accordance with the reasons given in the preceding paragraphs.
………………………………..
Ms E. Symons
Presidential Member
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A
FILE NUMBER: | XD 12/386 |
PARTIES, APPLICANT: | MICHAEL JOHN FRAME |
PARTIES, RESPONDENT: | TIGNE PTY LTD |
COUNSEL APPEARING, APPLICANT | |
COUNSEL APPEARING, RESPONDENT | |
SOLICITORS FOR APPLICANT | |
SOLICITORS FOR RESPONDENT | |
TRIBUNAL MEMBERS: | Ms E. Symons |
DATES OF HEARING: | 17 July 2012 |
PLACE OF HEARING: | ACAT Canberra |
PART B
RECOMMENDATION:
FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )
COMMENTS:
0
0