Maria Bechara v Gregory Harrison Healey
[1995] IRCA 340
•02 August 1995
CATCHWORDS
INDUSTRIAL LAW - Termination of employment - whether summary dismissal or resignation - applicant employed as solicitor by respondent solicitor - apprehended bias of Judicial Registrar - status of applicant at time of dismissal - whether applicant employee or consultant - evidence - liability for PAYE tax - relevance of concurrent proceedings - claim for accrued leave entitlements - claim for superannuation payments wrongfully deducted
Industrial Relations Act ss. 170 EA, 376
Income Tax Assessment Acts s 221A (1)
Superannuation Guarantee (Administration) Act 1992 ss 11 (1), 12 (3)
ANI v Spedley (1992) 26 NSWLR 411
World Book (Australia) Pty Limited v FCT (19920) 108 ALR 510 at 518
MARIA BECHARA V. GREGORY HARRISON HEALEY
NI 1129 OF 1994
Before: Tomlinson JR
Place: Sydney
Dates: 2 August 1995
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA NO 1129 OF 1994
NEW SOUTH WALES DISTRICT REGISTRY
B E T W E E N Maria Bechara
Applicant
A N D Gregory Harrison Healey
Respondent
MINUTES OF ORDER
August 1995 Tomlinson JR
THE COURT ORDERS THAT:
The application for compensation for unlawful termination is dismissed.
The respondent is ordered to pay to the applicant the sum of $7,484 being outstanding holiday pay within 28 days of the date of this decision.
The respondent is to reimburse the applicant the sums of money wrongfully deducted as superannuation such amount to be determined by the Law Society Superannuation Fund at the request of the applicant and is to be reimbursed to the applicant by the respondent within 14 days after the respondent receives verification of the determined amount from the applicant.
The applicant is to pay to the Law Society the sum of $300.00 within 14 days of the date hereof
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA Matter No NI 1129 of 1994
NEW SOUTH DISTRICT REGISTRY
B E T W E E N : Maria Bechara
Applicant
A N D : Gregory Harrison Healey
Respondent
COURT: Tomlinson JR
PLACE: Sydney
DATE: 24, 26, 28 April 1995
7, 16 June 1995
25 July 1995
REASONS FOR DECISION
This is an application under the 1988 Industrial Relations Act (as amended) (“the Act”) for compensation for unlawful termination brought by Ms Maria Bechara. The application is dated 18 November 1994 and re-instatement is not sought. Additionally the applicant sought accrued annual leave entitlements and loadings together with re-imbursement of superannuation contributions allegedly wrongfully deducted from her salary.
It was common ground between the parties that the applicant was a solicitor employed by the respondent from 4 May 1992. The respondent is the principal of the legal firm Messrs G H Healey & Co. The basis of the applicant’s case is that at all times until Friday 11 November 1994 she remained an employee of the respondent’s and that she was unlawfully terminated. The applicant stated as such she should have had tax instalments deducted by the respondent from her pay right up until 11 November 1994. The defence of the respondent to the application for relief under the Act is twofold: first that on and from 10 September 1993 the applicant ceased to be an employee of the Messrs G H Healey and Co and from that point became a consultant to the firm and secondly that the applicant by her actions resigned. If it was found that the applicant did become a consultant at that date it could be concluded that the applicant was responsible for the payment of tax on and from that date until 11 November 1994. It was also argued by the respondent that if it was found that there had in fact been an unlawful termination, that such termination was not harsh and unreasonable within the meaning of the Act.
At the outset it was stated by me that prior to taking up the position of Judicial Registrar with the Industrial Relations Court of Australia I was an Investigative Solicitor employed by the Law Society of New South Wales in the Professional Standards Department and additionally held the position of Responsible Legal Officer on the Ethics Committee. The parties were so advised in order that consideration may be given to my continued involvement with the matter and the avoidance of the perception of possible prejudice to the parties. No objection was taken and the matter proceeded to hearing.
During the course of the hearing of this application the manner in which the respondent answered questions under cross-examination caused concern. I stated that various areas wherein the respondent to my mind exhibited a reluctance to assist the business of the court would be dealt with in detail. Having had the benefit of time to review those matters it is concluded that the respondent had no desire to deliberately mislead and accordingly it was determined that no further action would be taken.
At the commencement of the hearing of the matter on 16 June 1995 Mr M J Neil QC having considered my comments concerning his client made application that I step aside on the grounds of suspicion of bias and that a judge should not be involved with a case if he (or she) might not bring an unprejudiced mind when dealing the facts before the court. Mr Neil relied on the case of ANI v. Spedley (1992) 26 NSWLR 411 and stated further that the ordinary bystander in the street, having heard my comments concerning the manner in which the respondent gave his evidence on oath, would conclude that I was incapable of objectivity and fairly reaching a conclusion.
In dealing with and dismissing the application by Mr Neil I stated that at the beginning of proceedings I stated that prior to accepting the position Judicial Registrar I had been employed by the Law Society and that no objection was taken on that basis. I further added that I had never had any dealings with either of the parties personally prior to the current proceedings. As a former solicitor in the capacity that I acted I stated that I was probably more than ordinarily aware that a solicitor is a officer of the court and as such has a duty to uphold the honour of the court and to assist the business of the court. The test of the ordinary bystander propounded by Mr Neil was noted and in response it was stated that it is part of the function of the court to see that solicitors fulfil their duties to the court and that that duty is a public duty. Accordingly a solicitor/witness has a higher duty than the one imposed on the ordinary witness. Although in my comments concerning the manner in which the respondent answered questions I used the phrase “I find” I agree with the contention of Mr Galitsky that that phrase was semantically used incorrectly as the court in fact was not making a legal finding as to a particular fact but was indicating a tendency of the respondent’s. There was no finding made as to the conduct of the parties beyond the jurisdiction of the Industrial Relations Court of Australia. Spedley’s case was distinguished as that involved two separate actions whereas the matter before the court in this instance involved only the one hearing.
The applicant filed her detailed affidavit dated 10 April 1995 on 21 April 1995 setting out the history of her relationship with the respondent. Much of that affidavit was objected to by the respondent on the grounds of relevance.
The applicant deposed that she commenced employment with the respondent as an employed solicitor on 4 May 1992 and that that employment ceased on 11 November 1994. Further it was deposed that this was her first job as a solicitor after being admitted to practise in December of 1991. The Court heard evidence that prior to that the applicant had held a position as a para-legal assistant for a short period of time.
Paragraph 2 of the applicant’s affidavit stated:
‘I was initially employed by the Respondent at his firm’s city office and worked there until about March 1993. The Respondent then gave me the day to day responsibility for his firm’s Ashfield office and I worked at this last mentioned office thereafter. At all times during my employment with the Respondent, I was the holder of a practising Certificate issued by the Law Society of NSW which restricted me to working as an employed Solicitor.
The affidavit then outlined conversations which occurred onwards from the middle of 1993 between the applicant and the respondent dealing with the possibility of the applicant becoming an Equity Partner with the firm of the respondent. Paragraph 5 of the applicant’s affidavit stated:
“...I September 1993, I noticed that the fortnightly salary credited to my account (at the Commonwealth Bank, University of Sydney) had increased from $878.05 to $1,300.00 on 16 September 1993. Neither the Respondent nor anyone else in the firm told me of the precise amount of the increase before I became aware of the fact by examining my bank statements..
Paragraph 7 of the applicant’s affidavit stated:
“In early 1994, I attended, at the expense of the Respondent’s firm, a Solicitor’s Practice Management Course conducted under the auspices of the Law Society of New South Wales, successful completion of which allowed participants to become qualified to practise as a Solicitor in partnership on his/her own account. At the time when arrangements were made for me to attend this course, I said to the Respondent words to the effect:-
“I have already indicted to you that I have reservations about becoming a partner.”
He then said words to the effect:-
“I know, but I want you to do it anyway in case you decide to become a partner.”
In her evidence the applicant told the court that at no time did she advise the respondent she would become a partner in his legal practice and that immediately after she left working for the respondent, that is the week commencing Monday 14 November 1994, she commenced to practice on her own account, first from her home and then from a small rented office in Hercules Street Ashfield. Exhibit 1 was a copy of a Statement lodged with the Department of Consumer Affairs showing the applicant’s place of business at that address. That document provided inter alia:
“Business Name: Maria Bechara
Registration Number: R30765-09
Principal or only Place of
Business has been changed to: Level 1, 18A Hercules Street
Ashfield 2210
Other Places of Business have
changed a follows: 87 Ryde Road, Hunters Hill 2110
Preferred address for postal service
“remains” 87 Ryde Road Hunters Hill
Lodged by Maria Bechara
Date 25 /11/94”
Whilst employed by the respondent and whilst she was working at Ashfield the applicant met the landlord of the respondent’s Ashfield office, Mr Barrone. That office was located at 222 Liverpool Road Ashfield. At one time towards the end of 1993 the applicant stated she together with Mr Healey attended a meeting with Mr Barrone to discuss the tenancy of the Ashfield premises. The applicant stated the respondent said nothing about entering into a fresh lease but agreement was reached between the parties about the payment of some outgoings.
According to the applicant after she ceased working for the respondent, that date being 11 November 1994, Mr Barone contacted her about a commercial matter she had been handling for him during the course of her time with the respondent. At that time Mr Barone told her he was sick of the rent always being behind and did not like the way the respondent refused to enter into a lease. Mr Barone indicated the rental for the premises occupied by the Ashfield office of the respondent’s firm was $380.00 per week.
In her evidence in chief the applicant stated she did not advise the respondent that she would become a partner in his legal firm nor was there any discussion concerning a motor vehicle as alleged by the respondent in his affidavit of 21 April 1994. The applicant denied the suggestion that the respondent offered her a position as a consultant with his firm on the basis that she would get the sum of $38,000.00 together with additional compensation for tax payable. The applicant further stated that on 18 November 1994 she was advised by the Law Society that she was eligible for an unrestricted practising certificate.
In her affidavit of 10 April 1995 the applicant stated that in about July 1994 she received her group certificate for the 1993 - 1994 financial year which stated that her employment ended on 10 September 1994. It was alleged a long and heated discussion followed wherein the respondent said words to the effect:
“I will have our accountant fix it up and issue you with an amended Group Certificate. Don’t worry about the tax, we will pay it”.
The applicant stated that she then asked for a pay increase to $50,000.00 per year and that she raised the matter of the group certificate on at least three further separate occasions. In cross examination the applicant stated that at the time she asked for this pay increase the respondent had called her “a fucking bitch” and that she had thereafter asked for the pay increase to indicate to him that that kind of language would not deter her from seeking what she felt was due to her. The applicant also stated that this increase was not much of a salary in light of what she was bringing in to the firm in the terms of fees rendered. The applicant stated that in or about September 1994 she had a conversation with the respondent involving matters generally wherein the respondent advised her that, among other things, she had become a consultant with his firm. In her affidavit the applicant stated:
“I am an employee and don’t threaten me with termination. Just give me a proper group certificate”
Respondent:
“You bill the clients and bring in the money and I will pay the tax”.
Subsequent to this last-referred conversation, I made a concerted effort to bill and recover costs from clients at the Ashfield office in order to remit sufficient funds to the firm to pay my tax”.
Subsequently, according to the applicant, she was advised by her personal accountant that the respondent was not co-operating in discussing the subject of the group certificate and that the matter remained unresolved. On 11 November 1994 the applicant attended the city office of the respondent and at her request met with Mr Healey where she repeated her request for a group certificate. The Mr Healey advised her that she had become a consultant on 10 September 1994 and as from that date she was responsible for her own tax. It was stated that the respondent would talk to the applicant’s accountant about the matter. After some discussion the respondent said to her that her employment was terminated and again called her “a fucking bitch”.
The applicant stated immediately after that conversation she went to the offices of the Law Society to seek advice. Paragraph 17 of the applicant’s affidavit states:
“17. I gave the respondent a further opportunity to issue the amended Group Certificate after speaking to the Respondent’s accountant (John McDonald) on 17 November 1994. I said to him (inter alia words to the effect)
‘I’ll give G H Healey & Co until this Friday 18 November 1994 to issue the amended Group Certificate. I will hold off doing anything until then.’ I did not receive the amended Group Certificate or any further response by that Friday.
I then arranged the have the employment restriction on my practising certificate lifted and since then practised as a sole practitioner under the name of M T Bechara & Company.”
In cross examination the applicant stated that she never at any time discussed the matter of superannuation deductions available to her as a consultant with her own accountant and that she started to look around for another job on the first occasion that she was threatened with termination. Also in cross-examination the applicant agreed the respondent after 11 November 1994 asked her many times to return to his firm and she stated that she had no desire to resume the connection. On Sunday 13 November 1994 the applicant agreed that the respondent telephoned the applicant at her home and stated that her job was still open.
The court also heard from the applicant that the respondent did not explain who he used the word “independent contractor” with regard to the position of independent contractor or provisional taxation. The applicant stated that in September of 1994 she was not aware of any outstanding claims legal or otherwise against the firm of the respondent and further that the respondent had never discussed the operation of provisional tax with her. Marked as MFI 6 was a newspaper clipping referring to the current and pending litigation activities of the respondent. The court heard no evidence that other consultants or partners of the respondent could have been considered liable in the event of an adverse verdict and so I place no weight on that evidence at all.
The applicant specifically denied the respondent offered her a position as a consultant to his firm on the basis she would get the sum of $33,800.00 per annum together with additional compensation for tax. In re-examination the witness confirmed that she would not have accepted such a proposal.
In cross-examination the applicant agreed that before the expiration of business on Friday 18 November 1994 she had lodged her application under the Industrial Relations Act seeking compensation, that is, before the expiration of the deadline she had given to the respondent in respect of the provision of the group certificate.
The Court heard evidence from Mr Gregory Harrison Healey who in his affidavit of 21 April 1995 stated that he believed at the time the applicant became a consultant she possessed a restricted practising certificate and that during mid 1993 he had several discussions with the applicant who subsequently agreed to become a consultant with his firm. Further, that at no time did the applicant state that she had no intention of becoming a partner in the Ashfield practice. Mr Healey denied that he ever threatened the applicant’s employment and that in November of 1994 for the first time stated that she wanted a group certificate. Mr Healey deposed that he in late October or early November of 1994 had a conversation with a Mr Moses on behalf of the applicant and it was agreed matters would be sorted out.
Subsequently on 11 November 1994 according to the respondent a heated exchange took place between the parties which resulted in the applicant saying words to the effect:
“Are you terminating me?”
to which the respondent replied
“Suit yourself”.
The respondent further alleged he telephoned the applicant at home the following Sunday and said that he did not wish her to leave. At approximately that point the respondent alleged he learned the former accountant of the applicant was the subject of an investigation by the Australian Federal Police and that the tax records and papers of the applicant had been taken.
On behalf of the respondent the court heard evidence from Mrs Joy Cotter, the accounts supervisor of the respondent. By affidavit dated 19 Aril 1995 Mrs Cotter stated that on 4 May 1992 the applicant was employed at a salary of $25,000.00 from which PAYE tax was deducted and additionally superannuation contributions were paid by the respondent. On 2 November 1992 the applicant’s salary was increased to $30,000.00. The affidavit of Mrs Cotter states inter alia:
“3.iii In accordance with the arrangements entered into with a number of other solicitors associated with the firm, Ms Bechara became a Consultant as from 13 September 1993. Ms Bechara thereafter received an all inclusive fortnightly consultancy fee for $1,300.00 (333,800.00 p.a. being the amount drawn by solicitors proposing to become partners).
From this consultancy fee Ms Bechara arranged for superannuation contributions to be deducted and paid into the Law Society’s solicitors Superannuation Fund. Annexed hereto and marked with the letter “A” is copy of Application for Membership signed by the Applicant taken from the Solicitors Superannuation and Prospectus supplied to her.
The affidavit continued with certain information concerning holiday leave taken by the applicant.
CONCLUSION
The court heard much evidence as to the manner in which the respondent conducted his practice as a solicitor, and the manner in which he treated other consultants and partners professionally. In the first instance the court ruled that such evidence was relevant to proceedings in order to allow all facts to be the subject of consideration. The issue before the court first was to categorise the contract of employment - whether the applicant was an employee, a consultant or indeed something else. I am conscious of the fact that in allowing such material to be placed before the court had the effect of prolonging the proceedings and to that end numerous exhibits were tendered to the court. However it was my view at the time that in order to accurately determine the nature of the relationship between the parties such evidence was admissible and relevant at the time. Much of that evidence in the end had little probative value.
This is application is one the outcome of which shall be decided upon the evidence as to what happened at the time the parties ceased their business arrangements. That is - November 1994. The parties differ in their recollections as to what happened at that time. In order to substantiate their differing recollections the parties have sought - in much detail - to raise issues of credibility.
The basis of the application of Ms Maria Bechara is that she was at all times and employed solicitor earing a salary of less than $60,000.00 per annum and that she was unlawfully terminated entitling her to compensation under the Industrial Relations Act. Implicit in the application for relief under the Act is the allegation by the applicant that she is not responsible for any tax due on and from 10 September 1993 until 14 November 1994 arising out of money earned from the respondent as a result of her labours. The basis of the defence of Mr Gregory Healey to that application is that first at the time of the termination Ms Bechara was a consultant to the firm of G H Healey & Company and accordingly was not able to bring proceedings under the Industrial Relations Act and secondly that Ms Bechara resigned. Further that if it be that there was an unlawful termination that such was not harsh unfair nor unjust in its effects. Implicit in the defence of the respondent is the allegation that on and from 10 September 1993 the applicant is responsible to the Commissioner for Taxation for tax arising out of income earned by her as she became a consultant.
I find a consultant to be a specialist in a particular field of endeavour who is employed by an organisation but who remains separate and apart from that organisation. That definition is based on the fact that a consultant cannot be held responsible nor accountable for the performance of the obligations imposed at law which attach to that organisation. Implicit in that definition is the fact that a consultant is not responsible for the acts or omissions of other employees of that organisation committed during the course of the work-engagement period or at any other time. This court heard no evidence as to the responsibility of the various consultants employed by the respondent nor of the applicant herself. Further, this court heard no direct specialist evidence from the parties’ governing body - The Law Society of New South Wales as to the fiscal or vicarious responsibilities of the different categories of legal employees. I am unable on the evidence presented by the respondent to find the applicant clearly fell into the category of being a consultant. Various documents were tendered and admitted as exhibits showing the amount of insurance premiums paid by the respondent but for the purpose of reaching a definitive conclusion as to the status of the applicant those documents are of little weight as in my opinion they fall into the category of being self-serving. The respondent relied upon subjective evidence as to the practices adopted in his own firm as conclusive evidence that the applicant had become a consultant. For the purposes of these proceedings I do not accord that evidence much weight as there was no strong link shown that all consultants/partners/employed solicitors were accorded exactly the same treatment in line with an established policy or management practice. Indeed, Mr Healey stated on occasion that “Maria was different - I ultimately wanted her to become a partner and I was having trouble with the others.” Or words to that effect.
In support of the above definition of a consultant Exhibit Q was a bundle of documents produced on subpoena from the Law Society being Applications for Renewal of Practising Certificates. Of note is the document relating to the period 1994/1995 wherein the respondent is noted as being a sole practitioner.
For the purposes of these proceedings the applicant at all times was a solicitor and as such must be more than ordinarily aware of all and any changes relating to her employment status. As solicitors both the applicant and the respondent have duties and responsibilities to third parties such as to the court, to the client, to the Law Society and to the Commissioner for Taxation. Such duties are strict and in order to be accorded the privilege of practising as a solicitor both the applicant and the respondent have to prove that those duties have been fulfilled.
It was common ground between the parties that the applicant commenced employment as an employed solicitor in May of 1992. Records produced by both parties indicate that duties and responsibilities to the Law Society and the Commissioner for Taxation at that point were fulfilled.
The evidence before this Court showed that later in the course of her employment the applicant accepted the day to day responsibility for the running of the Ashfield office and left the City office of the respondent where she had been an employee subject to supervision. To my mind that was an alteration - if only a promotion - in the employment status of the applicant. Following on from that change of work place for the applicant the parties had certain specific conversations concerning the alteration of the status of the employment of the applicant on and from the middle of 1993. Those conversations ranged over a period of some months. The applicant stated that in early 1994 the respondent paid for her to complete a course so that she became eligible to practise as a solicitor on her own account. To my mind the applicant had reached the conclusion in her own mind that her employment status may change. The affidavit of the applicant leaves open the consequences to her employment status of her completing the course offered by the Law Society.
From time to time during these proceedings reference has been made to proceedings in other places. I regard all evidence relating to the lease of the premises at 222 Liverpool Road Ashfield as of secondary importance to these proceedings and probably of primary importance to other proceedings
During the course of her employment with the respondent applicant in evidence stated she received forms relating to Superannuation contributions from the finance section of the office of the respondent and that she recalled signing those forms. The applicant stated that she did not discuss the level of contribution that would be made for her to become a member of that fund. The applicant stated during cross-examination that she failed to make enquiry of the finance section of the respondent’s firm G H Healey & Company as to the relevance of the change in procedure relating to superannuation contributions or to any impact such change may have on the status of her employment. Exhibit N was the prospectus issued by the Solicitors’ Superannuation Fund of the Law Society and the front cover sheet bears the words “For employed Solicitors, Partners and Sole Practitioners” and accordingly I am unable to place much weight on the body of evidence put forward by the respondent that because the method by which superannuation payments were forwarded to a particular fund altered on a particular date and only he alleged that on and from that date the employment status of the applicant also changed. It should however be borne in mind at this point that discussions had already taken place between the applicant and the respondent involving the applicant becoming a partner. During the course of her evidence the applicant told the Court that her sister was an accountant, and that the various firms of accountants her sister from time to time was employed by were the firms the applicant instructed to look after her tax affairs. The applicant provided no evidence that she discussed the altered superannuation position with her professional adviser or her sister. The applicant denied she was aware of the altered superannuation arrangements in that payments were now in fact being deducted from her salary.
During the course of the hearing of the application the court ruled that various matters may have been germane as to the manner in which the respondent conducted his practice in the way in which he classified various employees be admitted to evidence on the basis of possible relevance. To that end a large amount of subpoenaed material was referred to but upon consideration not found to be relevant to what happened between the parties at the actual termination.
It cannot be said that the applicant definitely fell into the category of being a consultant as the evidence on balance showed that the respondent attempted to unilaterally alter the status of the applicant without proper consultation and formality. No evidence was placed before the court that the applicant accepted the altered employment status and changed her conduct and role within the firm accordingly. The respondent offered no concrete agreed proof, apart from vague references to taxation benefits, and apart from information provided by him to the Law Society without the knowledge and involvement of the applicant, that the status of the applicant at a defined point in time altered from employee to consultant and that alteration was agreed upon by both parties. However in agreeing to bring in extra profit costs in order to assist the firm with tax liabilities and also seeking to align a rise in basic salary with the amount of profit costs earned by her, it is my view that from her own evidence the applicant’s employment assumed some of the characteristics of non-equity partner. A partnership is the relation which subsists between persons carrying on a business in common with a view of profit. “Business” is defined as every trade occupation or profession. For a business to be carried on in common, it is not essential for all the partners to take an active part in direction and management. Whether a business is being carried on on behalf of the persons who are alleged to be partners is a difficult question of fact which can only be answered after a careful examination of all the circumstances surrounding the dealings between those persons. I find the applicant not to have fallen into the category of non-equity partner of the respondent.
The applicant failed to call her accountant to give evidence on her behalf in support of her statements that her accountant had had discussions with the respondent’s accountant only concerning the failure to produce a group certificate. The court was therefore unable to determine precisely what was said in those discussions and finds it is proper for the respondent to argue against the statements of the applicant that those discussions centred around the taxation arrangements of the parties concerning the status of the applicant as a consultant. It seemingly would have been a simple matter for the applicant to call her accountant to put the matter beyond doubt.
I found the respondent’s witness Mrs Joy Cotter to be clear in her evidence. I am unable to place much value on the evidence tendered by this witness concerning the alteration in status of the applicant as no evidence was provided that she took part in management decisions concerning the alteration of the status of the applicant and further no evidence was produced that she could attest to the fact that the applicant was aware of the change in her status.
The respondent has strongly indicated throughout these proceedings that at all times the applicant was subject to his control and supervision with regard to the conduct of client’s affairs and although he may not have been physically present at all times, it was implicit in the employment relationship that the applicant was under his direction. That indication by the respondent was at no time controverted by the applicant. The so-called “control” test in my view still remains basic to the employer - employee relationship and the relationship of the applicant to the respondent at the time in question passed that test.
However having considered all the evidence before the Court it is my opinion that overall the status of Ms Bechara did not change and I find that at all times the applicant commenced as and remained an employee of the respondent firm.
On behalf of the applicant it was argued that the applicant’s salary fell within the definition of “salary” and “wages” for PAYE purposes pursuant to section 221A(1) of the Income Tax Assessment Act dealing with “salary and wages”. I agree with that contention but I make no finding as to the responsibility of a particular party as to the payment of income tax for the period commencing 10 September 1993 until 11 November 1994 other than to note that the applicant produced evidence in the form of documents provided to the Commissioner for Taxation that she believed the respondent was liable for the taxation.
On behalf of the applicant it was also argued that the respondent as employer is obliged to make superannuation payments pursuant to the Superannuation Guarantee (Administration) Act 1992, as the salary of the applicant fell within the definition of “salary or wages” contained in Section 11(1) of that Act. I agree with that contention.
Annual leave entitlements together with the statutory loading were claimed by the applicant. Section 376 of the Act deals with the powers of Judicial Registrars and allows me to deal with this claim on the basis that the claim is not more than $10,000.00.
I turn now to the second part of the application of the applicant - that she was unlawfully terminated.
The applicant does not seek reinstatement - she has now established her own firm. The primary remedy of the Industrial Relations Act is reinstatement. Additionally the court may also order compensation. The relief that may also be granted under s376 has been referred to.
The Court heard evidence that during the employment with the firm of the respondent the applicant made some investigation about other employed positions with legal firms offering commercial law positions but it is noted that those investigations were not vigorously pursued and can only be described as half-hearted. The time of those investigations was not proximate to the end of the employment. It is clearly established that an employee/applicant has a duty to mitigate the loss of the employment. There was no evidence before the court that at the time of the termination the applicant had any current information as to the likelihood of her obtaining employment as an employed solicitor with a similar firm or organisation.
The evidence showed that the applicant and the respondent had conversations after 11 November 1994 concerning the provision of a group certificate. After leaving the employ of the respondent solicitor the applicant within a matter of some two days had commenced practice on her own behalf. It can therefore be concluded as probable that the applicant knew her that her professional relationship with the respondent was about to end and that she would not be seeking an employed position elsewhere with another firm.
Section 170 EE of the Industrial Relations Act deals with remedies the court may grant. In respect of contravention of a provision of Division 3 of Part VI A of the Act (other than sections 170 DB or 170 DE) this court may make orders requiring the respondent to re-appoint the employee to the position in which the employee was employed immediately before termination or to appoint the employee to another position on terms and conditions no less favourable. Additionally, if an order is made along the lines referred to above, the court may make any order it thinks necessary to maintain the employment and also may make any order it thinks necessary to maintain the employment. The court may make an order requiring the employer to pay to the employee remuneration lost because of the termination. The applicant does not seek an order that the respondent supply a group certificate relating to the relevant period however it is noted steps have been taken in other areas to rectify that matter.
The applicant clearly demonstrated that the admitted use of foul and abusive language by the respondent towards her personally did not prevent her immediately seeking a continuation of her employment and a rise in pay. In normal circumstances such treatment by a man towards a woman would call for an apology or possibly cause a prompt resignation. That did not happen. The relationship between the parties continued. The foul language incident accordingly assumes no relevance to these proceedings. Hence I am of the view that the reason for the bringing of the attention of the court by the applicant to the foul language incident can only be to be to discredit the respondent and I place no weight on the incident at all.
There were other matters brought to the attention of the court by the applicant relating to the professional and private life of the respondent - again I place no weight on those matters for the purpose of these proceedings as they are entirely irrelevant - and I have formed the view in that regard also the purpose of the applicant was to discredit the respondent.
As stated earlier, I have been forced to draw my conclusions from the actions of the parties from 11 - 18 November 1994. Those actions are the foundation of my decision. A large number of documentary evidence in the form of exhibits were tendered during the hearing of this application all purporting to show that each party had a specific intention to demonstrate certain facts relating to the status of the applicant to third parties. Those specific intentions are secondary to my decision and raise issues of estoppel which will not be dealt with here. Into this category falls the evidence relating to the contributions paid to the Law Society Superannuation Fund. The evidence of the parties’ conflicts as to whether the applicant knew the contributions were being deducted from her salary. I am unable to find much support for a conclusion either way on that body of evidence as to the status of the applicant at the time of termination and so I accord it little weight. However I find that the applicant did not consent to the respondent making superannuation deductions from her salary and so find that such deduction by the respondent was wrongful.
On the evidence of the applicant it was not made entirely clear to the court whether she would have returned to work for the respondent if he had supplied the group certificate. However the evidence before the court was that the applicant immediately upon leaving the employ of the respondent commenced practice on her own account. The respondent on Sunday 13 November 1994 asked the applicant to return to work at his firm and I am of the view that that matter was never resolved between them. I am of the view the respondent thought there was every chance the applicant would re-consider the matter and possibly return to work. In oral evidence the applicant stated she had resolved never to return to work for the respondent. The applicant at that time refrained from advising the respondent she planned to set up practice on her own account.
In the circumstances, the evidence of the applicant being unclear at this point, I am of the view that both parties from 13 November 1994, thought something had to be done to finalise the position and that in light of the past manner in which the parties had conducted their relationship that onus was on the applicant. On the applicant’s evidence the respondent had threatened her previously - July of 1994 - with termination and her employment had continued thereafter. The applicant had given the respondent a deadline - Friday 18 November 1994 - within which time to supply a group certificate. From the evidence I find that the respondent was of the view that the group certificate issue would be resolved and that there was every chance the applicant would return to work. The applicant did something to discharge the onus, referred to above, on her to resolve the position between the parties - she visited the Industrial Relations Court and filed an application for compensation for unlawful termination under the Industrial Relations Act. That action was filed and dated 18 November 1994 - before the expiration of the time limit set by her in which the respondent had to provide the group certificate. That action was outside the parameters of the agreement by implication according to the oral evidence reached between the parties as to their future business relationship. The respondent by the actions of the applicant was denied the opportunity to discuss future working arrangements. The respondent was not by the actions of the applicant denied the opportunity of providing a group certificate if he so wished.
Exhibit B was a letter dated 1 November 1994 from the respondent to the applicant that stated inter alia:
“John McDonald informs me he has had discussions with your accountant in relation to clarifying what monies you claim are due to you and I understood this was to be attended to this week. I received last week an application from the Law Society, obviously submitted by you so that you could have the restriction on your practising certificate lifted.
I am aware that after our contretemp (sic) on Friday, 12 November 1994 and notwithstanding my telephone call to you over that weekend, you confirmed that you did wish to leave. This is notwithstanding my indicating I did not want this to happen and advising you of the difficulties that it would and did cause for the respective clients and their matters coming on for the following weeks.
I note when speaking to me you indicated that the clients were now my problem. Subsequently, since that stage there were telephone calls to my home and to this office suggesting your “walking out” was due to my harassment of you. I disregarded these calls as I did not think that type of behaviour would emanate from you but may have been from someone who was seeking to capitalise on your departure and to cause either you or me distress.
In fact, whilst I felt you were creating a situation where you could leave, I did not think of it in any sinister light as you had indicated to me you were going overseas with your father.
However, on Friday 18 November 1994, I received notification from the landlord at Ashfield terminating the lease. No advice was ever received from you as to the requirement to exercise an option or negotiate a new lease.
I have now, today, been advised that you have been contacting clients of the firm and indicating that you have now your own practice and can complete their matter (sic)”.
I am unable to accord that letter much weight concerning what took place between the parties over the week-end of 12 and 13 November 1994 as it is against the oral evidence - that the applicant would re-consider her position and further the reference to the involvement of Mr McDonald did not accord with the applicant’s version of the state of affairs. With regard to the overall position I prefer the oral account put forward by the parties concerning the negotiations involving the cessation of employment.
Exhibit A was a letter dated 22 November 1994 from the applicant to the respondent in reply to the above which inter alia stated:
“On 11th November 1994 I attended the city office an the meeting took place between you and myself on Level 8 of the building so that the meeting could be conducted confidentially. During this meeting I advised you that I did not appreciate your threats in regards to termination and that if you did not deal with the matter in hand by the following Wednesday then I propose (sic) to lodge my tax return with the relevant statutory declaration, upon which you told me that my employment was terminated. I asked you if you were going to provide me with any notice for the termination to which you replied “You are terminated”. I subsequently left the office and headed for the elevator when you followed me and called out a phrase which I am loathe (sic) to repeat. As always your understanding of a situation is one that suits your purpose and is not reflective of the true situation.
The understanding was in fact that you would meet your liability both to the Australian Taxation office and myself by 16th November 1994 otherwise I would proceed to take the necessary action. After having spoken to your accountant on 17th November 1994 in relation to the matter he advised me that he would speak to you in relation to whether or not you would be prepared to meet your liabilities. On this occasion I advised your accountant that I was prepared to extend the time for you to meet your liabilities until Friday 18th November 1994. When I did not hear from you by midday Friday I proceeded to take the necessary in relation to my unfair dismissal as well as action to ensure that you met your liabilities.
Paragraph 2: After you terminated my employment without notice you left me with no option but to attend the Law Society and discuss with them my situation. The Law Society was kind enough to refer me to the Federal Industrial Court and to assist me in preparation of my application to have the restriction on my practicing (sic) certificate lifted which application I was quite entitled to make having met the criteria”.
Apart from that reference to “midday Friday (18 November 1994)” there was no other evidence provided by either party as to a time limit of hours and minutes imposed by the applicant. Nor was there any information provided by any witness as to a time by which the applicant had to notify the respondent of her intentions concerning his offer to resume the work relationship. I find that the close of business, or shortly thereafter, on Friday 18 November 1994, would be time within the parameters of the understanding of the parties. No evidence was provided as to what course of action the respondent would have taken had he been aware of the fact that by early in the week commencing Monday 14 November 1994 the applicant had commenced practice on her own account. The reason why the applicant felt she “had no option but to attend the Law Society and discuss with them my situation” is unclear. From the evidence it was at that time that the applicant had commenced practice on her own account and further the circumstances surrounding the termination of the employment at that time at the very least were capable of two interpretations. I am unable to place much weight on the letter referred to above as it does not in my opinion accurately reflect the situation.
It is clear the applicant and the respondent had a complex and highly-charged relationship, one in which ordinary formality had been abandoned. Accordingly it is clear to me that the regardless of what had been said on 11 November 1994 the matter of the cessation of the applicant’s employment was not resolved until 18 November 1994. It was on that date that the applicant lodged the application for relief under the Industrial Relations Act seeking compensation. I find that at the time the application was lodged by the applicant, her contract of employment with the respondent had not properly been concluded. The evidence showed in the past the respondent had used personally abusive and derogatory language towards the applicant that the applicant had totally ignored and had continued in her employment. The final acknowledgment of the conclusion of the contract of was the responsibility of the applicant particularly in light of her past conduct as to that which she had tolerated from the respondent and also in light of her intentions regarding the setting up of legal practice on her own account. The questions for determination are - did the applicant have an obligation at law to advise the respondent she was setting up her own practice and whether that in visiting the Industrial Relations Court and an application for relief under the Act before the deadline had passed for the respondent to provide a group certificate did the applicant terminate her own employment? It is clear that in failing the advise the respondent of her future employment plans and further lodging her application for relief with this court prior to the expiration of the consensual time limit the applicant twice misled the respondent. Normally, if an employer says “you are terminated” - that is all that is necessary for a dismissal to have occurred. But I am of the view that each case has to be considered on its facts, and the facts of this case, not the least being that both parties are solicitors and secondly the complex inter-personal relationship, set the normal employer/employee relationship apart. It seems that in the past, on the applicant’s own evidence, the respondent had threatened the applicant with termination. The above conclusions accord with the contention of the respondent that the applicant planned to resign from the respondent’s firm. Finally and most importantly I agree with the contention of the respondent that in the account of the respondent Mr Healey of the events of 11 November 1994 only admits resignation by the applicant and in that regard I prefer the version of the respondent.
I find the applicant by her own actions terminated her own employment on 18 November 1994 within the confines of her relationship with her employer the respondent.
Having found that the applicant terminated her own employment by her own conduct I accordingly dismiss her application for compensation for unlawful termination.
However the applicant has included a claim for outstanding holiday pay due on the basis that she was an employee of the respondent and accordingly in light of the findings made above I order the respondent to pay to the applicant the sum of $7,484.00 within 28 days of the date of this decision being eight weeks leave due at $885 per week together with an allowance for the statutory loading.
I further order the respondent to reimburse to the applicant the sums of money wrongfully deducted from her salary as superannuation contributions from 13 September 1993 until 11 November 1994. Such amount is to be determined by the Law Society Superannuation Fund at the request of the applicant and is to be paid to the applicant by the respondent within 14 days after the respondent receives verification of the determined amount from the applicant. It is my view that the combined amounts of money ordered to be paid by the respondent does not exceed the limit imposed by the Act.
I note the application of Mr Andrew Brown of the Law Society that in complying with the subpoena served upon that Society at short notice to produce documents on 7 June 1995 and having regard to Order 27 Rule 4A of the Industrial Relations Court Rules being Statutory Rules of 1994 No 357 I order the applicant to pay conduct money to the Law Society in the sum of $300.00 within 14 days of to-day’s date.
I certify that this and the preceding twenty eight pages are a true copy of the Reasons for Decision of Judicial Registrar Tomlinson.
Associate:
Date: 2 August 1995
Counsel for the
Applicant : Mr S Galitsky
Solicitor for the
Applicant : Haylen McKenzie
Counsel for the
Respondent : Mr M J Neil QC
with him Mr G Warburton
Solicitor for the
Respondent : Paul A Curtis & Company
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