Glenn Readman. v Workcare Management Pty Limited
[2012] FWA 4866
•17 JULY 2012
[2012] FWA 4866 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Jason Boyd;
Jarrett Hadid;
Glenn Readman.
v
Workcare Management Pty Limited
(U2011/13716)
(U2011/13717)
(U2011/13719)
SENIOR DEPUTY PRESIDENT HAMBERGER | SYDNEY, 17 JULY 2012 |
Application to add respondent in unfair dismissal case; identity of the employer.
[1] On 17 November 2011, the Health Services Union East Branch (HSU) filed applications for unfair dismissal remedies on behalf of Mr Jason Boyd, Mr Jarrett Hadid and Mr Glen Readman (the applicants). The respondent named in the applications was WorkCare Management Pty Limited (WorkCare Management). Following an unsuccessful conciliation conference on 22 December 2011, the applications were listed for arbitration to take place in March 2012. An outline of submissions was filed on behalf of the applicants together with witness statements. However on 20 March 2012 the HSU made an application to alter the respondent to the three unfair dismissal applications from WorkCare Management to Mr Kevin Zammitt. One of the grounds identified at the time for this alteration was that WorkCare Management had been ordered to be wound up and a liquidator had been appointed on or about 1 March 2012. The application to alter the name of the respondent was referred to me and hearings were conducted on 8 and 15 June 2012. The three applicants were represented by Mr William Ash of the HSU. Mr Zammitt represented himself. At the commencement of the hearing it was agreed that the issue before me was in effect who ‘the real employer’ of the applicants was, and the hearing was conducted on that basis 1.
[2] Establishing the identity of the applicants’ employer at the time of their (alleged) termination is a matter to be determined on the facts, in accordance with the relevant legal principles. To say that Mr Zammitt was the applicants’ real employer would be to say that there was a contract of employment between him and each of the applicants. For there to have been such a contract, inter alia, there would have had to have been an intention between the parties to create a legally binding relationship, an offer by one party and its acceptance by the other, the provision of some form of ‘consideration’ by both parties, The parties must also have genuinely consented to the terms of the contract. 2
[3] The application of these principles was considered in the case of Damevski v Giudice. 3
[4] Marshall J referred [at 77 and 78] to the English case of Franks v Reuters Limited and First Resort Employment Ltd 4
‘In the leading judgment, Lord Mummary, referring to the House of Lords decision in Carmichael v National Power Plc [1999] UKHL 47; [1999] 1 WLR 2042, drew attention to the need to look “beyond and beneath the documents” and not reach a decision concerning the existence of an employment contract on the basis of construing the correspondence....
Lord Mummary said that even where the work relations are documented, it was necessary to examine not only the correspondence, but also the circumstances surrounding it, the subsequent conduct of the parties, and the way in which the parties operated and understood the situation.’
[5] Marshall J emphasised the need to ‘examine the entire factual matrix to establish what legal relationship, if any, actually existed.’ He said [at 84] ‘The agreement between [two parties] can be evinced by their conduct’.
‘There is no reason to treat an employment relationship any differently. The agreement between the two can be evinced by their conduct. In Anson’s Law of Contract,28th ed, (J Beatson), (2002) Oxford, Oxford University Press, it is pointed out at p.30 that:
“An agreement may be inferred from conduct alone; the intention of the parties is a matter of inference from their conduct, and the inference is more or less easily drawn according to the circumstances of the case.” (footnote omitted)
85 In Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, conduct of the parties was held to be determinative in establishing acceptance and intention in relation to formation of contract. After pointing out that pre-contractual conduct is only admissible on questions of construction where the contract is ambiguous, Heydon JA said at 163 and 164:
“The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1907] HCA 79; (1908) 5 CLR 647 at 668, 669, 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9,147 at 9,149, 9,194-9,156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9,251 at 9,255.”
86 In providing his exposition of the case law relating to formation of contract, Heydon JA said at 177:
“But limited recognition has been given to the possibility of finding contracts exist even though it is not easy to locate an offer or acceptance. In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117 - 11,118, McHugh JA (Hope JA and Mahoney JA concurring) said:
“It is often difficult to fit a commercial arrangement into the common lawyers’ analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of `offer’, `acceptance’, `consideration’ and `intention to create a legal relationship’ which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship...
Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may be reason of the parties’ subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.”
Those passages were cited with approval by Ormiston J in Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 at 82-83.”
87 Heydon JA also said that:
“One further observation of McHugh JA in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (at 11,117) is relevant:
“...it is an error `to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed’....Nevertheless, 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... .”
See also, to the same effect, Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601 at 611 (affirmed on appeal (at 615)).”
88 Mason P supported the observations of Heydon JA, saying at 155 in Brambles:
“As Heydon JA demonstrates, this case shows the difficulties of pressing too far classical theory of contract formation based on offer and acceptance (see also Pobjie Agencies v Vinidex Tubemakers (2000) Aust Contract Reports 90-112 (91,217)).”
... 93 Anson’s Law of Contract, 28th ed. at p.31, discusses the test applied to intention for the purpose of establishing an agreement:
“In common with most European legal systems, the test of a person’s intention is not a subjective, but an objective one; that is to say, the intention which the law will attribute to a person is always that which that person’s conduct bears when reasonably construed by a person in the position of the offeree, and not necessarily that which was present in the offeror’s own mind.
...
Although the approach is objective, it is not purely objective in the sense that the intentions of the parties are entirely irrelevant so that a contract may be formed which is in accordance with the intention of neither party. It has been stated that `the judicial task is not to discover the actual intentions of each party; it is to decide what each was reasonably entitled to conclude from the attitude of the other.”
94 Anson’s Law of Contract also refers to the test of intention in relation to the creation of legal relations at p. 71:
“The test of an intention to effect legal relations is an objective one. It may be that the promisor never anticipated that the promise would give rise to any legal obligation, but if a reasonable person would consider there was an intention so to contract, then the promisor will be bound.”
95 It is an accepted principle of contract law that although a person’s apparent intention will generally represent their real intention, an objective approach should be taken in establishing intention: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd; Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] EWCA Civ 13; [1990] 3 All ER 25 and Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 176 per Brooking J and 176 per Tadgell J.
96 Endoxos may have set about making arrangements for the provision of labour through a third party, but ultimately it acted in a way that showed that it in fact intended to create legal relations. The evidence indicates that Endoxos wanted to maintain control of Mr Damevski, expected him to use their equipment and clothing emblazoned with Endoxos livery and, ultimately, wanted to be able to dismiss Mr Damevski.
97 In Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd, Mahoney JA said at 330:
“It is generally accepted that, in determining whether what the parties have done results in a binding contract, their intention is significant. And there is reference in the cases and the textbooks to the question whether, for there to be a binding contract, it is necessary that the parties have an actual or subjective intention to contract: see, eg, the cases referred to by McLelland J in Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251; see generally, Halsbury’s Laws of England, 4th ed, vol 9, par 300 at 175. But questions in that form are, I think, apt to mislead: it is, in my opinion of more assistance to ask whether actual or subjective intention to contract plays a part in determining whether there is a binding contract, and (if it does) what part it plays.
The proper view is, in my opinion, that the existence of a contract is a consequence which the law imposes upon, or sees as a result of, what the parties have said and done. Actual subjective intention to contract is a factor which the law takes into account in determining whether a contract exists but it is not, or not always, the determining factor.”
The Evidence
[6] Mr Zammit’s evidence was slightly confused. However this can largely be attributed to the fact that he was representing himself without legal assistance. I am satisfied that prior to 2008 there was a business known as WorkCare Medical Pty Ltd (WorkCare Medical). In 2008 a new entity, WorkCare Management, was set up which acquired the business of WorkCare Medical on 1 September 2008. WorkCare Medical was subsequently wound up. 5 The entitlements of the employees were transferred to WorkCare Management. There was no evidence that there was anything improper about the way that employees moved from WorkCare Medical to WorkCare Management. Mr Zammitt became a director of WorkCare Medical in September 2008. He also became a director of WorkCare Management in August 2008. In his evidence he was engaged ‘to assist with the acquisition’6.
[7] Prior to the GFC in 2008 the business had between 50 and 70 employees 7. There were six separate divisions. The business was an integrated clinical and allied health service, which provided a private ambulance service (the Emergency Medical Response team: EMR) which is where the applicants were employed8. Injured workers would be picked up from their workplace and would be taken ‘right through the journey’ up to returning to pre-injury duties9.
[8] There was a specific organisational structure in which managers had key responsibilities. The two most senior managers were Mr Zammitt as the Managing Director and Dr David Mann. There was also a Financial Controller, and divisional managers 10.
[9] WorkCare Management had several shareholders. Some of the shareholders participated on a daily basis within the business. 11 Mr Zammitt was not a shareholder, nor was he a beneficiary of any of the trusts that held shares in the company. He performed his managerial role in relation to both organisations as a consultant (rather than an employee) through Daketra Pty Ltd, his own consulting company.12 Daketra was a shareholder in WorkCare.13
[10] According to Mr Zammitt, between 2008 and November 2011 WorkCare Management suffered a large drop in revenue. The company was restructured and an unsuccessful attempt was made to sell it 14. After the company failed to make a payment under a fixed and floating charge a receiver and manager was appointed on 27 February 2012. The operating assets of the business were seized leaving WorkCare Management unable to meet its obligations, including in relation to taxation. The ATO then successfully applied to the Federal Court for WorkCare Management to be wound up.15
[11] In early November 2011 the applicants had a meeting with Mr Zammitt. The applicants had stopped working over a dispute about unpaid wages. The meeting became very heated. Mr Zammitt conceded during the hearing that some weeks pay was owing together with a substantial amount of superannuation. 16 His evidence was that while the company was in financial distress and had been paying the applicants late the company had been making arrangements to address the employees’ concerns.17 Payments were made out of the general cash flow of the business.18 Both Mr Zammitt and Mr Mann lent the organisation a substantial amount of money to try and support the business while they negotiated a sale on behalf of the shareholders. He never received any dividends from the company19. Payments to the employees were made by the financial controller. Cash that was owed to the business came into the company account, and the instructions from the Board and Mr Zammitt to the financial controller was that the pays had to be paid as a priority. According to Mr Zammitt, wages would be paid on presentation of timesheets to whatever manager was responsible for the payroll. The managers would sign the timesheets off in accordance with their budget or their rosters to confirm the work had been done. These timesheets would go to the payroll officer who would then prepare the pays and the financial controller would transfer the funds appropriately.20 The accounts belonged to WorkCare Management.21 Occasionally employees would be paid in cash, though this was always from the company’s account, not Mr Zammit’s.22
[12] Mr Boyd gave evidence about his experience in employing prospective employees. Mr Zammitt would give permission for someone to be employed; an advertisement would be placed; and a selection panel would be set up. He and, his manager, Mr Rooney would establish the selection criteria, interview prospective employees, produce a short list and then provide the names to Mr Zammitt. The latter would make the final decision about whether to offer a job to the applicant. 23 I asked Mr Boyd:
‘--- When you interviewed people, who were they applying for a job with?’ Mr Boyd replied:
‘--- With WorkCare Medical.’ 24
[13] Mr Boyd gave evidence that if he had problems with his pay he would see Mr Zammitt about it. 25 Mr Zammitt also had the final say in relation to rosters and leave.26
[14] Mr Boyd himself signed a written offer of employment as a casual with WorkCare Medical Pty Ltd on 5 June 2006 27. On that day he also signed a document entitled ‘Confidentiality Agreement’ between himself and Pty Ltd28. The tax file number declaration he filled out subsequently gave the name of his employer as WorkCare Medical Pty Ltd.29 Later that month he was offered (and accepted) $33,500 plus superannuation as full time staff member by Mr Alan Becken, Business Operations Manager of WorkCare Medical30. In February 2007 Mr Becken wrote to Mr Boyd advising him that he would act as ‘2IC’ while Mr Geoff Rennie was away.31 Mr Boyd regularly signed employee time sheets which included the statement ‘this is a true and accurate reflection of the time and the employee has spent for WorkCare Medical’.32 When Mr Zammitt during cross examination asked Mr Boyd whether WorkCare Medical Pty Ltd was his employer he responded “that would be correct.”33 When asked who he was being paid by he likewise responded “WorkCare Medical”. He did not think it was Mr Zammitt who was paying out of his own personal pocket. Rather, Mr Zammitt authorised his payment as his boss.34
[15] Mr Hadid’s leave records indicated that he commenced employment with WorkCare Management on 4 June 2009. He confirmed that he was first interviewed for the job by Mr Rooney and two other employees. He was then offered the position by Mr Zammitt at a second interview. He agreed during cross examination that directions given to him on a daily basis generally came from the ‘chain of command’ - not Mr Zammitt personally. 35 Mr Readman signed an ‘Employment Agreement’ with WorkCare Medical on 14 December 2007 setting out his terms and conditions of employment.
Submissions on behalf of the applicants
[16] Mr Ash submitted that Mr Zammitt should be listed as respondent if the tribunal was satisfied that it was strongly arguable that he was the real employer. This was a case where the corporate veil should be pierced. In particular Mr Ash submitted that this was a case where the company was merely acting as the agent of an individual. Such a finding could be made based on an investigation of all aspects of the relationship between the parties. In the circumstances of this case, the evidence was that Mr Zammitt was in control of the day to day employment of the applicants. Mr Ash submitted that a contract had formed between the applicants and Mr Zammitt, who was the employer through an agency arrangement. He referred to Wrzosek v Rainbow Nominees 36 where the Commissioner considered whether the receiver should be joined as respondent to the proceedings. She emphasised the need to examine ‘the reality of the working relationship rather examining merely the legal constructs and labels applied to the relationship.’
Consideration
[17] I am not satisfied that Mr Zammitt was the applicants’ real employer at the time their employment terminated - rather they were employed by WorkCare Management. Much of the evidence presented by Mr Ash went to show that Mr Zammitt was closely involved in the day to day management of the business - but that is hardly remarkable - after all, he was the Managing Director.
[18] All the written documentation supported the proposition that the applicants were originally employed by WorkCare Medical, and then transferred to WorkCare Management. There was no evidence to suggest that that transfer occurred in an improper way, for example to avoid meeting obligations in relation to employee entitlements. It is clear from the case law that one cannot simply rely on written documentation - a contractual relationship can also be inferred from conduct. However I am not persuaded that the conduct of any of the parties evinced an intention to form a contractual relationship directly between the applicants and Mr Zammitt. For example, the applicants were always paid by the company - not by Mr Zammitt personally. I am not relying merely on the subjective intentions of the parties, but also on what a reasonable person could conclude from their conduct.
[19] The application to name Mr Zammitt as the respondent in relation to the three unfair dismissal applications is dismissed.
SENIOR DEPUTY PRESIDENT
Appearances:
W Ash, on behalf of the applicants
K Zammitt, on his own behalf
Hearing details:
SYDNEY
2012
8, 15 June
1 PN74 - 75
2 Macken, J, O’Grady, P, and Sappideen, C (1997) The Law of Employment, 4th edition
3 Damevski v Giudice [2003] FCAFC 252 (13 November 2003), Wilcox, Marshall and Merkel JJ
4 Franks v Reuters Limited and First Resort Employment Ltd [2003] EWCA Civ 417 (unreported, Supreme Court of Judicature Court of Appeal (Civil Division), President Lord Justice Thorpe and Lord Justice Mummery, 10 April 2003
5 PN351
6 PN236
7 PN127, 152
8 PN138
9 PN140
10 PN137, 142
11 PN585
12 PN128-150, 157, 251-2
13 Exhibit HSU1
14 PN393-6
15 PN255-261
16 PN278
17 PN279-282
18 PN284
19 PN308
20 PN287-8
21 PN292
22 PN315-7
23 PN615
24 PN618
25 PN631
26 PN633
27 Exhibit Z1, attachment B3
28 Ibid attachment B4
29 ibid attachment B5
30 Ibid, attachments B1 and B2.
31 Ibid, attachment B8
32 Ibid attachment B9
33 PN725
34 PN749
35 PN946
36 Krystyna Wrzosek v Rainbow Nominees Pty Ltd t/a The Bernley Private Hotel [2006] NSWIRComm 1155
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