Mr Wayne Malcolm McDonald v Leda Management Services Pty Ltd as trustees for Leda (Qld) Financial Trust

[2010] FWA 6013

[2010] FWA 6013

FAIR WORK AUSTRALIA

DECISION

Workplace Relations Act 1996
s.643 - Application for relief re (Unlawful and Harsh, Unjust or Unreasonable) termination of employment

Mr Wayne Malcolm McDonald
v
Leda Management Services Pty Ltd as trustees for Leda (QLD) Financial Trust
(U2009/3921)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 9 AUGUST 2010

Termination of employment - motion to dismiss – 100 employees or fewer.

[1] Mr McDonald (“the Applicant”) made an application under s.643(1)(a) and s.659 of the Workplace Relations Act 1996 (Cth) (“WRAct”) on 15 May 2009 in relation to the termination of his employment with Leda Management Services Pty Ltd as trustees for Leda (QLD) Financial Trust (“the Respondent”). The Applicant’s employment was terminated on 31 March 2009 (“the Relevant Time”).

BACKGROUND

[2] A conciliation conference was held before Commissioner Swan (as she was then) on 3 June 2009 however as the matter was not resolved on the same day the Commissioner issued a certificate pursuant to s.650(2) of the WR Act.

[3] The Applicant completed the relevant Form R33 and elected to proceed to arbitration in respect of his complaint under s.643(1)(a) of the WR Act. The form was received by the Australian Industrial Relations Commission on 25 June 2009. 1

[4] This matter was then allocated to me for arbitration on 22 July 2009.

[5] On 31 July 2009 I listed the matter for arbitration and issued directions to the parties. The Applicant filed its material as required.

[6] The Respondent was required to file its material by 6 October 2009. As at 20 October 2009 I had not received any material from the Respondent and as such my Associate telephoned the Respondent’s contact person (Mr Craig Cornish) named on the Employer’s Form R28 and sent an email to Mr Cornish to ascertain why this was the case.

[7] The Respondent did not advise why it had not responded to the Directions but advised that Mr Greg Miles now had carriage of the matter on the Respondent’s behalf.

[8] The arbitration hearing was cancelled and the matter was then listed for directions on 28 October 2009. After the directions conference the parties sought to resolve the matter at their own initiative without success.

[9] On 25 November 2009 the Respondent wrote to me advising that it engaged 100 or fewer employees at the Relevant Time and as such, the WR Act precluded the Applicant from making a claim in accordance with s.643(10) of the WR Act.

[10] On 30 November 2009 the Respondent provided a Statutory Declaration of Mr Rayner, Chief Financial Officer of the Respondent attesting to the number of employees the Respondent engaged at the Relevant Time.

[11] This declaration was deficient in that:

• the number of employees specified in the declaration differed to the number of employees listed in the attached payroll documentation;



• the name of the employer specified in the declaration differed to the name of the employer listed on the attached payroll documentation;



• there was no information pertaining to the Respondent’s Related Companies as previously requested by me and required by s.643(11) of the WR Act; and



• there was no information as to the number of independent contractors engaged by the Respondent as previously requested by me.

[12] I advised the Respondent that Mr Rayner’s declaration was deficient via email dated 30 November 2009 and requested further information from the Respondent.

[13] By 7 January 2010 I had not received a reply from the Respondent to my email of 30 November 2009. On the same day my Associate sent the Respondent an email to enquire whether the Respondent had considered if it could provide the further information required to sustain its jurisdictional objection.

[14] On the same day the Respondent provided the further information as requested and I advised the Respondent to prepare a fresh statutory declaration in relation to the above matters. The Respondent provided a fresh statutory declaration of Mr Rayner on 14 January 2010. The contents of this declaration are discussed below. 2

[15] On 15 January 2010 the Applicant was asked to provide a response to the Respondent’s statutory declaration. The Applicant’s affidavit of 29 January 2010 attested to his belief that the Respondent and its related bodies corporate engaged more than 100 employees at the Relevant Time.

[16] Upon receipt of the Applicant’s affidavit, the Respondent advised me that it again sought to resolve the matter by negotiation rather than proceeding to a jurisdictional hearing.

[17] The matter remained unresolved, as such on 2 February 2010 I asked the Respondent to provide a further declaration that explained the corporate structure of the Respondent (as the Applicant had agitated such issues). The Respondent provided this to me on 5 March 2010 (notwithstanding the Respondent advising me that the declaration would be provided no later than the week commencing 8 February 2010, then advising it would be provided no later than 23 February 2010).

[18] This supplementary declaration provided to me on 5 March 2010 was given in the form of an affidavit of Mr Robert John Ell, Managing Director of the Leda Group of Companies (“the Leda Group”) (of which the Respondent falls within).

[19] The Applicant was provided with an opportunity to respond to the Respondent’s further material and he responded to this material on 27 April 2010 by way of affidavit. The Applicant again sought to challenge the number of employees engaged by the Respondent and its related companies.

[20] The parties were advised to file their final material by 5 May 2010 to allow me to determine the jurisdictional matter. The Applicant and Respondent provided their material on 7 and 6 May 2010 respectively.

[21] I then listed the matter for jurisdiction hearing on 1 June 2010 however the Respondent requested an adjournment (which was granted) and the jurisdiction hearing proceeded on 10 June 2010.

[22] At the hearing the Applicant’s counsel had the opportunity to cross examine Mr Robert Ell of the Respondent. In light of the Respondent submitting that it was not relying on Mr Rayner’s declaration, counsel for the Applicant did not seek to cross examine Mr Rayner.

[23] At the conclusion of the hearing I determined that the Respondent’s case was incomplete, specifically in relation to the number of independent contractors engaged by the Respondent at the relevant time and requested the Respondent to provide its further material within 7 days.

[24] The Respondent provided this further material to FWA and the Applicant’s counsel on 18 June 2010. As the Applicant’s counsel had not responded to this further material by 9 July 2010, I wrote to the Applicant’s counsel seeking advice as to whether the Applicant wished to cross examine the Respondent’s witnesses in relation to this new material.

[25] The Applicant’s counsel advised me on 23 July 2010 that the Applicant had instructed him not to cross examine the Respondent’s witnesses on the additional material tendered since the hearing.

[26] On 27 July 2010 the Applicant’s counsel advised:

“I confirm that Mr McDonald now seeks the Senior Deputy President to determine the jurisdictional question on the basis of materials before him.”

[27] I now turn to the contentions of each party in respect of the jurisdictional issue.

LEGISLATION

[28] In accordance with Section 11, Part 2, Schedule 18 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 this matter is to be determined by FWA.

[29] The relevant sections of the WR Act read as follows:

“643 Application to Commission to deal with termination under this Subdivision

[…]

(10) An application under subsection (1) must not be made on the ground referred to in paragraph (1)(a), or on grounds that include that ground, if, at the relevant time, the employer employed 100 employees or fewer, including:

(a) the employee whose employment was terminated; and

(b) any casual employee who had been engaged by the employer on a regular and systematic basis for at least 12 months;

but not including any other casual employee.

(11) For the purposes of calculating the number of employees employed by an employer as mentioned in subsection (10), related bodies corporate (within the meaning of section 50 of the Corporations Act 2001) are taken to be one entity.

(12) For the purposes of subsection (10):

(a) the relevant time is the time when the employer gave the employee the notice of termination, or the time when the employer terminated the employee’s employment, whichever happened first; and

(b) for the purposes of calculating the number of employees employed by the employer, employee has the same meaning as in paragraph (b) of the definition of that term in section 636.”

[30] Section 50 of the Corporations Act 2001 reads as follows:

“Where a body corporate is:

(a) a holding company of another body corporate; or

(b) a subsidiary of another body corporate; or

(c) a subsidiary of a holding company of another body corporate;

the first-mentioned body and the other body are related to each other.”

RESPONDENT’S CONTENTIONS

[31] In his supplementary statutory declaration dated 11 January 2010 (and provided to FWA on 14 January 2010), Mr Rayner, Chief Financial Officer of the Respondent contended:

• Leda Management Services Pty Ltd engaged 71 employees as at the Relevant Time (including the Applicant, casual employees engaged on a regular and systematic basis for at least 12 months, full time and part time employees) 3;



• the Respondent’s related bodies corporate did not engage any employees as the Respondent is the employing entity for all persons who work for the Leda Group 4;



• at the relevant time, Leda Holdings Pty Ltd engaged five independent contractors 5;



• the Respondent’s payroll documentation confirmed that the Respondent engaged 71 employees. However, I note the payroll documentation is for the period ending 26 May 2009 6;



• the Company name that appears on the payroll documents is a reference to the entity that holds the contract with the external payroll provider, rather than the employing entity of the Applicant and the Respondent’s other employees; 7 and



• he has a full and complete knowledge of the Leda Group’s corporate structure as he manages the payroll preparation for the Leda Group. 8

[32] As I mentioned above, the Respondent did not seek to rely on Mr Rayner’s evidence at the hearing on 10 June 2010.

[33] The evidence provided by Mr Robert Ell of the Respondent in his affidavit sworn on 5 March 2010 attests to:

• the Respondent employed 76 employees at the Relevant Time 9;



• included in this number is the Applicant, casual employees engaged on a regular and systematic basis for at least 12 months, full time and part time employees, two employees engaged by Leda Holdings Pty Ltd (a related body corporate) 10;



• the attached payroll documentation contains a list of 77 employees. In relation to this document, Mr Robert Ell attests that this document contains a list of persons employed at the Relevant Time save for one person whose employment was terminated on 24 February 2009 but remained on the payroll records until 22 July 2009. 11



• the same payroll documentation notes the Applicant’s employment was terminated on 31 May 2009. 12

[34] Mr Robert Ell of the Respondent provided a further affidavit sworn on 6 May 2010 in response to the Applicant’s affidavit of 27 April 2010, attesting to the following:

• “William Robert Ell, who is my father and Chairman of the Leda Group of Companies required a Caretaker/Manager, primarily for the properties at [...] Budds Beach Surfers Paradise. The applicant was chosen for that purpose. I am informed by my father and believe that, in order for the Applicant to fulfil those duties, he was provided, for future reference, with an Information Folder which, in part, included the names of all independent Tradesperson, should the need arise. These are not employees of the “Leda Group”.” 13



• Mr Boswell ceased employment with the Leda Group on 5 November 2008; 14



• Mr Moore and Ms Banham were not engaged by the Leda Group but had a private contractual relationship with Mr Robert Ell’s father, Mr William Ell; 15



• Mr Phil Bennett was engaged as an employee and was included in the count of the 76 employees engaged at the Relevant Time;



• Mr Gary Sharp’s employment with the Leda Group ceased on 26 May 2009. 16

[35] Given that the evidence provided by Mr Robert Ell in relation to the advice from him by his father is not direct evidence, I will accord this evidence the relevant weight. However, I note that Mr William Ell subsequently provided an affidavit consistent with Mr Robert Ell’s evidence. 17

APPLICANT’S CONTENTIONS

[36] The Applicant attested to the following in his affidavit sworn on 29 January 2010 (received by FWA on 1 February 2010):

• at the time that the Applicant was engaged to work for the Respondent, he was advised by Mr Boswell of the Respondent that the Leda Group “employed 300-400 people, and sometimes up to 500” 18; and



• he believed that the “LEDA group of companies employees over 100 people through at least the following entities: Leda Holdings Pty Ltd, Leda Developments Pty Ltd, Leda Marine Pty Ltd, Leda Pty Limited, Leda Management Services Pty Ltd, Leda Charters Pty Ltd.” 19

[37] On 27 April 2010 the Applicant provided a further affidavit that attested to the following:

• when he commenced employment with the Respondent the Respondent provided him with a list of telephone numbers of over 150 employees engaged by the Leda Group; 20



• he was required to return this list to the Respondent upon termination of his employment; and



• he believed a number of persons named in his Affidavit were engaged by the Respondent as employees yet did not appear in the Respondent’s payroll documentation. 21

[38] On 7 May 2010 the Applicant provided a further affidavit that was sworn on the same day. The Applicant further attested to his belief that the Leda Group engaged more than 100 persons.

JURISDICTIONAL HEARING AND FURTHER EVIDENCE FROM THE RESPONDENT

[39] In response to the Applicant’s contentions, the Respondent led the following evidence at the hearing or shortly after the hearing:

• Mr Dennis Hughes was engaged as a contractor and was never employed by the Leda Group; 22



• In response to the Applicant’s proposition that upon commencement of his employment the Respondent provided him with a list of telephone numbers for all employees of the Leda Group and that there were over 150 names on this list 23, Mr Robert Ell -




(i) confirmed a list was provided to the Applicant but assumed that this list was a list of trades persons that was attached to his Affidavit sworn on 5 March 2010; 24

(ii) stated that “We’ve never had 150 employees so I don’t know how that can be the case.” 25

• That at the Relevant Time, Mr Rayner confirmed that the Leda Group engaged only five contractors on a regular and reoccurring basis and 76 employees; 26



• Mr William Ell was aware that a folder containing a list of trades persons existed for the Care Taker/Property Manager of the Respondent’s property at Budds Beach 27 but no persons listed on the list were employed by the Leda Group;28



• Two employees (Mr Moore and Ms Banham) named in the Applicant’s affidavit sworn on 27 April 2010 as being employees were never employed by the Leda Group but were privately engaged by Mr William Ell; 29 and



• Mr Hughes has never been an employee of any company within the Leda Group, however, he is a director of a company that provided earth moving and management services to a company within the Leda Group of companies. 30

CONSIDERATION

[40] As described above, this matter has been subject to considerable delays. I also note that the Applicant has been unwell throughout the course of the proceedings which has not allowed his representative, on some occasions, to obtain instructions promptly.

[41] On the basis of the material before me, I find that:

• Mr Dennis Hughes was never engaged as an employee by the Respondent;



• Mr Moore and Ms Banham were not engaged by the Leda Group based on the evidence of Mr William Ell, a director of the Leda Group who would reasonably be expected to have knowledge of who is engaged as a contractor and as an employee by the Leda Group;



• there is no evidence that the Respondent engaged more than 100 employees and I accept the Respondent’s evidence as to its employee profile at the Relevant Time; and



• even if it was the case that those persons the Applicant says were engaged by the Respondent as employees (which the Respondent disputes), this would still result in a finding that the Respondent engaged 100 or fewer employees.

[42] Consequently, I find that the requirements in s.643(10), (11) and (12) of the Act have been met and as such I must dismiss the Applicant’s application under s.643(1)(a) of the Act.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr M Campbell of Counsel for the Applicant

Mr G Miles for the Respondent

Hearing details:

2010.

Brisbane.

June 10.

 1 Note s.651(6) of the WR Act specifies that when a certificate given by the Commission identifies the ground of an alleged contravention of s.659 of the WR Act as a ground on which conciliation is or is unlikely to be unsuccessful, the Applicant has 28 days to file the Notice of Election to proceed to arbitration or to begin court proceedings.

 2   See PN 31 of this decision.

 3   Statutory Declaration of Mr Bruce James Rayner dated 11 January 2010 at PN 3 - 4

 4   Statutory Declaration of Mr Bruce James Rayner dated 11 January 2010 at PN 5

 5   Statutory Declaration of Mr Bruce James Rayner dated 11 January 2010 at PN 6

 6   Statutory Declaration of Mr Bruce James Rayner dated 11 January 2010 at PN 7, 9

 7   Statutory Declaration of Mr Bruce James Rayner dated 11 January 2010 at PN 7

 8   Statutory Declaration of Mr Bruce James Rayner dated 11 January 2010 at PN 8

 9   Affidavit of Mr Robert John Ell sworn 5 March 2010 at PN 10

 10   Affidavit of Mr Robert John Ell sworn 6 May 2010 at PN 11

 11   Affidavit of Mr Robert John Ell sworn 6 May 2010 at PN 15, 22 and Annexure “RJE 2”

 12   Affidavit of Mr Robert John Ell sworn 6 May 2010 at Annexure “RJE 2”

 13   Affidavit of Mr Robert John Ell sworn 6 May 2010 at PN 4

 14   Affidavit of Mr Robert John Ell sworn 6 May 2010 at PN 5

 15   Affidavit of Mr Robert John Ell sworn 6 May 2010 at PN 5

 16   Affidavit of Mr Robert John Ell sworn 6 May 2010 at PN 5

 17   Affidavit of Mr William Robert Ell sworn 17 June 2010 at PN 6

 18   Affidavit of Mr Wayne Malcolm McDonald sworn 29 January 2010 at PN 12

 19   Affidavit of Mr Wayne Malcolm McDonald sworn 29 January 2010 at PN 13

 20   Affidavit of Mr Wayne Malcolm McDonald sworn 27 April 2010 at PN 4 – 5

 21   Affidavit of Mr Wayne Malcolm McDonald sworn 27 April 2010 at PN 8 -10 that alleges persons by the names of Dave, Phil and Gary were employees of Leda Group as well as Vaun Boswell, Ngoc Banham, Stewart Moore and Dennis Hughes.

 22   Evidence given by Mr Robert John Ell. See Transcript of Proceedings dated 10 June 2010 at PN 63

 23   See Transcript of Proceedings dated 10 June 2010 at PN 227

 24   Evidence given by Mr Robert John Ell. See Transcript of Proceedings dated 10 June 2010 at PN 224

 25   Evidence given by Mr Robert John Ell. See Transcript of Proceedings dated 10 June 2010 at PN 228

 26   Affidavit of Mr Bruce Rayner sworn 18 June 2010 at PNS 6-7

 27   Affidavit of Mr William Robert Ell sworn 17 June 2010 at PN 2

 28   Affidavit of Mr William Robert Ell sworn 17 June 2010 at PN 6

 29   Affidavit of Mr William Robert Ell sworn 17 June 2010 at PN 7

 30   Affidavit of Mr Dennis Leon Hughes sworn 17 June 2010 at PN 2 and 5 and see Exhibit “DH1” that contains a number of invoices from Dennis Hughes Holdings Pty Ltd issued to Ecovale Pty Ltd (a company within the Leda Group of Companies)

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