Matthew Tolmachoff v Trustee for the Wingrain Trust Aka Grain Brokers Australia

[2019] FWC 8027

[2019] FWC 8027

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Matthew Tolmachoff
v
Trustee for The Wingrain Trust AKA Grain Brokers Australia
(U2019/9502)

COMMISSIONER HAMPTON ADELAIDE, 31 DECEMBER 2019

Application for an unfair dismissal remedy – jurisdictional objection – high income threshold – whether applicant protected from unfair dismissal by virtue of his level of earnings – management employee not covered by award or enterprise agreement – company provided vehicle available for reasonable private use – whether vehicle a non-monetary benefit at time of dismissal – whether commuting to office a private benefit – vehicle found to be relevant benefit for calculation of earnings – dispute as to extent of private use – limited direct evidence – not satisfied that sufficient private use undertaken to put applicant over the high income threshold – applicant’s earnings below the threshold – objection dismissed – merits to be heard.

1. What this decision is about

[1] Mr Matthew Tolmachoff has made an unfair dismissal application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (the FW Act) against the Trustee for The Wingrain Trust AKA Grain Brokers Australia (Grain Brokers).

[2] In opposing the application, Grain Brokers has raised a jurisdictional objection contesting Mr Tolmachoff’s eligibility to make this application. Grain Brokers contend Mr Tolmachoff was not covered by a modern award or enterprise agreement, earned more than the high income threshold, and is therefore not a person protected from unfair dismissal. 1 The threshold was $148,700 as at the time of dismissal.2

[3] It is uncontroversial that Mr Tolmachoff’s salary at the time of the dismissal was $145,000 per year. Grain Brokers contend that the value of the private benefit enjoyed by Mr Tolmachoff’s access to a company vehicle, in addition to his salary, places Mr Tolmachoff’s earnings above the high income threshold. Mr Tolmachoff contends that the value of his private use of the vehicle did not cause him to exceed the high income threshold at the time of the dismissal.

[4] After conducting a Directions Conference on 15 October 2019 I determined that the Respondent’s jurisdictional objection should be heard as a preliminary issue. Should the Commission reject the jurisdictional objection and find that Mr Tolmachoff was a person protected from unfair dismissal, the matter would then be listed for further hearing on the questions of merit and remedy.

[5] Consequently, this Decision deals with the jurisdictional objection only.

[6] Both parties have sought permission under s.596 of the FW Act to be represented by a lawyer or paid agent in these proceedings. Given the complexity of the matter and the capacity to more efficiently deal with the application, this permission was granted during the Directions Conference. Mr Tolmachoff was represented by Mr Jakobsen of Beger & Co. Lawyers while Grain Brokers was represented by Mr Boyle and Ms Paolino of Minter Ellison.

2. The cases presented by the parties

2.1 Grain Brokers

[7] As previously stated, Grain Brokers contends that Mr Tolmachoff was not a person protected from unfair dismissal under the FW Act as his earnings were above the high income threshold and his employment was not covered by a modern award or enterprise agreement. This latter aspect is not in dispute.

[8] Grain Brokers state that Mr Tolmachoff’s base salary at the time of the dismissal was $145,000 per year. Grain Brokers also made superannuation contributions on behalf of Mr Tolmachoff at a level that accords with its obligations under the relevant superannuation legislation 3 and those contributions are not relevant for present purposes.4 All of these matters are also not in dispute.

[9] Grain Brokers further submits that in addition to his salary, Mr Tolmachoff was entitled to, and was provided, a fully maintained vehicle; a Toyota Hilux SR5. This vehicle was more expensive to purchase than a Mitsubishi Triton (the vehicle predominantly provided by Grain Brokers to employees), and it was suggested that this was taken into consideration when setting Mr Tolmachoff’s salary. Grain Brokers also paid for the vehicle’s registration, insurance, maintenance and fuelling. The monetary value of this benefit was not agreed between Grain Brokers and Mr Tolmachoff. Grain Brokers submits that the monetary value of Mr Tolmachoff’s personal use of this vehicle is to be included in any consideration of his earnings.

[10] Grain Brokers posits that the formula for calculating the monetary value of private use of a vehicle is as follows:

“(a) Determine the distance travelled by the employee in the vehicle in question in the 12 month period prior to the termination of the employee's employment.

(b) Determine the percentage of that distance that was for private use.

(c) Multiply the above two figures to obtain the annual distance travelled all full for the employee's private purposes.

(d) Estimate the cost per kilometre for a vehicle of the type used. This information may be obtained from the Royal Automobile Club of Victoria (RACV), National Roads and Motorists' Association or like motoring organisations.

(e) Multiply the annual distance travelled for private purpose by the estimated cost per kilometre. The result is the value of the motor vehicle component of the employee's remuneration.” 5

[11] Applying this formula Grain Brokers contends that Mr Tolmachoff travelled at least 12,340 kilometres (38 % of the total distance) for private travel in the 12 months prior to his dismissal and that the cost to run the vehicle was $0.9137 6 per kilometre. Grain Brokers contended that Mr Tolmachoff’s travel in the vehicle between his residence in Golden Grove, to Grain Brokers’ office in Mawson Lakes, both in the northern suburbs of Adelaide, was private use. In addition, a number of fuel records were provided to suggest the vehicle was refuelled on non-working days and at locations distant from the office and his residence.

[12] Grain Brokers submit that the value to be ascribed to Mr Tolmachoff’s private benefit of the vehicle is $11,275.06. When combined with his salary, Mr Tolmachoff’s total annual rate of earnings at the time of his dismissal was at least $156,275.09; an amount in excess of the high income threshold.

[13] In addition to its submissions, Grain Brokers relied upon witness statements and sworn evidence from:

•  Mr Jeffrey Winspear, Managing Director of Grain Brokers; and

•  Mr David Hanrahan, Group General Manager of Grain Brokers.

[14] Mr Winspear gave evidence regarding Mr Tolmachoff’s engagement and his perspective of negotiations for the Hilux vehicle. Mr Winspear was also the person who collected the vehicle in July 2019 and delivered it to another employee of Grain Brokers whose vehicle had been delayed in freight.

[15] Mr Winspear’s evidence was forthright and with one exception I accept it as to facts and events directly observed by him. The one exception is that I am not convinced that Mr Winspear and Mr Tolmachoff discussed the applicant’s alternative vehicle choice at the initial meeting between them. It is likely that the general salary range was set and an offer made for a specific salary before Mr Tolmachoff confirmed that he wanted the higher cost Hilux option. Ultimately, this is not critical to the disposition of this matter.

[16] Mr Hanrahan gave evidence regarding the work performed by Mr Tolmachoff and the operations of the division of the business in which the applicant was employed. I found his evidence as to the facts of the matter that he directly observed to be persuasive and credible. To the extent that he made assumptions or drew inferences from the available facts to support Grain Brokers’ calculations of the business and private use of the vehicle, these are ultimately matters for the Commission to determine based upon the best evidence available. In particular, I consider that the estimates made about the extent of business trips undertaken by Mr Tolmachoff to be largely speculation. I also observe that the evidence about the extent of travel between Mr Tolmachoff’s home and office, is marginally less so.

2.2 Mr Tolmachoff

[17] Mr Tolmachoff rejects the suggestion that his salary, when combined with the limited private benefit derived from use of the vehicle, exceeded the high income threshold. He ultimately did so on a number of grounds.

[18] Mr Tolmachoff did not have access to his vehicle in the immediate lead up to the point of his dismissal. He contends that as the high income threshold requires consideration of his rate of earnings at the time of dismissal, rather than an average of the previous 12 months, no private use value should be added to his salary in this case.

[19] Mr Tolmachoff refers to his contract of employment 7 which specifies his home address in Golden Grove as the principal place of work and contends that although an office was subsequently established, his designed workplace was not changed. On this basis it was suggested that any “commute” from his residence to the office (or any other place for work) would be work-related, and not private, travel. He also suggests that commuting between a place of residence and a workplace may not be private use in the present context.

[20] Mr Tolmachoff also disputes that the vehicle was provided in lieu of salary, suggesting instead that the salary had been set in his offer of employment before Mr Tolmachoff requested the more expensive Hilux SR5. He also made a brief submission that as Fringe Benefits Tax (FBT) was not paid in respect of the vehicle, it was implied that personal use of the vehicle was “minor, infrequent or irregular.” 8 Having raised some concerns about drawing such an inference, I understand that this aspect was not ultimately pressed by Mr Tolmachoff.

[21] Mr Tolmachoff suggests that the assumptions underlying Grain Brokers’ estimate of his private use are flawed and demonstrably wrong. He submits that he used the vehicle for only 10% personal use as opposed to the 38% assumed by the Respondent. In questioning these assumptions, Mr Tolmachoff also suggested that the Commission should treat the Respondent’s estimates as suppositions and attribute them little evidentiary weight. To this end, Mr Tolmachoff claims that Grain Brokers has not discharged its evidentiary onus and that the jurisdictional objection should be dismissed.

[22] Mr Tolmachoff gave evidence in support of his submissions. I found Mr Tolmachoff’s evidence about the facts of this matter to be generally clear and reliable. I did however gain the impression that Mr Tolmachoff was being very careful with his evidence, not just to ensure its accuracy, but also with a view to his case more generally. This does not lead me to the question the truth of his evidence about the facts but rather to treat some of the general statements about the capacity to use of the Hilux with at least some caution. This includes his reference to some unstated limitation on his personal use associated with his understanding of the FBT rules.

3. Consideration

3.1 Relevant statutory provisions

[23] Before considering the substance of Grain Brokers’ jurisdictional objection and the responses made by Mr Tolmachoff, it is appropriate to identify the relevant provisions of the FW Act.

[24] Section 382 of the FW Act sets out when a person is protected from unfair dismissal:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[25] A person’s earnings and the high income threshold are assessed by reference to ss.332 and 333 of the FW Act respectively as follows:

“332 Earnings

(1) An employee’s earnings include:

(a) the employee’s wages; and

(b) amounts applied or dealt with in any way on the employee’s behalf or as the employee directs; and

(c) the agreed money value of non-monetary benefits; and

(d) amounts or benefits prescribed by the regulations.

(2) However, an employee’s earnings do not include the following:

(a) payments the amount of which cannot be determined in advance;

(b) reimbursements;

(c) contributions to a superannuation fund to the extent that they are contributions to which subsection (4) applies;

(d) amounts prescribed by the regulations.

Note: Some examples of payments covered by paragraph (a) are commissions, incentive-based payments and bonuses, and overtime (unless the overtime is guaranteed).

(3) Non-monetary benefits are benefits other than an entitlement to a payment of money:

(a) to which the employee is entitled in return for the performance of work; and

(b) for which a reasonable money value has been agreed by the employee and the employer;

but does not include a benefit prescribed by the regulations.

(4) This subsection applies to contributions that the employer makes to a superannuation fund to the extent that one or more of the following applies:

(a) the employer would have been liable to pay superannuation guarantee charge under the Superannuation Guarantee Charge Act 1992 in relation to the person if the amounts had not been so contributed;

(b) the employer is required to contribute to the fund for the employee’s benefit in relation to a defined benefit interest (within the meaning of section 291-175 of the Income Tax Assessment Act 1997) of the employee;

(c) the employer is required to contribute to the fund for the employee’s benefit under a law of the Commonwealth, a State or a Territory.

333 High income threshold

(1) Subject to this section, the high income threshold is the amount prescribed by, or worked out in the manner prescribed by, the regulations.

(2) A regulation made for the purposes of subsection (1) has no effect to the extent that it would have the effect of reducing the amount of the high income threshold.

(3) If:

(a) in prescribing a manner in which the high income threshold is worked out, regulations made for the purposes of subsection (1) specify a particular matter or state of affairs; and

(b) as a result of a change in the matter or state of affairs, the amount of the high income threshold worked out in that manner would, but for this subsection, be less than it was on the last occasion on which this subsection did not apply;

the high income threshold is the amount that it would be if the change had not occurred.”

[26] Regulation 3.05 of the Fair Work Regulations 2009 (FW Regulations) states how benefits other than payment of money are to be considered in the context of earnings and the high income threshold as follows:

“3.05 When a person is protected from unfair dismissal—high income threshold

(1) For subparagraph 382(b)(iii) of the Act, this regulation explains how to work out amounts for the purpose of assessing whether the high income threshold applies in relation to the dismissal of a person at a particular time.

Note: Under section 382 of the Act, a person is protected from unfair dismissal if specified circumstances apply. One of the circumstances is that the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

… …

Benefits other than payment of money

(6) If:

(a) the person is entitled to receive, or has received, a benefit in accordance with an agreement between the person and the person’s employer; and

(b) the benefit is not an entitlement to a payment of money and is not a non-monetary benefit within the meaning of subsection 332(3) of the Act; and

(c) the FWC is satisfied, having regard to the circumstances, that:

(i) it should consider the benefit for the purpose of assessing whether the high income threshold applies to a person at the time of the dismissal; and

(ii) a reasonable money value of the benefit has not been agreed by the person and the employer; and

(iii) the FWC can estimate a real or notional money value of the benefit;

the real or notional money value of the benefit estimated by the FWC is an amount for subparagraph 382(b)(iii) of the Act.”

[27] It is common ground that Mr Tolmachoff’s employment was not covered by a modern award or an enterprise agreement. It also common ground that Mr Tolmachoff was provided with a fully maintained vehicle, he was permitted to use this for reasonable private use, and no value for that access was agreed by the parties.

[28] Provision of a motor vehicle by an employer to an employee, if made available for personal use, is capable of being considered to be a benefit for the purposes of regulation 3.05(6) and s.382. The Commission has determined 9 that where an employee is given access to a company supplied vehicle, from which they derive a personal benefit, and a reasonable monetary value has not been agreed for its private use, the method of apportionment to enable the Commission to derive the benefit for present purposes is that as set out in H.W. Fewings v Kunbarllanjnja Community Government Council10 (Fewings).

[29] Fewings requires the following approach:

“In our view the most appropriate method of calculating the value of the motor vehicle component of an applicant's remuneration is as follows:

1. Determine the annual distance travelled by the vehicle in question.

2. Determine the percentage of the annual distance travelled which was for the applicant's private purposes.

3. Multiply the figures from 1. and 2. This provides the annual distance travelled for private purposes.

4. Estimate the cost per kilometre for a vehicle of the type used. This information can be obtained from the RACV, NRMA or like motoring organisations.

5. Multiply the annual distance travelled for private purposes by the estimated cost per kilometre. The result is the value of the motor vehicle component of the applicant's remuneration.

The ATO formula may be used in circumstances where the parties agree that it will provide a reliable estimate. That is not the case in the matter before us.

The party advancing the proposition that an applicant is excluded from the relevant provisions of the Act because regulation 30B(1)(f) carries the burden of establishing the evidentiary basis upon which such a determination can be made.” 11

[30] Before dealing with this approach, it is necessary in this case to deal with two preliminary issues that arise from the facts and the terms of the FW Act and regulations.

3.2 Is the provision of the motor vehicle relevant given the events surrounding the dismissal?

[31] The evidence reveals that the provision of a fully maintained motor vehicle was part of Mr Tolmachoff’s employment arrangements and it was agreed by the time that the contract was signed that the vehicle was to be a Toyota Hilux SR5. The vehicle concerned was purchased specifically for Mr Tolmachoff and up until immediately before his dismissal in August 2019 he had sole access to it.

[32] Whilst Mr Tolmachoff was away overseas on leave, he was contacted by Mr Winspear to obtain access to the vehicle so that it could be provided to another employee, who was awaiting supply of her own work vehicle. This was arranged and Grain Brokers collected the vehicle on 23 July 2019 from the Applicant’s house. When Mr Tolmachoff returned from leave on Monday 29 July 2019, the Hilux was still in the possession of the other employee and the Applicant was directed to use a hire vehicle obtained on behalf of the employer for his own use. Mr Tolmachoff acquired the use of a hire vehicle at or around this time and used it until shortly before his dismissal.

[33] The sequence of events at the time of dismissal, including when Mr Tolmachoff had the hire vehicle, requires some consideration. It is clear that by early August 2019 both parties were aware the employment relationship may be approaching its conclusion. At this time Mr Tolmachoff still had access to the hire vehicle. On or around the evening of Friday 9 August a discussion took place between Mr Tolmachoff, Mr Winspear and Mr Hanrahan. Mr Tolmachoff alleges he was told to resign or be terminated, whereas Grain Brokers suggested he was told that termination would most likely occur but that a decision would be made next week. There could be little doubt that the employment relationship was ending at that stage and the effective date of dismissal, 14 August 2019, was ultimately not disputed by the parties. 12

[34] At the conclusion of the 9 August discussion Mr Winspear requested Mr Tolmachoff to return the hire vehicle. For reasons set out above, it is clear enough that the relationship would be ending but this was not yet confirmed. The evidence given during the hearing was that Mr Tolmachoff did indeed return the hire vehicle on Monday 12 August 2019. However, it was not until Wednesday 14 August 2019 that termination of Mr Tolmachoff’s employment was confirmed in writing and it was effective on that date. This raises the issue of what was Mr Tolmachoff’s entitlement, if any, at the time of dismissal. More precisely, the issue is whether there was the provision of a relevant non-monetary benefit at the appropriate time for the purposes of s.382 of the FW Act.

[35] Grain Brokers contends that it is the entitlement to a benefit that is material, rather than provision of that benefit itself. Grain Brokers further submitted that Mr Tolmachoff was entitled to a vehicle under his contract of employment and, despite the fact a vehicle was not provided at the exact time of the dismissal – potentially in breach of the contract, this entitlement was not varied at or before the dismissal.

[36] Mr Tolmachoff contends that the jurisdictional threshold must be strictly applied and it is the rate of earnings at the time of dismissal that is relevant. Along with the fact that changes in remuneration are not averaged over the year to determine that rate, the actual provision of the benefit (the vehicle including for reasonable private use) must be assessed at the time of the termination. On that basis, Mr Tolmachoff contends that there was no non-monetary benefit provided at the relevant time and that the rate of earnings should not include that element.

[37] I accept that the assessment of the rate of earnings for present purposes is to be made by reference to the circumstances applying at the time of the dismissal and that an averaging across the year prior to the event is not to be applied. 13

[38] This case concerns the provision of a non-monetary benefit and terms of regulation 3.05(6) (set out earlier) are engaged. Amongst the other requirements, under 3.05(6)(a) a relevant non-monetary benefit includes where, as in this case, the Applicant “is entitled to receive, or has received, a benefit in accordance with an agreement” with Grain Brokers. It is tolerably clear that a benefit may be relevant where the applicant is entitled to receive it, as well as where the entitlement has actually been received. Of course, the Commission must also be satisfied that all of the requirements of sub regulation (6)(b) and (c) have been met and I accept that in some cases a benefit that may have been an entitlement, but not actually ever received, should not be included as a matter of discretionary fairness.

[39] In this matter, I am satisfied that:

•  At the point of termination, Mr Tolmachoff was entitled to the provision of the Toyota Hilux SR5 with reasonable personal usage. It remained a term of his employment contract, this was not subject to any mutual or other effective variation, and he had an enforceable entitlement to that benefit. The fact that a hire car was used for a period and that vehicle was returned before the dismissal was effective, does not in my view lead to a contrary position.

•  The benefit is not an entitlement to a payment of money and is a non-monetary benefit within the meaning of subsection 332(3) of the FW Act.

•  In all of the circumstances here, I consider that the benefit should be taken into account for the purpose of assessing whether the high income threshold applies to Mr Tolmachoff at the time of the dismissal.

•  A reasonable money value of the benefit has not been agreed by Mr Tolmachoff and the employer.

[40] This satisfies all of the requirements of sub regulation 3.05(6), with the exception of whether the Commission can estimate the real or notional money value of the benefit (regulation 3.05(6)(c)(iii)), which I will return to shortly.

3.3 Should Mr Tolmachoff’s travel between his residence and the office, when established, be treated as private usage?

[41] In determining the extent of Mr Tolmachoff’s private benefit of the vehicle, it is necessary to consider how his travel from his home in Golden Grove to Grain Brokers’ office in Mawson Lakes should be characterised. It is well-established that the travel between an employee’s home and their usual place of work is not considered business travel for present purposes. 14 The complexity in this matter is that Mr Tolmachoff’s home was specified in his employment contract as his place of work.15 Further, at least until January 2019, there was no office or public place of business for Grain Brokers in South Australia other than that home.

[42] The new office was the subject of discussions between Mr Tolmachoff and more senior management and it became evident that this should be established. This suited both parties as Mr Tolmachoff saw the personal benefit of having a place of work outside of his home, and both parties considered that having a place of work where clients could attend and any additional South Australian based staff could work from, was appropriate.

[43] Mr Tolmachoff scoped out, negotiated and signed the lease on the new office premises in December 2018 and Grain Brokers commenced operation there on or around 15 January 2019. No steps were taken to amend the written employment contract.

[44] Mr Tolmachoff contends that his home remained his nominated workplace under his contract of employment and that this was not altered. As such, he was entitled to treat that as his continuing place of work and all travel from his home to attend the office and all other work commitments, was business travel. Mr Tolmachoff further contends that he regularly commenced work from home, including by participating in telephone conferences and undertaking research. He also contends that at times he continued the telephone conferences whilst he drove between his home and the office and remained in his vehicle until the meetings had concluded.

[45] Grain Brokers contends that it was mutually understood that the newly established office became the place of work and this should be applied regardless of the fact that the clause in the written employment contract was not updated. Further, given that a person’s place of work may be wherever their phone is, the fact that someone might do something such as reading an email whilst travelling to work does not change the character on the trip from home to the office from that of commuting, which should not be treated as business travel.

[46] The question here becomes whether Mr Tolmachoff’s primary place of work, as specified in the contract, was varied when the parties began to use the Grain Brokers office in Mawson Lakes. It is of course open for parties to an agreement to vary its terms by subsequent agreement, including by implication. So much was stated by Taylor J in the oft cited extract from Tallerman and Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd 16 (Tallerman), below:

“It is firmly established by a long line of cases commencing at least as early as Goss v. Lord Nugent and ending with cases such as Morris v. Baron & Co and British & Beningtons Ltd. v. North Western Cachar Tea Co. Ltd – and, indeed, including Goss v. Lord Nugent itself – that the parties to an agreement may vary some of its terms by a subsequent agreement. They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement.” 17 (notes omitted)

[47] Taylor J’s ratio Tallerman was cited by the High Court with approval in Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Ltd, 18 where the majority considered that it accorded with principle and authority.19

[48] The intention of parties to a contract is to be determined objectively, not by their subjective intentions. Evidence of surrounding circumstances can indicate the parties’ intentions. 20 As stated by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd:

“It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean.” 21

[49] The Tallerman principles, where a mutual intention is to be attributed to the contracting parties, were also considered by the Full Federal Court in the context of an employment contract in Westpac Banking Corporation v Wittenberg (Westpac). 22Buchanan J23 stated in that matter that:

“The search, accordingly, in a case where it is said that a contract of employment has been replaced in an ongoing relationship of employment (or even that its terms have been varied), is for an imputed mutual intention that such a change in the contractual landscape has occurred” 24

[50] Buchanan J provides further discussion on importing an intention to vary in the context of a unilateral change, including a caution as to when such should be found. For reasons I will come to, the potential variation to Mr Tolmachoff’s contract was not unilateral, as such Buchanan J’s observations regarding consensual variation become apposite:

“A suggestion of consensual variation raises different issues. The variation suggested must arise directly from the altered circumstances and respond to them in a way which can be objectively attributed and imputed to both parties. The test for implication of the term, or the implied abandonment of an existing term, leaving a void to be filled, is not supplied by the view of a court that the change would itself be reasonable. Unless it can be said that abandonment of a term represents a common intention it may not be assumed in my respectful view. A fortiori, the altered circumstances are consensual; so must be the contractual variation, if any.” 25

[51] It is helpful to consider the actions of Mr Tolmachoff and Grain Brokers in establishing the Mawson Lakes office in this context. It is clear that both Mr Tolmachoff and Grain Brokers jointly sought to establish a new place of work and that this change would benefit both parties. Mr Tolmachoff was a key figure in the establishment of the Mawson Lakes office, having located the site, negotiated the terms and executed the lease in late 2018/early 2019. While the place of work listed in the employment contract was not expressly varied at this time, the circumstances of Mr Tolmachoff’s place of work were undoubtedly altered. I am satisfied that the joint effort to create this alteration, including Mr Tolmachoff’s particularly active involvement in that process, imputes the necessary mutual intention of Mr Tolmachoff and Grain Brokers to vary the employment contract such that the Mawson Lakes office became his principal place of work.

[52] I accept that Mr Tolmachoff undertook some work at home on occasions before attending the office; and at times whilst travelling to that office. However, when considered in context, the travel from home to the office and vice versa in the company provided vehicle remains a personal benefit in the present context. That is, in the absence of some express obligation to the contrary, it is the responsibility of an employee to get themselves to and from the normal workplace. The fact that the employer has provided and fully funded the means for such travel, and has relieved the employee of the costs of doing so, remains that case in each of the circumstances outlined above. However, if an employee is obliged by their work to travel directly from their home to attend a meeting or undertake work at another workplace or venue, the use of the company vehicle for that purpose would be business usage for present purposes. Further, travel directly from an external appointment to home would also be treated in the same manner.

[53] I have applied the above approach in assessing Mr Tolmachoff’s private travel for the period after the office was established. I consider that all travel from Mr Tolmachoff’s home to any workplace or work appointment prior to that time to be business travel for present purposes.

3.4 The estimated proportion and value of Mr Tolmachoff’s personal use of the vehicle

[54] As will become clear, it is feasible in this case to estimate the private use and value of the vehicle within the meaning of regulation 3.05(6)(c)(iii).

[55] It is important to observe that there is some relatively limited documentary evidence about the nature and extent of Mr Tolmachoff’s work travel and attendance. There was a spread-sheet 26 of client appointments in the evidence of Mr Hanrahan. There is also some evidence27 of attendance at the Mawson Lakes office, once it was established; however, there was no work calendar or diary provided to the Commission that might confirm the extent and location of business meetings outside of the office or the Applicant’s home. There was also no log book associated with the use of the Hilux. Mr Tolmachoff largely worked in a self-directed manner and was unsupervised, and as a result, the evidence provided by Grain Brokers about his business travel was by necessity general and impressionistic rather than detailed and direct. Further, Mr Tolmachoff was not pressed under cross-examination about the detail of his travel that might have been revealed by reference to the office attendance records and no attempt was made by Grain Brokers to directly correlate the grower appointment material with the days revealed in the office attendance records in that context. Ultimately, the absence of this detailed evidence becomes important for reasons that will become clear.

[56] Mr Tolmachoff was able to use the vehicle for reasonable private usage. The scope of what was “reasonable” was originally unstated but later defined to include private travel within 500km of Mr Tolmachoff’s home. There is no indication of any private travel where this limitation was relevant.

[57] The distance travelled by Mr Tolmachoff in the Hilux during the 12 months preceding the dismissal was 32,476 kilometres. 28 This does not include any use of the hire vehicle during the latter stages of the employment and this element was not relied upon by Grain Brokers in this matter.

[58] Under the approach required by the authorities, it is necessary to estimate the extent of private travel undertaken by Mr Tolmachoff utilising the company provided vehicle.

[59] Grain Brokers contends that Mr Tolmachoff in the twelve months prior to his dismissal:

•  Commuted from his home to the office (once it was established) on at least 100 occasions and that the round trip was 26.7 km; 29

•  Fuelled the vehicle on at least six occasions when on annual leave or weekends, demonstrating that the vehicle was being used for private purposes;

•  Attended private appointments from the office using the vehicle; and

•  Used the vehicle whereby family members drove the vehicle utilising L-plates and P-plates.

[60] Grain Brokers further contends that applying the formula in Fewings, it only needed to establish private use of 12.5 per cent and that the Commission “should have no trouble” in finding that the required private travel occurred. 30

[61] Mr Tolmachoff accepts that he used the Hilux for some personal use, but contends that this was no more than 10 per cent of the distance travelled in the relevant year. 31 I observe that 10 per cent would equate to 3,248 km.

[62] Mr Tolmachoff contends that Grain Brokers carries the onus of demonstrating that he exceeded the high income threshold and that it had failed to do so. In the absence of any log book, which he was not required to keep, and his capacity to determine how he would undertake his various duties, Mr Tolmachoff submits that Grain Brokers did not provide the required evidence.

[63] Mr Tolmachoff also contends that the basis of Grain Brokers’ proposition is mere speculation and not supported by the evidence. Further, some of that speculation was wrong given his evidence about the extent of business trips and the absence of any significant private usage of the vehicle. This, he submits, included occasions when he travelled to and/or from client appointments and his home. In addition, the handful of private use examples relied upon by Grain Brokers “doesn’t get the respondent anywhere near the jurisdictional tipping point.” 32

[64] It is generally considered that the respondent employer has the evidentiary onus to demonstrate a jurisdictional objection associated with the high income threshold. 33 In practical terms, this means that the employer must provide the Commission with sufficient persuasive evidence that enables the Commission to properly assess the level of earnings, including where relevant to estimate the value of a non-monetary benefit, in order to satisfy the Commission that the high income threshold has been exceeded.

[65] In this case, the absence of any logbook or other record of vehicle usage provides a significant limitation on the extent of available evidence. The independent nature of Mr Tolmachoff’s engagement as a management employee, including the fact that he was often the only user of the Mawson Lakes office, also meant there was little physical oversight of his comings and goings using the vehicle. In that light, I have been careful to make my findings based upon the objective evidence that is available and only relying upon inferences that are properly supported by that evidence.

[66] The objective evidence before me includes a working document 34 developed by Mr Winspear which comprises (in part) security records of Mr Tolmachoff’s entrance at, and exit from, the Mawson Lakes office. The inference is open that Mr Tolmachoff privately commuted on many of the days his security pass was used to enter the office, subject to certain important caveats. Grain Brokers has submitted that Mr Tolmachoff commuted to the office on approximately 100 occasions in the relevant period.35 I have considered the relevant period to be 15 January 2019 to 18 July 2019 inclusive. This is the period in which Mr Tolmachoff was working from the Mawson Lakes office and had access to the Toyota Hilux SR5. The end date, 18 July 2019 is his final day before commencing the period of annual leave, when he went overseas and did not use the vehicle, and during which he lost access to the vehicle.

[67] Of the total of 134 days set out in the Respondent’s working document, there were 100 days when Mr Tolmachoff was recorded as attending the office. The other 34 days do not include any demonstrated commuting and are made up of annual leave and public holidays and 24 days when Mr Tolmachoff was apparently working but did not attend the office at any stage. This would include days when he was undertaking full day visits to growers or other external work appointments and/or working from home.

[68] There is also evidence that on average, Mr Tolmachoff spent between a day and a half and 2 days on the road visiting growers and others each week. 36 This informs the reasonable inferences about the extent to which Mr Tolmachoff was commuting on the days that he attended the office.

[69] As mentioned, certain adjustments should be made to the suggestion by Grain Brokers that Mr Tolmachoff commuted each way on at least 100 days, particularly given Mr Tolmachoff’s evidence that he would sometimes attend grower or other meetings either before attending the office or after attending the office. There is also some support for this proposition in the Respondent’s working document and associated materials. Given that circumstance and the absence of work calendars or other documentary evidence to form a contrary view, there is no foundation for the presumption that Mr Tolmachoff commuted both ways on each of the 100 days when he attended the office. I consider that an estimate of no more than 75 per cent of the suggested commuting is reasonable, allowing for the above factors and noting that Mr Tolmachoff may have commuted one way on some days and potentially both ways on other days despite attending a regional grower meeting. I have also not included any distance that may have been travelled in the hire vehicle at the end of the employment relationship given that there is little evidence about this element.

[70] As a result, the objective evidence indicates that Mr Tolmachoff may have commuted up to 2,000 km 37 using the Hilux in the relevant period. I do not consider that a finding beyond this extent of usage can properly made given the state and nature of the evidence before the Commission.

[71] There is evidence to support the notion that Mr Tolmachoff used the vehicle on some weekends and during holidays, 38 for private purposes. This includes the fact that the vehicle was fuelled up on some of these occasions well away from his home and he was not travelling for work purposes at the time. However, the evidence is that this was limited and whilst I find that this took place beyond the six refuelling events, Mr Tolmachoff did not generally use the vehicle for family transport due to the size of his family. In all of the circumstances, I consider that a distance of no more than 720 km39 in the 12 months prior to the time he lost access to the Hilux should be allowed given the state of the evidence.

[72] There is also evidence that Mr Tolmachoff travelled in the vehicle from the office to attend at least some personal appointments. This includes some semi-regular activities such as medical and dog grooming activities, although the objective evidence about the extent of such is limited. In all of the circumstances, I consider that a distance of no more than 480 km 40 in the 12 months prior to the time he lost access to the Hilux is reasonable in respect of private travel to and from the office for personal appointments and the like. I also note that some of the travel of this nature might also have already been included in the commuting calculations to the extent that any appointments were undertaken as part of the travel to and from the office.

[73] In relation to the fact that both P and L Plates and other materials were apparently found in the Hilux, I cannot be satisfied that this meant that the vehicle was driven by Mr Tolmachoff’s family. He denied that suggestion and gave an apparently plausible basis for that position; being the fact that all of his family had unrestricted driving licences, or did not drive, 41 during the period of his employment with Grain Brokers. I also observe that Mr Tolmachoff was not directly challenged as to why the plates were in the Hilux.

[74] The total private mileage that is supported by the evidence is a figure of no more than 3,200 km. This is about 10 per cent of the total distance travelled in the relevant period. Applying the cost per kilometre rate suggested by the RACV to drive a Toyota Hilux SR5, being $0.9137 per kilometre, 42 to this distance I find this equates to a value of $2,924.

[75] When this value is added to the remainder of the relevant annual earnings (his wages) of $145,000, this produces a rate of earnings of $147,924; which is below the high income threshold.

4. Conclusion

[76] In all of the circumstances of this matter, and based upon the evidence that is before the Commission, I am satisfied that Mr Tolmachoff’s annual rate of earnings was less than the high income threshold of $148,700 within the meaning of s.382(b) of the FW Act.

[77] Accordingly, Grain Brokers’ jurisdictional objection is dismissed.

[78] I will now proceed to hear from the parties on merits and remedy and I will convene a directions conference shortly to make the appropriate arrangements.

COMMISSIONER

Appearances:

P Jakobsen of Beger & Co, with permission, for Mr Tolmachoff.

C Boyle and S Paolino of Minter Ellison, with permission, for the Trustee for The Wingrain Trust AKA Grain Brokers Australia.

Hearing details:

2019

Adelaide and Perth (by video link)

2 December.

Printed by authority of the Commonwealth Government Printer

<PR714597>

 1 As a result of s.382(b) of the FW Act.

 2 Established under s.333 of the FW Act.

 3   Superannuation Guarantee Charge Act 1992 (Cth).

 4 As a result of s.332(2)(c) and (4) of the FW Act.

 5   Respondent’s Outline of Submissions.

 6   Based on estimates published by the Royal Automobile Club of Victoria (RACV) – Annexed to Exhibit R1.

 7   Annexure JW-1 of Exhibit R1.

 8   Applicant’s Outline of Submissions. Based upon his understanding of the FBT laws.

 9   Sam Technology Engineers Pty Ltd [2018] FWCFB 1767 at [48] (Sam Technology).

 10   AIRC Print Q0675, 7 May 1998.

 11   Fewings.

 12   The evidence of Mr Tolmachoff at transcript PN 328, where he accepts that his employment ended on 14 August.

 13   Francesco Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia [2012] FWCFB 6108.

 14   Sam Technology at [72], see also Francesco Zappia v Universal Music Australia Pty Limited T/A Universal Music Australia [2012] FWCFB 6108 at [11].

 15   Annexure JW-1 at 1.6 of Exhibit R1.

 16 (1957) 98 CLR 93.

 17   Tallerman at 144 .

 18 (2000) 201 CLR 520 (Sara Lee).

 19   Sara Lee at 534.

 20   Concut Pty Ltd v Worrell [2000] HCA 64.

 21 (2004) 219 CLR 165 at [40].

 22 [2016] FCAFC 33.

 23   McKerracher and White JJ concurred on this analysis.

 24   Westpac at [257].

 25   Westpac at [262].

 26   Attachment DH-3 to exhibit R3.

 27   Attachment DH-2 to exhibit R3.

 28   The evidence of Mr Winspear – exhibit R1 at 11 and 12.

 29   Adopting the Applicant’s estimate of the commuting distance – transcript PN449.

 30   Oral submissions at PN467.

 31   Exhibit A1 at 23.

 32   Oral submissions at PN516.

 33   Fewings. See also Slavin v Horizon Holdings Pty Ltd[2012] FWA 2424 at [15].

 34   Exhibit R2.

 35   Transcript at PN449

 36   Transcript at PN404.

 37   Rounded.

 38   There were only 4 days of annual leave in the period when Mr Tolmachoff had access to the vehicle.

 39   Marginally more than 15 km per week over a 48 week period – allowing for the period of overseas annual leave and the state of the evidence about the limited extent of such usage. There were 66 days during the relevant period that were annual leave, public holiday or weekend days. Even allowing for using the vehicle privately on 25% of each of those days at around 40 kms per trip, produces no more than the same general distance estimate.

 40   10 km per week over a 48 week period – allowing for the period of overseas annual leave and the fact that on the evidence such travel was limited and would not have occurred each week.

 41   Transcript PN372.

 42   Annexure JW8 of Exhibit R1. There was no dispute about the use of this figure for present purposes.