Patrick John Jackson and Northshore Realty
[1994] IRCA 170
•16 December 1994
CATCHWORDS
INDUSTRIAL LAW - Termination of employment - Complaint of unlawful termination - Contract of Service or contract for services - misconduct - summary termination.
Industrial Relations Act 1988, S170CA, S170CB, S170DB, S170DC, S170EA, S170EE
Stevens v Brodribb Sawmilling Company Pty Limited (1985-86) 160 CLR 16 at 24
Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 404
Montreal v Montreal Locomotive Works - (1947) 1 DLR at 169
Musicians Union of Australia v Western Suburbs (Newcastle) Leagues Clubs Ltd (1987) 16 IR 345 at 349
Federal Commissioner of Taxation v Newton (1956-1957) 96 CLR 577
PATRICK JOHN JACKSON AND NORTHSHORE REALTY
No. TI-168 of 1994
Before: Ryan JR
Place: Hobart
Date16 December 1994
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY Matter No TI 168 of 1994
B E T W E E N: PATRICK JOHN JACKSON
Applicant
AND: NORTHSHORE REALTY
Respondent
RYAN JR
MINUTES OF ORDER
16 December 1994
THE COURT ORDERS THAT:
The application is dismissed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY Matter No TI 168 of 1994
B E T W E E N: PATRICK JOHN JACKSON
Applicant
AND: NORTHSHORE REALTY
Respondent
COURT: RYAN JR
PLACE: HOBART
DATE: 16 DECEMBER 1994
Judgment today is ex temporé in the sense that written reasons have not been settled in advance of delivery and are not available for the parties as soon as judgment is delivered. However, written reasons will be produced from the transcript of proceedings this afternoon and copies will be provided for the parties.
The hearing took place on Wednesday, 14 December. Mr Young appeared for the applicant; Mr Webster appeared for the respondent.
Patrick John Jackson seeks the usual remedies under section 170EA of the Industrial Relations Act 1988. He claims that the respondent, Northshore Realty Pty Limited, employed him as a real estate sales consultant from 6 June 1994, and unlawfully terminated his employment on 12 August 1994, and that the respondent gave no reason for the termination.
The applicant also seeks an extension of time so that the application filed on 14 September is allowed within the court's discretion as provided by section 170EA(3)(b). An extension of time does not seem necessary. There is no written notice of termination and therefore the section 170EA(3)(a) requirement that the application must be made within 14 days after the employee receives written notice of termination is inapplicable.
In the course of the hearing the applicant suggested - or rather, in the course of the hearing I suppose Mr Young suggested - that a letter of 12 August 1994 from Piet Schouten and Company, lawyers acting for the respondent, was tantamount to a written notice of termination. He did not really go so far as to suggest the letter, exhibit A6, was a written notice of termination. There is no need to address that letter at this stage. It certainly was not a written notice of termination. It was not a notice addressed to the applicant. It in no way related to any actual or alleged contract of employment.
It is also noted that the applicant has added a paragraph 2(h) to his affidavit made and filed on 14 September 1994 in compliance with order 75 of the Industrial Relations Court Rules. Paragraph 2(h) reads:
Extension of time is sought following a legal opinion as to the validity of the employment contract, a copy of which is attached.
The court assumes that attached to the affidavit at filing was an unmarked copy of an agreement which is also attached as annexure D to the respondent's affidavit. The respondent's affidavit, filed on 30 September, pursuant to order 75, includes as annexures A, B, C, D and E, the following agreements:
A. Richardson and Wrench Hobart Sale Agreement, P.J. Jackson Property Group Pty Limited, trading as Richardson and Wrench and Northshore Realty Pty Limited;
B. Management Agreement, Northshore Realty Pty Limited and P.J. Jackson Property Group Pty Limited;
C. Deed of Indemnity, Kerry Patrick Priest and P.J. Jackson Property Group Pty Limited, and Patrick John Jackson and Northshore Realty Pty Limited;
D. An Agreement of Association entitled Employment Contract Northshore Realty Pty Limited and Patrick John Jackson;
E. A supplementary agreement made on the sixth day of June 1994 between Northshore Realty Pty Limited and Patrick John Jackson.
Let me say that the court has not taken account of the respondent's affidavit as such, because it was not necessary to do so and because Mr Young took the curious course, at least in this jurisdiction, of objecting to it, because it was not read at the hearing. The annexures are very much in evidence.
It is conceded by both parties that on 6 June the respondent purchased the real estate business of P.J. Jackson Property Group Pty Limited, which business traded as Richardson and Wrench Hobart, from premises at 117 Sandy Bay Road, Sandy Bay. It is also conceded that the applicant initiated the drawing up of the four agreements listed above as annexures A, B, C and D, and that the four agreements were drawn up by a solicitor, Mr G. Howes of G.R. Howes and Company.
In respect of A, the Richardson and Wrench Hobart sale agreement, it is clear that Mr Howes acted for both the applicant, as vendor, and the respondent, as purchaser, and this is stated clearly on the face of the document. It is also reasonably clear that while B, the management agreement, C, the deed of indemnity, and D, the agreement of association titled Employment Contract, were initiated by the applicant, Mr Howes, in effect, acted for both the applicant and the respondent in respect of all four agreements.
E, the supplementary agreement, was initiated by the respondent, or at least by Mr Kerry Priest, a director of the respondent company. Again, it was drawn up by Mr Howes and again Mr Howes appears to have acted for both the applicant and the respondent.
Although the applicant was guarded in cross-examination, the thrust of his application and his evidence is that agreements B, C, D and E, did not really operate and that the respondent employed the applicant personally as the manager of the business at 117 Sandy Bay Road, and that the only way the respondent could validly operate the business under the Auctioneers and Real Estate Agents Act, Tasmania Act No 37 of 1991, was with an individual as manager and that he was that individual.
He tendered his manager's licence, number 187, issued 1 January 1994, which shows him as real estate manager of the respondent's business at 117 Sandy Bay Road. The applicant admitted that the purchase price for the business was paid to P.J. Jackson Property Group Pty Limited, but in cross-examination he suggested the company did not really employ anyone and that despite the terms of the agreements he was employed by the respondent and was not employed by his company, P.J. Jackson Property Group Pty Limited.
The applicant tendered numerous exhibits which demonstrated that the weekly payments of $576.92, which under B, the management agreement, were to be paid to P.J. Jackson Group Pty Limited, were in fact paid by cheque to the applicant personally and were banked by him in a Sandy Bay Westpac account number 512201 entitled Mr Patrick John Jackson and Mrs Sarah Elizabeth Jackson for the Jackson Family Trust. However, in this respect, exhibit R1 is most interesting. It is a letter of 14 June 1994 on the letterhead of Northshore Realty 117 Sandy Bay Road. The letter is from the applicant and it is addressed to Mr Kerry Priest, Northshore Realty, 269 Main Road, Derwent Park:
Dear Kerry,
re licence management fee,
I would be most grateful if in future the above fee could be paid weekly, and if possible by cheque made payable to P.J. Jackson with no tax deducted.
Regards,
Patrick.
If these payments were really wages under a contract of employment, it is curious that the applicant would describe the payment as a management fee to be made payable to P.J. Jackson with no tax deducted. It seems the applicant sought the best of both worlds. Of course, at the end of the day the important thing is not what the applicant sought, or with what motivations, but was there or was there not a contract of employment, and if so was it terminated, and if so was it an unlawful termination such as to attract remedy under section 170EE?
It is not necessary for the purpose of the judgment to go into chapter and verse of the two telephone conversations on 12 August between the applicant and the respondent's director, Kerry Priest. These matters were canvassed at length in examination-in-chief and cross‑examination and in re-examination. The applicant and Mr Priest and two employees in the Sandy Bay office gave evidence of the second conversation. The applicant and Mr Priest gave evidence of both conversations. Suffice it to say the court has carefully considered this evidence and indeed all evidence given or tendered at trial.
Mr Webster submits that the applicant was not an employee and that there was no termination. In the alternative, should it be necessary, he submits that if there was a termination it was valid and not harsh, unjust and unnecessary.
His first attack is on the claim that there was a contract of employment between the applicant and the respondent. He cites Stevens v Brodribb Sawmilling Company Pty Limited (1985-86) 160 CLR 16 at 24, where Mason J stated as follows:
A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it.
Then Dixon J, in Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 404, is quoted as follows:
"The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's orders and directions."
Mason J continues in Stevens:
But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question. Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.
Still in Stevens at page 25, Mason J raises a question that can be raised here in this case, too, and that question is: Is there an inference that the respondent retained lawful authority to command the applicant in the performance of the work he undertook to do, or was it in fact work undertaken by P.J. Jackson Property Group Pty Limited?
Still in Stevens the organisation test, separate from or linked to the control test, is referred to by Mason J at 27, as follows:
In the present case it was argued that Gray was part and parcel of Brodribb's organisation in that his snigging activities were integral to the supply of timber necessary for Brodribb's sawmilling operations at Orbost. The relevance of this submission was said to be that it added weight to the inference that Gray was subject to the control of Brodribb and therefore that the relationship between them was one of employment. In short, the contention was that the organisation test is relevant to the issue of control. But this is not to use the concept as a criterion for determining a legal issue or legal liability. It is merely to use the fact that A is part of B's business organisation as additional material from which to infer that B has legal authority to control what A does. No doubt in some circumstances, depending on the nature of the organisation and the part that A plays in its activities, it is legitimate to have regard to that fact in drawing an inference as to B's control of A in the performance of a relevant activity. However, here there are other facts which bear more cogently on the issue of control and negate the inference which is sought to be drawn.
The organisation test was put to a different use by Starke J in the same case, but in the appeal in the Victorian Supreme Court (1984) VR 327:
"The learned judge appeared to be of the opinion that the 'control' test and the 'organisation' test were alternatives. In my judgment that is not so. Both are relevant considerations in my opinion in determining whether the contract is one of service or for services."
Mason J continues:
This is to treat the element of organisation simply as a further factor to be weighed, along with control, in deciding whether the relationship is one of employment or of independent contract. This seems to be what Lord Wright had in mind in Montreal v Montreal Locomotive Works(1947) 1 DLR 169:
For my part I am unable to accept that the organisation test could result in an affirmative finding that the contract is one of service when the control test either on its own or with other indicia yields the conclusion that it is a contract for services. Of the two concepts, legal authority to control is the more relevant and the more cogent in determining the nature of the relationship.
And again, Mason J, at 29:
Control is not now regarded as the only relevant factor. Rather, it is the totality of the relationship between the parties which must be considered.
And finally Wilson J and Dawson J, at 36 and 37 in Stevens:
The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged , the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of a person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.
Mr Webster then cites the Musicians Union of Australia v Western Suburbs (Newcastle) Leagues Club (1987) 16 IR 345 at 349, where Sweeney J was dealing with a Mr Ward. Mr Ward was not an employee of the club so far as his musical activities at the club were concerned. At the time Sweeney J held, he was an employee of the company, and indeed his own company, when performing these activities. In the opinion of Sweeney J, there was no jurisdiction to make an order or an award reinstating Mr Ward in his employment with the club so far as his musical activities were concerned.
In this case Mr Webster points to what he calls the totality of the agreements which he contends amount to an agreement or a contract for P.J. Jackson Property Group Pty Limited to provide management services to the respondent and that the agreements were not a contract of employment between the applicant and the respondent. He categorises annexure D, the contract entitled on its face Employment Contract Northshore Realty Pty Limited and Patrick John Jackson, as no more than an agreement for the payment of commission. In my view annexure D is more than that, but is in no way a contract of employment. It is what it says it is in the recital, an association agreed between the respondent and the applicant. The court notes in clause 2(l) the applicant there referred to as a salesman agrees to provide his own motor vehicle and to pay all expenses thereof and carry comprehensive motor vehicle insurance, including third party liability and property damage cover.
The court notes clause 6, which reads:
The salesman shall not be entitled to receive from the firm four weeks annual leave, sick pay, retainers, superannuation and long service leave benefits, except that the salesman shall be entitled to four weeks unpaid leave as the weekly management fee will continue to be paid.
The court notes clause 13, which reads:
The salesman may, for his own profit, act as a consultant for the Hobart Gasworks project and any other project agreed upon in writing by the parties from time to time.
Much is made by Mr Young of annexure E. This is an agreement between the applicant and Kerry Priest, with Priest signing on behalf of the respondent. It is short. It reads as follows:
The agreement made 6th day of June 1994 between Northshore Realty Pty Limited and Patrick John Jackson. Whereas by an agreement dated 3rd June 1994, Northshore and P.J. Jackson Property Group Pty Limited and Jackson entered into agreements for the running of the Hobart office, and whereas the agreement are for certain payments to be made to P.J. Jackson and P.J. Jackson Property Group Pty Limited, in the event that it becomes necessary for Northshore to pay Jackson a retainer, then the $300 payable to P.J. Jackson Group Pty Limited shall be deemed to be the retainer made. This shall include holiday pay, sickness and superannuation.
In my view the agreements for the running of the Hobart office are annexures B, C and D. B is the management agreement, C is the deed of indemnity, D is the association agreement, incorrectly categorised on its face as an employment contract. The agreement, annexure E, may perhaps also incorporate annexure A, the sale agreement of Richardson and Wrench. I doubt it, but nothing turns on that one way or the other.
Mr Young has raised the possibility that the arrangements were a sham, and he refers to Federal Commissioner of Taxation v Newton (1956-1957) 96 CLR577. Of course, as he readily conceded, Newton's case deals with section 260 of the Income Tax Act, and as Williams J indicated at 632.
Section 260 is an annihilating provision -
and as Fullaghar J indicated at 645:
The fact that a transaction is real and effective will not of itself take a case outside section 260.
All I can say is that section 260 cases are very special cases and, of course, agreements which are in all other ways effective are commonly held as being of no effect against the Income Tax Commissioner under section 260.
Mr Young has sought to establish that annexure E somehow renders the management agreement, annexure B, nugatory and either converts the association agreement, annexure D, into a real contract of employment between the applicant and respondent, or perhaps renders D nugatory and also and paves the way for a genuine contract of employment between the applicant and the respondent, be it written or be it oral or partly written and partly oral. The court disagrees. The court doubts annexure E, as a purported agreement between the applicant and Priest for the respondent, does much at all, but whatever it does, it does no more than provide that:
In the event it should become necessary for the respondent to pay the applicant a retainer, that the specified $300 payable to P.J. Jackson Group Pty Limited (probably a reference to P.J. Jackson Property Group Pty Limited) shall be deemed to be such a retainer and shall, if capable of implementation, include holiday pay, sickness and superannuation.
Whatever annexure E is intended to mean, if it is capable of meaning anything, it is no wand creating a contract of employment where none exists.
There was always the possibility that the agreements B, C, D and E were dormant and of no practical effect between early June and mid‑August 1994, or that, even if they were in operation, separate from them there also existed a contract of employment between the applicant and the respondent. The court stops short of finding that with agreements B to E in operation it would be impossible in law and fact for the respondent to enter a valid contract of employment with the applicant.
However, the court notes that if agreements B to E were in operation, in whole or in part between June and August 1994, a contract of employment between the applicant and the respondent would have been quite inconsistent with those agreements, and the applicant himself, on oath, admitted that his initiation of agreements B to D was because of what he described as a tax loss situation.
Several aspects of this case are unsatisfactory. The applicant has never explained why, if, as he alleges, the arrangements encompassed by the agreements B to E were never implemented (if they were not implemented). After all, he has not denied that the arrangements were initiated by him and prepared by a solicitor at that stage acting for him and for the respondent.
The respondent, for its part, has given unsatisfactory and inadequate reasons for the ending of a relationship encompassed by the arrangements. Mr Webster, on behalf of the respondent, states that the applicant failed to comply with a reasonable direction from Mr Priest, that direction being to attend on Mr Priest before noon on Friday, 12 August, and to bring with him the $3333.34 deposited by Mr Wilson in the Richardson and Wrench trust account.
Mr Webster further argues that it was the applicant who brought the relationship to an end after failing to attend on Mr Priest on 12 August, and that he in effect abandoned the arrangements and that his attendances at 117 Sandy Bay Road on Monday, 15 August, and through to Wednesday, 17 August or Thursday, 18 August, were merely to pick up personal belongings and bits and pieces.
Mr Webster, in the alternative argues that if a court rules against the proposition that the agreements resulted in P.J. Jackson Property Group Pty Limited providing a manager at 117 Sandy Bay Road, and if the court finds that there was a contract of employment between the applicant and the respondent and that the respondent terminated the employment, the termination was valid and was a termination justified by the serious misconduct of the applicant, which misconduct is said to be a failure to comply with the lawful direction to attend on Mr Priest at Derwent Park before noon on 12 August.
If there was a contract of employment and if it was terminated by the respondent on the grounds alleged above, the court would find that the failure on that one occasion to comply with a direction to attend before noon and to bring the $3333.34 deposited by Wilson in the Richardson and Wrench trust account did not constitute a degree of misconduct such as would justify summary termination. After all, the $3333.34 was taken by Mr Wilson to Priest on 12 August by or soon after noon and there are witnesses to the applicant's claim that he had another appointment at that time and told Mr Priest so by telephone.
Furthermore, Priest has never denied the applicant's claims that he often asked for Northshore Realty trust account books, which were often promised but never delivered. Moreover, the applicant was never given an opportunity to defend himself.
Having said that, the applicant has not explained why he did not attend on Priest after his appointment, which he says was to show a property to a Mr and Mrs Fitzroy. He suggested in evidence that he asked Mr Priest by fax to contact him and that he concluded by Monday, 15 August, that it was hopeless and that in effect Mr Priest had terminated his employment.
The court has gained the distinct impression that neither the applicant or Mr Priest has given the real and complete reasons for the breakdown in the relationship. The court has concluded that there was no contract of employment between the applicant and the respondent and that therefore there was no termination of employment by the respondent such as can attract remedy under Division 3, Part VIA, and that therefore the application must be dismissed.
It is not a function of this court to determine whether the arrangements reflected by the agreements, annexures A to E, were put into place precisely as envisaged by the agreements. It is not a function of this court to determine whether there are elements of conflict between the agreements, and especially between B, D and E. It is not a function of this court to determine whether the arrangements which were in place between 3 June and 12 August breached the Auctioneers and Real Estate Agents Act 1991.
The court has concluded that agreements A to E were executed in early June and were in operation until at least 12 August. The court has concluded that whatever the precise nature of these arrangements as they existed between 3 June 1994 and 12 June 1994, such arrangements did not constitute a contract of employment between the applicant and the respondent and that there was no such contract of employment. For the reasons already given the application must be dismissed and the order of the court is that the application under section 170EA is dismissed.
I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment of Judicial Registrar Ryan.
Associate :
Date : 16 January 1995.
Appearances:
Counsel for the Applicant : Mr Young
Solicitor for the Applicant :
Counsel for the Respondent : Mr Webster
Solicitor for the Respondent : Wallace Wilkinson and Webster
Date of Hearing : 14 December 1994
Judgment : 16 December 1994
0
2
0