Goulding v Simonds Homes Victoria Pty Ltd (No 2)
[2021] FCCA 1499
•2 July 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Goulding v Simonds Homes Victoria Pty Ltd (No 2) [2021] FCCA 1499
File number(s): MLG 1941 of 2018 Judgment of: JUDGE MCNAB Date of judgment: 2 July 2021 Catchwords: INDUSTRIAL LAW – Fair Work Act 2009 (Cth) – whether the applicant was an employee of the respondent – applicant found to be a contractor – tripartite arrangement – application dismissed. Legislation: Fair Work Act 2009 (Cth) ss 40, 44, 90, 117, 119, 323, 545, 546, 547.
Workplace Relations Act 1996 (Cth).
Cases cited: Barro Group Pty Ltd v Fraser [1985] VR 577
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122
Eastern Van Services Pty Ltd v Victorian WorkCover Authority [2020] 296 IR 391
Goulding v Simonds Homes Victoria Pty Ltd [2020] FCCA 2457
Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119
Number of paragraphs: 119 Date of last submission/s: 22 February 2021 Date of hearing: 22 – 24 February 2021 Place: Melbourne Counsel for the Applicant: Dr M Wolff Solicitor for the Applicant: Adams Maguire Sier Counsel for the Respondent: Mr N Harrington Solicitor for the Respondent: Minter Ellison ORDERS
MLG 1941 of 2018 BETWEEN: JOHN GOULDING
Applicant
AND: SIMONDS HOMES VICTORIA PTY LTD
Respondent
ORDER MADE BY:
JUDGE MCNAB
DATE OF ORDER:
2 JULY 2021
THE COURT ORDERS THAT:
1.The application filed on 5 July 2018, and amended on 18 March 2019, be dismissed.
2.Any application by the Respondent for costs be filed within 14 days of the date of these orders and be supported by submissions limited to two (2) A4 pages.
3.Any submissions in response to any application for costs be filed within 28 days of the date of these orders and be limited to two (2) A4 pages.
4.The questions of costs be determined on the papers.
5.These reasons for Judgment, and the transcript of the Applicant’s oral evidence given during the hearing on 22 February 2021, be referred to the Attorney-General’s Department (Cth).
REASONS FOR JUDGMENT
Judge McNab:
INTRODUCTION
This matter originated by way of an application and statement of claim filed on 5 July 2018 and amended on 18 March 2019. By that amended statement of claim (“the ASOC”) the Applicant claims that the Respondent:
(1)breached the Applicant’s employment contract; and
(2)breached the Fair Work Act 2009 (Cth) (“the FW Act”) by:
(a)failing to pay the Applicant in accordance with the remuneration term under the said contract, pursuant to s323(1);
(b)failing to provide four weeks’ written notice of termination, or pay in lieu thereof, pursuant to s117;
(c)failing to pay the Applicant eight weeks’ redundancy pay pursuant to s119; and
(d)failing to pay to the Applicant accrued untaken leave upon termination his employment, pursuant to s90(2) and s44.
The matter came before the Court for final hearing on 22 February 2021, and was heard across three days. Judgment was reserved at the conclusion of the final hearing.
For the reasons that follow, I find that at all times the Applicant was the proponent of the commercial arrangements between himself, and/or corporate entities associated with him and the Respondent, whereby he provided services to the Respondent as a contractor. He was never an employee of the Respondent. It is also notable that whilst the Applicant claims the contractual arrangements were imposed upon him by the Respondent, he subsequently entered into very similar arrangements with an unrelated third party (Rubicon Corporation) after the termination of the contractual arrangements which are the subject of these proceedings.
A central feature of the arrangements in this matter is that the corporate entities, as nominated by the Applicant, were the contracting party who rendered invoices to the Respondent (with GST included) and the evidence shows that neither the corporate entities, nor the Applicant, remitted GST to the Australian Tax Office. It appears that neither the corporate entities or the Applicant have paid tax on the revenue received from the Respondent, and the Applicant has not paid income tax for a significant period of time, certainly from April 2006 to August 2012. This is notwithstanding that the Applicant was using funds received from the Respondent into accounts held by the corporate entities for personal expenditure, and was receiving the benefit of payments of $300,000 per annum, plus other benefits, as at August 2012.
BACKGROUND
This matter’s progress before the Court is helpfully summarised in the interim decision of his Honour Judge Riethmuller delivered on 2 September 2020: see Goulding v Simonds Homes Victoria Pty Ltd [2020] FCCA 2457 (“the interlocutory decision”). These reasons should be read in conjunction with those reasons, to the extent that Judge Riethmuller’s decision informs this Judgment. Judge Reithmuller’s decision was concerned with the question of whether the originating application was statute barred in circumstances where the Applicant’s engagement with the Respondent, whether as an employee or as a contractor, was terminated on 20 August 2012 and the application was filed on 5 July 2018.
As set out in the interlocutory decision at [10] – [11], and as set out below, during the course of the period in which the Applicant was engaged by the Respondent, the Applicant alleges that he was employed directly by the Respondent, and therefore the Respondent was subject to the provisions of the Workplace Relations Act 1996 (Cth), and subsequently the FW Act when it came into effect. On that basis, the Applicant claims that he is entitled to:
(1)accrued annual leave upon termination of his employment (which he calculates at 49.7 days);
(2)Damages consequent upon termination of his employment of around $300,000 for unpaid wages; as well as a motor vehicle allowance and amounts under a profit share clause; or alternatively
(3)damages and compensation for breaches of the FW Act with respect to the minimum period of notice of termination and redundancy pay.
The Respondent claims that it never employed the Applicant. Instead, the Respondent claims that the Applicant was initially employed by Tomanic Pty Ltd (“Tomanic”), a corporate entity associated with the Applicant, and that from July 2007, the Applicant was employed by Jingo Pty Ltd (“Jingo”), a different corporate entity associated with the Applicant. The Respondent claims that they instead engaged Tomanic, and later Jingo, to provide services including the provision of personnel to undertake the required work. The Respondent claims that it never paid the Applicant directly, as invoices were rendered by Tomanic and Jingo to the Respondent, and subsequently the amounts owed were paid to those entities (including GST), for the Applicant’s services.
The Respondent maintains that these arrangements were put in place at the Applicant’s request as the Applicant “did not wish to be directly employed by Simonds Personnel due to the breakdown of his domestic relationship”. The Applicant denies this claim.
Procedural Background
Much of the procedural background of this matter is set out in the interlocutory decision at [2] – [6]. The application was originally filed on 5 July 2018 and amended on 18 March 2019. Orders were made on 6 August 2018 for, amongst other things, a mediation with a Registrar of the Court. The parties were unable to resolve the dispute at mediation.
The matter was set down for final hearing on 14 April 2020.
On 3 April 2020, the matter came before Judge Riethmuller with respect to proposed amendments to the pleadings sought by the Applicant. His Honour state states at [6] of the interlocutory decision that “by this point it was apparent that there would be significant issues at trial concerning the credibility of various witnesses with respect to events that occurred many years ago.” Due to COVID-19 restrictions, the final hearing was adjourned to a date to be advised. The final hearing date on 14 April 2020 was maintained to deal with interlocutory issues.
On 14 April 2020, the matter came before Judge Riethmuller in relation to interlocutory issues, including, amongst other things, whether:
(1)Jingo should be permitted to join the proceedings to pursue a contractual claim against the Respondent;
(2)the Applicant should be permitted to further amend his statement of claim to make a claim for monies allegedly due pursuant to a ‘profit share’ clause in the relevant contract in the years prior to the final year of his engagement with the Respondent;
(3)the Applicant should be permitted to amend the pleadings to make a claim for ‘retrenchment’; and
(4)the Applicant should be permitted to make a claim for ‘exemplary damages’.
Judge Riethmuller ultimately made orders dismissing the application to join Jingo to the proceeding and dismissed the Applicant’s application to further amend the statement of claim. His Honour also listed the matter for the final hearing on 22 February 2021.
The Applicant’s Qualifications and Relevant Employment Experience
The Applicant gives evidence that he has extensive qualifications and experience in finance and commercial business, prior to working with the Respondent. The Applicant asserts that he holds the following relevant qualifications:
(1)a Bachelor of Business (Accounting) from the Phillip Institute of Technology (now RMIT) completed in November 1989;
(2)a Graduate Diploma in Manufacturing Management from RMIT completed in December 1992;
(3)he became a Fellow of the Institute of Public Accountants on 24 February 2005;
(4)he completed the RG146 minimum requirements for advising on Superannuation and Managed Investments with Gryphon Learning on 9 March 2006;
(5)a Certificate IV in Property (Real Estate Agency Practice) from Swinburne University of Technology completed in 2006;
(6)he became an accredited Mortgage Consultant and a full member of the Mortgage & Financial Association of Australia on 31 March 2008;
(7)he became a Certified Licenced Real Estate Agent on 27 May 2008; and
(8)he received a Masters of Commerce and a Masters of Business Administration from Deakin University on 11 November 2010.
The Applicant also has the following employment history in the commercial and financial sector:
(1)from December 1982 to May 1986, working as a Banking Officer for the Commonwealth Bank;
(2)from 1986 to July 1989, working as a Chief Accountant for a BHP subsidiary called Brownbuilt;
(3)from July 1989 to July 1991, working as a Management Accountant for Hilton Hosiery;
(4)from July 1991 to September 1992, working as a Financial Controller for SICPA Australia;
(5)from September 1992 to October 1997, working in various roles including Commercial Manager, Production Operations Manager and National Sales and Marketing Manager for a division of Amcor Limited called Containers Packaging;
(6)from October 1997 to January 1999, working as General Manager for Hills Industries;
(7)from February 1999 to November 2000, working as Commercial Manager and Financial Manager for Nylex Limited;
(8)from November 2000 to June 2002, working as General Manager of Ozito Industries;
(9)from July 2002 to May 2005, working as General Manager of the Gillion Group of Companies; and
(10)from May 2005 to March 2006, working as the Principal of Tomanic, providing project management and consultancy on various property developments, and as a Building Contractor.
The listing of the Applicant’s evidence regarding his qualifications and experience is relevant to the question of the Applicant’s understanding of the commercial arrangements in this matter.
The Applicant’s Claims
In or around April 2006, a subsidiary of the Respondent, Simonds Personnel P/L (“Simonds Personnnel”) (who is not a party to these proceedings) entered into a written agreement with Tomanic, for the provision of services. The written agreement was signed by the Applicant in his capacity as Principal of Tomanic and by a representative of Simonds Personnel. While not directly relevant to these proceedings, pursuant to the written agreement between the parties (see Applicant’s affidavit filed on 22 January 2020, annexure JWG-14), Tomanic was engaged under the following relevant terms:
WHEREAS:
A. [Simonds Personnel] wishes to make use of the ability of [Tomanic’s] services for the cost planning and estimates.
B. [Tomanic] is able to provide the services to [Simonds Personnel].
C. The parties have agreed on the terms and conditions of this agreement as are hereinafter set forth.
NOW THIS AGREEMENT WITNESSETH as follows
NATURE OF SERVICE:
1. (a) [Simonds Personnnel] shall engage [Tomanic] to provide the Client with project cost planning and estimating services (the Services) together with such other services described herein and as from time to time may be required by [Simonds Personnnel] and agreed upon by [Tomanic];
(b) [Tomanic] shall advise [Simonds Personnnel] of the names and contract details of all employees it proposes to use to provide the Services for [Simonds Personnel] and provide [Simonds Personnel] with such additional information as may be required.
…
In its Defence filed on 30 April 2021, the Respondent claims at [4(b)] that the Applicant requested in March or April 2006 that Tomanic be engaged by Simonds Personnel to provide service to it, as the Applicant did not wish to be directly employed by Simonds Personnel due to the breakdown of his domestic relationship. At [24] of his affidavit filed on 22 January 2020, the Applicant denies having such an intention or making such a representation to any representative for the Respondent. The Applicant states at [178] of his affidavit filed on 16 March 2020 that :
178. I never sought to be “officially” classified as an employee because I thought I was for all practical purposes a manager and an employee, irrespective of the payment arrangements which I frankly considered a secretarial matter.
Tomanic was de-registered on 13 April 2007 and on 17 August 2007, Jingo was set up with the Applicant’s partner, Ms Lupieri, as Director and sole shareholder. The Applicant held no office or equity in Jingo.
From March 2008 onwards, by way of a series of commercial agreements between Jingo and the Respondent, the Applicant provided his services to the Respondent until the last agreement was terminated by the Respondent on 20 August 2012.
The evidence shows that, during the period Jingo was engaged by the Respondent, Jingo would render invoices to the Respondent in respect of the services provided by the Applicant and the Respondent would then pay the gross sum owed on those invoices to Jingo. Jingo was a corporate trustee to the Jingo Investments Trusts, which was also established by the Applicant and Ms Lupieri with them as the beneficiaries to the trust. The amounts paid by the Respondent to Jingo in respect of the invoices would be paid into the Jingo Trust, and would then be dispersed to the beneficiaries of the trust, being the Applicant and Ms Lupieri, at their discretion and direction.
March 2008 – Regional Manager for the North Region
In early 2008, the Applicant says he became aware of the availability of a new role as ‘Regional Manager – North Region’ with the Respondent business. The Applicant says that on or about 1 February 2008 he spoke to Mr Paul McMahon, then CEO of the Respondent business, about the role. The Applicant emailed Mr McMahon on the same day setting out his understanding of the discussion held between him and Mr McMahon in relation to the position of Regional Manager: see Applicant’s affidavit filed 23 January 2020, annexure JWG-21. That email contains the following relevant passage:
Paul,
per previous discussions and just to clarify package as discussed
Base $180,000
Plus GST
4 weeks paid leave
…
Payment by way of approved invoice monthly at end of month paid on the 15th of each month, monthly in arrears per service agreement with Jingo Investments Pty Ltd ATF Jingo Investments Ply. Ltd. Service agreement with above amendments per current agreement with MHA.
By way of the ASOC, the Applicant claims that, from on or about 3 March 2008, he was employed by the Respondent business in this position, pursuant to a contract of employment. To the extent that the contract was in writing, the contract was constituted by a written contract dated 4 April 2008, which sets out that the relevant parties to the contract were the Respondent business and Jingo. The document was signed by Ms Luperi, as Director of Jingo, and a representative of the Respondent. The written contract provides the following relevant terms:
NATURE OF SERVICE:
1. (a) [the Respondent] shall engage [Jingo] to provide the client with Regional Manager North Region together with such other services described herein and as from time to time may be required by [ the Respondent] or client and agreed upon by [Jingo];·
(b) [Jingo] shall advise the Company of the names and contract details of all employees it proposes to use to provide the Regional Manager- North Region for the client and provide the [Respondent] with such additional information as may be required.
…
DUTIES AND DIRECTIONS
4. [Jingo] shall provide suitable employees to perform the services requested of it by [the Respondent] or Client and shall perform, observe and conform to all the reasonable instructions and directions which shall from time to time be given to it by [the Respondent] or Client and shall in all things act with the authority and in conformity with the policy and direction of [the Respondent] and Client from time to time conveyed to it by [the Respondent] PROVIDED HOWEVER that [Jingo] shall be free to exercise its own independent judgement as to the manner in which the services are performed and the employees it engages.
The Applicant says that the contract was also partly oral, and was to be construed by the discussions between him and Mr McMahon, which occurred on various occasions between about February and March 2008, including the email sent by the Applicant to Mr McMahon, as set out above.
The Respondent denies the Applicant’s claim that he was employed directly by the Respondent, and says the Applicant was employed by Jingo and that, under the terms of the agreement set out above, Jingo was engaged to provide services to the Respondent business, including the provision of personnel to fulfil its obligations under the terms of the agreement. In effect, the Respondent denies that the Applicant was a party to the agreement, and instead that Jingo was engaged to provide suitable employees, which was ultimately the Applicant, to perform certain services.
The Applicant denies he was an employee of Jingo and says at [150] – [151] of his affidavit filed on 16 March 2020 that:
150. In the period from April 2008 to August 2008, there was no contractual relationship between me and Jingo Pty Ltd ("Jingo") save that the director of Jingo (who is also my wife) had permitted me to use its bank account to receive payments from Simonds Homes, which bank account was our joint account and which we used to cover our living expenses.
151. I do not, and never have had, a contract with Jingo.
I note that [150] of the Applicant’s affidavit makes reference to ‘April 2008 to August 2008’, but that the following paragraphs in the affidavit instead state ‘April 2008 to August 2012’.
On the basis of the agreement between Jingo and the Respondent, as set out in part above, from on or around 3 March 2008 until 1 March 2010, the Applicant worked in the role of Regional Manager for the North Region. The Applicant’s role included, amongst other things, him being responsible for customer service, drafting, cost estimation, and obtaining permits and staff for the North Region. He also provided ‘technical support’ for the overall regional business as well managing client engagement. It is claimed that the Applicant had responsibility for approximately 30 to 40 employees of the Respondent.
During the period of the Applicant’s engagement with the Respondent under this agreement, Jingo rendered invoices (inclusive of GST) to the Respondent on a monthly basis. The Respondent would pay the gross sum on the invoice to Jingo.
June 2009 – Regional Manager for the North Region
The Applicant claims that his engagement under the first agreement concluded on 31 December 2008, and no formal written agreement was reached with any representative for the Respondent to renew the agreement. On that basis, the Applicant claims that, from on or about 1 January 2009 to on or about 28 February 2010, he continued in his role as Regional Manager for the North Region. By way of the ASOC, the Applicant alleges that, during this period, he was employed pursuant to a contact of employment. The Applicant claims the contract was constituted by conversations between him and Mr McMahon in or about October to December 2008.
The evidence is that, during this period, Jingo continued to render invoices to the Respondent on a monthly basis, and the Respondent paid the gross sum of the amount claimed in the invoice to Jingo. I find that this is the case.
The Respondent denies the Applicant’s claim, and says that the written contract between it and Jingo, as set out above, continued without ceasing to until as late as July 2011 by mutual agreement between the parties to the agreement.
The Applicant goes on to claims that, in or around June 2009, the terms of the alleged employment contract were varied in writing, by way of discussions with Mr McMahon and was to be partly implied by law.
The Applicant says that he spoke to McMahon about an increase in remuneration and an entitlement to a profit share in the Respondent business. The Applicant then says that Mr McMahon told him that his annual salary would increase by $20,000 to $200,000 per annum, and that he should render invoices to the Respondent on the basis of that amount commencing on 1 July 2009. The Applicant received a letter from Mr Michael Gerolemou, General Manager of Human Resources for the Respondent, which referred to the increase in the Applicant’s remuneration but did not provide for any entitlement to a profit share in the Respondent business: see Applicant affidavit, annexure JWG-26. That letter relevantly states as follows:
Dear John,
I would like to take this opportunity to personally thank you for your ongoing effort and loyalty over the past 12 months. Your contribution has helped the success of the Simonds Group, and I look forward to your continued support in the future .
In recognition of your performance, I am pleased to confirm the approval of an increase to your contract agreement as follows:
Effective 01 July 2009
Contract increase of $20,000 pa to $200,000 pa
In a subsequent letter to the Applicant on 14 July 2009, Mc McMahon included the same terms as set out in Mr Gerolmeu’s letter, but included an additional paragraph as follows:
Furthermore, you are entitled to a 2% of annual net profit (bonus) based on North meeting a minimum budget net profit as prepared by Scot Mahoney (Chief Financial Officer).
The Applicant alleges that there was no further documentation giving effect to the increase in his remuneration or his entitlement to a profit share in the Respondent business.
The Respondent again denies that the Applicant was employed directly by the Respondent, for the same reasons as set out above, and says that the agreement was varied “to provide Jingo with a contract price increase of $20,000 plus GST and a profit share entitlement for the year 1 July 2009 until 30 June 2010”, constituted by the letter sent to the Applicant by Mr Gerolmeu. The Respondent reiterates that the terms of the written agreement dated 4 April 2008, as set out above, continued to until as late as July 2011 by mutual agreement between the Respondent and Jingo.
March 2010 – General Manager for the Central Region
From on or about 1 March 2010 to 28 February 2011, the Applicant worked as a ‘Central Region General Manager’ for the Respondent. In this role, the Applicant undertook similar duties to the Regional Manager for the North Region role, as set out above, but also included the Applicant being responsible for dispute resolution. The Applicants says that he also made trips to China to promote the Respondent business.
The Applicant claims at [11] of the ASOC that his engagement in this role is to be construed by the letter sent to the Applicant from Mr McMahon dated 14 July 2009, as set out above. In his affidavit filed on 22 January 2020, the Applicant states at [75] that he does not recall being provided with any further documentation in relation to the role.
To the extent that the agreement was oral, the Applicant claims that it was constituted by discussions between him, Mr McMahon, and Mr Lionel Wadell, Victorian State Manager of the Respondent, in or around February 2010. In his affidavit filed on 22 January 2020 at [73], the Applicant says he was told that he would be appointed to the role and he would be paid $220,000 per annum plus GST. No further evidence has been adduced as to nature of the Applicant’s engagement in this role with the Respondent.
During the period that he was in this role, the Applicant says at [78] of his affidavit that he “continued to provide invoices to Simonds on a monthly basis”.
The Respondent again denies that the Applicant was engaged directly by the Respondent, for the same reasons as set out above, and again reiterates that the written agreement dated 4 April 2008 continued to be in effect until as late as July 2011 by mutual agreement between the Respondent and Jingo.
March 2011 – General Manager for the Northern Region
From on or about 1 March 2011 to 30 June 2011, the Applicant worked as ‘General Manager – Northern Region’. In this role, he had the same or similar duties as when he was engaged as Central Region General Manager by the Respondent.
The Applicant again claims at [13] of the ASOC, that it was construed by the letter sent to the Applicant from Mr McMahon dated 14 July 2009. In his affidavit filed on 22 January 2020, the Applicant states at [83] that he does not recall being provided with any further documentation in relation to the role.
In so far as the contract was oral, Applicant claims that it was constituted by discussions between him, Mr McMahon and Mr Wadell in or around January and February 2011. Relevantly, the Applicant states at [82] of his affidavit that he told both Mr McMahon & Mr Wadell that he would only take on the role if he could have full autonomy on construction and that he could personally pick his Building Manager. He says that Mr McMahon and Mr Wadell agreed to his requests and he was seconded back to the role. He says that his remuneration increased to $240,000 per annum plus GST. The Applicant states at [88] of his affidavit that “all other terms and conditions remained similar to those in my previous roles with Simonds.”
The Respondent again denies that the Applicant was engaged by the Respondent, for the same reasons as set out above, and says that the written agreement dated 4 April 2008 continued to until as late as July 2011 by mutual agreement between the Respondent and Jingo.
July 2011 – General Manager for Greater Northern Victoria
From on or about 1 July 2011 to 20 August 2012, the Applicant worked as a ‘General Manager – Greater Northern Victoria (which included ‘Northern Metro and Northern Country areas of Victoria’), which again had the same or similar duties to the other work the Applicant had undertaken as a General Manager.
The Applicant again claims at [15] of the ASOC, that his engagement with the Respondent was construed by the letter sent to the Applicant from Mr McMahon dated 14 July 2009. In his affidavit filed on 22 January 2020, the Applicant states at [101] that he recalls discussing a new proposed written agreement with the Respondent in or around June or July 2011. The Applicant goes on to say that:
I recall that a number of the terms of the draft agreement were not acceptable to me, including the notice term, my car entitlement, and that it failed to reflect the profit share arrangements.
The Applicant goes on to claim at [17] of the ASOC that, to the extent the agreement was written, it was also included a motor vehicle expense term that was included in the Respondent’s vehicle expense policy.
In so far as the contract was oral, Applicant claims that it was constituted by discussions between him, Mr McMahon and Mr Wadell in or around June 2011. This included:
(1)remuneration of $25,000 per month;
(2)the Applicant’s entitlement to be reimbursed for motor vehicle expenses; and
(3)the Applicant’s entitlement to a 2% annual net profit (bonus) share; as set out above.
The Applicant also makes references to terms of the agreement implied by law which include a reasonable notice of termination of 12 months, because of:
(1)the role of General Manager Greater Northern Victoria being a senior and important position within the Respondent and the Victorian building industry more broadly;
(2)the amount of the Applicant’s remuneration;
(3)the significant responsibility which attached to the role;
(4)the Applicant's length of service;
(5)the Applicant's age; and
(6)difficulty the Applicant would have, and did have, in obtaining suitable alternate employment: see FASOC at [17(c)].
In this period, Jingo rendered monthly invoices to the Respondent for $25,000 and the Respondent paid the gross sum on the invoices to Jingo.
The Respondent denies the Applicant’s claim in relation to this period, and alleges that Jingo was engaged by the Respondent to provide certain services, including the provision of personnel. The Respondent claims that the agreement between Jingo and the Respondent business was constituted by a written agreement, dated 19 July 2011. That agreement is set out in a document which is annexure JWG-31 to the Applicant’s affidavit filed on 22 January 2020. I note that the Applicant claims in his affidavit that the contractual document included in the evidence material was not the one that was provided to him by the Respondent in mid-2011. The Applicant claims he had not seen the document included in the evidence until it was shown to him by his legal representatives in late 2018. In that written agreement, the parties are the Respondent business and “the contractor named in Item 2 of Schedule 1.”
Schedule 1 of the contract document relevantly sets out the contractor named Item 2 was as follows:
SCHEDULE 1
…
ITEM 2
Jingo Pty Ltd
ABN 13 268 446 741
8 Warramunga Road,
BUNDOORA VIC 3083
The contract document also contains the following relevant terms:
5 SERVICES TO BE PROVIDED
5.1 The Contractor must provide the Services to Simonds set out in Item 8 of Schedule 1.
5.2 The Contractor and its employees servants and agents shall report to and be accountable to the Manager Simonds and such other person(s) as the Directors of Simonds advises from time to time.
5.3 In performing the services the Contractor and its employees servants and agents must:
i. serve Simonds faithfully and diligently and exercise all due care;
ii. act in the best interests of the Simonds at all times;
iii. refrain from acting or giving the appearance of acting contrary to the interests of the Simonds;
iv. use its best endeavours to protect and promote Simonds good name and reputation; and
v. provide its services to the best of its skill and ability;
vi. comply with all policies and procedures of Simonds applicable from time to time as notified to the Contractor;
vii. Attend all professional development and information sessions as required by Simonds.
viii. Provide the items listed in Item 9 of Schedule 1;
ix. respond promptly and in a professional manner to all queries by Simonds, its employees, suppliers, contractors and others;
x, be available at all times during normal business hours by telephone or voicemail which includes by mobile telephone.
6 GENERAL OBLIGATIONS OF CONTRACTOR
6.1 The Contractor shall:
(a) provide the Services to Simonds in a timely manner and in accordance with the terms of this Contract;
(b) ensure that the Contractor and all the employees of the Contractor engaged in this Contract are suitably qualified and experienced, and act to the best of their skills and ability and in accordance with accepted professional standards for persons having those qualifications and experience;
(c) where Item 10 of Schedule 1 names an employee of the Contractor that is to perform the Services, ensure that individual performs the Services;
(d) follow all instructions of Simonds in respect of the performance by the Contractor of its obligations under this Contract and cooperate fully with Simonds and act in good faith towards Simonds;
(e) comply with all laws;
(f) attend at the premises of Simonds as and when required by Simonds.
(g) provide to Simonds 21 days notice of any unavailability to being able to provide the Services at any time;
(h) Complete all reports in respect to the service that are required by Simonds and return the reports once completed promptly to Simonds;
(i) Not make any adverse comments about Simonds its personnel and/ or the products and services of Simonds;
G) Pay all taxes and other government or semi government charges that are required to be paid including income tax, payroll tax> goods and services tax, superannuation and the like; and
(k) To register and maintain such registration of its business registration number during the operation of this agreement.
(1) Comply with all policies of Simonds.
(m) The Contractor will be required by Simonds to attend training on occasions. Cost of attendance including all expenses will be borne by the Contractor.
The Respondent also denies the Applicant’s claim to motor vehicle expenses as against the Respondent, and says that his claim for reimbursement of those expenses is instead against Jingo. Similarly, the Respondent denies the Applicant’s claim as to annual leave entitlements, and says that the Applicant’s claim should instead arise against Jingo.
In his affidavit filed on 4 March 2020, Mr Scott Mahoney, Chief Financial Officer (“CFO”) of SFO Administration Pty Ltd (a related entity of the Respondent) and Director of Simonds Group Ltd, gave evidence that, in reviewing the records of the Respondent, there is a letter from Mr Gerolemou addressed to the Applicant and dated 15 August 2011, which endorses the contract (see Exhibit SM-7). The cover letters makes reference to “alteration to your existing Employment Contract”, however, the terms of the agreement update the existing contractual arrangements between the Respondent and Jingo. Invoices continued to be rendered by Jingo to the Respondent in accordance with the terms of this revised contract. The document was not an employment contract between the Applicant and the Respondent.
The Applicant’s engagement with the Respondent was terminated on 20 August 2012 during the course of a meeting with Mr McMahon and Mr Gerolemou. The Applicant claims that his engagement with the Respondent was terminated immediately, and that “no matters of conduct or performance” were raised by Mr McMahon or Mr Gerolemou. The Applicant says at [128] of his affidavit that when he asked why his engagement was being terminated, Mr McMahon replied “management connectivity”. The Applicant was provided with a letter of termination on that day, which stated as follows:
We refer to our discussions with you today and confirm that we have decided to not continue with your services agreements beyond today’s date.
We take this opportunity of thanking you for your services over the years and confirm that we will pay to you-
1. Payment for your services up to that date of this letter.
We will pay you for the above upon delivering to Simonds Personnel HR Department the tax invoices for the appropriate amount.
ORDERS SOUGHT
Pursuant to the ASOC, the Applicant seeks:
(1)compensation pursuant to s545 of the FW Act with respect to breaches of the FW Act,
(2)pecuniary penalties pursuant to s546(1) of the FW Act, with that compensation payable to the Applicant pursuant to s546(3)(c);
(3)statutory interest pursuant to s547 of the Act;
(4)damages for breach of contract;
(5)a declaration that the Applicant was employed by the Respondent for the claim period; and
(6)declarations that the Respondent breached s40, s90(2), s117, s119 and s323(1) of the FW Act.
The Respondent opposes the making of such orders, and seeks that the application be dismissed.
EVIDENCE
At the Final Hearing, the Applicant gave evidence, relying primarily on his affidavit filed on 23 January 2020 (which was filed in three parts), but also other affidavits filed on 16 March 2020 and 7 April 2020.
The following people gave evidence on behalf of the Respondent:
(1)Mr Mahoney, relying on his affidavits filed on 4 March 2020 and 12 May 2020;
(2)Mr Christopher Burkitt, former General Manager/National Operations Manager/National Training Manager for the Respondent, relying on his affidavit filed on 4 March 2020; and
(3)Mr Geoffrey Elliot, former Operational Manager of the Madisson Projects business, relying on his affidavit filed on 4 March 2020.
The Applicant’s Evidence
In relation to the initial commercial arrangement between the Applicant and Madisson Homes (“Madisson”) (a company recently acquired by the Respondent), the Applicant deposes in his affidavit filed on 23 January 2020 that:
(1)he contacted Mr Harman in early 2006 about work opportunities, and met with Mr Harman on or about 10 March 2006. After some further correspondence in March 2006, the Applicant deposes at [10] that Mr Harman informed over the phone that the Respondent had a role available for a cost planner/estimator, and arranged for the Applicant to be introduced to Mr Elliot;
(2)in late March 2006; he met with and spoke to Mr Elliot, who informed him that the Applicant could not be guaranteed a permanent role and that he could initially engage him as a contractor, but that the role could not be confirmed as permanently on-going. The Applicant also deposes at [14] – [16] to Mr Elliot asking whether he had an ABN for Tomanic and explained that the Applicant would be required to invoice Madisson. Mr Elliot asked for that ABN and the Applicant provided it to him;
(3)on 5 April 2006, Ms Kelly Cutajar, Human Resources Officer of Simonds Homes, wrote to him enclosing a copy of a contract, and requesting that the Applicant return the contract signed, provide bank details and also obtain work cover insurance (which the Applicant did not do).
The Applicant states that the role was a 9.00am to 5.00pm role, he was required to attend the offices on time and that he was provided with a desk and computer, as well as having access to the other resources of the office. The Applicant says that he was reimbursed for travel to meetings for which he was required to use his own vehicle, but at other times used a company pool car that was provided to him. The Applicant claims he was paid for annual leave and public holidays without loss of pay.
The Applicant states at [29] of his affidavit that on 4 April 2007, a new contract was issued by Madisson to him for the work that he was doing. He says that after entering that new contract, his role expanded, and Mr Elliot suggested the state to “generate a business development role for the company whilst continuing with cost planning and estimating.” He says that in or around June 2007, his role expanded and:
31. […] became a much broader role and developed into a sales, marketing, administration, business development and project management, planning and estimating role. I went from working a 9am to 5pm role providing cost planning and estimates, into a more senior role with greater responsibility and meeting clients after hours.
In or around late January 2008, the Applicant says he became aware of a position as Northern Regional Manager that had become available. He says that on or about 1 February 2008, he spoke to Mr McMahon about the role, and that he was told to formally apply. On 1 February 2008 the Applicant sent an email to Mr McMahon, which is set out above, setting out his understanding of that discussion (see Applicant’s affidavit filed 23 January 2020, annexure JWG21).
The Applicant says at [38] of his affidavit that he formally applied for the role on-line around 1 February 2008, and did so in his personal name. The Applicant relevantly states at [40] that:
40. On about 11 February 2008 I was provided a proposed contract for the Regional Manager - Northern Region role. The second page of that document identified the parties to the agreement to be "John Goulding/ Jingo Pty Ltd", and Simonds Homes Melbourne Pty Ltd. I now am only in possession of the first two pages of that draft contract. As discussed below, I was later provided with a revised contract identifying the parties as Jingo and Simonds only.
On or about 3 March 2008, the Applicant commenced as Regional Manager – North Region. The Applicant states at [45] of his affidavit that “on or about 4 April 2008 a contract was executed by Simonds Homes Melbourne Pty Ltd (now Simonds Homes Victoria Pty Ltd) and my partner Ginette Lupieri on behalf of Jingo.” The Applicant goes on to say that:
Ginette never met with Simonds staff or had any involvement with representatives of Simonds during the period of my work with Simonds, other than attending functions as my partner. I brought the agreement home and she simply signed it and it was then returned the next day.
As part of the role, the Applicant variously says that he was:
(1)issued with a Simonds credit card, mobile phone, business cards, iPad, computer, carpark and petrol card;
(2)authorised and required to attend board meetings, recruit and appoint employees, dismiss employees and attend conferences;
(3)called on to represent the company at industry functions;
(4)authorised to deal with customer issues and complaints;
(5)negotiated a lease and managing of setting up a new North region office on behalf of the Respondent; and
(6)paid for annual leave (for which he had to apply) and public holidays.
The Applicant says at [42] of his affidavit that in early 2008 Mr Harman or Mr McMahon announced a ‘Simonds Rewards policy’. The Applicant relevantly asserts:
42. […] I was told that, as a senior manager and full time staff member at Simonds, the Rewards Policy applied to me. That policy provided that I would receive an additional day off work for each complete year of service and that this would be utilised in lieu of annual leave or special leave in the first instance. The days did not accrue annually but the number of days additional leave increased each year, such that I was entitled to two days additional leave after two years' of service; three days additional leave after three years' of service, etc. I was also informed by Chris Burkitt that my "service" for the purpose of the Simonds Rewards Policy would include my service for Madisson Homes.
In or around June 2009, the Applicant says he spoke to Mr McMahon about an increase to his remuneration, and an entitlement to a profit share in the Respondent business. On or about 14 July 2009, the Applicant received correspondence from Mr McMahon confirming the increase of the Applicant’s remuneration to a total of $200,000 per annum effective 1 July 2009 and that he was entitled to a 2% annual net profit share, based on the North Region meeting a minimum budgeted net profit, as prepared Mr Mahoney. The Applicant asserts that there is no further documentation giving effect to Mr McMahon’s correspondence.
In or around February and March 2010, the Applicant says, following conversations Mr McMahon and Mr Wadell, he was told that he would be appointed at Central Regional Manager, and that his remuneration would increase to $220,000 per annum. He states at [77] of his affidavit that, in addition to his duties in Australia, as set out above, he was required to travel to China to promote the business, and he made two trips to China to set up a new office and attend seminars with prospective clients and investors.
In or around March 2011, the Applicant asserts that, following discussions with Mr McMahon and Mr Wadell, he was seconded back the North Region as General Manager, and his remuneration was increased to $240,000 per annum. The Applicant says at [83] of his affidavit that he was not provided with any documentation about this change in his role with the Respondent. The Applicant also states at [88] that “all other terms and conditions remained similar to those in my previous roles with Simonds.”
In or around June 2011, the Applicant says he was contacted by Mr McMahon, and that he was asked to take on the management for both the Metro and Country North Region as a General Manager. The Applicant asserts Mr McMahon offered to pay him $300,000 per annum. The Applicant says he accepted the role and commenced in that position on or about 1 July 2011. The Applicant says at [101] of his affidavit that, in relation to this new role, he was provided with a new proposed contract in or around June or July 2012, but that he objected to a number of the terms in the contract, and negotiations did not progress further.
On 20 August 2012, the Applicant met with Mr McMahon and Mr Gerolemou. The Applicant asserts at [128] that he was told the Respondent had decided to not to extend the Applicant’s commercial arrangement with the business, and that termination of the arrangement was to occur immediately.
The Applicant states at [137] – [139] that when the Applicant attended the Respondent business to collect his belongings on 21 August 2012:
135. On about 21 August 2012, I went into the office out of hours and Michael provided me with a letter from Simonds Homes with notice of the termination of my contract. Michael tried to get me to sign the notice of termination.
136. After reviewing the letter I said that I thought Simonds had significantly underpaid my termination entitlements.
137. Michael produced a copy of the 2008 contract and showed it to me and said that Simonds was paying me in accordance with that contract. That included payment for work performed to date, three months' notice and outstanding annual leave.
138. I told Michael that I had not had a contract for three years and had worked on a verbal contract and promise from the CEO Paul McMahon in good faith on the basis of his assurances that I would be taken care of. I again raised the concerns I had expressed in the termination meeting.
139. I said that I was not happy with the 3 months' notice term, given my age length of service and seniority and it was not adequate. I raised my car situation given the travel I had done for Simonds, specifically the maintenance costs, wear and tear and depreciation due to the extra kilometres, business expenses and annual leave. I said to Michael I am owed my profit share and said that given my seniority, tenure and lack of any cause the notice period was totally inadequate not reflective of changed circumstances. I also disputed the annual leave calculations and asked Michael to provide me with my annual leave records.
The Applicant says on 22 August 2012, he received a further letter from Mr Gerolemou which was substantially in the same terms as the one that was produced to him on 21 August 2012: see Applicant’s affidavit filed on 23 January 2020, annexure JWG-37. The letter provided for an acknowledgment by Jingo that it accepted the sum of $115,704.37 plus GST in full payment of all outstanding amounts owed and payable under the commercial arrangement with the Respondent. The letter also contained a term that the Respondent be released from all claims and demands. The Applicant states at [141] that this letter was not signed or returned to the Respondent, and no payment was made in respect of:
(1)amounts owed for work performed in August 2012 prior to termination;
(2)lieu of notice of termination of the commercial arrangement;
(3)annual leave; and
(4)a profit share for the financial year ending 30 June 2012.
The Applicant gave evidence in person on the first of day of the final hearing.
The Respondent’s Evidence
Mr Mahoney
In his affidavit filed on 4 March 2020, Mr Mahoney concedes that he had “very little involvement with the Applicant during his engagement with Madisson homes” and that he was not involved in the engagement of “Tomanic and/or the Applicant” at the beginning of the commercial relationship between the parties. However, Mr Mahoney says at [18] of his affidavit that the Applicant was engaged to perform services for Madisson as a contractor through Tomanic, and that Madisson (and the Respondent) entered into a contract with Tomanic for the provisions of the Applicant’s services.
In relation to the Applicant’s later commercial relationship with the Respondent, or its related entities, Mr Mahoney says at [20] and [22] of his affidavit that:
20. In about mid-April 2007, the Respondent ceased its relationship with Tomanic. I recall the Applicant requested this change to the contracting arrangement. It is my understanding that Tomanic was then deregistered. The Applicant then requested the Respondent contract with a new entity, Jingo Pty Ltd (Jingo). I was not directly involved in the preparation of a new service agreement between Madisson Homes, Simonds Personnel Pty Ltd and Jingo. However, the Respondent's business records include a signed copy of a service agreement between Madisson Homes, Simonds Personnel Pty Ltd and Jingo dated 4 April 2007. I am aware that the Respondent's records also include a near identical agreement between the Respondent and Tomanic for the same period, but commencing on 1 July 2007, the document is otherwise dated 4th April 2007. It seems to me that for a short period of time, both Tomanic and Jingo were parties to a contracting arrangement. However, Tomanic issued invoices until 31 May 2007, and Jingo commenced to issue invoices to the Respondent from 31 July 2007. Now attached to my affidavit and marked 'SM-2' is a copy of this agreement.
…
22. In about April 2008, the Applicant was engaged through Jingo to provide services related to the role of Regional Manager - North Region. I was not directly involved in discussions that led to this engagement, nor was I directly involved in the preparation of a new service agreement between the Respondent and Jingo. However, the Respondent's business records include a signed copy of a service agreement between the Respondent and Jingo, which is dated 4 April 2008. Now attached to my affidavit and marked 'SM-3' is a copy of this agreement. It is my understanding that the arrangements through which the Applicant was engaged with Madisson Homes were carried over and replicated by the Respondent. That is, the Applicant continued to be engaged as a contractor through Jingo.
Mr Mahoney asserts at [23] of his affidavit that he was aware the “the Applicant had a preference to be engaged to perform services for the Respondent as a contractor, and not as an employee”. He concedes that he cannot recall how he became aware of that information, but goes on to say he likely became aware of that information due to informal conversations with Mr McMahon. However, Mr Mahoney asserts that as CFO he budgeted the costs of retaining the services of the Applicant on the basis that the Applicant was to be engaged as a contractor, which Mr Mahoney says is consistent with what he was told in relation to the manner in which the Applicant was to be engaged by the Respondent. In support of this assertion, Mr Mahoney refers to the email from the Applicant to Mr McMahon dated 1 February 2008, which Mr Mahoney asserts at [25] of his affidavit sets out the basis on which the Applicant proposed to perform work for the Respondent.
Mr Mahoney makes reference to the Applicant’s affidavit filed on 23 January 2020, and exhibit ‘JWG-31 (‘Contract to provide State Manager –Metro North & V C North Services in Victoria’), which Mr Mahoney says was stored on the Applicant’s personnel file. In relation to exhibit JWG-31, Mr Mahoney states at [31] – [32] that:
31. Upon my review of the personnel file, I now produce a document dated 15 August 2011 where Michael Gerolemou (General Manager- Human Resources) wrote a covering note/letter to the Applicant confirming an alteration to 'your existing Employment contract with Simonds Personnel Pty Ltd' and Jingo. A document titled 'Schedule 1' is attached. I believe that Mr Gerolemou signed that letter as I have seen his signature elsewhere. Now attached to my affidavit and marked 'SM-7' is a copy of that letter/note and the attached Schedule, dated 15 August 2011.
32. I refer to exhibit SM-7 to my affidavit. I believe the reference to 'your existing Employment contract' is a reference to Ex JWG-31, a 2011 contract between Jingo and Simonds Personnel Pty Ltd. I have formed that opinion because the Schedule 1 attached to SM-7 is identical in form to the Schedule 1 attached to Ex JWG-31.
As to the Applicant’s claim for a profit share in the financial year ending 30 June 2012, Mr Mahoney states at [34] that:
34. […] I refer to the Applicant's Affidavit and the document exhibited as JWG-27 - letter to the Applicant from Mr McMahon regarding the Applicant's entitlement to 2% of the annual net profit. The letter to the Applicant states that the entitlement to a profit share is "based on North meeting a minimum of budgeted net profit as prepared by Scott Mahony (Chief Financial Officer)". In the year ending 30 June 2012, the Northern Region's full year actual net profit was $1,992,633. However, the budgeted profit was $2,318,384. The Northern Region therefore achieved a net profit that was $325,751 below budget. As a result, the Applicant was not entitled to receive a profit share in the year ending 30 June 2012.
In his affidavit filed on 12 May 2020, which is centred on the issue of the Applicant’s claim to a profit share, Mr Mahoney relevantly deposes at [6] –[8], [12] that:
6. I am aware that the Respondent has produced certain documents to the Applicant by way of discovery, including two particular documents titled:
a. Executive Management Salary Review Paper dated 1 July 2012 (2012 Document); and
b. Executive Management Salary Review Paper dated 1 June 2010 (2010 Document).
Now attached to my affidavit and marked 'SM-1' and 'SM-2' respectively are copies of these documents.
7. I was employed in the position of CFO in the period 2008 - 2012. Based on my working knowledge of the company accounting processes at that time and the manner in which working documents were produced and used, I say these documents were created by the Human Resources and Finance teams for the purposes of budgeting. These are standard documents produced by the Respondent at that time to understand the costs associated with employing and/or engaging people. I observe that these documents do not relate to each other as they relate to completely different years.
8. When I make reference to working documents below, I mean by that descriptor that the documents are not final in form. I also mean they do not form part of the final audited accounts of the Respondent.
…
12. I am informed by Ms Prpich, solicitor acting for the Respondent, that, at an interlocutory hearing held on 14 March 2020, a submission was made by Counsel acting for the Applicant to the effect that the handwriting on the 2010 Document suggested that the Metro North region was allocated a net profit of $2.2 million in which a 2% share would equate to $42,000 for the Applicant on a pro-rata basis for seven months. This is incorrect. I refer to the final audited figures for that year for the Respondent. The Metro North region did not achieve a $2.2 million net profit in this year. The Applicant would well know that fact. He is a trained accountant and always had access to the revenue documents for his region/work area.
Without the need to go into the evidence in this affidavit to any great extent, for the reasons set out below, Mr Mahoney concludes at [25] of his affidavit that:
25. […] based on the information provided to me concerning the Applicant's allegation of underpayment based on the two documents, and based upon the information I reviewed including the final accounts for FY2010, I have formed the opinion that the Applicant was not underpaid any entitlement to a 2% profit share. That 2% was only triggered once the profit exceeded the budgeted sum.
Further, as to the Applicant’s claim for redundancy pay as a result of the termination of the commercial service agreement, Mr Mahoney asserts at [35] of his affidavit filed on 4 March 2020 that, when the Respondent terminated its agreement with Jingo, the Applicant was engaged through Jingo to perform his role, and the role was not made redundant as the role was instead performed by someone else after the termination of the agreement.
Mr Mahoney gave evidence in person on the second day of the hearing.
Mr Burkitt
In his affidavit, Mr Burkitt gives evidence that at the time the Applicant commenced work with the Respondent in or around March 2008, he was State Operations Manager. On that basis, he deposes at [14] that he was aware the Applicant had previously performed work for Madisson and that he had been engaged by Madisson as a contractor. Mr Burkitt concedes at [15] that “at least initially (in 2008)” he was unaware of the commercial arrangements between the Applicant and Respondent, as the Applicant communicated directly Mr McMahon.
Mr Burkitt refers to [42] of the Applicant’s affidavit filed on 23 January 2020, where the Applicant deposes to having a conversation with him in early 2008 in relation to the Rewards Policy. Mr Burkitt states at [17] of his affidavit that:
17. At the time that I spoke to the Applicant about the Rewards Policy, I made an assumption that he was going to be employed by the Respondent. On that basis, I did tell the Applicant that any prior service with a related entity would be recognised for the purposes of the Rewards Policy. I said this because the Rewards Policy is designed to reward employees, not contractors. The Applicant did not tell me that he had been engaged through a corporate entity and that he was engaged in that way to provide services. However, shortly after this, at around the time that the Applicant began working for the Respondent, I was told by Mr McMahon that the Applicant was engaged as a contractor.
Mr Burkitt deposes at [18] that he was consistently told by people in the executive leadership team of the Respondent that the Applicant was engaged by the Respondent as a contractor and not an employee, and that this arrangement was entered into at the Applicant’s request. Mr Burkitt says that he was told “at the executive level” that this was a similar arrangement to the one by which the Applicant was engaged by Madisson.
Mr Burkitt gave evidence in person on the second day of the final hearing. He was not cross-examined by Counsel for the Applicant.
Mr Elliot
In his affidavit, Mr Elliot gives evidence that the Applicant spoke to him in approximately March 2006 about commencing work for Madisson Projects in a cost planning/estimating role. These discussions occurred in the context of the Applicant’s prior discussions with Mr Harman, as set out above.
Mr Elliot refers to the Applicant’s affidavit filed on 23 January 2020, where the Applicant asserts that Mr Elliot offered to engage him as a contractor, as he could not guarantee him a permanent role with Madisson. Mr Eliot deposes at [12] of his affidavit that this is not correct.
Mr Elliot says at [13] – [14] of his affidavit that:
13. The Applicant spoke to me and asked to be engaged by Madisson Homes / Simonds Personnel Pty Ltd as a contractor and not as an employee. I recall he said something to me to the effect that it was beneficial for him to be engaged as a contractor because he was going through a family breakup. When he made this statement, I assumed his reasons for operating as a contractor might have been to protect his income from his former wife. However, I did not discuss this matter with him in great detail. I was happy to engage him as a contractor and was not troubled if he wished to provide services as a consultant under a short term (1 year) contract. I did not direct the Applicant to enter a non-employment contracting relationship with the Simonds business. He requested this business arrangement.
14. The Applicant's personal company (Tomanic Pty Ltd) was engaged under a written contract to provide services to Madisson Homes/ Simonds Personnel Pty Ltd through this corporate entity. I have been provided with a copy of this agreement. Now attached to my affidavit and marked 'GE-1' is a copy of the two (2) (back to back) independent contracting agreements between Madisson Homes/ Simonds Personnel Pty Ltd and Tomanic Pty.
Mr Elliot further asserts at [18] of his affidavit that the Applicant asked to be engaged as an independent contractor because of a “family break up”. Mr Elliot says at [21] of his affidavit that the Applicant never said to him during the period of 2006 to 2010, that he believed he was an employee and therefore should have been treated as if he was an employee.
Mr Elliot refers to [16] of the Applicant’s affidavit, where the Applicant references that Mr Elliot sent a request to him on 4 April 2006, asking the Applicant to provide an ABN for Tomanic, which the Applicant provided on 5 April 2006. Mr Elliot deposes at [15] of his affidavit that the request for the ABN was made in the context of the Applicant asking to be engaged as a contractor, so that Tomanic could invoice Madisson for the work performed by the Applicant.
In relation to claims made by the Applicant that he was paid for annual leave and for public holidays without loss of pay, Mr Elliot disagrees with that characterisation. Mr Elliot deposes at [17] of his affidavit that:
It was a term of the contracts entered into between Madisson Homes/ Simonds Personnel Pty Ltd and Tomanic Pty Ltd that the Applicant would not be required to provide services for one week in each three month period, such week to be agreed between the parties (see attachment GE-1). Tomanic would be paid for the week even though the Applicant did not render services. I refer to GE-2 – the invoices Tomanic issued to Simonds. The Applicant was not paid for certain periods of leave.
As to the Applicant’s assertion that Mr Elliot suggested to him that he generate a business development role for Madisson, while continuing in his current role as a cost planner/estimator, which the Applicant claims he did resulting in a broader role including “sales, marketing, administration, business development and project management”, Mr Elliot asserts that he does not “recall the extent of the business development tasks, if any performed by [the Applicant].” Mr Elliot concedes that it would have been his intention to enable the Applicant to expand his contribution and value to the business, however, he says that he does not recall the Applicant performing such a broad role.
Mr Elliot gave evidence on the third day of the final hearing via Microsoft Teams, with the consent of both parties. In my view, Mr Elliot was a compelling witness. He gave clear evidence of the matters that he had knowledge of in relation to these proceedings. He made appropriate concessions and did not attempt to give evidence on matters that he had no actual knowledge of or that he had no memory of.
CONSIDERATION
The primary question at issue in this matter is whether the Applicant was an employee of the Respondent by way of an express or implied employment agreement or was instead an independent contractor retained by Tomanic, and later Jingo, and was supplied as such to the Respondent in a tripartite arrangement.
In submissions filed on 1 February 2021, the Applicant submits at [2] that he was employed by the Respondent through a series of written employment contracts between 5 April 2006 and 20 August 2012, as set out above.
The Applicant submits at [8] – [9] that he never had a contractual relationship with Jingo, and that “Jingo was for all practical purposes in effect an alter ego for the Applicant”, as the Applicant never received any payment from Jingo, save the amounts paid by the Respondent into a joint bank account for him and his de facto partner, Ms Lupieri (who was Jingo’s Director and sole shareholder). In relation to the written contracts between the parties, the Applicant submits at [15] – [16] that:
15. The Applicant’s evidence will be that he considered it himself for all practical purposes a managerial employee, irrespective of the payment arrangements which he considered “a secretarial matter.”
16. Moreover, it will be the Applicant’s evidence that his view on the written contracts was for practical purposes irrelevant. The Respondent had the power to choose whatever form of contract they wished the Applicant to enter into. They at all times had the power to alter any work arrangements at will. They evidenced that power by frequently altering the roles and positions for the Applicant, and indeed by altering any aspect of the working arrangement that they wishes to change. Therefore, if they wishes the Applicant to enter into contract A, he would do so; and if they wishes for him to enter into contract B, he would do that. The Applicant reserved his bargaining power for questions about his remuneration. By contrast he had no desire to risk losing his job in an argument over the legalistic details of his work arrangement.
The Applicant submits that, in relation to billing arrangements, including invoices and GST, the fact Jingo rendered invoices for the Applicant’s services and that GST was paid on those invoices, has no bearing on the question of whether the Applicant was an employee or a contractor as “this was simply a practice agreed upon years ago for various reasons”: see Applicant’s submissions at [11] – [12]. The Applicant submits at [13] that the fact he has not filed tax returns for the relevant years is because he needs the outcome these proceedings to be finalised so that he can know with certainty whether he should file his returns as an employee or contractor.
In submissions filed on 9 February 2021, the Respondent submits at [1] that the Applicant was instead “a conscious and deliberate participant in a consensual and well-documented arms-length ‘triangular work arrangement’, an arrangement the Applicant fostered and advanced and from which he drew benefits over 4.5 years.”
The Respondent submit at [3] that:
(1)the Applicant established and implemented a tripartite labour hire arrangement between himself, Jingo (as the labour supply entity) and the Respondent (as the ‘host’ company), with that arrangement ‘deliberately structured’ so that that there was no contractual relationship directly between the Applicant the Respondent;
(2)Jingo was controlled by Ms Lupieri, as the sole Director and shareholder, and Jingo rendered invoices to the Respondent, charged GST and received all gross revenue;
(3)the Respondent and Jingo were parties to the arrangement pursuant to written contracts; and all payments of remuneration were made to Jingo; and
(4)the Applicant, via Ms Lupieri, took the benefit of the arrangement and the payments to Jingo (including gross payments in respect of which tax has not been remitted to the Australian Tax Office since 2008).
On that basis, the Respondent submits [4], [6] – [8] that:
4. This is a proceeding where there was a genuine triangular labour hire setting in place. There was no sham effected by the Respondent. There was no conversion or transfer of the Applicant from employment to a confected corporate triangular structure carrying the nomenclature of ‘contractor’. The three (3) parties intended to create the labour hire arrangement and gave effect to it by executing a written contract. That contract was lawful and enforceable and governed the rights and liabilities of the parties to it.
…
6. So, the real question before the Court is: on the facts, can a contract of employment be implied between the Applicant and the Respondent?
7. The answer on the evidence is readily apparent: a firm NO. There is no room for such implication on the known and uncontested facts. There was no sham or pretence here. There was no intention to deliberately deceive third parties. On the facts, there is no sense in which the Applicant was ignorant of any deceit (there was none) or a victim of it. The Applicant is no victim and there was no manipulation of him by the Respondent.
8. There was a commercial labour hire arrangement. There was no common law employment relationship. As was recently affirmed by the Full Court in Quest:
“an employment contract will not be implied in a labour-hire setting where “it is not necessary to imply one in order to explain the work undertaken by the worker for the end-user”
(References removed)
This is a matter where the credit of witnesses is an issue given the contest in the evidence regarding the circumstances in which the commercial arrangements between the parties were entered into. The Applicant was not a witness of good credit. He was evasive in his responses to direct questions in cross-examination and he readily sought to deny the plain effects of contracts that he had agreed would govern the relationship between the parties (and Tomanic and Jingo).
It is clear that the Applicant used the arrangements that were entered into by the parties to his own personal benefit by failing to pay tax and making use of funds paid as GST to Tomanic and Jingo, but were not remitted to the Australian Tax Office. Jingo’s Westpac bank account records show that the Applicant and Ms Lupieri were using the funds in the bank account to fund their living expenses and lifestyle. The Applicant’s evidence in his affidavit filed on 16 March 2020 that he considered himself a “manager and employee irrespective the payment arrangements which I frankly considered a secretarial matter” lacks any credibility given his professed qualifications and experience as a qualified accountant. Where there is any conflict between his evidence and any evidence given by the witnesses on behalf of the Respondent, I prefer the evidence of the Respondent’s witnesses.
I find that each of the:
(1)2006 Tomanic services agreement;
(2)2007 Jingo services agreement;
(3)2008 Jingo services agreement; and
(4)2012 Jingo - Rubicon services agreement, entered by the Applicant and an unrelated third party after his engagement with the Respondent;
were all entered into at the behest of the Applicant and for his benefit. As a qualified accountant he was the proponent of the arrangements whereby a labour hire entity was imposed so as to ensure that there was no direct contractual relationship as between himself and the Respondent.
These arrangements enabled, in particular Jingo, to receive gross revenue from the Respondent and to then have those funds available to the Applicant and his partner via the Jingo accounts. From those funds the Applicant was able to pay off home mortgages and pay for day to day living expenses. By way of example, the Applicant’s NAB home loan account for the period from 9 August 2008 to 6 February 2009 shows that he was able to make payments of $32,000: see Respondent’s Court book at page 542. The accounts show that the Applicant was able to regularly make payments of $5,000 per month to reduce his home loan and the source of those funds were from the Jingo bank account. Because of the way the Applicant conducted himself, the arrangements presented a substantial benefit to him and Ms Lupieri.
There is no evidence in this case that the Respondent company had a policy or practice of requiring parties providing services to do so via a subcontracting arrangement or a labour hire arrangement ( as was the case here). This is not a case where an ultimatum had been delivered that the arrangements of a particular party must be entered into in order to work for the Respondent. The Applicant’s submissions in that regard are without substance. The email correspondence between the Applicant and Mr McMahon, as set out at [22] above, confirms this and, indeed, I find that it was the Applicant who proposed the arrangements.
I find that the evidence Mr Elliott gave in relation to his discussions with the Applicant, prior to him commencing at Madisson, to be credible and that credibility was not shaken in cross-examination. Indeed, Mr Elliott’s evidence in relation to the Applicant’s engagement, and the arrangements in relation to the Applicant not being required to provide services for one week in each three month period, was also credible and not shaken during cross-examination.
The evidence of Mr Elliot that he recalled that the Applicant wishing to be engaged as a contractor via a third party because he was going through a family breakup makes sense and in that regard I refer to the affidavit of Mr Mahoney which includes an annexure of correspondence from the Child Support Agency to the Respondent in relation to the Applicant (see annexure SM-6).
It is notable that upon the arrangements between Jingo and the Respondent terminating in August 2012, Jingo, as trustee for Jingo Investments, entered into a contract with Rubicon Corporation with services to be provided by the Applicant as a Sales and Marketing Manager.
This is an example of a case contemplated by Allsop CJ in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122 (“Personnel Contracting”). At [36] of Personnel Contracting, his Honour (with whom Jagot J agreed) stated:
36. […] In some circumstances it would be perfectly legitimate to give significant weight to its negotiated terms. By way of example only, such circumstances may include where the working man or woman wanted to work as an independent contractor, perhaps with a family trust arrangement, and made that clear in negotiations.
The evidence shows that the Applicant proposed, negotiated and entered into a series of contracts whereby his services would be provided via the medium of a corporation, with a trust, being interposed between him and the Respondent. This is what the Applicant intended and the Respondent acted in accordance with those arrangements. This case is not analogous to the facts in Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119, particularly given that there was no conversion from employment to a new contracting relationship at the direction of the Respondent.
I do not accept the Applicant’s submissions that the way the Applicant performed his duties, the way his performance was assessed and the level of control was akin to that of an employee and that he should be regarded as an employee. The Applicant chose not to be an employee and had his own reasons for not being an employee. He should now bear the consequences of his election: see Eastern Van Services Pty Ltd v Victorian WorkCover Authority [2020] 296 IR 391 at [163]; Barro Group Pty Ltd v Fraser [1985] VR 577, 580.
For these reasons, all of the Applicant’s claims fail and the application is dismissed. I will make orders for the parties to make submissions in relation to costs. I note that the failure to remit tax in this case is significant, occurred over an extended period of time and was carried out by an Applicant with knowledge of his tax obligations. I will refer a copy of this decision, together with a transcript of the oral evidence of the Applicant given at the final hearing, to the appropriate authorities to deal with the matter.
CONCLUSION
For these reasons, the application filed on 5 July 2018 and amended on 18 March 2019 is dismissed.
I certify that the preceding one hundred and nineteen (119) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McNab. Associate:
Dated: 2 July 2021
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