Newman v Eagle Group Australiaasia Pty Ltd
[1996] IRCA 405
•11 September 1996
DECISION NO: 405/96
C A T C H W O R D S
INDUSTRIAL LAW - termination of employment - contract for services not contract of service.
Industrial Relations Act 1988 ss.170CA, 170CB, 170CC, 170DE, 170EA
CASES:
Stevens v Brodribb Sawmilling Company Pty Ltd (1985-86) 160 CLR
NEWMAN -v- EAGLE GROUP AUSTRALASIA PTY LTD
No. VI-5150 of 1995
Before: Judicial Registrar Ryan
Place: Melbourne
Date: 11 September 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-5150 of 1995
B E T W E E N :
RODNEY NEWMAN
Applicant
AND
EAGLE GROUP AUSTRALASIA PTY LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Ryan 11 September 1996
THE COURT ORDERS:
That the application is dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-5150 of 1995
B E T W E E N :
RODNEY NEWMAN
Applicant
AND
EAGLE GROUP AUSTRALASIA PTY LTD
Respondent
Before: Judicial Registrar Ryan
Place: Melbourne
Date: 11 September 1996
REASONS FOR JUDGMENT
The Applicant claims that:
he was employed by and dismissed by the Respondent
the termination of his employment was at the initiative of the Respondent and was unlawful
he worked for the Respondent as a mortgage assessor and financial consultant from 19 June 1995 to 25 September 1995
The Respondent filed a notice of employer’s appearance through Stephen Burrows. At that time Mr Burrows described himself as a director of the company.
The Australian Industrial Relations Commission certified that it had been unable to settle the matter by conciliation and the Applicant and Mr Burrows appeared at a Directions Hearing. The matter was listed for trial but the Respondent did not appear and was not represented at the hearing. Enquiries made just prior to the hearing suggested that the directors of the Respondent company denied that there was any contract of employment within the jurisdiction of the Industrial Relations Court and within the jurisdiction of Division 3 of Part VI of the Industrial Relations Act 1988. A Mr Jacob Hans Jost, apparently a director of the Respondent company, was advised by telephone that the application would proceed to hearing.
The Applicant appeared and gave evidence. He stated that:
he had been a licensed finance broker since 1985
he had worked at various times from 351 Collins Street and 151 Queen Street and in 1995 was working from Level 6, 422 Collins Street Melbourne
he had known Stephen Charles Burrows for eight years and was aware that in 1994 Mr Burrows traded as Block Credits from the Block Arcade at 282 Collins Street
The Applicant tendered a somewhat curious newsletter dated 16 September 1994 (Exhibit A1). The newsletter is headed:
“NEWSLETTER
BLOCK CREDITS
NEW APPOINTMENTS
MAJOR PROJECT VICTORIA”
One of two new appointments referred to in the newsletter is that of Mr Burrows as Credit Executive for the South Pacific region for Eagle Bank Inc. a bank incorporated in Nauru and refused representation in Australia (Exhibit A12 - Reserve Bank of Australia letter 15 August 1995).
The major project is referred to in the newsletter as follows:
“Block Credits has recently been the successful vendor to secure a major housing development outside Melbourne. The total project value at completion in seven years is noted to be $250 million with stage 1 valued at approximately $21 million. This project is unique and we will be seeking active broker report.”
The newsletter is somewhat florid in expression and contains the following statements:
“MONEY MONEY MONEY, who wants it? We have two major Trusts here in town with approximately $20 million available.
LETTERS OF CREDIT
Letters of credit and letters of guarantee are available for any realistic purpose.
BIG DEALS
BIG DEALS, we can handle them as Consulting Financiers or Syndicating Lenders, currently we are actively involved in several major projects totalling in excess of $600 million.
Our executives will travel anywhere to assess medium to large construction projects or developments, providing that our firm can hold First Mortgage Security.
Many brokers can create additional further income by private referral of their clients investment funds via BLOCK CREDITS CAPITAL TRUST....”
The newsletter also contained the following endorsement printed in hand:
“WANTED LIMITED POSITIONS FOR LIC. BROKER. ENQUIRE NOW! 654 7460 MELB”
The telephone number 654 7460 is also printed on the newsletter as the telephone number of Block Credits 282 Collins Street, Melbourne.
It is unclear whether the Applicant is claiming that in May 1995 he applied for a licensed broker position as advertised in the September 1994 Block Credits newsletter or whether he has simply tendered the newsletter as an example of how such positions were advertised and as an indication of his developing professional relationship with Mr Burrows.
In any event on 25 May 1995 Mr Burrows wrote to the Applicant addressing him as R T Newman 477 Collins Street Melbourne. This is probably a mistake. At the time the Applicant was working from 422 Collins Street. In any event Mr Burrows letter was tabled as Exhibit A2. It is on the letterhead of Eagle Group Australasia ACN 063174274. The company is described as Merchant Bankers, Level 2, 282 Collins Street Melbourne and the letterhead also refers to Eagle Bank Inc Nauru.
The letter relevantly reads:
“Dear Sir
Re: Position of Loans Assessor
During the month of June 1995 the Bank is seeking to appoint a mature and experienced person in the position of Domestic Mortgage Assessor.
The position will require customer portfolio management of accounts from $20,000 to $500,000 with Residential, Commercial, Industrial securities for advances up to 90% IVR at approximately 2.00% over the Australian Money Market Rates.
Upon assessment, the Bank will establish facilities for the borrower upon approval by the Credit Committee.
Remuneration under contract prepared by the Bank’s internal solicitor, will be in the order of $50,000 for first year and reset each year thereafter.
Target and budget levels are to be set for each quarter, which are easily attainable.
I trust a position such as this is a career opportunity with an expanding organisation.
Kind regards
EAGLE GROUP AUSTRALASIA
MERCHANT BANKERS
S.C. BURROWS, Credit Executive”
The Applicant responded on 29 May 1995 on the letterhead of Equity Finance Company Pty Ltd ACN 057714682, Level 6, 422 Collins Street, Melbourne, Attention: Stephen Burrows, 29 May 1995:
“Thank you for your letter of the 25th May 1995 confirming our discussion in your office on the 23rd may 1995.
I am very interested in working with Eagle Group Australasia in any role where I can be useful, whether that be advisory, treasury, loans management, network marketing or as a credit analyst.
As I understand it, the particular role you have in mind involves the following tasks:
Establishing a network of accountants, solicitors and others to refer deals to Eagle of a type which can be discounted or facilitated by Eagle.
Preparing loan offers, credit analysis and managing each loan to finalisation.
Managing existing loan offers and negotiations.
Ensuring that Eagle operates within existing consumer credit legislation and is not exposed in any way.
Providing advice to clients on a fee for service basis as required.
You have advised me that Eagle has negotiated an arrangement to discount executed loan facilities with Asset Backed Securities Ltd., Herbert Geer & Rundle and the Commonwealth Bank and that these arrangements are central to Eagles’ proposed lending activities. You have also advised that it is not the intention of Eagle to rely on income from brokerage, however income from up front assessment fees is an essential part of budget forecasts.
Experience tells me that the discounting of bank loan facilities is problematic at the best of times, never the less, nothing ventured, nothing gained.
As you know I have a leased office with interviewing, fax and telephone facilities at 422 Collins Street. The lease has 3 years to run at a rental of $383 per month all inclusive, fixed for the term. Would this be of value to Eagle?
I should know where I stand by the end of this week and will keep you informed. If I have misinterpreted the role you have in mind at Eagle, could you clarify this for me please.”
A copy of the letter tendered at the hearing appears to have been cut unevenly and there appears to be the remnants of a signature. The Applicant stated in evidence that he wrote and signed the letter. He admitted that Equity Finance Company Pty Ltd was his own company. He claimed that he was an employee of the company and manager of the company. He was somewhat evasive in terms of whether or not he entered a personal contractual relationship with the Respondent or whether the relationship was between the Respondent and Equity Finance Company Pty Ltd. The Applicant was, however, adamant that he was personally employed by the Respondent by way of a memorandum of understanding (Exhibit A4).
The memorandum of understanding reads as follows:
“I, RODNEY THOMAS NEWMAN (the “Service Provider”) agree to do and conduct and undertake the following:
To wholly and soley render services to EAGLE GROUP AUSTRALASIA PTY LTD (“EGA”) only and not to be engaged by any others unless a served severance notice is first given
The Service Provider remuneration AUD $50,000.00 per annum (the “remuneration”) paid bi monthly on 1st and 15th of each month based on the following formula calculation;
B =T + OR
100
Tequals the value of customer mortgage loan transactions settled and paid on letter of offers, assessments, consulting with EGA guidelines
ORequals other cash receipts
Bequals EGA budgeted performance figure which represents any and all fees due to EGA
Budget figures shall reviewed and reset every 90 days after the first 90 day period which budgets shall be set each 30 day period by EGA per monthly bulletin.
The Service Provider shall confine itself to assessing Australia Domestic residential, commercial and industrial EGA customer mortgages in the following categories;
a)Residential $20,000 to $500,000 metro properties in Melbourne, Sydney, Adelaide, Brisbane and country properties with populations over 20,000 persons.
b)Commercial $20,000 to $1,000,000 metro properties only.
c)Industrial $20,000 to $5,000,000 metro properties excluding heavy industrial, toxic, specialized, etc.
d)Interest rates as determined by E.G.A. each week.
e)Term period of mortgage from 30 days to 5 years.
The Service Provider shall comply with the general directions, instructions, notices expressed by E.G.A. and conform harmoniously and peacefully with E.G.A.’s mode of operandi.
The Service Provider shall account for its own taxation and operate its own office at its own expense inclusive of travel, meals, stationary, fuel, phone, SEC, etc.
The Service Provider shall not discredit E.G.A. or its associates, affiliations, in any way that may imply or by any utterance degrade or bring reproach on E.G.A. in the eyes of other persons, and shall act in a professional and ethical considerate manner at all times.
The Service Provider shall hold secret, confidential, and in trust, forever any and all dealings, transactions, business of E.G.A. and its customers, not to disclose, reproduce, copy, obtain, transmit in any form, documents, information or such like to any person, company, authority, unless such has been consented and granted for security clearance as endorsed by E.G.A. Clearance level 1 or by EGA Solicitor.
The Service Provider agrees to sever forthwith its services upon breach of any part of this Memorandum.
The Service Provider shall be bonded to the value of $2,000.00 to cover any damage, breakage, loss of property, unauthorised conduct, whereby such bond shall be by way of a contra against remuneration.
The Service Provider shall not act as agent or represent E.G.A. in any matter unless expressed in writing by EGA.”
The Court notes that the Memorandum of Understanding has been signed by the Applicant and witnessed but there is no signature or acceptance of the memorandum on the part of the Respondent.
The Court also notes that paragraph 10 has been crossed out and initialled by the Applicant.
I pointed out to the Applicant at this stage that the Memorandum of Understanding did not suggest an employer/employee relationship but rather a contractual relationship by which the Applicant undertook to provide certain services to the Respondent and was described as a service provider.
The Applicant’s attention was drawn in particular to Paragraph 6 which requires that the service provider account for its own taxation and operate its own office at its own expense inclusive of travel, meals, stationery, fuel, phone, SEC. etc.
As already indicated the Applicant was somewhat evasive as to whether payments made to him by the Respondent were made to him personally or to Equity Finance Company Pty Ltd. He produced two cheques which were made out to him personally as R T Newman. Both cheques were drawn on the Respondent’s account and both related to service provider statements in which the Applicant was described as “contractor” with a daily rate of $136.98 also described as $50,000 p.a. with the rate stated to be calculated as follows:
“50,000 divided by 365 days equals daily rate.”
One cheque is dated 21 August 1995. It is for the sum of $1,000 and is stated to be a payment in respect of the service providers statement for the period 1 to 15 August (15 days) at $136.98 a day is correctly stated as $2,054.70 but the statement contains the following note:
“NOTE: Due to insufficient funds received from your department, the following has been allocated per agreement.
Eagle Interlink (invoiced) $1,500.00
To: R.T.N. $1,000.00
Office $ 500.00
________ ________
$1,500.00 $1,500.00
________ ________
The second cheque is dated 30 August 1995 and is in the sum of $2,191.68. Again the Applicant is referred to as contractor and $2,191.68 correctly represents 16 days at the daily rate of $136.98.
The third cheque, also made out personally to the Applicant and also for $1,000 and dated 15 September 1995 is part of Exhibit A7. The amount due is stated to be $1,000 although the 16 day period claimed (1 to 15 September) would represent $2,191.68.
The Applicant seeks compensation which he describes as unpaid wages:
1 August 1995 unpaid wages $1,054.70
15 August 1995 $1,054.70
15 September to 25 September 1995 - 10 days $1,369.86
one week in lieu $ 958.90
$4,438.16
________
The Applicant tendered other documentation including a list of the Respondent’s services in respect of loans, project and structured finance, lines of credit, off balance sheet funding, debt restructuring, share placements, underwriting, equity raising, mezzanine finance, venture capital, joint ventures, mergers and acquisitions, investment strategies, valuations, bank guarantees, loan applications, offers of finance, loans allegedly settled and fees allegedly earned, a copy extract indicating that Messrs Jost and Burrows ceased to be directors of the Respondent company on 5 November 1995, various block credits capital trust settlement statements, disbursement orders and details of proposed property acquisitions to be funded by the Respondent.
The Applicant also produced a copy of what was stated to be a confidential memorandum to Mr Burrows from a solicitor. The memorandum contains confidential legal advice. I doubt very much that the Applicant obtained access to the information with the approval of the Respondent. The advice is privileged. I have placed no weight on it. In any event the information is not relevant.
At the conclusion of the hearing I advised the Applicant again that I could see no evidence that he was in an employer/employee relationship and if I concluded that he personally or through his company, Equity Finance Company Pty Ltd, was acting as an independent contractor providing services to the Respondent, then his application lacked jurisdiction and would be dismissed.
Indicia to assist in determining whether a relationship is that of employer/employee or principal/independent contractor; contract of service or contract for services; are set out in Stevens v Brodribb Sawmilling Company Pty Ltd (1985-86) 160 CLR at 24, 26-27, 29 and 36-37.
Each matter must be determined on the facts. Here, the reference to the exclusive services of the Applicant might suggest a contract of service but there are many indicia of a contract for services including the distinct calling of the Applicant, the requirement that he provide or that he be prepared to provide his own place of work or equipment, the payment by him from his remuneration of expenses and the payment of remuneration without deduction of income tax. The actual terms of the contract will always be of considerable importance.
Having examined all of the documentary material and considered the sworn evidence of the Applicant I have concluded that the Applicant either personally or through his company, Equity Finance Company Pty Ltd, was in an independent contractual relationship with the Respondent and was not an employee of the Respondent and that the application is without jurisdiction and must be dismissed.
MINUTES OF ORDERS
THE COURT ORDERS:
That the application is dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
I certify that this and the preceding 8 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.
Associate:
Dated: 11 September 1996
The Applicant appeared for himself.
There was no appearance by the Respondent.
Date of hearing: 6 March 1996
Date of judgment: 11 September 1996
0
0
0