Loveday v Shearwood
[2018] FCCA 1067
•3 May 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LOVEDAY v SHEARWOOD | [2018] FCCA 1067 |
| Catchwords: INDUSTRIAL LAW – Small claim – applicant engaged on ad hoc arrangement to provide services to respondent when undertaking renovations to a property – whether applicant employee or independent contractor – claim made out. |
| Legislation: Fair Work Act 2009 (Cth), ss 61, 139, 537, 538, 548 Building and Construction General Onsite Award 2010 |
| Cases cited: Ace Insurance Ltd v Trifunovski (2011) 200 FCR 532 |
| Applicant: | DAVID GEOFFREY LOVEDAY |
| Respondent: | MARK DEVON SHEARWOOD |
| File Number: | MLG 1499 of 2017 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 23 March 2018 |
| Date of Last Submission: | 23 March 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 3 May 2018 |
REPRESENTATION
| Applicant: | In person |
| Respondent: | No appearance |
THE COURT ORDERS THAT:
The respondent pay the applicant the sum of $1,348.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1499 of 2017
| DAVID GEOFFREY LOVEDAY |
Applicant
And
| MARK DEVON SHEARWOOD |
Respondent
REASONS FOR JUDGMENT
(As Corrected)
Introduction
These reasons for judgment explain orders that were made on 23 March 2018 following the hearing of a small claim for compensation.
By application and statement of claim filed on 12 July 2017, the applicant pursues a small claim for the payment of outstanding wages which, he claims, are owed to him by the respondent.
The applicant is a disability pensioner of somewhat advanced years.
The applicant with his wife and their three children occupied premises at 34 Leahy Street, Nhill in the State of Victoria (property). Nhill is a small town some 375 kilometres west of Melbourne and quite near the South Australian border.
The applicant became a tenant of the property in 2009.
In late October 2012, the respondent purchased the property.
The applicant’s evidence was that the respondent lived in Sydney. The applicant had not known of or met the respondent until after he had purchased the property. In their first contact, the respondent told the applicant that he was the new owner and that he should pay rent to him.
The works
In mid-June 2013, the respondent arrived at the property in Nhill and told the applicant he was undertaking renovations to the house occupied by the applicant with his wife and children. He told the applicant that those renovations would involve about four days’ work. As events evolved, the respondent proposed to undertake these works on the property notwithstanding the applicant’s tenancy and that the property was occupied by the applicant and his family.
Shortly afterwards, the respondent arrived at the property in the company of two others; one of whom the respondent described as his ‘builder’, the other being described as his personal trainer.
In a posting on his social media site made on 26 June 2013 from Sydney the respondent stated in relation to the renovations of the property:
It’s all happening, pics to follow, watch this space, building, renovation about to begin, I’m about to get my hands dirty.
Heading to Melbourne Thursday and working with the builder Friday Saturday Sunday and Monday.
Putting in new kitchen is only the start.
This is the biggest development I’ve done but it’s only the beginning, many more to follow.
The statement that the respondent was about to get his ‘hands dirty’ served to indicate the respondent’s personal involvement in the works.
The respondent engaged the applicant to assist his ‘builder’ in the performance of the works comprised in those renovations. He engaged the applicant on a daily basis, telling him that he would be employed for four days. The applicant both described the work which he undertook and produced photos illustrating the works comprised in the project.
On 16 July 2013, a building inspector issued a stop work notice in relation to the works being undertaken at the direction of the respondent.
The respondent had, it emerged, commenced the works on the property without having a building permit to do so.
The matter was duly investigated by the Victorian Building Authority which successfully pursued a prosecution against the so-called builder, Mr Adam James, for carrying out building work at the property whilst not being registered as a domestic builder.
The works undertaken by the respondent did not continue for four days. Rather, the works commenced on 3 July 2012 and continued until at least 19 July 2013. The applicant walked off the job on 19 July 2013.
The applicant explained that he had felt misled by the respondent who had assured him that he and his family would be inconvenienced for only four days. Instead the applicant found that he and his family had been left with a house in which the kitchen, laundry and lounge room were in an incomplete state of repair. The plaster work on the walls was extensively damaged. Asbestos had been removed from areas around the laundry and the kitchen left in a dilapidated condition.
In consequence of the building inspector’s stop work notice, no further works were undertaken to the property.
Although the respondent had agreed to pay the applicant standard labouring rates, he did not do so. On 1 August 2013, the applicant sent the respondent two invoices for a sum of $156 and $1,192 respectively. The applicant’s invoices detailed the work that he performed each day.
On 9 August 2013, the respondent replied to the applicant’s invoices for payment. He did so by issuing a notice to vacate. By his notice the respondent allowed the applicant and his family a period of seven days to vacate the property.
However, on 15 August 2013, the respondent had a change of heart. Instead, he issued a notice of rent increase. The notice recorded that the current rent being paid by the applicant ($145 per week) would be increased with effect from 1 November 2013. The respondent’s notice proposed that the rent increase could be effected according to either of two options. Pursuant to the first option the applicant’s rent would be increased to $220 per week on the proviso that the applicant would only take a tenancy of the house located on the front half of the property. Pursuant to the second option the respondent proposed that the applicant would take a weekly tenancy of the entire property for the sum of $450 per week. The respondent’s motivation respecting a rent increase was disclosed shortly afterwards.
On 29 October 2013, the respondent’s social media site posted this:
I’ve just found out that all that effort to evict my tenants in one of my properties is the least of my problems, now found out its actually all the builders fault, now have to go through Court with him to get back the tens of thousands of dollars I’ve spent.
While the respondent’s statement indicated that he had spent tens of thousands of dollars respecting the renovations, there was no other evidence supporting an assertion that this accurately reflected the true cost or extent of the works which had been undertaken at the property.
The applicant pressed the respondent to pay him his outstanding claim for wages. He proposed that if the applicant reduced his claim to $1200 he would pay him that amount. The payment would be made by the payment of $600 in cash and the abatement of rent for two weeks which, the respondent nominated in early 2014. Shortly afterwards the respondent sent the applicant a letter in the following terms:
Dear David
I am in agreement that the work that you carried out on 34 Leahy St this year will hereby be compensated.
It is agreed that $1200 will be refunded to you in the form of cash and rent payments.
Six hundred dollars will be forwarded to you into your nominated bank account and 2 payments of rent will be waived, one on February 6th for the period between 6/2/14–20/2/14 and one on March 6th for the period between 6/3/14–20/3/14
If this is agreed by yourself, could you kindly return this form signed together with your invoices for the total of $1200 to 6/49 Austral St, Penshurst 2222 ASAP
Could you please provide here your BSB and account details…
Kind regards
Mark Shearwood (Emphasis added)
The applicant signed the document as requested and returned it to the respondent. Again, the respondent did not pay the applicant’s claims.
On 16 December 2013, the Victorian Civil and Administrative Tribunal (VCAT) made an order that the respondent complete all renovations to the premises. The respondent was orders to do so by 14 February 2014. The respondent did not complete those renovations.
On 14 March 2014, the applicant and his family vacated the premises.
On 5 May 2014, VCAT assessed a claim for compensation which had been made by the applicant. It assessed that compensation at $1,780 (including a claim for breach of the covenant of quiet enjoyment).
The applicant continued to press the respondent for payment of his claim for unpaid wages.
In order to prevent the applicant from making phone calls to the respondent for payment of his claim, the respondent made an application for an intervention order against him.
It is upon this evidence that the applicant’s small claim is made and falls for determination.
Following the institution of the proceeding the applicant made a series of attempts to effect service of the proceeding upon the respondent. The affidavits of attempted service indicated sufficiently that the respondent was evading the attempt being made to effect service. On 8 September 2017, a judge of this Court made an order for substituted service.
I am satisfied that service of the proceedings was effected upon the respondent in the manner required by that order.
On 27 October 2017, the Court adjourned the matter to 23 March 2018 and made directions for the respondent to file and serve a response together with any affidavit on which he relied. The respondent has not taken the opportunities afforded by that order to do so.
Consideration
The Court was assisted by submissions from an officer of the Fair Work Ombudsman. It acknowledges the significant contribution provided by that office in the course of hearings of small claims.
The applicant pursues a small claim under the Fair Work Act 2009 (Cth). Chapter 4 of the Act concerns the subjects Compliance and Enforcement, and comprises ss 537 – 572. The guide to Chapter 4 explains that civil remedies may be sought in relation to contraventions of civil remedy provisions and how applications may be made for orders respecting non-payment of safety net contractual entitlements: see s 537.
Division 3 of Part 4-1 in Chapter 4 provides a small claims procedure.
Sub-section 548(1) prescribes the circumstances in which proceedings may be dealt with as a small claim. Relevantly, the applicant has pursued a claim for an amount that an employer was required to pay to him because of a safety net contractual entitlement: see paras 548(1)(b), 548(1A)(a)(ii) and 548(2)(a) of the Act.
By force of sub-s 548(3), in the conduct of the small claims proceeding, the Court is not bound by rules of evidence or procedure. Moreover, it is entitled to act in an informal manner and without regard to legal forms or technicalities.
The expression ‘safety net contractual entitlement’ means an entitlement under a contract between an employee and employer that relates to any of the subject matters described in ss 61(2) or 139(1) of the Act. Relevantly, sub-s 139(1) provides that a modern award may include terms about minimum wages.
In the present case, the Building and Construction General Onsite Award 2010 provides coverage for employers throughout Australia in the on-site building, engineering and civil construction industry and their employees falling within schedule B classification definitions. This award provides such coverage to the exclusion of any other modern award: cl 4.1. Clause 19 of the award provides for minimum wages and addresses a number of distinct or discrete entitlements including the minimum hourly rate payable for employees who are engaged on a daily hire: para 19.3(a).
The applicant’s claim turns upon the question whether the respondent engaged him as an employee or independent contractor. For the purposes of Chapter 4 of the Act, the expressions employee and employer have their ordinary meanings: s 538. It is trite that the question whether a person is an employee or independent contractor is not to be answered by reference to the label attributed by the parties to the relationship. What is required is consideration of the inherent character of the parties’ relationship: Curtis v Perth and Fremantle Bottle Exchange Co Ltd (1914) 18 CLR 17, 25. The substance or reality of the relationship is what is of significance: Hollis v Vabu Pty Ltd (2001) 207 CLR 21, [24], [58]. In Hollis, the plurality observed at [24]:
[T]he relationship between the parties . . . is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing “the totality of the relationship” between the parties; it is this which is to be considered (citations omitted).
The plurality considered the notion of control as a discrimen between employees and independent contractors. Their Honours also considered the role which control had played in such analysis as from earlier times to the present: [43] – [45].
As in Hollis, in the present case the applicant was not providing skilled labour. Rather, the applicant was simply carrying out work in the course of the respondent’s renovations as and when directed to do so. The evidence, including photos produced by the applicant, demonstrated the respondent’s personal attendance and presence in the course of carrying out the works. It is clear that the respondent superintended the works being carried out by the applicant: cf Hollis at [48] – [58]; see also Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161, [30].
One of the considerations identified by the plurality as relevant in the determination whether vicarious liability should be imposed in respect of the negligent conduct of a bicycle courier was the matter of deterrence. Their Honours in referring to Bazley v Curry [1999] 2 SCR 534, a decision of the Supreme Court of Canada, endorsed the view of McLachlan J at 554-555 that as concerned deterrence, employers were often in a position to reduce accidents and intentional wrongs as by efficient organisation and supervision such that holding a person liable as an employer may serve to encourage the adoption of steps and practices as would reduce risk of future harm.
Although these policy considerations were raised in the context of vicarious liability, I regard these considerations as instructive in the present case: see also Tattsbet Ltd v Morrow [2015] 233 FCR 46, [4].
The reasoning in Hollis referred to above was referred to with evident approval in Victorian WorkCover Authority v Game (2007) 16 VR 393, [42], a widow’s claim in which liability for compensation turned on the question whether the deceased was an employee or independent contractor. The Court of Appeal dismissed an appeal from a finding that the deceased had been an employee at the time of the fatal accident notwithstanding that he had been a partner in a business at some time in the course of the relevant relationship. Ashley AJ (Maxwell ACJ and Nettle JA agreeing), observed at [48] that the deceased had undertaken an integral part of that business and as part of its organisation as distinct from that of an independently functioning contractor.
I regard the totality of the relationship between the parties as that of employee and employer and not one of independent contractor. There is no suggestion the applicant was carrying on a trade or business of his own: cf Fair Work Ombudsman v Group Property Services Pty Ltd [2016] FCA 1034, [41] applying Marshall v Whitaker’s Building Supply Co (1963) 109 CLR 210, 217; Stevens v Brodribb Co Pty Ltd (1986) 160 CLR 16, 29; Ace Insurance Ltd v Trifunovski (2011) 200 FCR 532, [29].
The considerations identified in Hollis above favour a conclusion that deterrence is a relevant consideration of the issues arising in this matter. The evidence demonstrates the respondent’s willingness to engage the applicant on an ad hoc daily basis for the purposes of carrying out renovations to the premises and to do so without a building permit, without adopting proper procedures for the safe removal of asbestos and employing an unregistered and uninsured builder to perform that work.
The Fair Work Act 2009 imposes obligations on employers in relation to their employees and confers benefits and rights on employees. It does so without defining when a worker is an employee as distinct from an independent contractor, leaving the determination of the workers proper characterisation as a matter for the general law: Jinge Cai trading as French Accent v Michael Anthony Rosario [2011] FWAFB 8307, [25].
I do not regard the applicant’s post-contractual conduct in rendering an invoice as relevant to the nature of the contract. The terms and nature of the parties’ agreement is to be determined objectively at the time that the agreement is made: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, [22]. Post contractual conduct is not relevant to those issues: FAI Traders Insurance Company Limited v Savoy Plaza Pty Limited [1993] 2 VR 343. Given the respondents repeated failure to pay the applicant for the hours he had worked on each of the days he assisted in the works, it was entirely reasonable for the applicant to issue an invoice seeking payment for each of the days he had worked.
It is clear that no single indicium is determinative of the nature of the parties’ relationship. As Allsop CJ has observed, the statutory and factual context will always be critical in the multifactorial process of the proper characterisation of the parties’ legal and human relationship; that is, employment: Tattsbet Ltd v Morrow [2015] 233 FCR 46, [5]; see also per Jessup J at [61], White J agreeing at [140].
In the present case, the applicant’s claim arises in the statutory context of the Fairwork Act. It arises in the factual context that the respondent imposed his will on the applicant to perform works during the period of the tenancy and to direct the applicant to perform the services required of him for the duration of the renovations project he wished to achieve.
For the foregoing reasons I find that the parties’ relationship was one of employment and not that of independent contractor. The amount claimed by the applicant was fair and reasonable. There will be an order that the respondent pay the applicant the sum of $1,348.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 3 May 2018
CORRECTIONS:
Cover sheet and Orders: Page 1 and 2 and Reasons for Judgment: Page 1, deleted Respondent’s name “Sheerwood” and inserted correct name “Shearwood”. Both parties contacted Chambers outlining misspelling of Respondent’s name in proceeding’s documents. Corrections made pursuant to rr 7.01 and 7.03 of the Federal Circuit Court Rules 2001 (Cth).
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