Lee v Quest Investments Limited
[2017] VCC 926
•7 July 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION EXPEDITED CASES LIST | Revised Not Restricted Suitable for Publication |
| Case No. CI-12-02765 |
| JULIAN LEE | Plaintiff |
| v | |
| QUEST INVESTMENTS LIMITED and MURCHISON HOLDINGS LIMITED | First Defendant Second Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7, 8, 9, 10, 11 October 2013, 19, 20, 22, 26, 27 May 2014, 24, 25, 26, 27 November 2014, 2 March 2015, 22 June 2015, 16, 17, 18, 19 February 2016 | |
DATE OF JUDGMENT: | 7 July 2017 | |
CASE MAY BE CITED AS: | Lee v Quest Investments Limited & Anor | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 926 | |
REASONS FOR JUDGMENT
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Subject:CONTRACT; LIMITATION OF ACTIONS; BANKRUPTCY; ESTOPPEL
Catchwords: Whether employee or contractor – whether claims statute barred – whether claim is in debt or damages – impact of bankruptcy on standing to bring proceedings – whether plaintiff is entitled to commission – Anshun estoppel
Legislation Cited: Bankruptcy Act 1966 (Cth), Corporations Act 2001 (Cth), Crimes Act 1958 (Vic), Electronic Transactions (Victoria) Act 2000 (Vic), Limitation of Actions Act 1958 (Vic), Superannuation Guarantee (Administration) Act 1992 (Cth), Taxation Administration Act 1953 (Cth)
Cases Cited:Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Geia v Palm Island Aboriginal Council [2001] 1 Qd R 245; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Markwick v Hardingham (1880) 15 Ch D 339 (CA); McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457; Roy Morgan Research Pty Ltd v Commissioner of Taxation (2011) 244 CLR 97; Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Surrendera Overseas Limited v Government of Sri Lanka [1997] 2 All ER 481; Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161; Tapp v Law Cover Insurance Pty Ltd [2013] FCA 35; Victorian Producers’ Co-operative Co Ltd v Dye [1927] VLR 572; VL Finance Pty Ltd v Legudi [2003] VSC 57
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr F Lim (solicitor) | Francis Lim Barristers & Solicitors |
| For the Defendants | Mr I Jones QC (7-11 October 2013) Mr P Baume (7 October 2013 to 19 February 2016 except 22 June 2015) Mr J Kewley (22 June 2015) | John Dick |
HIS HONOUR:
Introduction
1 This is an unusual case. The trial began on 7 October 2013 with an estimated duration of 5 days. Due to a poor estimate from both parties and some egregiously bad behaviour from the defendants, the case did not finish until February 2016. The duration of the trial expanded in this way partly because on each occasion when the allocated time expired, the trial remained unfinished. The parties had then to wait approximately 6 months before the trial judge was available to resume the hearing. In February 2015 when the parties were to make final submissions, the defendants were not ready to proceed. The defendants had failed to file their outline of final submissions as required by earlier orders. Further, the defendants’ counsel was not prepared and in a position to make oral submissions.[1] Then in August 2015, the defendants apparently withdrew the retainer of counsel who had appeared for them throughout the trial and replaced him with a new barrister the day before final oral submissions were to begin. This necessitated yet another adjournment to February 2016. Thus, the trial was conducted in a manner which would be unlikely to find favour with the principles espoused in the Civil Procedure Act 2010 (Vic). It is difficult to think readily of a less efficient, less timely and less cost-effective way of resolving a dispute. In addition, the parties unduly strained the resources of the court – the trial estimate was 5 days and the actual length was about four times longer.
[1]Counsel’s lack of preparedness appeared to be due to the defendants not briefing him until shortly before the case was to resume at which time he was already engaged in another matter.
Summary
2 The case concerns a claim by the plaintiff (“Lee”) against the first defendant (“Quest”) and the second defendant (“Murchison”) that the defendants breached Lee’s employment agreement by wrongfully terminating his employment and failing to pay him monies to which he was entitled. These monies included unpaid wages, money in lieu of notice, commission and unpaid superannuation. Quest and Murchison deny that Lee’s termination was unlawful or in breach of any employment contract. They also deny that Lee was entitled to any damages whether referable to wages, notice or unpaid superannuation.
3 Lee’s claims are summarised as follows in his closing submissions:
(a)Quest is indebted to Lee in the sum $156,851. This comprises the following elements:
(i)unpaid wages from 4 June 2004 to 3 March 2009 at $1,800 per month because Lee was paid $1,200 per month instead of $3,000 per month for a period of 58 months — $104,400;
(ii)unpaid wages from 4 March 2009 to 3 June 2009 at $3,000 per month — $9,000;
(iii)six months’ wages constituting damages in lieu of reasonable notice when Lee’s employment was terminated — $18,000;
(iv)unpaid commission on the investment moneys procured by Lee — $250,000 x 5% = $12,500;
(v)unpaid superannuation on the unpaid wages and the unpaid commission due to Lee — $143,900 x 9% = $12,951.
(b)Murchison owes Lee the sum of $89,718.93 comprising:
(i)unpaid commission on the investment funds procured by Lee — ($1,921,448.20 x 5%) - $15,000 = $81,072.41;
(ii)unpaid superannuation on the unpaid commission — ($1,921,448.20 x 5%) x 9% = $8,646.52.
Credit
4 In this case, credit is important. Significant parts of the evidence relate to events and conversations involving Lee and the executive chairman and managing director of Quest and Murchison, Chiang We Tiong (“Chiang”). They are critical witnesses. To a lesser degree, the credibility of other witnesses, especially those called by Quest and Murchison, is of some significance.
5 The defendants argued that I should give no credence to the evidence of Lee. They said that Lee was ‘a recidivist fraudster and liar’.[2] In making this submission, the defendants relied on several matters: Lee’s fraudulent conduct as a stockbroker; Lee’s attitude to the completion of his tax returns; and Lee’s evidence at trial.
[2]Original submissions paragraph 37.
6 When he worked as a stockbroker in Melbourne, Lee incurred substantial losses while trading on fictitious accounts which he created without the knowledge or consent of his employers. Ultimately, he pleaded guilty to criminal charges of obtaining financial advantage by deception contrary to section 82 of the Crimes Act 1958 (Vic). There were three counts facing Lee. The first count related to his employment at Epic Securities Limited where between 22 September 1997 and 15 January 1998, he established four false accounts to undertake share trading. The accumulated trading debt on these accounts was $192,431.13.
7 Later in January 1998 having been suspended by his employer, Lee moved to Peake Lands Kirwan Pty Ltd. There, Lee created two false trading accounts between 26 February 1998, and 20 January 1999. In January 1999, these accounts were in credit but other client accounts were in debit to an unacceptable level.
8 In late October 1999, Lee began work as a client advisor at Hartley Pointon Limited. Between approximately 3 November 1999 and 1 June 2000 Lee dishonestly created eight false trading accounts. Apparently when Lee’s supervisor initially challenged him about the debt in these accounts, Lee said that the clients spent a lot of time in Malaysia and he was working with them to settle the accounts. At the end of May 2000 when challenged again about the state of the accounts, Lee admitted they were false and said he was sorry for acting as he had – he said that he was trying to repay the debt, which at the time was about $272,574.00, but lacked the assets to do so. Hartley Pointon Limited terminated Lee’s employment and pursued him for the money owing. Hartley Pointon Limited was the petitioning creditor when Lee was declared bankrupt in December 2001.
9 Lee was sentenced to imprisonment for three years and six months with a 12 month non-parole period. In circumstances where Lee had displayed a clear and calculated intention to deceive multiple employers over a period of approximately 2.5 years for the purposes of obtaining personal profit, it was a reasonable submission that Lee’s evidence should be treated with scepticism.
10 The defendants argued that another major area of concern was Lee’s conduct regarding the tax returns he filed with the Australian Taxation Office. The defendants drew attention to errors in the taxation returns lodged by Lee over a number of years. They referred to particular features of the returns:
(a) although his case for wrongful dismissal depended on Lee being an employee of the defendants, he described himself in his tax returns as a ‘Business Consultant’. It was said that there was an obvious inconsistency between these two positions;
(b) Lee did not declare all the payments received from the defendants and made some claims for deductions and rebates which were not justified. Most notably perhaps, for a period of about eight years, Lee claimed a child rebate payment in respect of one of his children who had died.
11 The defendants contended that Lee had a cavalier attitude towards the truth and would say whatever he thought was most financially advantageous for him. Because of this, it was submitted that the court should effectively disregard his evidence unless there was some corroboration from a more reliable source.
12 While there is undoubted force in the defendants’ submissions and the fraudulent behaviour and taxation issues cannot be denied, the situation is more complicated. Lee spent approximately 5 days in the witness box. I had the opportunity to observe him closely over a lengthy period. I was particularly struck by his lack of sophistication and almost childlike naivety. Lee made no effort to avoid or downplay the share trading scandals which led to his imprisonment. He frankly admitted his wrongdoing and appeared genuinely contrite about his unlawful conduct. He seemed painfully aware of how inappropriate his behaviour was, and how it caused loss to his employers and humiliation to his family.
13 In relation to the tax returns, Lee had no persuasive explanation to justify his behaviour. If anything, he seemed to me unable to fully comprehend all the points which the defendants made regarding the errors or deficiencies in the tax returns.
14 Accordingly, based both on Lee’s evidence in general and upon his demeanour and conduct in the witness box, I would not automatically disbelieve his evidence without corroboration. My overriding view of Lee was that he was keen to succeed in business and make a name for himself and possibly redeem himself in his father’s eyes. However, he lacked the skills, drive and, quite possibly, the educational and intellectual qualities needed to succeed. If a person repeats an illegal financial scheme not once, but twice, after incurring and creating significant debt on the initial occasion, it suggests that the person lacks the acumen to trade stocks profitably and the intelligence to cover his tracks well or to appreciate the perilous position he was in. However, Lee plainly had an issue with honesty in his past and was not a particularly reliable or credible witness.
Chiang
15 At all material times, Chiang was executive chairman and managing director of Quest and Murchison. He has worked for both Quest and Murchison and their respective subsidiaries since 1991. Chiang presented himself as an accomplished and experienced businessman with tertiary qualifications from England who had management and board-level responsibilities for the operations of, inter alia, companies listed on the Australian Securities Exchange (“ASX”). I had a number of concerns about Chiang’s credibility.
16 First, in his testimony Chiang represented himself as an important and well-connected businessman. He stated that he had developed significant relationships in Australia and met very influential people in his country, including Bob Hawke, Paul Keating, Peter Costello, John Elliott, Allan Myers QC and George Beaumont QC.[3] In his witness statement, Chiang stated that aspects of Lee’s relationship with Quest and Murchison, such as the lack of an employment contract did not concern him as it was “such a low level position”.[4] While I might expect Chiang to be familiar in general terms with the business operations and activities of Quest and Murchison, and perhaps play an active day-to-day role in procuring larger contracts or developing important business relationships, I am sceptical that Chiang would remember in detail the engagement of what Chiang himself describes as merely a part-time administrative assistant from approximately 10 years earlier.
[3]Exhibit D-11, at paragraph 16.
[4]Ibid, at paragraph 25.
17 Secondly, Chiang claimed in his witness statement that he had learned about Lee’s criminal conviction in April 2006.[5] He stated that in mid-April 2006, Lee came to him requesting a reference for an Australian passport and, at that time, Lee confessed his criminal conviction to him. Chiang claimed that Lee stated that he had been put in jail because he had not paid his debts. When cross-examined about when exactly he had found out about Lee’s conviction, Chiang stated that he found out from John Ansaldi in 2004. He then vacillated between various years before finally settling on 2006.
[5]Ibid, at paragraph 59.
18 If I assume that Lee only disclosed his criminal conviction in 2006, it troubles me that, in a letter of recommendation to the Australian Government, Chiang would state that ‘[p]rior to joining our Company, Mr Lee was very forthright in informing us of his legal indiscretion and his serving out the sanction imposed on him’. It is disturbing for Chiang to write something which he knows to be untrue in an important letter directed to the Australian Government. Alternatively, if I assume that this statement in Chiang’s letter to the Australian Government is correct, then this is also disturbing given the concerns it raises about the veracity of statements contained in Chiang’s witness statement and his testimony at trial.
19 Thirdly, Chiang has at times displayed an ambivalent relationship with the truth. In February 2004, Murchison’s share price increased from 40c to 80c per share. As a result of the 100% increase in share price, the ASX suspended trading of Murchison’s shares on 15 March 2004 due to concerns over the company’s ability to continue as a going concern.
20 On 19 March 2004, Chiang[6] wrote a strongly worded letter to the ASX in order to substantiate the company’s financial position and lift the suspension on trading. The tone of the letter was, in my view, typical of the manner or demeanour which Chiang displayed in the witness box during the trial: self-righteous, self-serving and economical with the truth. The letter asserted that the ASX had failed to properly understand Murchison’s financial position. Chiang and Robertson referred to its major shareholder’s continuous support of Murchison, including the pledging of HK$18.11 million shares to Standard Chartered, the subsidiary’s banker. Annexed to the letter dated 19 March 2004 was a document detailing the major shareholder’s share pledges. Of the HK$18.11 million of shares pledged, approximately $14.11 million were shares in a company called Wanasports Holdings Limited (“Wanasports”).
[6]Grant Robertson, a director and secretary of the defendants, co-authored the letter with him.
21 The Wanasports Annual Report 2004 was part of the evidence at trial. The Annual Report lists Chiang as an executive director of Wanasports. The report also reveals that the company’s shares were suspended on 24 June 2003 and remained suspended on 19 March 2004, the date of Chiang’s letter to the ASX. In cross-examination, Chiang stated that he did not explain or inform the ASX about the suspension because “there was no requirement… it’s a public document… there was no need”. Robertson stated in cross-examination that Chiang did not tell him at, or before, the time of the letter that Wanasport’s shares had been suspended. If this is correct, it demonstrates Chiang’s propensity to either mislead or omit significant facts, to both important regulatory bodies and business colleagues, in order to best suit his interests at the time.
22 Fourthly, at times Chiang changed his evidence during trial. An example of this concerns the alleged provision of a share transfer form for 15,000 Murchison shares. In his evidence-in-chief, Chiang stated that “there was no possibility that the transfer could have taken place, let alone to hand over a blank transfer form to him [Lee]. It’s just impossible because I’m not an authorised signatory.” In cross-examination Chiang recanted, claiming that he could not recall saying that Lee should not have the form and agreed that Lee had been properly provided the form by Quest Stockbroker Hong Kong Ltd. I have already referred to his evidence about the time at which he learned of Lee’s convictions.
23 Fifthly, Chiang has had adverse credit findings against him in other proceedings. In a proceeding similar in a way to the current case, in the District Court of Hong Kong, Her Honour Judge Mimmie Chan made adverse findings against Chiang. Her Honour stated that:
“I have very little sympathy for the attempts of Mr. Chiang and Mr. Wong to draw demarcation lines between the individual companies and between the companies and the individuals (eg. in the case of the employment of Mr. Lee), and to hide behind corporate veils and Chinese walls when circumstances benefit them to do so, and yet lift such corporate veils and ignore the Chinese walls when it befits their case…”
That Her Honour would question Chiang’s reliability as a witness and note, in particular, his propensity to subvert facts to suit his own best interests only serves to reinforce my issues with Chiang’s credit.
24 Sixthly, on or about 28 July 2008, Chiang wrote to Lee stating:
‘thanks, Julian. MCh is abit low, can we organise a little buying? WT’
In cross-examination, Chiang explained that the email of 28 July 2008 formed part of a Murchison share buy-back scheme.
25 I do not consider this a satisfactory explanation. As the plaintiff pointed out, any share buy-back scheme could have been more than adequately performed by the defendants’ traders in Hong Kong. Chiang repeatedly asserted in his testimony that Lee was an administrative assistant whose tasks were confined to, inter alia, forwarding mail to relevant people. Given the relatively onerous and prescriptive provisions in the Corporations Act 2001 (Cth) (“CorporationsAct”) regulating share buy-backs,[7] Lee’s allegedly low-level position within the company, and the lack of any, or any detailed, instructions by Chiang to Lee on the parameters of the buy-back, and any other corroborating evidence of Chiang’s assertion, I do not consider that Chiang’s email dated 28 July 2008 was for the purposes of a Murchison share buy-back regime.
[7]I note that the Corporations Act 2001 (Cth) requires a company which intends to make on-market buy-backs to lodge notice with ASIC at least 14 days before the first transaction.
26 It seems to me rather more likely that Chiang was attempting to artificially inflate Murchison’s share price. Such conduct amounts in substance to a form of market manipulation. I am satisfied that Chiang’s intent was to have Lee orchestrate buying activity in Murchison’s shares which would not otherwise occur. I infer that this contrived buying might result in creating interest in the company and artificially inflate its share price.
27 This view of Chiang’s conduct is supported by other evidence in the case. In August 2009, Chiang filed proceedings against Lee in the Melbourne Magistrates’ Court alleging a breach of contract by Lee. Chiang contended that he lent $14,802.83 to Lee, which he had failed to repay. Chiang’s complaint alleged that the advance to Lee occurred on about 18 May 2005. Chiang said that the loan was repayable on demand and that Lee did not repay the loan after demand was made on about 30 June 2009.
28 In substance, Lee’s defence on this issue alleged that:
(a)in about December 2004, Chiang instructed Lee to get people to buy shares in Murchison;
(b)Chiang promised that the purchasers of the shares would only have to pay $1.20 per share and that Chiang would reimburse the purchasers for any difference between $1.20 and the actual price paid;
(c)between about 15 December 2004 and 18 February 2005, Lee arranged for several people to purchase 142,648 shares in Murchison at prices ranging between $1.40 and $1.72 per share. The difference between the actual price paid and $1.20 was $53,270.60 and the commissions payable by the purchasers totalled $1,532.23. Hence the total outlay for the share purchases was $54,802.83;
(d)in about March 2005, Chiang paid $40,000 in partial payment of the amount due; and
(e)on about 18 May 2005, Chiang paid the remaining $14,802.32 by way of bank cheque.
29 Lee gave evidence about these matters in his witness statement, and was not challenged on this evidence during cross-examination.
30 While I did not have the benefit of the Magistrate’s reasons or orders in the case, the parties before me agreed that Chiang was unsuccessful in the action and that the Magistrates’ Court dismissed his claim. Under cross-examination in the case before me, Robertson stated that Chiang informed him that the purpose of the alleged loan was to assist Lee with various domestic expenditure requirements. However, Chiang stated in cross-examination before me that the purpose of the loan was to enable Lee to repay moneys that he owed to Gino Abate.
31 In the present case, Lee adduced email correspondence passing between Chiang and Lee dated 12 May 2005. Lee stated that:
‘Gino’s bro’s Tony and Carlos are asking for the above $14,802.83. They started buying since last Dec ’04. Last week, I told them that it would be done by this week. Please look into this.’
Chiang replied in writing stating: ‘sorry it slip my mind. I will arrang soon. bank transfers or cheques, wendy is looking into it, hopefully by tomorrow. WT.’ (sic).
32 The evidence persuades me that the amount of $14,802.83 was money which was due to Gino Abate and/or his brothers in relation to share purchases made and was not money which Chiang had lent to Lee.
33 Finally, Chiang had an inconsistent attitude to Lee. On the one hand, at trial, the defendants were very critical of Lee and made scathing criticisms of him: he has a history of consistent pre-meditated corporate fraud; he has an unbroken history of corporate dishonesty, fraud and greed; he has a consistent history of fraud and non-disclosure; he is a serial fraudster; and he is a recidivist fraudster and liar. While these descriptions are found in the defendants’ submissions, I infer that, as chairman of the defendants, Chiang approved of, and agreed to, the filing of those submissions.
34 On the other hand, some of the statements made by Chiang in the contemporaneous documents reflect a very different view of Lee. In correspondence with Lee in April 2007, Chiang said that: he valued his friendship; he trusts and likes him very much; he has known and trusted Lee over the past two years and he is a dear friend, a good friend; he stills trusts Lee.
35 These sentiments appear quite inconsistent with the attitude adopted by the defendants at the trial. One might wonder whether the sentiments expressed at the time accurately set out Chiang’s true views and the approach at trial was adopted for the expedient of endeavouring to avoid a finding of liability to Lee. It should also be noted that even on Chiang’s own inconsistent evidence, at the time he expressed some of these sentiments about Lee in April 2007, he was aware of Lee’s criminal history. However, that did not seem to adversely affect Chiang’s assessment of, and affection for, Lee. At the time of making these statements, Chiang was also aware of, but undeterred by, Lee’s conduct in twice conducting share trades which were alleged not to have been authorised by Quest. This took place initially in about September 2005 and in about July 2006. Chiang wrote to Lee concerning the allegedly unauthorised trades by letters dated 9 September 2005 and 7 August 2006 respectively.
36 Having regard to the various matters set out, I regard Chiang as a witness whose testimony often cannot be relied upon. Having seen Chiang in the witness box at some length, I consider that his manner or demeanour was neither reassuring nor impressive. He frequently ignored directions about answering questions directly and omitting irrelevant and unnecessary comments. In short, I consider Chiang a witness of poor credibility whose evidence should generally not be accepted without independent corroboration. Chiang is an intelligent man. To that extent, he is more dangerous than Lee because he brings greater skill to bear in crafting a version of events in his evidence. In my opinion, it is a matter of concern that such a person should be chairman of two companies listed on the Australian Securities Exchange.
37 Overall, the choice between Lee and Chiang in terms of credit is an unattractive one. The major difference, apart from Chiang’s apparently greater intelligence, was that Lee has to discharge the burden falling on a plaintiff to prove his claim to the requisite standard.
Robertson
38 Robertson is an Australian based director and secretary of the defendants. The plaintiff contends that I should find Robertson’s credit as a witness to be impugned by several factors, including that:
(a) Robertson attempted to absolve Chiang’s position in relation to the ASIC letter by stating that he was not sure if Chiang had informed him before writing the letter that Wanasport’s shares had been suspended;
(b) Robertson could not resolve whether Lee was an employee or independent contractor;
(c) Robertson at times sought Lee’s advice on important financial matters and asked Lee to assist with due diligence despite asserting that Lee was an administrative assistant;
(d) Robertson stated that Lee did not disclose to Quest and Murchison all the details of the abalone deal with BNY, although he later admitted receiving 3-4 lever arch folders from Lee relating to the deal.
39 Although he was a co-signatory to the ASIC letter referred to in paragraph 38(a) and very likely assisted in drafting the letter, I am not satisfied on the balance of probabilities that Robertson knew that Wanasport’s shares were suspended at the time of the ASIC letter. Robertson was not a director of Wanasport and could not reasonably be expected to know that their shares were suspended. Further, Robertson stated in cross-examination that he could not recall whether Chiang had informed him of Wanasport’s trading suspension. However, he said, and I accept, that he would not have signed the letter in that form if he had have known of the suspension. I note that Chiang never contended that he told Robertson of the suspension and there was nothing put to Robertson that he was aware of it at the time.
40 The remaining matters listed (b) – (d) are disputed facts in the proceeding. Accordingly, I cannot make adverse credit findings against Robertson for, for example, asserting that Lee was an independent contractor or employee when the matter is an issue in dispute between the parties which I am expected to resolve.
Wong
41 Brian Wong is a Hong Kong based director and chief financial officer of Quest and Murchison responsible for the financial and accounting affairs of Quest and Murchison and their related subsidiaries. Wong prepared a witness statement in advance of trial, elements of which gave me cause for concern about the veracity of his evidence.
42 Wong’s evidence appeared to me to be highly contrived. First, Wong stated that he read Chiang’s witness statement dated 16 May 2013 prior to preparing his own witness statement. It was unclear to me why Wong was made aware of his the chairman’s evidence prior to giving his own. It is for good reason that legal practitioners generally deal separately with witnesses before trial and minimise the risk of collusion or improper influence between them. The integrity of the court process is compromised when a witness, before giving evidence, is aware of the evidence given by another relevant witness. Secondly, the wording and phraseology employed in the witness statement more generally was inconsistent with Wong’s fluency and command of the English language evidenced during his viva voce testimony. Thirdly, in paragraph 9 Wong uses the words “inter alia”. However, under cross-examination, Wong admitted that he did not know what the term meant and could not answer whether someone else had prepared this paragraph for him. These points suggest to me that Wong’s evidence has been moulded or sculpted to serve his employer’s best interests and does not necessarily reflect the truth.
43 Further, Wong initially stated that he had made a payment to Lee on 11 April 2007 after discussion and direction from Chiang. But after additional cross-examination on the point, Wong altered his position and stated that he had made the payment to Lee of his own accord, without any direction from Chiang. In the circumstances, I treat Wong’s evidence generally with considerable caution. Broadly, his evidence should not be accepted unless corroborated by other evidence.
44 Other witnesses for the defendants such as Carol Rudico, Sharon Tan and Wendy Cheung did not give evidence as to particularly significant matters. Rudico had difficulty recollecting events about which she was questioned. She commonly answered by saying that she did not remember. I am not convinced that her recollection was as bad as she made out. She presented as a little contrived as if she had been schooled not to remember too much, especially if it might be harmful to the defendants. Witnesses like Anthony Yin and David Chua gave testimony supportive of Lee. I did not doubt their reliability.
Issues
45 According to the parties, the court has to determine the following issues in this case:
(a) was Lee an employee of Quest and/or Murchison or an independent contractor?
(b) did Lee commence work in March 2004 or October 2004?
(c) was Lee employed or engaged as an investment manager or an administrative assistant?
(d) was it part of Lee’s role to arrange the purchase of shares in Quest and Murchison, or did Lee do this voluntarily without any request from Chiang?
(e) if Lee arranged for persons to buy shares in Quest and/or Murchison, was there an agreement with Quest and/or Murchison that Lee should receive payment equivalent to 5% of the value of the shares purchased?
(f) are Lee’s claims against Quest and Murchison for the 5% payment statute-barred.
(g) does Lee’s bankruptcy between 31 January 2002 and 22 February 2005 affect his claims against Quest and Murchison?
(h) did the operation of the Anshun principle with respect to Lee’s claim against Quest at the Australian Industrial Relations Commission (“AIRC”) disqualify Lee from bringing this proceeding against Quest and Murchison?
(i) does Lee have locus standi to bring proceedings against Quest and Murchison to enforce his alleged rights to the 9% superannuation contributions in respect of his salary (including the 5% commissions or remuneration on share purchases) under the Superannuation Guarantee (Administration) Act 1992 (Cth)?
(j) does section 925F of the Corporations Act disentitle Lee from seeking to recover the 5% commission/remuneration payments?
46 Of the issues set out, the major issues are potentially affected by the defence under the Limitation of Actions Act 1958 (Vic) (“Limitations Act”) and Lee’s bankruptcy. This is because, if the defendants are correct in their contentions about these issues, then only a small amount of the claim will survive. The unpaid wage claim against Quest covers the period from 4 June 2004 to 3 March 2009. If the limitations argument is correct, then the claim for the period before 7 June 2006 will fail. Also, assuming the defendants’ bankruptcy argument is correct,[8] any claim to higher wages for the period from 31 January 2002 to 22 February 2005 would be open only to the trustee in bankruptcy and not Lee personally. This is because Lee was bankrupt between those dates. Only one claim to commission occurred after 7 June 2006. Claims in respect of earlier periods would be precluded by the Limitations Act (subject to the argument about acknowledgement of the debt). The potential result, therefore, is that the remaining claims would be:
·the claim for unpaid wages after 7 June 2006 at $1,800 per month;
·the claim to six months’ wages in lieu of reasonable notice upon termination;
·the claim to commission regarding the shares which David Chua purchased in January 2008; and
·the claim to unpaid superannuation moneys.
[8]And assuming there was no limitations issue.
47 The first of these claims depends upon Lee establishing a contract whereby Quest and Murchison agreed to pay him a rate of $1,800 per month. Lee’s argument for payment in lieu of notice depends, partly, upon establishing the agreement to remunerate Lee at a rate of $1,800 per month, and partly on Lee proving an entitlement to six months’ wages in lieu of notice. The court must be satisfied that, in the circumstances, notice was required and six months was a reasonable notice period. The claim regarding superannuation moneys is dealt with separately elsewhere in this judgment.
Does the Limitations Act have any, and what, effect on Lee’s claims?
48 Lee’s claim in this case is for breach of contract for unpaid wages, money in lieu of notice, unpaid commissions and unpaid superannuation entitlements.
49 In their defence, the defendants (paras 13, 15, and 21) pleaded that all the causes of action alleged by Lee (except for the claim involving David Chua) were statute-barred under the Limitations Act because they were brought after the expiration of six years from the date upon which the causes of action accrued. Further, the defendants alleged that there was no fresh accrual of any claim under section 24(3) of the Limitations Act because:
(a) the actions were not to recover a debt or liquidated pecuniary claim but instead were actions for damages for breach of contract as alleged in paragraph 15 of the amended statement of claim;
(b) properly characterised, even if the amounts claimed in the proceeding were claimed as debts, they were not properly to be characterised as claims for debt or other liquidated pecuniary claims, as required for the application of section 24(3) of the Act;
(c) there had never been any acknowledgement or part payment as required for the application of section 24(3) and section 25 of the Limitations Act.
50 In his written submissions, Lee recognised that the Limitations Act created an issue for him.
51 Lee’s outline set out a list of the share placements which he contended that he procured for Quest and Murchison:
Murchison
Date
Investor’s Name
Amount Raised
10/05/2004
Laviston Pty Ltd – placement of 102,000 shares at $1.00 each
$102,000.00
10/05/2004
Laviston Pty Ltd – placement of 23,000 shares at $1.00 each
$23,000.00
16/05/2004
Global Property Corporation Pty Ltd – placement of 300,000 shares at $1.00 each
$300,000.00
17/05/2004
David Ling Chua – placement of 500,000 shares at $1.00 each
$500,000.00
16/12/2004
Moh How Yeoh – placement of 50,000 shares at $1.20 each
$60,000.00
16/12/2004
Global Property Corporation Pty Ltd – placement of 530,000 shares at $1.20 each
$636,000.00
16/12/2004
Yuan Muh Lam – placement of 5,000 shares at $1.20 each
$6,000.00
16/12/2004
Renzo Bevinetto – placement of 25,000 shares at $1.20 each
$30,000.00
15/12/2004 to 18/02/2005
Global Property Corporation Pty Ltd – total of 17 transactions involving a total of 142,648 shares on the ASX
$224,448.20
11/01/2008
David Ling Chua – exercise option 40,000 shares at $1.00 each
$40,000.00
Total:
$1,921,448.20
Quest
Date
Investor’s Name
Amount Raised
15/04/2005
Cheow Moi Chua – placement of 500,000 shares at $0.50 each
$250,000.00
As I understood the defendants’ position, they did not seriously dispute that the transactions itemised in the tables took place. However, they sought to downplay Lee’s role in attracting the purchases of the securities and argued that by virtue of section 925F of the Corporations Act, he was not entitled to claim any commission in respect of these purchases.
52 As the tables above demonstrate, Lee claimed that in relation to Murchison, he procured placements of shares to the value of $1,921,448.20 and in relation to Quest, he procured a placement of shares to the value of $250,000. Assuming for the purposes of argument that Lee did procure all the share placements alleged and became entitled to a commission or payment equal to 5% of the value of the placements, it is noteworthy that only one of the share placements occurred after June 2006. This transaction concerned the exercise by David Chua of options to purchase 40,000 shares in Murchison at a price of $1 each and is the only claim which is not prima facie statute-barred.
53 Lee contended that, in about April 2007 Chiang, as chairman of Quest and Murchison, acknowledged the debt owing to Lee regarding commission payments and that this acknowledgment revived the debt. Lee said that as a result, the time for issuing proceedings commenced afresh. To this end, Lee relied upon section 24(3) and 25 of the Limitations Act which provides as follows:
“Section 24 – Fresh accrual of action on acknowledgment or part payment
(3) Where–
(a)any right of action has accrued to recover any debt or other liquidated pecuniary claim or any claim to the personal estate of a deceased person or to any share or interest therein; and
(b)the person liable or accountable therefor acknowledges the claim or makes any payment in respect thereof–
the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment:
Provided that a payment of a part of the rent or interest due at any time shall not extend the period for claiming the remainder then due, but any payment of interest shall be treated as a payment in respect of the principal debt.
Section 25 – Formal provisions as to acknowledgments and part payments
(1) Every such acknowledgment as aforesaid shall be in writing and signed by the person making the acknowledgment.
(2) Any such acknowledgment or payment as aforesaid may be made by the agent of the person by whom it is required to be made under the last preceding section, and shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is made.”
54 Lee’s argument was that various emails which passed between him and Chiang around April and May 2007, fairly construed, established that the defendants accepted or agreed that they owed money to Lee which they were bound to pay. The admission of debt was said to be unqualified and not subject to any conditions. Lee also referred to case law which, he contended, supported the position he adopted.
55 The defendants asserted that there could be no extension of time granted to Lee to make his commission claim partly because section 24(3) of the Limitations Act was inapplicable, and partly because, even if it were applicable, the terms of the provision were not satisfied because there was no unequivocal acknowledgment of a particular debt or liquidated sum.
Is Lee’s claim for debt or damages?
56 Section 24(3)(a) of the Limitations Act is satisfied to the extent that a claim is for a debt or liquidated pecuniary amount. A claim for debt arises if a contract contains an obligation to pay a certain or ascertainable sum,[9] and unless otherwise agreed, the right to payment under a contract matures into a debt only if the performance to which the payment relates has been given.[10] A claim for debt is distinct from a claim for damages. Hence, the nature and characterisation of Lee’s claim impacts upon whether Lee is entitled to a claim in damages or a claim in debt.
[9]Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012) at [26.10].
[10]Ibid at [26.12].
57 Lee contends that section 24(3)(a) covers any cause of action to recover any debt and is not restricted to only recovery of liquidated pecuniary amounts. He further submitted that his claims relating to unpaid wages, superannuation and commissions are based on work or services already done or rendered.
58 Quest and Murchison contend that in circumstances where Lee has alleged that the defendants breached their contractual obligations to him, and he accepted their repudiation, Lee’s remedy lies in damages, not a debt or liquidated amount. As a result, the defendants say that subparagraph (a) of section 24(3) of the Limitations Act cannot be enlivened and that the section has no application.
59 In McDonald v Dennys Lascelles Ltd,[11] Dixon J stated that:[12]
“When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored so far as may be to the position they occupied before the contract was made. But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition, or has committed a breach going to its root, the contract is determined so far as it is executory only, and the party in default is liable for damages for its breach”.
[11](1933) 48 CLR 457.
[12]Ibid at 476-77.
60 In relation to Lee’s claim for unpaid commissions, Lee carried out the work determined by the defendants and procured the placement of shares to personal contacts or clients whom he had come to know over his time in Melbourne. Lee did the work, made the share placements but did not receive the agreed payment. I find that this is a right to payment of an ascertainable sum which can be worked out through a relatively simple mathematical formula – being 5% of the value of the total share placements. This right had been unconditionally acquired by Lee and was not divested or discharged upon his acceptance of the repudiation. By the same reasoning, Lee’s claim for unpaid salary or wages for work which he had already performed is a claim in debt or a liquidated pecuniary amount.
61 Conversely, Lee’s claim for unpaid wages for work which he had not yet performed when he accepted the defendants’ repudiation, or alternatively, money in lieu of notice, is a claim which lies in damages. Lee’s right to payment of wages is a right which accrues upon performance of his duties. While the precise quantum of payments owed to him for work to have been performed after the acceptance of the repudiation may be ascertainable, they are not rights which had been unconditionally acquired by Lee under the contract and as such, Lee’s claim to these amounts are claims in damages. Further, the precise sum is not quantifiable or ascertainable under the terms of Lee’s engagement due to general common law principles such as the duty to mitigate loss.
62 In Automatic Fire Sprinklers Pty Ltd v Watson,[13] Latham CJ stated that:
[13](1946) 72 CLR 435.
“The general rule is, in my opinion, as there stated, namely that a servant who has been wrongfully dismissed cannot wait until the determination of the period for which he was hired and then sue for the whole of his wages.
…
He cannot remain idle, even though he truly alleges readiness and willingness to do the work, and claim wages or salary as if he had done the work. The rule that a dismissed servant is bound to mitigate his damages by obtaining other suitable employment, if available, is inconsistent with the view that he is entitled to do nothing and to sue for his full wages as if he had earned them”.
I consider that Lee’s claim for unpaid wages for work not yet done and money in lieu of notice is a claim for damages. Accordingly, this claim does not enliven section 24 of the Limitations Act.[14]
[14]Assuming the claim is otherwise statute-barred, which the claim for damages for lack of notice is not.
63 In saying this, I note that the Limitations Act would not apply to claims in debt for wages owing in respect of work done after 7 June 2006, or for damages claimed in respect of the repudiation of the agreement with Lee. These claims or alleged causes of action arose within the period of six years before Lee issued his writ and are, therefore, not within the applicable limitation period.
64 If I am wrong in my conclusions regarding the application of the Limitations Act, I move on to consider whether the defendants acknowledged Lee’s claim in the way contemplated by section 24(3)(b) and section 25 of the Limitations Act.
Acknowledgment of debt
65 Lee contends that correspondence passing between him and Chiang between about 9 April 2007 and 2 May 2007, when taken as a whole, constitutes an acknowledgment of debt sufficient for the limitation period to commence again.
66 Quest and Murchison submit that there was no acknowledgment of debt as required by section 24(3) and 25 of the Limitations Act. They say that for these sections to apply, there must be an unequivocal act of acknowledgment referable to the particular debt which is being claimed. They say that, to the extent the emails between Chiang and Lee referred to above constitute an acknowledgment, they were referrable to an indebtedness of an outstanding amount of $2,400, which was the total of Lee’s unpaid wages for February and March 2007.[15] Quest and Murchison paid this amount to Lee on 22 April 2007. Alternatively, the defendants submit that if the emails constituted an acknowledgment of debt, it is an acknowledgment only of past debt. It cannot apply to debt incurred after 2 May 2007 (at the latest).
Legal principles
[15]The debt may have been greater to the extent that it included expenses incurred by Lee which the defendants were to reimburse.
67 Section 25 of the Limitations Act provides certain formal requirements for provision of an acknowledgment. These include:
· an acknowledgment must be in writing and signed by the person making the acknowledgment
· an acknowledgment may be made by an agent of the person required to give the acknowledgment
· an acknowledgment may be made to an agent of the person to whom the acknowledgment is to be made
· an acknowledgment binds the acknowledger and their successor(s), but no one else.
68 Further, relevant cases demonstrate the following principles in relation to acknowledgments:
· the question of what amounts to an acknowledgment is a question of construction;[16]
[16]VL Finance Pty Ltd v Legudi [2003] VSC 57 at [60].
· the acknowledgment need not specify the amount of debt owed, provided it can be ascertained extrinsically;[17]
[17]Ibid.
· an acknowledgment can be construed from a combination of documents;[18]
[18]Ibid.
· an acknowledgment needs to be in writing and signed by the debtor or his agent;
· the written acknowledgment needs to be given to the creditor. This requirement is the hardest to define precisely. It is no longer necessary that an acknowledgment be sent or delivered to the creditor. But the acknowledgment, expressly or implicitly, must be addressed to the creditor.
· the debtor need not have intended to communicate the acknowledgment to the creditor or the creditor’s agent. However, ‘a document does not constitute an acknowledgment unless it is, in substance, expressive of the debtor’s intention to admit the debt and to have the document produced and used for that purpose’.[19]
[19]Ibid, at [63].
· the statement must acknowledge the maker’s indebtedness and legal liability to pay the claim in question. A debtor can only be held to have acknowledged the claim if he has, in effect, admitted his legal liability to pay that which the plaintiff creditor seeks to recover.[20]
· an acknowledgment of a creditor’s right must be unconditional. Offers to pay money in order to settle disputes are not necessarily acknowledgments of a debt. They might well be a proposed compromise of a disputed liability.[21]
Did Quest and Murchison acknowledge Lee’s debt?
[20]Surrendera Overseas Limited v Government of Sri Lanka [1997] 2 All ER 481 at 487.
[21]Victorian Producers’ Co-operative Co Ltd v Dye [1927] VLR 572 at 574-5.
69 As Chiang is the executive chairman and managing director of Quest and Murchison, I am satisfied that Chiang was an agent authorised on behalf of the defendants to make an acknowledgment. Further, I am satisfied that the provisions of the Electronic Transactions (Victoria) Act 2000 sufficiently provide for the signature of documents by email.
70 The defendants contended that the acknowledgment contained in the emails related to amounts owed to Lee for outstanding wages for the period of February and March 2007. As part of this submission, Quest and Murchison claim that the indebtedness was promptly remedied by payment made on 11 April 2007. Certainly, there was no dispute at trial that Brian Wong had made an error in failing to pay Lee on a timely basis and Lee conceded that these payments were made on 11 April 2007.
71 The emails by Chiang dated 9 and 10 April 2007, read together, acknowledge that there have been errors in payments by Brian Wong. Chiang states inter alia:
· ‘As for the 3 percent, please provide the email and I shall ensure you are paid accordingly. Julian, I do not want to fight with friend, so I am giving upsince it is shameful when my only friend in Melbourne even bang down the phone on me. This is very shameful and insulting to us both. So I decided, if u want to fight, and I dont, I will settle everything with you thus far and then we see whether u want to carry on’ (sic).
· ‘I shall say that again, dont push me to the brim. Please sue MCH if you want to and I see you in court then. Please let me haveall your claims and once and for all, clear it so that at least I do not let you down. I do not take threats kindly Julian, its not nice in what you said. You want to be paid 3000 and no other discussion, is it not the case. Well I understand the context alright. … I surrender, do what you are happy my friend’ (sic).
· ‘Brian is wrong and for that, I now ask u to send me the list of outstanding owed to you and we can settle amicably’ (sic).
· ‘Julian, I will fix the problem you have with Brian first so that I do not owe you money. Then you tell me what you want to do and on what terms going forward.’
· ‘I must apologise that your wife is unhappy too, looks like I am successful to make you and family very unhappy. So I will stop arrangements for now and clear up the amount outstanding as a priority. Too much unhappiness and bitterness that I regret very much. Had I known, the outcome may be rather different. Wendy shall write to you for the amount owed and we sort out oberything, it’s a promise from me. Seems like no one is good enough in our company to handle the matter with you, so please send me the list and we will settle before things get out of hand and further unhappiness and bitterness result. Its not worth it my friend’ (sic).
· ‘I have asked Brian to sort out your money owed. As to the others, looks like it is all coming out. Might as well isnt it? please lets do a reconciliation of what you done, it is pointless to debate whether they are all correct as there are no right or wrong, true or untrue, when one loses confidence in the other’ (sic).
I find that these emails most likely related to outstanding wage payments from February and March 2007 and the reimbursement of expenses incurred, payments which were subsequently rectified by Brian Wong on 11 April 2007.
72 However, even if I am wrong about this, to the extent that the emails dated 9 and 10 April 2007 could be construed as referrable to some other payment, such as unpaid commissions, I find that Chiang’s correspondence does not constitute an acknowledgment of Quest and Murchison’s legal liability to pay the debt. Rather, I find that the emails demonstrate a clear intention to compromise or settle a dispute, quickly and amicably, in an effort to avoid litigation.
73 The plaintiff relies upon an email dated 2 May 2007 from Chiang to Lee. The email states, inter alia, that:
‘Dear Julian,
Global prop and laviston were deals the company did with them on investment in oceanic. You are now claiming its your deal, then you must be responsible for the mess it is in too. I am so so disappointed in your recent actions of claiming everything as if we owe you a great deal when what I tried to do was to help you with your finances without having to argue with you. Please do not take kindness as weakness. You have definitely cross the mark with me with these actions.
…
As to our shares holding in trust by you, you have not account for where they are? did u sell them without us knowing, I am asking not accusing. It appears to be a case of breach of trust. You claimed you have been let down by Brian, and also the shares you claimed you bot for us, we settle them by selling out for you. All I want is to clear out everything so that I will not let down the clients.
…
Now your fantasy of saying its deposits? They were supposed to help u to privide liquidity. As a Christian, I am so ashamed that u are now inventing stories. When You have a criminal record, we stood by you, we wrote a testimonial for you to assist you to be a citizen, have u forgotten these actions.
…
I shall be in Melbourne in June and we can then sort out everything.
…
Please in view of the circumstance, stop all work for Murchison and Quest until we have a chance to sort out face to face in June. Julian, this is my FINAL appeal to you to stop all these silly stuff.’
74 It is clear from the email, read as a whole, that Chiang did not admit or acknowledge a legal liability to Lee’s claim, or recognise Lee’s unconditional right to payment. The letter is analogous to that in Victorian Producers’ Co-operative Co Ltd v Dye,[22] in which talks aimed at settling a matter so as to avoid being ‘mixed up in any unpleasant affair’ did not constitute an acknowledgment of a debt owing. Instead, offers to settle are separate and distinct offers denying liability for the debt, and made as a compromise of a disputed liability recognising the commercial realities of the situation. I find that Chiang’s offers to pay money are the latter – compromises of a disputed liability.
[22][1927] VLR 572 at 574-5.
75 I thus find that, although some of Lee’s claims satisfy subparagraph (a) of section 24(3), the debt was not subsequently acknowledged pursuant to subparagraph (b). Hence, any contractual claim made by the plaintiff arising before 7 June 2006 is statute-barred by operation of the Limitations Act.
Does Lee’s bankruptcy between 31 January 2002 and 22 February 2005 affect his claims against Quest and Murchison?
76 Lee was made bankrupt by the creditor’s petition of Hartley Poynton Limited on 31 January 2002. Lee was discharged from bankruptcy by automatic operation of section 149(2) of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) on 22 February 2005. Relevantly, all bar two share placements – one procured for Murchison on 11 January 2008 totalling $40,000 and the other procured for Quest in 15 April 2005 totalling $250,000 – occurred while Lee was bankrupt. I will refer to the share placements occurring between 31 January 2002 and 22 February 2005 as the affected commissions.
77 The defendants contend that upon the making of the sequestration order against Lee, all of Lee’s property and after-acquired property during the bankruptcy period vested in the trustee in bankruptcy. The defendants argued that the affected commissions were after-acquired property which vested forthwith in the trustee in bankruptcy. They submitted that upon discharge of the bankruptcy, Lee’s rights or choses in action did not re-vest in Lee, but remained the property of the trustee in bankruptcy. As such, Lee was unable to sue for the affected commissions.
78 Initially, Lee relied upon an argument that, because the definition of ‘property’ contained in section 5 of the Bankruptcy Act did not expressly include a chose in action, a chose in action therefore does not automatically vest in the trustee in bankruptcy. Instead, he argued that the trustee must elect whether to claim or disclaim it.
79 Section 5 of the Bankruptcy Act states that property:
“means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.”
80 Generally, it is an uncontroversial principle of law that a chose in action is personal property. Further, subject to section 60(4) of the Bankruptcy Act,[23] choses in action based on property interests, such as debts, contracts, actions for breach of contract have all been found by courts to constitute personal property which vests forthwith in the trustee in bankruptcy.[24] I find that Lee’s right to claim in respect of commissions generated while he was bankrupt vested in his trustee in bankruptcy.
[23]Section 60(4) of the Bankruptcy Act 1966 (Cth) allows the bankrupt to continue, in their own name, a proceeding in respect of a personal injury or wrong done to them, their spouses or family members.
[24]Geia v Palm Island Aboriginal Council [2001] 1 Qd R 245.
81 Second, upon Lee’s discharge from bankruptcy (and in contrast to annulment), the choses in action comprising the claims to commissions do not re-vest in Lee. This principle was clearly expounded by Rares J in Tapp v Law Cover Insurance Pty Ltd:[25]
“Moreover, if, after the discharge of the bankrupt, additional assets that vested in the trustee by force of a provision of the Act, such as ss 58 or 117, came into the trustee’s hands, a discharged debt is treated as a liability of the estate that is payable out of it. That is because the release effected by s 153(1) operates only to release the former bankrupt and does not operate to release the estate: Re Kavich; Kavich v Official Trustee in Bankruptcy (1995) 58 FCR 82 at 86D per Hill J. Accordingly, where the bankrupt has a cause of action that vested in the trustee and on which the trustee has not obtained judgment at the time the bankrupt is discharged under s 153, the trustee remains entitled to continue to pursue the action. And, if the trustee recovers money or assets for the estate at any time, he or she must then distribute that money or the proceeds of those assets among the creditors who had debts provable in the bankruptcy. The intervening discharge from bankruptcy and the release of the bankrupt cannot alter the existing rights of the trustee, and the creditors in respect of, at least, the property of the bankrupt that vested in the trustee before the discharge.”
[25][2013] FCA 35, at [20].
82 I find Lee has no prima facie entitlement to sue for the commissions generated while he was bankrupt because the relevant choses in action remained vested in the trustee in bankruptcy upon Lee’s discharge from bankruptcy.
83 Lee further contended that, by reason of the alleged acknowledgement of debt by Chiang to Lee around April and May 2007, the cause of action accrued at the earliest on or about 9 April 2007, more than two years after Lee was discharged from bankruptcy. To this end, the plaintiff relied upon the operation of section 24(3) of the Limitations Act. Lee submitted that, under the terms of this provision, a fresh cause of action for debt accrued to the plaintiff on and not before 9 April 2007, upon which he was entitled to sue.
84 The defendants submitted that such a proposition would lead to a state in which there were two extant causes of action for the same debt, one vesting in the trustee in bankruptcy and the other in Lee upon receipt of the acknowledgment. The defendants submitted that such a position would be legal nonsense.
85 Even assuming for argument’s sake that I had found the letters from Chiang to Lee do constitute an acknowledgment for the purposes of sections 24(3) and 25 of the Limitations Act, I find that the defendants’ submission on this point is correct. Section 24(3) of the Limitations Act is a deeming provision, the purpose of which is to restart or revive the limitations period of a cause of action upon acknowledgment or part payment. The terms of section 24(3) state that “the right shall be deemed to have accrued on or not before the date of the last acknowledgment” (emphasis added). The provision, read in its context, does not purport to commence an entirely separate cause of action upon which the plaintiff can sue, but merely to determine or establish the date from which time runs afresh. The plaintiff’s construction of the provision would lead to the scenario where a fresh and concurrent cause of action for the same debt is created at each instance in which a partial payment or acknowledgment of debt is made.
86 Even if I am wrong about this too, Lee’s argument must fail. Upon discharge of the bankruptcy, the choses in action for the affected commissions remained vested in the trustee in bankruptcy. In order for the acknowledgment to make time run afresh, the right of action must have accrued to the person receiving the acknowledgment. An acknowledgment to Lee cannot revive an action which was no longer Lee’s to pursue. Section 25 of the Limitations Act states that an acknowledgment “shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged” (emphasis added).
87 In the case of Markwick v Hardingham,[26] the plaintiff mortgaged two houses to a third party in 1828. In 1832, before leaving England to reside overseas, the plaintiff executed a power of attorney to his solicitor authorising him to receive rents and profits from his mortgaged property and to deduct a fair sum as remuneration for himself as payment. Upon returning to England nine years later, the plaintiff was significantly indebted to his solicitor and so granted a mortgage over his property to the solicitor and further undertook to execute a deed as required for further securing any real property which the plaintiff might have. In 1845, the plaintiff was declared bankrupt. The trustee in bankruptcy did not interfere with the mortgaged property, deeming the property so encumbered as to be profitless to creditors, and the solicitor continued to receive the rents from the property as before. In 1849, the plaintiff’s solicitor paid the third party mortgagee a principal sum and took a transfer of the mortgage on the plaintiff’s house. In January 1865, the plaintiff wrote to his solicitor stating that he would like to regain possession of the house and settle his accounts. In February 1865, the solicitor replied that it would give him “infinite pleasure to wind up and close all accounts”. In 1877, and some 32 years after initially declaring bankruptcy, the plaintiff’s bankruptcy was annulled. The plaintiff sued the defendant, as executors of the late solicitor’s will, to redeem the mortgage. The plaintiff relied in part on the acknowledgment contained in the February 1865 letter. The defendant pleaded the statute of limitations.
[26](1880) 15 Ch D 339 (CA).
88 Lord Justice James, delivering the judgment of the Court of Appeal, stated:
“It is impossible to hold… that the right of the Plaintiff was barred when the letters of January and February, 1865, were written. At that time the Plaintiff was in point of law a stranger to the property. He had been mortgagor, but if the estate of a mortgagor has become by his own act, or by the operation of law, vested in some one else, it would be an absurd and inadmissible construction of the section of the Statute of Limitations to consider him a mortgagor capable of receiving an acknowledgment of a title to redeem. A statement to A., or a communication with A., from which it is to be inferred that B. has a right to redeem, is not an acknowledgment of A.’s right, nor is it an acknowledgment to B. Nor is it the more so because A. had many years previously been the original mortgagor. Can it then be considered as an acknowledgment made to the bankrupt as agent to the assignee of his estate? It is quite clear that the Plaintiff did not correspond with Mr. Dennett [the plaintiff’s solicitor] in any such character or with any such intention, or with any authority express or implied from his assignee. … Nothing could revert to the Plaintiff but what was in the assignee, and therefore no right to redeem reverted.”[27]
The annulment of the plaintiff’s bankruptcy in Markwick had the effect of re-vesting so much of the plaintiff’s assets as was in specie and available at the time of annulment. In contrast, Lee’s bankruptcy was discharged by automatic operation of the Bankruptcy Act and, as propounded in Tapp, property did not re-vest in Lee and remained the property of the trustee in bankruptcy.
[27]Ibid, at 352.
89 Accordingly, even if the correspondence from Chiang around April and May 2007 were sufficient to constitute an acknowledgment of debt, it was an acknowledgment of debt to Lee. To borrow the words of Lord Justice James, Lee was, by operation of law, a mere stranger to any right of action for the affected commissions by the time of the acknowledgment. Any statement acknowledging a debt to Lee was ineffective simply because it was made to the wrong person.
90 I find that the affected commissions are statute-barred and are not recoverable by Lee.
91 I find that the defendants’ arguments regarding the Limitations Act and the effect of the Bankruptcy Act provisions are in substance correct. As a result, it appears that the causes of action which remain are those set out at the end of paragraph 46 above.
92 I address each of these matters in turn.
Are the defendants liable to pay Lee at the rate of $1800 per month for the period after 7 June 2006?
93 Lee alleged in his Amended Statement of Claim that it was a term of the employment agreement which he made in March 2004 with the defendants that Quest would pay him a base salary of $1200 per month which, after a three month probation period, would be increased to $3000 per month. The defendants admit that Lee was to be paid $1200 per month but deny any other payment was agreed to. They say that, in July 2007, Lee sought an increase in his monthly payment from $1200 to $3000 but Quest rejected his request. Thereafter, Lee continued to accept payment without demur, at the rate of $1200 per month until 21 May 2009.
94 Lee’s evidence on this issue was brief. He simply claimed in his affidavit that he and Chiang met in Melbourne around early March 2004 and struck an agreement whereby Lee became the investment manager for the defendants. Lee claimed it was a term of the agreement that he be paid a base salary of $1200 per month and then after three months’ probation, he would be paid $3000 per month.
95 The evidence shows that Lee did not seek a remuneration increase until July 2007. This was well after the expiration of the three month probationary period. Lee agreed that his request for an increase was rejected and that he nevertheless remained in his position working for the defendants. Lee maintained that he was friends with people who, through him, had taken up share placements in the defendants and he considered that he had a moral obligation to acknowledge their support by staying and keeping them informed of the companies’ progress.
96 The evidence did not show any complaints by Lee that he did not receive the higher remuneration in and from 2004 after serving the probationary period. Lee did not explain his silence on that matter. Nor did he explain why it was not until 2007 that he requested the payment which was said to be due in accordance with the agreement made.
97 In my view, Lee was unconvincing on this issue and failed to discharge his onus of proof. Accordingly, Lee’s claim for payment at a rate of $3000 per calendar month fails. If Lee had a genuine grievance about his pay after the expiration of the probationary period, I would have expected to see some evidence, oral or written, of a complaint to the defendants or a good explanation of why no complaint was made.
Six months’ wages in lieu of notice
98 This issue raises several matters:
· Was Lee entitled to be paid in and after 2009 at $3000 per calendar month?
· Was Lee entitled to any wages in lieu of reasonable notice of his termination or was his immediate dismissal justified?
· If Lee were entitled to notice, was six months’ notice appropriate?
99 I have already found that Lee failed to establish an entitlement to payment at a rate of $3000 per calendar month. Thus, this part of his claim must fail.
100 The question of Lee having a potential entitlement to payment of wages in lieu of notice is influenced partly by the existence of the agreement he alleged, and partly by whether or not he was engaged as an employee or contractor. It is well recognised that an employee whose employment is terminated without cause is entitled to reasonable notice or payment in lieu.[28] Whether the same applies to the engagement of an independent contractor is a moot point. Lee referred me to no authority supporting the giving of notice or a payment in lieu to a contractor. This might be because such an engagement is a commercial arrangement governed by the usual rules applicable to contracts in general – here, it would not be implied because such a term would have to satisfy the criteria laid down by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings:[29]
“For a term to be implied, the following conditions (which may overlap) must be satisfied: 1) it must be reasonable and equitable; 2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; 3) it must be so obvious that ‘it goes without saying’; 4) it must be capable of clear expression; 5) it must not contradict any express term of the contract.”
[28]This principle is subject to there being no express term in the contract to the contrary.
[29](1977) 180 CLR 266, 283.
101 I consider that the retainer of an independent contractor is such as not to attract an implied term of the kind alleged. It is not necessary and the retainer would work perfectly well without such a term. Nor is it so obvious that it goes without saying.
102 If Lee were an employee, the implication of a term requiring reasonable notice of the termination of the contract is a usual incident of employment contracts (subject to the employer’s right to dismiss an employee immediately for good cause).
103 I do not doubt that generally an employer is entitled to dismiss an employee summarily for serious misconduct or gross and wilful misconduct. This would, in my view, include breaching the criminal law, especially if the offence related to work – for example, recording phone conversations with officers of the defendants without their knowledge or approval. Such conduct is unlawful. In this case, Lee admitted that he engaged in such conduct. Accordingly, I accept that if Lee were an employee, he was liable to be dismissed summarily for misconduct.
Was Lee an employee of Quest and/or Murchison or an independent contractor?
104 Lee contended that he was an employee and not an independent contractor. In his submissions, this seemed to be based primarily on the alleged oral agreement which he said was made with Chiang to that effect. But there was other evidence supporting Lee’s position. Firstly, on about 1 December 2004, Chiang informed Lee by letter that the Murchison Board had resolved to grant him the option to subscribe for 25,000 employee shares in the company.[30] On 16 May 2005, Lee exercised his option and subscribed for 10,000 shares in Murchison at an exercise price of $1.00 per share. Later, in January 2008, in a letter signed by Chiang, Murchison advised Lee that the Board had resolved to grant him options to subscribe for a further 25,227 shares in the company at an exercise price of $1.02 per share. As with the earlier offer, the letter said that all information concerning the options was fully explained in the enclosed document. Neither of the explanatory documents formed part of the evidence in this case. The 24 January 2008 letter noted in part that:
‘If the employment of the holder within the Group is terminated for any reason (before the expiry date), those options that are not exercised before the termination of employment will automatically lapse on the date of termination. In the event that the employment is terminated by notice given by the holder according to the term of his employment contract, the options will automatically lapse at the time of notice given.’
[30]Plaintiff’s submissions, at paragraph 80.
105 In their final submissions, the defendants argued that Lee was allowed to participate in the employee share option programs because:
‘… as is well known company law, the directors of the defendants … had a discretion as to directors to allow Lee to participate in these programs if they decided it was in the interests of the defendant company to do so.’
Counsel for the defendants did not explain the legal source or basis of this discretion or the grounds upon which it was apparently exercised in Lee’s favour.
106 Quest and Murchison also submitted that the scheme permitted options to be issued to shareholders and said that Lee was a shareholder at the relevant time. This statement is puzzling because it did not appear from the evidence that Lee was a shareholder in Murchison before December 2004.
107 In the defendants’ oral closing submissions, counsel referred to the evidence of Robertson where he agreed that, for some time, there had been a share plan for executives of Murchison and another plan for employees. The documents referrable to the employee plan showed that:
‘… an ‘eligible employee’ meant an employee who was eligible to participate in the Plan under clause 2.1.’
108 Clause 2.1 of the employee share plan read as follows:
‘A person is eligible to participate in the Plan if he or she is an employee in full time or part time permanent employment with a company in the Group and has completed 12 months’ continuous service, or such shorter period of service as the board may in its discretion permit, within the Group.’
Thus, according to the requirements of Murchison, only an employee could participate in the share plan. Accordingly, it would appear that Murchison, and perhaps Chiang as chairman in particular, regarded Lee as an employee.
109 In his evidence, Robertson said that in 2004/05, there was a requirement that a person participating in the Murchison share plan be an employee or shareholder in the company. But, at that time, the scheme would not apply to a consultant or contractor who was not an employee. Robertson believed the terms of the scheme were altered to make non-employees eligible but he could not say precisely when the change was effected or point to written proof of the alteration.
110 In my view, on the evidence, at the time applicable to Lee’s initial offer of options, it was necessary that a participant in the share plan be an eligible employee as defined. This required that the person be a full time or part time permanent employee with a company in the Murchison Group. I was not taken to, or asked to consider, any other documents which showed that, at the relevant time, the board of Murchison had a discretion to allow non-employees to participate in the employee share scheme.
111 Secondly, in August 2006, at Lee’s request, Chiang wrote him a character reference letter. Chiang’s letter included the following comments:
· This is to confirm that Mr Julian KC Lee is employed as our representative in our Melbourne office.
· For the past two years, the management of our company has found Mr Lee to be a reliable employee.
· … I recommended him to the management of Murchison to employ him as our resident representative in Melbourne.
The terms of this reference letter, directed as they were to ‘To Whom It May Concern’, states clearly that Lee was employed by Murchison.
112 Thirdly, in June 2009, Robertson requested from the defendants’ Hong Kong offices the record of payments made for work done and expenses incurred by Lee during the period for which he worked with, or for, the defendant companies. The records which Hong Kong forwarded to Robertson included a statement of the amounts paid, the period to which payment related, the relevant bank and the date on which the funds were paid. The records refer to the amounts paid for work done as ‘salary’. The same description also featured on another document relied upon by the two defendants to evidence payments made to Lee beginning on 1 December 2004 for work done in October 2004. Again, this reference to ‘salary’ suggests that Lee was an employee of Quest and/or Murchison.[31]
[31]I note that when Robertson sent these records to Ian Jordan, a partner of the law firm Mills Oakley, he said that “all service payments” were paid into Mr Lee’s bank account. This suggests that Robertson possibly had a different view from the Hong Kong based directors regarding Lee’s position. Perhaps this was due to the fact that he was a locally trained lawyer and would be more likely to understand the significance of the distinction between an employee and a contractor.
113 On the other hand there are elements of the evidence which suggest that Lee was not an employee. First, Lee never claimed and never received the usual benefits incidental to employment – namely, annual leave, sick leave, long service leave or holiday loading.
114 Secondly, Lee never asked for Quest or Murchison to take out PAYG instalments from his payments or to provide him with an annual group certificate for taxation purposes. The defendants did not make any PAYG payments to the Commonwealth or provide Lee with a group certificate.
115 Thirdly, in his tax returns, Lee described himself as a ‘business consultant’. He also had his own ABN. This description of Lee for taxation purposes suggests an independent business operator rather than an employee. This was consistent with Lee not being a full-time employee of the defendants. Lee was at liberty to pursue other commercial opportunities.
116 Fourthly, the defendants seemed not to be very prescriptive in regulating precisely when and how Lee was to carry out his work. Lee enjoyed considerable freedom in performing his various tasks. He did not have to account in detail for his time. A major factor seemed to be that he should be available to take phone calls and to respond to emails from Chiang as and when required. This was not limited to weekdays or normal business hours in Melbourne because Chiang travelled extensively in Asia and beyond due to his work.
117 Traditionally, the courts used the test of control as the determining factor in deciding whether someone was an employee.[32] The test has evolved more recently so that the whole of the relationship between the parties is considered. Hollis v Vabu Pty Ltd[33] concerned a claim by a person who was struck and injured by a bicycle courier. Hollis sued on the basis that the defendant was either vicariously liable for the actions of the cyclist or was liable as principal for the actions of its agent. Notwithstanding Vabu’s argument that the couriers were not employees but were independent contractors, the court found Vabu vicariously liable.
[32]Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Hollis v Vabu Pty Ltd (2001) 207 CLR 21; Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161.
[33](2001) 207 CLR 21.
118 In their submissions in this case, the defendants sought to emphasise their lack of control over Lee. They claimed that he conducted his activities free of direction or control by the defendants and that the defendants had no right to control Lee’s mode, place, hours or periods of activities. I accept that Lee retained a broad discretion regarding the precise manner in which he conducted much of his work for the defendants.
119 In a context where there are competing factors pointing in opposite directions, I have concluded the better view is that Lee was not an employee but an independent contractor. In his tax returns for the financial years ending June 2006 and June 2007, he describes himself as a business consultant. The code which Lee entered in the tax returns to describe his main business activity was A69629 which was the code attributed to business contractors. I regard this matter of some importance because:
(a) Lee completed the form himself;
(b) at the time Lee completed the form, he knew or should have known that a taxpayer is obliged to ensure that the information in the tax return is accurate and true – providing false information to the Australian Taxation Office can result in significant consequences;
(c) Lee said that he was providing business consulting services to other parties. At the same time as he was working for the defendants, he was attempting to set up a new business and also engaged in other work.
120 If Lee was working on another business or performing work for other entities, it was appropriate for him to classify himself as a contractor. Moreover, Lee did not receive a payslip or group certificate from the defendants but had monies paid into his bank account. The payment he received from the defendants were irregular. For example, in 2004, he did not receive any payments in his account between March and December 2004. But Lee said he was paid indirectly through a transfer of 15,000 shares in Murchison. In relation to sick leave and other entitlements which Lee claims in the proceeding, Lee sent no written demand to the defendants. He said that there was no need to ask for these things because it was compulsory for employees to receive them. Somewhat inconsistently with this, Lee said that he asked the accountant Brian Wong and Chiang about the payment of superannuation and claimed that Chiang said he would attend to it and Lee was not to worry about it. Further, Lee did not seek or receive from Quest or Murchison normal employee benefits such as annual leave, sick leave or long service leave. Nor did the defendants withdraw tax from his payments or give Lee a group certificate.
121 The relationship between Lee and the defendants seemed to evolve. Initially, he was retained in what amounted to a part time role which was mainly administrative in nature. Over time, Lee became involved in other matters within the business. The contemporaneous documentary evidence demonstrated that:
· Lee was involved in arranging investments for Quest, with Quest funding his airfares to Kuala Lumpur to work out a long term supply agreement with Quest’s investors;
· In respect of the abalone deal with BNY, Lee liaised with partners[34] and suppliers[35] and was involved in arranging shipping.[36]
[34]Email from Mr Lee to Mr Wong, dated 11 December 2008.
[35]Email from Mr Lee to Mr Chiang dated 4 November 2008.
[36]Email from Mr Lee 2008 to Swee Eng of KYH dated 16 November.
· Lee sought out investors in Quest’s VOIP products;[37] and
[37]Emails between Mr Lee and potential VOIP customers dated 14 October 2006.
· Lee liaised with parties seeking Quest’s investment in their businesses.[38]
Through this process, Lee became rather more than a “lowly administrative assistant”, the description which the defendants sought to apply to him. Although the defendants sought to downplay his role, with his fundraising activities and other work such as that undertaken with BNY, Lee assumed a more important role in the business.
[38]Emails between Mr Lee, Mr Pawsey and Mr Chiang dated 14 March 2007, 26 March 2007, 28 March 2007.
122 Lee’s evidence about the agreement allegedly made with the defendants is limited. As with the alleged term about the extent of his remuneration, it is no more than an assertion. He gives no details of when or where the conversation with Chiang occurred. Chiang’s travel diary indicates that he was not in Melbourne between June 2003 and April 2004, so I think it likely that Lee confused the date of his meeting and talks with Chiang. The defendants alleged in their defence that Robertson terminated Lee for cause and no notice was required. Lee failed to follow up the oral agreement with written confirmation or explain why he failed to complain in writing of this alleged breach of the agreement when it first occurred. Lee’s difficulty with the agreement alleged is the quality of his evidence. While Chiang is not a credible witness, Lee has nonetheless failed to satisfy me that the parties agreed upon a term as to reasonable notice.
123 Lee claims that he agreed with Chiang that in the event of Lee finding people to buy shares in the defendant companies, the defendants would pay him a sum equal to 5% of the monies subscribed for shares. There appears to be no serious dispute that the transactions set out in the table at paragraph 51 took place. Parties introduced by, or associated with, Lee bought shares in the defendants.
124 The parties put forward different stories to explain these share dealings. Lee says that Chiang was keen to raise additional capital by selling shares in the companies. Lee suggested that Chiang did not appear to have particularly useful contacts within the investment community in Melbourne. Thus, Chiang was keen to make use of whatever contacts Lee might have developed over his time in Melbourne.
125 The defendants take issue with Lee’s version of events and Chiang says that he knew influential people in Australia. From Chiang’s perspective, Lee, as a former criminal, was keen to exploit whatever opportunity he could to work in finance and re-establish himself within the financial community in Melbourne. To this end, the defendants argued that it would help Lee to show that he was working for, or closely with, two companies listed on the Australian Securities Exchange.
126 On this issue, I prefer the evidence of Lee to that of Chiang. Lee raised a substantial amount of money regarding share placements in a limited time. The first occasion was May 2004 when he raised approximately $925,000. The second occasion was December 2004 when he raised approximately $732,000. This was followed shortly after by additional funding of $224,000.
127 Although Lee disputes that the letter dated 7 August 2006 and signed by Chiang is genuine and says that he never received it, the letter is relevant. The letter included a reference to the original intention that Lee act as an investment manager and said that this intention was no longer valid. Chiang’s affidavit material made no reference to the existence of such an intention. The thrust of Chiang’s evidence was that Lee undertook a low level administrative position where the main task was to open mail and forward mail to Hong Kong as well as performing minor administrative duties. Chiang said there was never any mention or discussion that Lee’s job was to introduce potential investors. Chiang said that, while Lee from time to time introduced him to potential investors, this was done on an informal basis and not on the instructions of the defendants.
128 In my view, the evidence at trial does not sit comfortably with the August 2007 letter in which Chiang also asks Lee to stop putting himself forward as Quest’s investment manager. Having regard to the circumstances, this comment gives some support to Lee’s version of events, namely, that the defendants engaged him at least partly to perform investment management work. It would not be surprising that such work should be remunerated separately and on a different basis from his usual monthly payments. I am also fortified in my view because of the use which the defendants made of Lee regarding the special purchases of Murchison shares,[39] and his other work for the defendants such as the BNY abalone venture.
What is the appropriate notice period?
[39]This is referred to at paragraph 25 and following.
129 If Lee were an employee and was wrongfully terminated (both of which propositions I reject), I need to determine the period of reasonable notice applicable for Lee. I note that there is a policy consideration underlying the giving of reasonable notice: it is to serve the common purpose of the parties. That common purpose is to:
· serve as a warning of the coming end of the contract;
· allow the parties to adjust and to arrange themselves in anticipation of the ending of the employment;
· allow both parties to cushion themselves against sudden change giving them time to make alternate arrangements in a form similar to those being terminated.[40]
[40]See Donaghey, Termination of Employment (2nd ed) LexisNexis, para 12.25 (2013).
130 The question of what constitutes reasonable notice is a question of fact. This is determined by weighing a number of factors, including:
· the length of service of the employee;
· the grade of the appointment;
· the nature of the employment;
· the professional standing of the employee;
· the age of the employee at termination;
· the expected period of time required by the employee to find alternative employment.
131 Here, Lee was engaged with the defendants for about five years. While he had some basic administrative duties, he was also engaged in higher level work regarding fundraising and the exploration of other commercial opportunities for the defendants. In part at least, Chiang seemed keen to exploit Lee’s contacts in Melbourne both within the Chinese community and among clients for whom he had previously acted. Lee’s qualifications and experience were limited and were not essential for the performance of his role. It is difficult to say how long it might have taken Lee to find alternative employment. His history of dishonesty and incarceration might well have been an obstacle with many employers. At the time his employment was terminated, Lee was about 55.
132 The assessment of reasonable notice is made in light of all the circumstances at the date notice is given and not when the contract of employment began.[41] Plainly, there will be a difference between a person who is a longstanding employee in a high-grade appointment and a low paid person in a more routine kind of job. While the former could expect 6-12 months’ notice, the latter would receive substantially less notice.
[41]Sappideen, O’Grady and Warburton, ‘Macken’s Law of Employment’ (6h ed, 2009), Law Book Co, 269.
133 Having regard to the whole of Lee’s circumstances including the factors set out above, I consider that a reasonable period of notice would be 6 weeks. This would equate to a payment of $1,800.
Anshun Estoppel
134 The defendants contended that the principles of Anshun estoppel, as set out in Port of Melbourne Authority v Anshun Pty Ltd,[42] precluded Lee from making any claim for remuneration and damages for alleged wrongful dismissal.
[42](1981) 147 CLR 589, 598.
135 The defendants referred to the recent statement of principle in the decision by the Victorian Court of Appeal in Shaw v Gadens Lawyers.[43]There, Maxwell P, with whom Tate and Garde AJA agreed, said:
[43][2014] VSCA 74.
“[59]In the present case, the established principle of finality in litigation forms part of the common law background against which a provision of this kind must be construed.[44] Three common law principles are relevant here, those concerning (respectively) res judicata, issue estoppel and what is conventionally known as Anshun estoppel. These principles may be shortly summarised as follows:
• res judicata, or “cause of action estoppel”, prevents a party to an action from asserting or denying, as against the other party, the existence of a particular cause of action, the non-existence or existence of which has been determined by a court of competent jurisdiction in previous litigation between the same parties;[45]
• the principle of issue estoppel is that a judicial determination directly involving an issue of fact or of law disposes once and for all of that issue, so that it cannot afterwards be raised between the same parties or their privies;[46]
• the principle of Anshun estoppel prevents a party from later relying upon a claim or defence which it has unreasonably refrained from raising in earlier proceedings, being proceedings so closely connected with the later subject-matter that it might reasonably have been expected that the claim or defence would have been raised in those earlier proceedings.[47]
[60] Each of these estoppels is founded on the same principles of public policy, that there is a public interest in there being an end to litigation and that no person should be twice sued for the same cause. In Lambidis v Cmr of Police,[48] Priestley JA (with whom Kirby P and Powell JA agreed) said:
[A]mong the public policy reasons common to both res judicata and issue estoppel are the protection of parties from unnecessary relitigation and the avoidance of the expense, inconvenience and anxiety involved in the same persons fighting a second time on an issue already decided between them. These ends are for the benefit of the efficiency and finances of the State and its heavily burdened and expensive to run courts and tribunals, as well as for individuals.[49]”
[44]See Achurch v R [2014] HCA 10, [16] (Achurch).
[45]Blair v Curran (1939) 62 CLR 464 at 532; Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 556–7.
[46]Blair v Curran (1939) 62 CLR 464 at 531.
[47]Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
[48](1995) 37 NSWLR 320 (Lambidis).
[49](1995) 37 NSWLR 320 at 332.
136 The defendants contended that the issues the subject of the present proceeding, namely, the claims for unpaid remuneration, should have been and were in fact ventilated in the proceedings brought by Lee against Quest in the Australian Industrial Relations Commission (“the Commission”) in 2009. They said that the terms of the decision given by the Commission made it clear that Lee could elect to proceed further in the Federal Court of Australia but he chose not to do so.
137 The documents referred to in the Court Book revealed the following.
· On about 9 June 2009, Lee filed an application in the Commission pursuant to section 643 of the Workplace Relations Act.
· The grounds of the application were that the plaintiff’s termination was harsh, unjust or unreasonable and there was discrimination or other prohibited conduct under section 659 of the Workplace Relations Act.
· The application sought the following relief: three months’ salary and entitlements; $10,000 representing lost remuneration due to the termination; and some outstanding expenses from September 2008 and February 2009.
138 The decision by Commissioner Foggo referred to the fact that the unspecified discrimination ground alleged in connection with section 659 of the Workplace Relations Act would have to be pursued in the Federal Court.[50]
[50]In paragraph 50. In paragraph 22
139 The certificate under section 650 of the Workplace Relations Act together with the assessment of merits accompanying the certificate noted that, based on the submissions of the parties in the conciliation, the Commissioner believed the application had limited, if any, merit.
140 Given that the defendants did not explain in their submissions to this court, the applicable sections of the Workplace Relations Act and how they operated, I advised counsel for the defendant that it appeared from those documents, or the parts thereof to which he directed my attention, that the Commission had jurisdiction to conduct a conciliation; that the conciliation process was analogous to a mediation; that the conciliation process did not result in a settlement of the dispute and that at least part of the claim had to proceed in the Federal Court. Counsel did not take issue with my tentative assessment of the position. It seemed to me that given the Commission made no binding determination and noted that the Federal Court was the appropriate venue for part of Lee’s claim, then it was difficult to see how an Anshun point could properly arise.
141 Subsequently, on closer examination of parts of the Commission’s decision to which the defendants made no reference, it became clear that the Commission lacked the jurisdiction to deal with Lee’s complaint under section 643(1)(a) of the Act. Commissioner Foggo said:[51]
“On the basis of the submissions I find that the employer, Quest Investments Ltd, did not have more than 100 employees at the time the employer allegedly terminated the employment of Mr Lee. On that basis that the employer did not have more than 100 employees at the time of termination of employment, as provided for in s643(10), the jurisdictional objection by the respondent is upheld. The Commission does not have jurisdiction to consider the application made by Mr Julian Lee pursuant to s643(1)(a) of the Act and this ground of the application is therefore dismissed …”
[51]At para [21].
142 The effect of this statement by Commissioner Foggo appears to be that Lee’s claim arising from the allegedly wrongful termination of his employment could not be dealt with in the application he made to the Commission. In circumstances where the Commission lacked the jurisdiction to deal with Lee’s complaint, the defendants failed to advance any argument as to why Lee should be prevented from bringing a claim in the County Court.
143 On the material before me, I find that there was no Anshun estoppel preventing Lee from claiming for remuneration and damages for alleged wrongful dismissal.
Does Lee have locus standi to bring proceedings under the Superannuation Guarantee (Administration Act) 1992 (Cth)?
144 In the Amended Statement of Claim, Lee alleged that, in breach of the employment agreement, Quest did not pay the superannuation owing to Lee on his unpaid wages and unpaid commission. Lee contended that this amounted to $12,951, being 9% of the amount of unpaid wages and commission, namely, $143,900. Further, Lee alleged that Murchison also failed to pay $8,646.52, being the amount said to be payable on the unpaid commission owing to Lee. Lee said this was 5% of $1,921,448.20.
145 In his closing submissions, Lee argued that he had standing to make such a claim under the Superannuation Guarantee (Administration) Act 1992 (Cth). He relied also upon the decision of the High Court in Roy Morgan Research Pty Ltd v Commissioner of Taxation.[52] Lee’s submissions referred particularly to two passages from the decision, one from the judgment of the plurality comprising French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ, and another passage from the judgment of Heydon J. The plurality said:[53]
“Broadly speaking, the effect of the legislation under challenge is that if, as specified in the Administration Act, an employer fails to provide to all employees a prescribed minimum level of superannuation then any shortfall represented by failure to meet that minimum level in full, becomes the Charge.[54] This impost is levied on the employer by the Charge Act. The amount of the Charge is a debt due to the Commonwealth and payable to the respondent, the Commissioner of Taxation: Taxation Administration Act 1953 (Cth), Sched 1, s 255‑5. The Charge includes a component for interest and an administration cost. The result is to supply an incentive to employers to make contributions to superannuation for their employees without incurring a liability to the Commissioner for the Charge.”
[52](2011) 244 CLR 97.
[53]Ibid at [3].
[54]The Charge is the superannuation guarantee charge provided for in the Superannuation Guarantee Charge Act 1992 (Cth) (“the Charge Act”).
146 In his individual judgment, Heydon J stated:[55]
“Sections 5 and 6 of the Superannuation Guarantee Charge Act 1992 (Cth) impose a superannuation guarantee charge on employers. It is calculated by reference to an employer's ‘superannuation guarantee shortfall’: Superannuation Guarantee (Administration) Act 1992 (Cth), s 17. That shortfall is the difference between nine percent of a given employee's total salary or wages for a quarter and what the employer contributed to a retirement savings account or certain types of superannuation fund for the employee's benefit, plus a nominal interest component and an administration component. The function of the interest component is to compensate for fund earnings foregone by the failure to pay the nine percent. The function of the administrative component is to recover expenses associated with administering the superannuation guarantee charge. The legislation creates an obligation on the employer to pay that charge to the Commissioner of Taxation which is enforceable as a debt due to the Commonwealth. The superannuation guarantee charge is to be paid into the Consolidated Revenue Fund. A similar sum (but without the administration component) is then to be paid out to a superannuation fund for the benefit of the relevant employee.”
[55]Roy Morgan Research Pty Ltd v Commissioner of Taxation (2011) 244 CLR 97 at [54].
147 Presumably in reliance upon these passages, Lee advanced the following submissions:
(a) the defendants have an obligation to make superannuation contributions to Lee’s nominated superannuation fund, the MLC Superannuation Fund, amounting to 9% of his total salary including commissions payable to him;
(b) the defendants defaulted in making the 9% superannuation contribution payments;
(c) as a result of this default, the Australian Taxation Office may make a default assessment of the superannuation guarantee charge payable by the defendants;
(d) the superannuation guarantee charge will be reduced in proportion to the superannuation contribution made by the defendants to Lee’s nominated superannuation fund;
(e) the superannuation guarantee charge is only payable to the Australian Taxation Office on the day the assessment is made;
(f) the Australian Taxation Office has not made any default assessment against the defendants;
(g) in the circumstances, Lee has standing to bring a claim for superannuation entitlements in this court to enforce his rights under the Superannuation Guarantee(Administration) Act 1992 (Cth).
148 The substance of Lee’s claim is to the effect that an individual employee has a right to bring a personal claim against an employer where the employer has failed to pay applicable superannuation contributions and the Australian Taxation Office has not issued a default assessment under the relevant legislation. I note that, although Lee has asserted that he has standing to “enforce his rights” under the legislation, his counsel did not refer to any authority in support of this proposition or identify the specific legislative provision which created this individual right.
149 The defendants contended that Lee lacked the standing to make any claim for unpaid superannuation contributions. They argued that, if an employer failed to meet the minimum payment required by law, such shortfall became the superannuation guarantee charge (“the charge”) which is levied on the employer by operation of the Charge Act. The charge is a debt due to the Commonwealth which is payable to the Commissioner of Taxation, not to Lee personally.
150 In my opinion, Lee’s contention is incorrect. The Commonwealth legislation makes clear, as expressly acknowledged by the High Court in Roy Morgan Research Pty Ltd v Commissioner of Taxation,[56] that unpaid employer contributions are a debt owing to the Commonwealth. Under Schedule 1, section 255-5 of the Taxation Administration Act 1953 (Cth), the Commissioner is entitled to recover unpaid tax-related liabilities, including the superannuation payments the subject of this case, after the tax becomes due and payable. Lee has not identified any legal basis upon which an individual employee can assert an entitlement to recover these unpaid monies as a debt due to the employee personally.
[56](2011) 244 CLR 97.
151 Accordingly, this aspect of Lee’s claim must fail.
Corporations Act provisions in relation to the recovery of commissions
152 In its submissions, the defendants contended that by virtue of the Corporations Act, Lee had no right to claim any commission for the placement of shares which he arranged. The defendants argued that section 925F(2) of the Corporations Act expressly excluded Lee’s claim to recover “any brokerage, commission or other fee” falling within the provisions of Part 7.6 of the Corporations Act. The defendants contended that this Part of the Corporations Act excluded any common law right to recover commission. This legislation was said to govern this area of law and to have made redundant any common law rights which previously existed. This was said to be clear from the fact that claiming commissions other than in accordance with the Corporations Act was proscribed under the legislation and constituted a criminal offence under section 1311 of the Corporations Act.
153 The defendants’ position was that the reference to “the client” in section 925F was a reference to a person or entity in the position of Quest or Murchison. When asked by the court to justify this position, counsel stated that it was his instructions. In my view, the defendants’ instructions are irrelevant. What matters is the construction of the legislation relied upon. The defendants advanced no argument to the court seeking to justify their view as a matter of statutory construction. They put forward no rationale to explain why “client” should be treated as a person or entity in the position of the defendants rather than a person or entity who purchases shares in a publicly listed company.
154 The defendants did not draw my attention to any provision which prohibited a person in Lee’s position as an employee or contractor from obtaining payment from the entity for which he worked for asking clients or friends to purchase shares in the entity. It is one thing for the law to prohibit someone in Lee’s position from obtaining commission payments from his clients or friends for buying securities. It is another to prohibit Lee recovering a financial reward from an entity for which he works for attracting purchases of shares in that entity.
155 The parties’ submissions on the operation and application of the Corporations Act to this part of the case comprised bare assertions rather than detailed submissions and argument.
156 The defendants did not plead or explain how it was that section 925F applied to the present case. This is a matter of importance in the context. The legislation in relation to this matter is complicated and neither party made any detailed submissions about the meaning and application of the labyrinthine provisions of the Corporations Act. For example, the defendants failed to support their argument by:
(a) explaining how the requirements of section 924A were met. Without this, Subdivision B of Division 11 of Part 7.6, of which section 925F forms part, could not apply.
(b) explaining by reference to the evidence which parties in the litigation were, or were not, holders of the requisite licences.
(c) explaining how the agreement or agreements relied on were entered by the non-licensee in the course of a financial services business carried on by that party. My limited and uninstructed research suggested that this would involve consideration of provisions such as “financial services”, “financial service business” and “carrying on a business” as these expressions are defined in the Corporations Act. As a result, one needed not only to understand the meaning and operation of provisions such as section 925F but also provisions in Division 4 of Part 7.6, Division 3 of Part 1.2 and Division 11 of Part 7.6 of the Corporations Act. The defendants did not attempt to provide such explanation or understanding.
157 For his part, Lee failed to grapple with these provisions, much less explain or make any helpful submissions about them.
158 Apart from provisions referred to above, there may be other parts of the Corporations Act which are relevant and affect the argument on this issue.
159 Thus, the situation created is extremely unsatisfactory for the court. First, there is an issue about whether the court has jurisdiction to address this commission argument. Neither of the parties made any helpful submissions on the matter. Plainly, there are constitutional and jurisdictional restrictions upon what this court can hear where the Corporations Act is involved.
160 Secondly, the court has not received from the parties the assistance it expects and requires to deal with the substantive point regarding the alleged impermissibility of Lee claiming commission. The defendants are particularly at fault because it is they who propounded the assertion that Lee is not entitled to any commission from them in respect of the shares purchased by Lee’s contacts or friends.
161 It might be that the defendants are legally correct in their assertion. However, I do not see it as the role of this court to articulate, analyse and then rule upon complicated arguments which the parties’ legal representatives could have made but did not. Further, the Civil Procedure Act 2010 (Vic) made clear that its overarching purpose was to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute in civil proceedings.[57] The court is obliged to give effect to that purpose in exercising its powers.[58] It seems to me that for the court to attempt to undertake work that the parties’ lawyers should perform would not give effect to the overarching purpose. Accordingly, on the material before me, the defendants have not satisfied me that their assertion should be upheld.
[57]Section 7.
[58]Section 8.
162 As a consequence of this finding, I now address the merits of this part of Lee’s claim.
163 Based on the documents and oral evidence of Lee and David Chua, I accept that Chua purchased shares in Murchison in January 2008 at a cost of $40,000.
164 I also find that Lee and Chiang agreed that Lee would be paid a 5% commission on the share purchases by Lee’s clients and friends in the defendant companies. To the extent that Chiang takes issue with this, I reject his evidence for several reasons.
165 First, he is not a credible witness.
166 Secondly, in a letter to Lee by Chiang dated 7 August 2006, Chiang said:
‘In view of the above breaches, my original intention for you to act as an Investment manager is no longer valid.
Kindly desist from putting yourself forward as our Company’s Investment Manager to the investment community in Melbourne and in Australia.’
This document, in my opinion, supports Lee’s case that Chiang engaged him, at least in part, as an investment manager. The comment that Chiang’s intention was ‘no longer valid’ implies that, previously, it was valid and he in fact had that intention. Likewise, Chiang’s stipulation or direction that Lee ‘desist from putting himself forward’ implies that Lee previously engaged in that conduct and that Chiang knew about it (and presumably consented to or approved of it because he was not critical of it). If Lee engaged in this form of activity to assist the defendants, it would not be strange for Lee and Chiang to have reached the payment agreement which Lee alleged.
167 Thirdly, Lee maintained in the case that the defendants engaged him at least in part as an investment manager. Lee produced a business card which he says the defendants supplied to him. The card recited his name and gave his title as ‘Investment Manager’. The defendants denied that anyone associated with them procured the cards and gave them to Lee. They argued that he produced them for himself without the defendants’ consent or approval. In the first half of August 2007, there was a flurry of email correspondence between Lee and Chiang. At one point, Lee wrote:
‘My job specifications is just two words: Investment Manager. (Remember the card that you’ve print for me).’
Chiang appears to have received the email and has not taken issue with Lee’s assertion. This was in a context where the emails exchanged were quite lengthy and the two men expressed opposing views about a multiplicity of points. If Lee’s statement were untrue, I would have expected Chiang to take issue with it at the time. Chiang did not do so. That Lee might try to arrange finance for the defendants and use his card in dealing with third parties was consistent with Lee’s evidence that he would attend various meetings with Chiang and exchange his business card with others attending the meeting. Here, Lee’s use of the card should have been (and I find most likely was) known to Chiang.
168 Finally, I note a fax dated 12 May 2005 which Lee sent to Chiang regarding share placements in which Lee claimed commission of $58,622.41. Chiang denied that he received the fax. I do not believe his denial.
169 In the circumstances, I consider it more likely than not that there was an agreement between the defendants and Lee whereby Lee was to be paid a sum equivalent to 5% of the value of the moneys subscribed by Lee’s clients and friends for securities in the defendants. There was no dispute that the defendants had not paid Lee in relation to this particular transaction by David Chua. I find that Lee is entitled to $2,000 from Murchison in relation to this transaction.
Conclusion
170 In summary, my conclusions in this matter are as follows:
(a) Lee was not entitled to the sum of $104,400 constituting payments of $1,800 per month for 58 months. There was no agreement between Lee and the defendants that, from June 2004, Lee be paid at a rate of $3,000 per month instead of $1,200 per month.
(b) Lee was not entitled to $9,000 being moneys due for work done at a rate of $3,000 from 4 March 2009 to 3 June 2009.
(c) Lee was not entitled to $18,000 being six months’ wages at a rate of $3,000 per month: Lee was a contractor and not an employee so there was no notice period; if he were an employee he was dismissed justifiably for misconduct; if he were an employee and wrongfully dismissed, he was entitled to $1,800 for 6 weeks’ notice.
(d) Lee was not entitled to any commission from Quest on investment moneys procured by Lee. All these claims made before 7 June 2006 were statute-barred. Further, any claims which arose before or during his period of bankruptcy, namely 31 January 2002 to 22 February 2005, vested in Lee’s trustee in bankruptcy and not Lee personally.
(e) Lee was not entitled to $12,951 or any other amount from Quest in respect of superannuation moneys which were allegedly unpaid.
(f) Murchison owes Lee $2,000 in relation to the shares bought by David Chua in January 2008.
(g) Lee was not entitled to any amount from Murchison in respect of superannuation moneys which were allegedly unpaid.
171 I direct the parties to confer and produce orders giving effect to these reasons for judgment. If the parties cannot agree on appropriate orders, I shall hear them on that matter and the issue of costs.
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