Maddison O'Brien v Soltaro Pty Ltd
[2019] FWC 4911
•15 JULY 2019
| [2019] FWC 4911 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Maddison O’Brien
v
Soltaro Pty Ltd
(U2019/2508)
DEPUTY PRESIDENT YOUNG | MELBOURNE, 15 JULY 2019 |
Application for an unfair dismissal remedy.
Introduction
[1] This decision relates to an unfair dismissal application by Ms Maddison O’Brien pursuant to section 394 of the Fair Work Act 2009 (the Act) against her former employer Soltaro Pty Ltd (Soltaro).
[2] Soltaro objects to Ms O’Brien’s application on the basis that it was, at the time of the dismissal, a small business employer and Ms O’Brien had not completed the minimum employment period (12 months) at the time of her dismissal.
[3] Determination of Soltaro’s jurisdictional objection was listed for hearing on 31 May 2019.
[4] After taking into account the wishes of the parties as to the way in which the Commission would consider and inform itself in relation to the application, I decided to conduct a determinative conference pursuant to section 398 of the Act to determine the jurisdictional objection raised by Soltaro.
[5] Ms O’Brien appeared on her own behalf and Mr Tynan Coles appeared for Soltaro.
Background
[6] Ms O’Brien commenced employment with Soltaro on 1 August 2018 in the role of Marketing Manager and was dismissed on 27 February 2019. She was therefore employed for a period of approximately 7 months.
[7] Ms O’Brien asserts that Soltaro employs twenty employees, being nineteen full-time employees and one casual employee. 1 Ms O’Brien says that she shared office space with a number of these persons and interacted with others, via email and/or Skype. Unsurprisingly, she does not say that she knows the details of the specific employment relationships of these persons or the details of the corporate structure of the business but relies upon a marketing document entitled “Company Profile – PGK Group of Companies”.2 That document, under the heading “Our Companies” lists the following:
• PGK Distribution Australia;
• PGK Distribution, NZ;
• PGK Distribution UK;
• Soltaro Australia;
• Soltaro China;
• Soltaro UK;
• SolXEnergy Australia; and
• SolXenergy NZ.
[8] Based on her interactions with others at work and the above document it was Ms O’Brien’s understanding that she was employed by a company with employees in a number of locations and which was part of a global group of companies.
[9] In its materials, Soltaro initially stated that at the time of Ms O’Brien’s termination of employment it employed two employees 3 but subsequently stated in its Outline of Argument that it employed twelve employees at the relevant time.4 Mr Coles’ position at hearing, however, was that Soltaro did, in fact, employ only two employees at the time of Ms O’Brien’s termination of employment and that he mistakenly included in Soltaro’s Oultine of Argument employees of Soltaro and another unassociated entity called Citisolar Qld Pty Ltd (Citisolar).
[10] Ms O’Brien asserts that all twelve employees included in Soltaro’s Outline of Argument are employees of Soltaro. In addition, Ms O’Brien asserts that the following persons are also employees of Soltaro:
• Andrew Turner;
• Ray Coventry;
• Adrian Smith;
• Carl Robinson;
• Kerry Collie;
• Paul Kyranides;
• Oscar Wu; and
• Sophia Wang. 5
[11] Ms O’Brien says that Mr Turner is a regular and systematic casual employee of Soltaro. Collectively, I will refer to these eight persons not included in Soltaro’s Outline of Argument as the Disputed Employees.
[12] In the four days prior to the conference, the Commission sought further information from Soltaro on a number of matters raised by the documents provided by Ms O’Brien and Soltaro’s own responses to requests from the Commission for information. Over that period, Mr Coles, on behalf of Soltaro, provided somewhat confused information regarding the structure of the business, the employing entities within it and their interaction. Where this information is relevant I address it below. As will become apparent, the business is run through a somewhat complex structure which involves a number of entities, unit trusts and business arrangements. I accept that Mr Coles was genuinely unclear about the business’ structure and that any confusing information or material provided by him prior to hearing was done so innocently. I note though that the jurisdictional objection was raised by Soltaro and in those circumstances I consider that Mr Coles ought have been in a position to more ably assist the Commission as to the business’ structure and arrangements.
Relevant legislation
[13] Section 396 of the Act sets out a number of matters the Commission must decide before considering the merits of an application under section 394. Under section 396(b) the Commission must decide whether the person making the application is protected from unfair dismissal.
[14] In order to be protected from unfair dismissal, section 382(a) of the Act requires that a person must have completed a period of employment with his or her employer of at least the minimum employment period. The minimum employment period is one year for a small business employer and six months for other employers (section 383 of the Act).
[15] Pursuant to section 23(1) of the Act, a national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time. For the purpose of calculating the number of employees employed by the employer at a particular time:
(a) all employees employed by the employer at that time (including the dismissed employee who has made an unfair dismissal application) are to be counted, subject to the caveat that a casual employee is not to be counted unless, at the time, the employee has been employed by the employer on a regular and systematic basis (section 23(2) and (4) of the Act); and
(b) associated entities are taken to be one entity (section 23(2) of the Act).
[16] The expression “associated entity” for the purpose of section 23(3) of the Act has the meaning given in 50AAA of the Corporations Act 2001 (Corporations Act). Section 50AAA of the Corporations Act provides as follows:
“Associated entities
(1) One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the principal; and
(b) the operations, resources or affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying investment (see subsection (8)) in the principal; and
(b) the associate has significant influence over the principal; and
(a) the interest is material to the associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying investment (see subsection (8)) in the associate; and
(b) the principal has significant influence over the associate; and
(c) the interest is material to the principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity) controls both the principal and the associate; and
(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity ) if the first entity:
(a) has an asset that is an investment in the second entity; or
(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.”
[17] Section 50AA of the Corporations Act defines “control” as follows:
(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
(2) In determining whether the first entity has this capacity:
(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and
(b) any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).
(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
(4) If the first entity:
(a) has the capacity to influence decisions about the second entity’s financial and operating policies; and
(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity’s members the first entity is taken not to control the second entity.”
Consideration
Ms O’Brien’s evidence
[18] It is not contested that Ms O’Brien was employed by Soltaro. Ms O’Brien’s evidence is that it was her understanding that she was employed by a company with employees in a number of locations and which was part of a global group of companies. She saw in the office or interacted with, via email and/or Skype, all of the twenty people referred to in paragraph 10 and 11 above. She gave evidence that in addition to working for Soltaro in Melbourne, she worked with and undertook work for Mr Lymn for PGK Distribution in Australia, for Mr Ray Coventry for PGK Distribution in New Zealand, conducted regular Skype meetings with Mr Adrian Smith and Mr Robinson of Soltaro UK with external third parties and also had contact with Mr Wu of Soltaro China. She provided email correspondence between herself and these persons in relation to marketing tasks she undertook for them, or at their direction, in her employment with Soltaro. 6 She said her first task was in relation to Soltaro’s website and that included references to “our Chinese team”. Her evidence was that no hours were billed or time recorded as between businesses or entities. She says that all twenty people reported to Mr Coles. She does not say that she has knowledge of the specific employment arrangements of all of the persons that she interacted with in her role as Marketing Manager but points to the PGK Group Company Profile document as supporting her assertion that she was employed by a company which employed a number of employees, and relevantly more than two, in a range of locations. She says that her payslips are generated from a PGK email account. This reinforced her understanding that Soltaro and/or its associated entities was the employer of all the persons she interacted with in her role.
[19] The email correspondence provided by Ms O’Brien 7 provides the following:
• Mr Smith’s email sign off is UK Country Manager, Soltaro, his email is stated as [email protected], his web address is and his address is listed as 8 Mohr Street, Tullamarine, Victoria;
• Mr Robinson’s email sign off is Technical and Project Manager, Soltaro and his email is stated as [email protected];
• Mr Turner’s email sign off is Corporate Account Manager, SolXEnergy Australia/New Zealand and his email is stated as [email protected];
• Mr Wu and Ms Wang have email addresses at soltaro.cn, web addresses of and a street address in China. Ms Wang refers to Mr Coles as
her “general manager” in one email.
• Mr Coventry’s email sign off is Business Development Manager - NZ PGK Distribution and includes the statement “Global Office: AU-NZ-UK”.
Mr Coles’ evidence
Employing entities
[20] Mr Coles’ evidence at hearing was that there are only two entities operating within the business. They are Soltaro and Citisolar. At the time of Ms O’Brien’s termination of employment he says Soltaro employed two employees, being Ms O’Brien and Mr Bliss, and Citisolar employed ten employees. Mr Coles provided a payroll activity summary document for Soltaro for the period 1 February 2019 to 28 February 2019 8 which lists only Ms O’Brien and Mr Bliss as employees and a further payroll activity summary document for “PGK Distribution” for the same period which lists ten employees, including Mr Coles.9 The employees in both of these payroll activity summary documents are all identified by Ms O’Brien as being Soltaro employees. None of the Disputed Employees are included as employees of either entity in the payroll activity summary documents.
[21] Mr Coles says that Mr Kerry Collie is the director of Soltaro and the shares of Soltaro are held by Mr Collie, Ms Cloe Coles, and Ms Sarah Pereira. Ms Coles is the majority shareholder of Soltaro. An ASIC search for Soltaro provided by Ms O’Brien is consistent with this. 10 He says that Mr Paul Kyranides and Ms Dianne Crocker are the directors and shareholders of Citisolar. An ASIC search undertaken by the Commission for Citisolar is consistent with this. He says that Mr Collie and Mr Kyranides are office holders only and are not employees of either entity. This is consistent with the payroll activity summary documents provided.11
[22] Mr Coles further gave evidence that references to PGK Distribution, including on the payroll activity summary document provided are, properly, references to Citisolar. Citisolar he says is the trustee for two unit trusts, being the Citisolar Unit Trust and the PGK Distribution Unit Trust. The PGK Distribution Unit Trust trades as PGK Distribution. He says that Mr Paul Kryanides started the PGK Distribution business and is his uncle. Ms Cleo Coles, the majority shareholder of Soltaro, is Mr Coles’ mother. Mr Coles says he is employed by Citisolar, in the role of Managing Director, and takes direction from Mr Kryanides in that role. He says he is also the Managing Director of Soltaro and takes direction from Mr Collie in that role. ASIC searches reveal that Mr Coles is not an office holder of either entity.
[23] Mr Coles says that Soltaro and Citisolar share resources and office space but are not associated entities. He also says that Soltaro and Soltaro Limited are not associated entities but accepts that Ms Coles has the ability to control both entities.
[24] As a result of his dual roles, Mr Coles says that he incorrectly stated in Soltaro’s Outline of Argument 12 that Soltaro employed twelve employees. He says this is the combined employee number for both Soltaro and Citisolar.
[25] In relation to the “companies” referred to in the Company Profile document and other documents provided by Mr Coles to the Commission, Mr Coles evidence at hearing was, relevantly, that:
• PGK Distribution UK no longer exists;
• PGK Distribution New Zealand refers to Pacific Equity Group NZ Pty Ltd (Pacific Equity) and relied on the information he had previously provided to the Commission 13 regarding Pacific Equity;
• SolXEnergy Australia and New Zealand do not exist. SolXEnergy UK is a third-party supplier. Mr Coles had previously advised the Commission that SolXEnergy provides thermal solutions to PGK Distribution on an exclusive right basis, which allows PGK to use SolXEnergy’s trading name; 14
• Soltaro UK is a reference to Soltaro Limited, an entity based in the United Kingdom, which is 100 per cent owned and controlled by Ms Coles’, his mother. Soltaro Limited employs two employees, Mr Adrian Smith and Mr Carl Robinson;
• Soltaro China is wholly owned and controlled by Mr Oscar Wu, is a third-party supplier to the business and licensed to use the “Soltaro” brand; and
• Ms Sophia Wang is an employee of Soltaro China, located in China. She is also an independent contractor to Soltaro, sourcing product for it.
[26] Mr Coles had previously advised the Commission that Mr Coventry is employed by Pacific Equity. 15 Searches undertaken by the Commission indicate that the directors of Pacific Equity are Mr Coles, Ms Crocker and Mr Kyranides. Mr Coles provided to the Commission an ASIC search which confirmed this to be the case and which identified that the three directors were also the shareholders of Pacific Equity, with Mr Kyranides the majority shareholder. Mr Coles provided a document entitled “Pacific Equity Group NZ Employer Monthly Schedule for the Month Ended: 28 February 2019.” That document listed Mr Coventry as the only employee.16
[27] Mr Coles evidence is that Mr Turner is his brother-in-law and a full-time plumber for his other brother-in-law. He says that in his spare time Mr Turner sells product for SolXEnergy on an independent basis and uses Soltaro office space as required. He says that Mr Turner is not an employee, whether casual or otherwise, of any relevant entity. As already noted, Mr Coles’ evidence is that SolXEnergy is a third-party supplier to Soltaro.
[28] Accordingly, Mr Coles evidence is that none of the Disputed Employees are employees of Soltaro or Citisolar. This is consistent with the payroll activity summary documents provided by Mr Coles.
[29] As to the inconsistencies in the information provided prior to hearing and the evidence given by him to the Commission, Mr Coles’ submits that he is not an expert in company structures. I accept that evidence.
Were there any associated entities?
[30] It is clear that the structure of the business in which Mr Coles’ is engaged is somewhat complex and involves a number of entities and trusts. Given this, it is not surprising that Ms O’Brien understood that she was employed by a much large entity or within a corporate group. On the material before me, I find that there are three components to the business in which Ms O’Brien was employed being, PGK Distribution, Soltaro and SolXEnergy.
PGK Distribution
[31] Consistent with Mr Coles’ evidence at hearing, ASIC searches confirm that Citisolar is the trustee company for the PGK Distribution Unit Trust and the Citisolar Unit Trust. I accept Mr Coles’ evidence before the Commission that references to PGK Distribution and similar phrases are, properly, references to Citisolar, as trustee for the two unit trusts. Further, also consistent with Mr Coles’ oral evidence, ASIC searches undertaken by the Commission confirm that Citisolar is the trustee for the PGK Distribution Unit Trust which trades as PGK Distribution. I therefore accept Mr Coles’ evidence that references to PGK Distribution are references to the trading name for the PGK Distribution Unit Trust, the trustee of which is Citisolar. Citisolar is therefore the relevant employing entity in relation to PGK Distribution in Australia. In light of this, I am satisfied that the payroll activity summary document headed PGK Distribution relied upon by Mr Coles is, in fact, the payroll activity summary document for Citisolar for the period 1 February 2019 – 28 February 2019.
[32] On the basis of Mr Coles’ own evidence, Pacific Equity is also a relevant employing entity in relation to the PGK Distribution component of the business in which Ms O’Brien was employed. The fact that Pacific Equity is an entity in New Zealand is not relevant.
Soltaro
[33] There is no dispute that Ms O’Brien was employed by Soltaro. The other entities within the Soltaro operations of the business are Soltaro Limited and Soltaro China. Mr Coles’ evidence before the Commission was that Soltaro Limited is a company based in the United Kingdom, of which his mother is the sole director and shareholder. Searches undertaken by the Commission confirm that Ms Coles is the sole director of Soltaro Limited and that it is an entity based in the United Kingdom. The Commission’s searches did not reveal the shareholding of Soltaro Limited, however, I accept Mr Coles’ evidence as to both the directorship and shareholding of Soltaro Limited.
[34] As to Soltaro China, Mr Coles previously advised the Commission that this was a reference to a Wuxi Soltaro Energy Technology Co. Ltd, a Chinese entity owned and controlled by Mr Oscar Wu. 17 At hearing, consistent with this previous information, Mr Coles’ evidence was that Soltaro China is an entity controlled and owned by Mr Wu, who is a third party supplier, licensed to use the Soltaro brand. I accept that evidence. I note that in material provided by Ms O’Brien, Ms Wang refers to Mr Coles’ as her “general manger”. Mr Coles’ evidence is that Ms Wang is an independent contractor in China. There is no evidence before me to the contrary or to demonstrate that Ms Wang is an employee of any entity. I therefore also accept Mr Coles’ evidence in this regard. I therefore accept that Soltaro China is an independent third-party supplier, owned and controlled by Mr Wu and that Ms Wang is not an employee of Soltaro or Soltaro Limited.
SolXEnergy
[35] In relation to SolXEnergy, Mr Coles says that SolXenergy is a UK Manufacturer that supplies thermal solutions to PGK Distribution on an exclusive right basis, which allows PGK to use SolXEnergy’s trading name. I have no evidence to suggest otherwise and accept Mr Coles’ evidence in this regard.
Employing entities
[36] I reject Mr Coles’ submission that the only two relevant employing entities for consideration are Soltaro and Citisolar. On the basis of the material before me, the relevant entities for consideration in the present circumstances are Soltaro, Pacific Equity, Citisolar and Soltaro Limited.
Soltaro and Citisolar
[37] I will first consider the relationship between Soltaro and Citisolar. It is clear that these entities work closely together and are run and managed by persons related to each other. Soltaro and Citisolar share resources, including payroll and office space and, it appears, personnel. There also appears to be an intermingling of their respective businesses. However, that does not establish that they are associated entities for the purposes of section 50AAA. Most significantly, Soltaro and Citisolar do not have any common shareholdings or directorships. Nor are they related bodies corporate. There is no evidence before me that Soltaro controls or influences Citisolar or that Citisolar controls or influences Soltaro. Mr Coles is the Managing Director of both entities. However, his evidence, which I accept, is that he takes direction from Mr Collie in relation to Soltaro’s activities and from Mr Kyranides in relation to Citisolar’s activities. Accordingly, on the evidence before me, which I accept is limited, I am satisfied that none of the subsections of section 50AAA of the Corporations Act are enlivened such that Solator and Citisolar may be considered associated entities for the purposes of that section and therefore section 23(3) of the Act.
Soltaro and Pacific Equity
[38] Likewise, on the basis of the evidence before me I am satisfied that none of the subsections of section 50AAA of the Corporations Act are enlivened such that Soltaro and Pacific Equity may be considered associated entities for the purposes of that section and therefore section 23(3) of the Act. I note, for completeness, that on the evidence before me it appears likely that Citisolar and Pacific Equity are associated entities. However, that is not presently relevant given my finding in relation to Soltaro and Citisolar above.
Soltaro and Soltaro Limited
[39] In relation to Soltaro and Soltaro Limited, I am satisfied on the evidence before me that subsections 50AAA (2), (3), (4), (5) and (6) of the Corporations Act are not satisfied or relevant. Section 50AAA (7) may, however, be relevant. This is so notwithstanding that Soltaro Limited is an entity in the United Kingdom.
[40] Section 64A of the Corporations Act defines “an entity” to include “a natural person”.It follows in my view that Ms Coles may be a “third entity’’ for the purposes of section 50 AAA (7), if it can be established that she controls both Soltaro and Soltaro Limited. There is no evidence before me to suggest that Ms Coles was involved in the day to day management of Soltaro. However, it is the case that she is the majority shareholder of Soltaro and on the basis of Mr Coles’ evidence, Ms Coles is also the sole owner and shareholder of Soltaro Limited. Further, Mr Coles’ evidence at hearing was that Ms Coles has the ability to control both Soltaro and Soltaro Limited. I am therefore satisfied, on the basis of the limited material before me, that Ms Coles has the capacity to jointly determine the outcome of decisions about Soltaro Limited and Soltaro’s financial and operating policies.
[41] In those circumstances and on the basis of the limited material before me, I find that Soltaro and Soltaro Limited are associated entities for the purposes of s 23(3) of the Act.
Is the Respondent a small business employer?
[42] Having found Soltaro Limited to be an associated entity of Soltaro, it is necessary for the employee numbers of both of those entities to be included in the calculation of employee numbers for the purpose of determining whether Soltaro was a small business employer.
[43] I find the payroll activity summary documents reflect the respective employees of both Soltaro and Citisolar. On that basis, at the time of Ms O’Brien’s termination of employment, Soltaro employed only two employees. Mr Coles’ evidence was that Soltaro Limited employs two employees, being Mr Smith and Mr Robinson. I accept that evidence. I also accept Mr Coles’ evidence that Mr Collie and Mr Kyranides are directors and not employees. I find on the evidence before me that none of the other Disputed Employees are employees of Soltaro. Accordingly, on the basis of the limited evidence before me, at the time of Ms O’Brien’s termination of employment Soltaro and its associated entities employed four employees. Soltaro was therefore a small business employer at the time of Ms O’Brien’s termination of employment.
[44] As a consequence of this finding, the minimum employment period that must have been completed by Ms O’Brien is 12 months. As set out earlier, Ms O’Brien was only employed for approximately seven months.
[45] The jurisdictional objection of the Respondent is therefore upheld and Ms O’Brien’s application is dismissed.
DEPUTY PRESIDENT
Appearances:
M O’Brien on her own behalf
T Coles for the Respondent.
Hearing details:
2019.
Melbourne:
31 May.
Printed by authority of the Commonwealth Government Printer
<PR710332>
1 Exhibit A2 and email from the Applicant dated 29 May 2019
2 Exhibit A4
3 Exhibit R1, Question 1.7
4 Exhibit R2, Question 2V
5 Exhibit A2 and email from Applicant dated 29 May 2019
6 Exhibits A4 and A5
7 Exhibits A4 and A5
8 Exhibit R6
9 Exhibit R7
10 Exhibit A4
11 Exhibits R6 and R7
12 Exhibit R2
13 Email from Respondent dated 30 May 2019
14 Email from Respondent 28 May 2019
15 Email from Respondent 30 May 2019
16 Email from Respondent dated 5 July 2019 with attachments
17 Email from Respondent dated 28 May 2019
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