Ritter v Keatley Real Estate Pty Ltd Trading as Mt Gambier First National

[2013] SASC 46

Supreme Court of South Australia

(Magistrates Appeals: Civil)

RITTER v KEATLEY REAL ESTATE PTY LTD TRADING AS MT GAMBIER FIRST NATIONAL

[2013] SASC 46

Judgment of The Honourable Justice Stanley

11 April 2013

EMPLOYMENT LAW - EMPLOYMENT RELATIONSHIP - ASCERTAINING EXISTENCE AND NATURE OF RELATIONSHIP - INTENTION OF PARTIES

EMPLOYMENT LAW - EFFECT OF INDUSTRIAL AWARDS, AGREEMENTS OR LEGISLATION ON EMPLOYMENT CONTRACT - PARTICULAR CASES

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS

INDUSTRIAL LAW - SOUTH AUSTRALIA - INDUSTRIAL INSTRUMENTS - OTHER MATTERS

The respondent employed the appellant as a real estate agent - the respondent sued the appellant for monies owed pursuant to the employment contract in the amount of $23,466.95 - the magistrate allowed the respondent's claim - the sum represented the difference between payments made to the appellant during his employment, and the commissions earned by the appellant - the respondent claimed the appellant had been employed on a commission only basis - the learned magistrate found that the appellant was employed on a commission only basis - the appellant appeals on the ground that the learned magistrate erred in so finding.

The appellant submitted that the learned magistrate had erred on three grounds - first, that the learned magistrate erred in failing to conclude that the statutory requirements for the parties to enter into a commission-only agreement had been satisfied - second, that the learned magistrate erred in his construction of the terms of the written agreement - third, that, in the alternative, the learned magistrate had erred in concluding that the advances paid to the appellant by the respondent exceeded the commissions earned.

Held: Appeal allowed, judgment in favour of the respondent set aside, the respondent's claim is dismissed - the appellant was subject to a notional agreement preserving State awards (NAPSA) - the requirements for commission-only employment prescribed by the NAPSA were not satisfied, so there was no valid agreement between the appellant and respondent - the learned magistrate erred in directing his attention to the Real Estate Agents' (Commission Only) Australian Pay and Commission Scale (Real Estate APCS) as opposed to the NAPSA.

Workplace Relations Act 1996 (Cth), referred to.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] WLR 896; Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251; Lake v Simmons [1927] AC 487; McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; Pacific Carriers Ltd v BNP Paribas  (2004) 218 451; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; Gardiner v Agricultural & Rural Finance Pty Ltd [2007] NSWCA 235; University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481; Codelfa Cosntruction Pty ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, discussed.
Taylor v Johnson (1983) 151 CLR 422; Byrnes & Anor v Kendle (2011) 243 CLR 253; Western Export Services v Jireh International (2011) 282 LAR 604; Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; James v Millar & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583; Water Board v Moustakas (1988) 180 CLR 491, considered.

RITTER v KEATLEY REAL ESTATE PTY LTD TRADING AS MT GAMBIER FIRST NATIONAL
[2013] SASC 46

Magistrates Appeal

STANLEY J:

Introduction

1. The respondent employed the appellant as a real estate agent from January 2009 until December 2011.  Subsequently the respondent sued the appellant for monies owing pursuant to the terms of the contract of employment.  The learned magistrate allowed the respondent’s claim in the amount of $23,466.95.  That sum represented the difference between payments the respondent had made to the appellant during the course of his employment, and the commissions earned by the appellant during that period. 

2. The basis of the respondent’s claim was that the appellant had been employed on a commission only basis, subject to the respondent paying the appellant an amount of $1,000 net per week against commissions to be earned.  The respondent’s case was that the advances paid to the appellant during the course of his employment exceeded his commissions. 

3. At trial, the learned magistrate found this was so.  The appellant appeals on the ground that the learned magistrate erred in so finding. 

   Trial in the Magistrates Court and reasons for judgment

4. The terms of the contract were set out in a letter of appointment signed by a director of the respondent, Mr Brian Spring, dated 15 January 2008, and countersigned by the appellant on 16 January 2009, indicating his acceptance of the appointment.  The learned magistrate found that the letter was incorrectly dated.  It was written on 15 January 2009.

5. Because of its importance to the determination of the appeal, I set out the relevant portion of the letter:

   Dear Barry

   I am pleased to offer you the position of real estate sales person with Mount Gambier First National commencing on 16 February 2009. 

   The position is full-time and your role is outlined in the attached position description, this however is a general statement and is not meant to be an exhaustive list of duties.  A standard three-month probationary period applies to this position.  To terminate employment, four weeks’ notice is required by either party, and any monies owed to either party are to be paid in full. 

   We are offering you $2,000 net per fortnight – fully refundable, 45 percent of commission earned plus superannuation of nine percent paid into the fund of your choice.  Forty percent of the commission will be paid for introducing buyers and 20 percent for rural sales on those customers outside our client base.  Administration fee of $450 will be deducted from any commissions earned, unless collected, before commission is paid.  The minimum selling commission to be charged is two percent plus GST.  Holidays will be paid at four weeks annual leave per year plus leave loading, paid on commissions earned.

6. At trial, the respondent contended that the appellant was employed on a commission only basis subject to an advance of $2,000 net per fortnight which was, as expressed in the letter of appointment, “fully refundable”.  The appellant contended that the terms of the agreement were that he was to receive a minimum of $1,000 net per week plus any commissions earned in excess of this figure.

7. The learned magistrate heard evidence from the appellant and from Mr Spring, and the respondent’s sales manager, Ms Maxine Tuffnell, who gave evidence of the negotiations which culminated in the execution of the letter of appointment by the appellant.  Further evidence was given by Ms Erica Mewett, the administration manager of the respondent.  She gave evidence that, on a regular periodic basis, she prepared spreadsheets which showed the commissions earned by the appellant and advances made to him.  On some occasions these spreadsheets included reconciliations indicating the amount that the appellant owed to the respondent.  These were provided to the appellant.  She gave evidence that while the spreadsheets referred to the advances as “wages”, this was simply because of the way the system was set up.  The respondent also called Mrs Harriett Keatley, one of its directors, to give evidence.  She said that for some time the directors of the respondent had been concerned about the extent of the debt owed by the appellant.  In October 2011 she convened a meeting attended by the appellant, herself and another director, Mr Dale Keatley.  There was a discussion concerning the debt owed.  The appellant proposed reducing the amount of the advance from $2,000 net per fortnight to $1,600 net per fortnight.  At that meeting the appellant said he intended to sell his house in order to obtain sufficient funds to repay the debt.  There was a discussion concerning the preparation of a second mortgage over the appellant’s house to secure the debt that was owed.

8. The learned magistrate found the appellant to be an unreliable witness.  Where there was any conflict between the evidence of the respondent’s witnesses and the appellant, he preferred the evidence of the respondent’s witnesses.  He found that the parties intended to enter into a commission only arrangement, and that was the basis upon which the parties contracted in January 2009. 

9. Next, the learned magistrate rejected an argument that the agreement between the parties failed to satisfy the statutory requirements for the making of a commission only employment agreement.   He found the agreement conformed with the requirements of the Real Estate Agents (Commission Only) Australian Pay and Classification Scale (“Real Estate APCS”).

   Submissions on appeal

10. On the appeal, Mr Hanna, counsel for the appellant, did not seek to challenge the credit findings. 

11. He submitted that the learned magistrate erred on three grounds.  First, he submitted that the learned magistrate erred in failing to conclude that the statutory requirements for the parties to enter into a commission only agreement had been satisfied.  Second, he submitted that the learned magistrate erred in his construction of the terms of the written agreement between the parties and that he should have concluded that the agreement did not provide for remuneration on a commission only basis.  Third, he submitted, in the alternative, that the learned magistrate had erred in concluding that the advances paid to the appellant by the respondent exceeded the commissions earned.  As a result, even if the learned magistrate was correct in concluding that a valid contract of employment providing for payment on a commission only basis existed, no monies were properly owed by the appellant to the respondent. 

12. Mr Austin, counsel for the respondent, submitted that the learned magistrate was correct to find that the parties had agreed to contract on the basis that the appellant would be remunerated on a commission only basis.  Further, the learned magistrate was correct to find that the preconditions for such employment had been satisfied, particularly given the appellant’s concession to this effect, in cross-examination.  The respondent submitted that the terms of the contract were unambiguous.  In the alternative, once recourse was had to the factual matrix surrounding the making of the agreement and its operation, it was apparent that the finding that the contract provided for payment on a commission only basis was correct.  Finally, the respondent objected to the appellant’s attempt to argue that the learned magistrate erred in finding that the advances paid to the appellant by the respondent exceeded the commissions earned.  The respondent submitted that this proposition had not been argued before the learned magistrate and the appellant was bound by the way in which he had conducted his case at trial. 

    Were the statutory requirements met for the parties to enter into a contract of employment for payment by commission only?

13. As at January 2009 the employment relationship between the parties was governed by the Workplace Relations Act 1996 (Cth) (“WRA”). Relevantly, for the purposes of this matter, the employment relationship was subject to the provisions of Part 7 of the WRA and Part 3 of Schedule 8 of the WRA. Part 7 and Schedule 8 were part of the substantial amendments to the WRA effected by the Work Choices legislation which commenced operation on 27 March 2006. Work Choices resulted in the establishment of a single, unified, national system of industrial regulation. This was achieved by, inter alia, a large number of State awards effectively entering the federal system.  To the extent that such instruments applied to employers, who became federal system employers under the Work Choices amendments, immediately before 27 March 2006, they were preserved as Notional Agreements Preserving State Awards (NAPSAs).[1] Part 7 established the Australian Fair Pay and Conditions Standard. This standard was part of a scheme to regulate wages paid to employees of federal system employers.

    [1]    The respondent was a federal system employer at January 2009.

14. Immediately before 27 March 2006 the respondent was subject to a State award, namely, the Real Estate Award (SA).  As at 27 March 2006 the Real Estate Award became a NAPSA.  A NAPSA was treated as if it were an agreement that had the force of Commonwealth law, although it could not generally be varied.  It was taken to contain the relevant State award as it stood at 27 March 2006, together with certain entitlements under State legislation, for example, concerning redundancy pay.  However, any wage rates became part of separate pay scales, known as Australian Pay and Classification Scales (“APCS”) fixed by the Australian Fair Pay Commission.  Accordingly, the minimum rates previously set by State awards were deemed instead to become separate instruments known as the APCS as key elements of the newly created Australian Fair Pay and Conditions Standard. 

15. Where immediately before 27 March 2006 an employer was covered by a State award which fixed rates of pay, the pay rate became a preserved APCS.  The respondent was subject to a preserved APCS.  On 3 August 2007 the Australian Fair Pay Commission made the Australian Fair Pay Commission Wage Setting Decision No. 6/2007 which is the Real Estate APCS.

16. The Real Estate APCS prescribed a piece rate applicable to commission only real estate agents covered by that APCS. Section 204(1) of the WRA required any APCS to prescribe whether the employment of a particular employee is covered by a particular APCS. Clause 4 of the Real Estate APCS prescribes the employees who are covered by it. It provides:

    4. Coverage

    This Pay Scale covers an employee who:

    (a) is an ‘employee’ within the meaning of subsection 5(1) of the Workplace Relations Act 1996; and

    (b)     is engaged as a real estate agent or to perform the functions of a real estate agent; and

    (c)     has been issued with a real estate agent’s license or is registered or qualified to perform the duties of a real estate agent by the relevant regulatory authority in the State or Territory in which the employee is employed; and

    (d)     has agreed with his or her employer, in writing, to be remunerated on a commission only basis (and that agreement is in force); and

    (e)     is capable of being classified under a classification contained in this Pay Scale; and

    (f)     has agreed with his or her employer, in writing, to be classified under a classification contained in this Pay Scale (and that agreement is in force);

    but does not cover an employee who:

    (g)     is under 21 years of age; or

    (h)     is engaged as a casual employee; or

    (i)    is subject to a training arrangement; or

    (j)    would, but for this Pay Scale, be otherwise covered by the preserved Pay Scale derived from the Clerical and Salaried Staffs’ (Agribusiness) Award 1999 [FED].

17. Clause 5 of the pay scale provided for classification as follows:

    5. Classification

    Commission only real estate salespersons undertaking sales transactions involving an agency relationship

    (1) The commission only real estate salespersons undertaking sales transactions involving an agency relationship classification applies to an employee who:

    (a)     has agreed with his or her employer, in writing, to be classified as a commission only real estate salesperson undertaking sales transactions involving an agency relationship (and that agreement is in force); and

    (b)     has been employed in the real estate industry to perform sales transactions involving an agency relationship for at least 12 months prior to entering the above agreement; and

    (c) if the rates of pay set out in clause 6 had applied (to the employee’s sales transactions involving an agency relationship) in any single 12 month period in the 5 years immediately before entering into the agreement referred to in paragraph 5(1)(a) - the employee would have been entitled to be paid an amount at least equal to what the employee was entitled to be paid under section 182 of the Workplace Relations Act 1996 (for work performed as a real estate agent) for the 12 months immediately before entering into that agreement.

    (2) For paragraph 5(1)(c), subclause 6(2) is to be applied on the basis that an agreement was in force specifying that each employee responsible for selling a property would be paid an equal share of 35% of the employer’s net commission resulting from a completed sales transaction.

18. Accordingly, whether the Real Estate APCS covered the employment of the appellant depended on whether the employee came within the terms of clause 4 of the Real Estate APCS. 

19. In my view, the Real Estate APCS did not govern the employment of the appellant.  The Real Estate APCS prescribed a three-limb coverage test.  The appellant did not meet the first or third limb of the test.  The appellant had not agreed with his employer, in writing, to be remunerated on a commission only basis.  The terms of the letter of appointment were ambiguous.[2]  The meaning of the expression “fully refundable” in the letter of appointment is unclear.  Further, the appellant had not agreed with the employer, in writing, to be classified under a classification contained in the pay scale.  The letter of appointment does not refer to the Real Estate APCS, which is the relevant pay scale.  Accordingly, there was not the requisite written agreement. 

    [2] See [5] of these reasons.

20. As a result, in January 2009, when the parties entered into a contract of employment, the contract was governed by a NAPSA being the former Real Estate Award (SA), but not by the Real Estate APCS. 

21. The NAPSA provided various protections to employees subject to its coverage.  Amongst those protections was clause 4.2.

22. Clause 4.2 provided that every employer and new employee must have a letter of appointment in accordance with the requirements of clause 4.2.2.  It permitted the employer and the employee to use a pro forma letter of appointment which was set out in Schedule 3 of the NAPSA.  It provided that if that pro forma was not used, then the letter of appointment had to conform to the requirements as to contents and registration specified in clause 4.2.2. 

23. Clause 4.2.2 provided, inter alia, that the employer and the employee must sign on or prior to the date of commencement of employment the original letter of appointment.  This obligation included an employee who was to be remunerated on a commission only basis.  The letter of appointment, as a minimum, had to contain the names and addresses of the employer and the employee, the classification in which the employee was to be employed, the minimum wage or salary to be paid to the employee, the method of payment and the period at which such wages were to be paid, the minimum allowances and expenses to be paid to the employee, the method of payment and the period at which allowances and expenses are to be paid, the method of calculating any commission/incentive payment, the method of payment and the period in which such commission/incentive payment was to be paid.  Any commission/incentive payments which were to be offset or reduced by allowable debits as mutually agreed in the contract of employment, had to be specified in the letter of appointment.  If it was intended for the employee to work on “commission only” the letter of appointment had to state what the agreed commission/incentive would be if the employee had to revert to a wage in accordance with clause 5.3.2 or 5.3.3.

1. Clause 5.3 provided for methods of remuneration.  It offered three alternatives.  First, a wage only, second, a wage and in addition commission or incentive, and third, commission only.  Remuneration by commission only had to conform with certain specified criteria.  Those criteria included:

   1. When negotiating “commission only” the parties at the same time had to negotiate a reversal rate, and what debits would apply to a reversal rate, which had to be stated in the letter of appointment.  A reversal rate was defined in the NAPSA to mean a wage and commission/incentive rate agreed in advance in the event that the employee had to revert from “commission only” to wage and commission/incentive in accordance with clauses 5.3.2 or 5.3.3. 

   2.That there was mutual agreement between the employer and the employee for the employee to be remunerated by commission only. 

   3.That this agreement was subject to approval by the Industrial Relations Commission of South Australia (“IRCSA”),

   4.That the employee had worked as a real estate sales person for two out of the previous five years, with one year of experience being immediately prior to the date of an application filed in the IRCSA by the employer and the employee for approval of the commission only agreement.

   5.The employer and the employee had agreed in advance to a reversal rate in case of the IRCSA not approving the application for commission only, or if the employee reverted from commission only to a wage because of the operation of clause 5.3.3.

2. Clause 5.3.2 provided that in the event of the IRCSA not granting approval for a new employee to be remunerated by commission only, the reversal rate was to be paid in the event the parties agreed to continue the employment contract. 

3. Clause 5.3.3 provided that where, in any subsequent year, an employee whose employment on a commission only basis has been approved by the IRCSA, found his or her gross taxable income was less than $60,000 the reversal rate was to be applied. 

4. The issue is whether the requirements prescribed by the NAPSA for commission only employment were satisfied.  In my view they were not.  I reach this conclusion on two bases. 

5. First, the letter of appointment contravenes clause 4.2.2 of the NAPSA.

6. The respondent provided the appellant with a letter of appointment.  It was not the pro forma letter of appointment prescribed in Schedule 3 of the NAPSA.  Schedule 3 provided:

   AN150126 – Real Estate Award

   SCHEDULE 3. PRO FORMA LETTER OF APPOINTMENT (LOA)  OPDATE 09:09:2003 on and from

   This Schedule will operate on and from 9th September, 2003.

   AN AGREEMENT made on the ...................day of...........................20.........................

   BETWEEN:.............................................................................................................................
   (Legal Name of Employer)

   ABN ................................................................................................................................

   Of....................................................................................P/code......................................

   Phone:........................Fax:...........................E-mail.........................................................

   Trading...................................................................................................................................
   ^{(write "As above" if same)}

   In the State of South Australia ("the Agent")

   AND:........................................................................................(Name of Employee)

   Of..................................................................PostCode:.........................................
   ("the Salesperson")

   Business Phone.............................................

   WHEREBY IT IS AGREED as follows:

   1. COMMENCEMENT DATE AND CLASSIFICATION

   Employee's commencement date:_______________________

   Employee's classification:

Salesperson
Trainee
Branch Manager

2. WAGE/SALARY

EITHER

The Award wage will be paid:
Fortnightly	Weekly

OR

An annual salary of $___________________ (insert amount) will be paid:
Fortnightly		Weekly

OR

The payment of a wage or salary is not applicable because the Salesperson will be paid commission only.

3. METHOD OF PAYMENT

Any money paid to the employee by the employer will be paid by:

Electronic transfer into an institution nominated by the employee

Cheque

Cash

4. KEY PERFORMANCE INDICATORS (Optional)

The employee should write each month (based on an average over each quarter) at least $............(insert amount) of the employer's gross commission.

This KPI is to commence on ...................(insert date).

The employee should list at least ....................(insert number) properties each month (based on an average over each quarter) and should sell at least........................(insert number) properties each month (based on an average over each quarter).

This KPI is to commence on ..................................... (insert date).

(Other)_____________________________________________

___________________________________________________

5. HIGHER DUTIES

Will there be any paid special or higher duties required of the employee?

YES
NO

If "YES" complete the table:

Name of Duty Payment When Paid

6. TRAINING

List any type and frequency of training to be provided by the employer:

__________________________________________________________________

7. ALLOWANCES AND EXPENSES

7.1 Locomotion Allowance

EITHER

The employee will receive the Award vehicle allowance and the:

Frequency of the payment will be:

Fortnightly	Weekly
(Other agreed basis)____________________

OR

The employer will provide a motor vehicle for the use of the employee and conditions of use (if any) of the motor vehicle by the employee are as follows:

__________________________________________________

OR

No locomotion allowance will be paid because the employee is being remunerated by "commission only".

7.2 Other Allowances and Expenses

Apart from the vehicle allowance will there be any other allowances and expenses to be paid to the employee?
YES		NO

If "YES" fill in the Table

Subject/Item $ Amount When Paid

8. METHOD OF CALCULATING COMMISSION/INCENTIVE

If the following format does not suit the method of calculating the employee's commission/incentive or it does suit and there is an additional incentive, then attach an annexure.

Step one

Insert what commission/incentive the employee is to receive. Depending on the office practice this may be expressed in different ways and the following are some examples:

Example 1

The employee will receive 35% of the employer's commission as a [commission][incentive] payment. The employee will receive 60% of the 35% if he/she only lists or 40% of the 35% if he/she only sells, or such other percentage splits as agreed.

Example 2

The employee will receive 20% of the employer's commission for a listing and 15% for a sale.

Example 3

Agent's Gross Commission Generated by Salesperson. Each year stands alone.	Salesperson's Gross Commission/Incentive on Office Lead	Salesperson's Gross Commission/Incentive Own Lead
Up to $10,000	25%	35%
$10,001 to $50,000	35%	45%
$50,001 and over	45%	50%

Now insert what commission/incentive the employee is to receive:

Step two

Agreed Debits

The employer may take the following debits into account when calculating the employee's commission/incentive

No.	Name of Debit	From whose commission/incentive debited
1	Franchise fees, listing fees and Agents conjunction fees	Employer's
2	The wage of a Qualified Salesperson	Employer's or employee's (not applicable if employee being paid by "commission only")
3	The vehicle allowance of a Qualified Salesperson	Employer's or employee's (not applicable if employee being paid by "commission only")
4	(Settlement achieved) Advertising in excess of vendor's authority with employer's authority	Employer's at rebate rate or lesser amount if agreed
5	(Settlement achieved) Advertising in excess of vendor's authority without employer's authority	Employee's at rebate rate or lesser amount if agreed
6	(Settlement not achieved) Advertising in excess of vendor's authority	Employer's or employee's at rebate rate or lesser amount as agreed
7	Approved employee business expenses against employer's name	Employee's or lesser amount as agreed and advertising at rebate rate
8	Non-Approved employee business expenses against employer's name	Employee's in full.

Step three

The credits (if any) under Step 1 are added to the employee's commission/incentive account as they come in.

The debits (if any) under Step 2 are added to the employee's commission/incentive account as they come in.

At the appointed time (see Clause 10 of this LOA) the employee's commission/incentive account will be reconciled and any credit paid to the employee.

If the employee's commission/incentive account balance is in debit at the time of reconciliation, that debit balance will be carried forward to the next reconciliation period.

8.1 Reversal Rate

“Reversal Rate” means that it is intended that the employee will be paid by "commission only", but at the same time a wage and commission/incentive rate (the reversal rate) has been agreed in advance in the event that the employee has to revert from "commission only" to wage and commission/incentive in accordance with the Award.

If the employee will be paid by "commission only" and in the event that the employee must revert to a wage because either the SAIRC does not approve "commission only" (5.3.2 of the award) or the employee grosses less than $60,000 (taxable income) in their first and subsequent years (see 5.3.3 of the award), the following commission/incentive is agreed in advance in the event that the employee must revert to wage and commission/incentive in lieu of "commission only".

Write in sufficient details to identify the amount of the employee's commission/incentive in the event that a wage must be reverted to.

Step one

Insert what commission/incentive the employee is to receive. Depending on the office practice this may be expressed in different ways and under the above Step 1 are some examples:

Now insert what commission/incentive the employee will receive if he/she must revert to a wage:

Step two

Agreed Debits

The employer may take the following debits into account when calculating the employee's commission/incentive

No.	Name of Debit	From whose commission/incentive debited
1	Franchise fees, listing fees and Agents conjunction fees	Employer's
2	The wage of a Qualified Salesperson	Employer's or employee's
3	The vehicle allowance of a Qualified Salesperson	Employer's or employee's
4	(Settlement achieved) Advertising in excess of vendor's authority with employer's authority	Employer's at rebate rate or lesser amount if agreed
5	(Settlement achieved) Advertising in excess of vendor's authority without employer's authority	Employee's at rebate rate or lesser amount if agreed
6	(Settlement not achieved) Advertising in excess of vendor's authority	Employer's or employee's at rebate rate or lesser amount as agreed
7	Approved employee business expenses against employer's name	Employee's or lesser amount as agreed and advertising at rebate rate
8	Non-Approved employee business expenses against employer's name	Employee's in full.

Step three

The credits (if any) under Step 1 will be added to the employee's commission/incentive account as they come in.

The debits (if any) under Step 2 will be added to the employee's commission/incentive account as they come in.

At the appointed time (see Clause 10 of this LOA) the employee's commission/incentive account will be reconciled and any credit paid to the employee.

9. ENTITLEMENTS ON TERMINATION

9.1 Award and Legislative Entitlements on Termination

The employer must pay any outstanding Award or legislative entitlements due to the employee at the time of termination of employment.

9.2 Commission Entitlements on Termination and Post Termination

Upon the termination of the employee's employment, the employee's commission account will continue to be administered, using the same method and same time lines for any payments as applied during the employee's employment. After a reasonable time (as defined) has elapsed, the account will be closed and reconciled according to the usual method. Up until the account is closed, the employer will be entitled to debit any reasonable expenses to which the employer is put after the employee's termination.

“Reasonable Time” the employer allowing time both for settled sales and for the receipt of all known debits (if any) which are attributable to the employee.

10. WHEN COMMISSION/INCENTIVE PAID BY

When is the employee's commission/incentive to be paid [it can be no longer than one month after the employer's commission is received - see clause 4.2.2.3 (x) of the Award]?

_________________________________(Insert intervals of payment eg monthly).

11. METHOD OF ANNUAL LEAVE PAYMENT

Payment for annual leave is split into two components, the first one on the wage/salary (11.1) and the second, on the commission/incentive (11.2). If remuneration is by "commission only", then only fill out the second component only (11.2).

11.1 First component - Payment for Annual Leave on the Wage/Salary Component

EITHER

The wage/salary payable by the employer to the employee will continue to be paid when annual leave is taken or paid as a lump sum at the start of leave.

OR

Annual leave will be paid by the employer to the employee at the rate of an additional 1/12^th of the wage/salary and paid to the employee at the same time the wage/salary is paid, provided that the employee will not be entitled to any additional payments when annual leave is actually taken.

OR

Being paid annual leave on wage/salary will be not applicable because the employee will be paid by "commission only".

11.2 Second Component - Payment for Annual Leave on the Commission/Incentive Component

EITHER

Annual leave will be paid on commission/incentive earnings at the same time the employee actually takes leave and calculated as per the award.

OR

The employer will pay annual leave to the employee at the rate of an additional 1/12^th of the employee's commission/incentive paid to the employee at the same time the employee's commission/incentive is paid, provided that the employee will not be entitled to any additional payments when annual leave is actually taken.

OR

The employee's commission/incentive has been set at a higher level than otherwise would have been the case in order to be inclusive of payment for annual leave. 8.4% [ie 1/12^th] of the employee's commission/incentive is identified as a payment for annual and the employee will not be entitled to any further payment for annual leave in relation to commission/incentive earnings.

12. PROBATION

The employee will be on probation for a period of three months providing the probationary period for a Trainee will be as specified in the training contract.

13. TERM OF CONTRACT EITHER

The basis of employment will be full-time.

OR

The basis of employment will be full-time but for a fixed term of:

.............................................. (insert period) and  expiring on ....................................... (insert date)

No obligation exists with the employer to continue the employment of a Trainee beyond the completion of the Traineeship, unless otherwise agreed.

14. INSURANCE

The employee must have a current policy of insurance indemnifying the employer from any claims arising out of the use of the employee's own vehicle for work purposes.

The employee must, at the request of the employer, produce a current policy of insurance indemnifying the employer from any claims arising out of the use of the employee's own vehicle for work purposes.

15. RELATIONSHIP TO COMPANY POLICIES AND PROCEDURES

This Agreement is supported by company policies and procedures determined by the company from time to time. These policies and procedures will not reduce the Salesperson's substantive entitlements contained in this Agreement but provide guidelines for the fair and efficient administration of the employment relationship.

16. DUTY/RESPONSIBILITY

The employee will diligently and faithfully perform all the duties and responsibilities of their employment in accordance with the job description and the company's policies and procedures and such other duties as may reasonably be required by the company. The employee undertakes:

to devote the whole of the employee's working time and attention to the use of the employee's best endeavours to further the development, reputation and business of the company;

to observe all lawful directions, orders, instructions and policies (as varied from time to time) of the company; and

not to be directly or indirectly involved or engaged in work for or provide services to any other company, business or individual, whether paid or not, which may in any way conflict with the interests of the company, unless otherwise agreed between the parties in writing.

17. NON-SOLICITATION COVENANT

The employee agrees to enter a non-solicitation covenant as a term of employment.

18. SALE BY TWO OR MORE EMPLOYEES

Where a sale is effected by two or more employees the commission is to be divided between the employees in such proportion as they may agree, provided that any such agreement may be varied at any time by the employees. In the absence of agreement, the commission will be split equally.

19. DISTRIBUTION OF LETTER OF APPOINTMENT

Upon completion and execution of this Letter of Appointment by both the employer and the employee:

One copy must be retained by the employer.

One copy must be retained by the employee.

One copy must be posted by the employer to The Real Estate Employers' Federation of South Australia:

PO Box 72
Mitcham Shopping Centre SA 5062
Phone: [phone]

With a registration and an administration fee of $50.00 payable by the employer.

One copy must be posted by the Employee to the Real Estate Salespersons' Association of South Australia: Secretary

PO Box 6665
Halifax Street
Adelaide SA 5000
Phone: [phone]

with a registration and an administration fee of $50.00 payable by the Employee.

20. VARIATION TO AGREEMENT

The parties acknowledge that the LOA can be only varied by agreement of both parties signing a variation agreement at any time. The variation must be in writing and lodged in accordance with Clause 19 of this Agreement.

21. PAY STATEMENTS

When the employee is paid any wage or commission or incentive the employee is to receive pay statements detailing such items as remuneration earned and for what period and all credits and debits taken into account and the name of property settlements. An employee is to receive a Commission statement at least monthly.

22. WHERE AWARD LOCATED

A copy of the award can be located on the employer's premises in the _______________

(Space allowed for other clause or attach annexures)

SIGNATURES

Signed for or on behalf of the Employer

Signed:............................................................................................................
Date:_______/_____/_____
Name in Full (printed):.................................................................................
Position:..........................................................................................................
Witnessed By: ...............................................................................................
Witness Name in Full (printed):..................................................................
Witness Address:........................................................................................

Signed by the Employee

Signed:............................................................................................................

Date:_______/_____/_____
Name in Full (printed):................................................................................
Position:.........................................................................................................
Witnessed By: ..............................................................................................
Witness Name in Full (printed):.................................................................
Witness Address:.......................................................................................

1. Accordingly, the letter of appointment had to conform to the requirements as to contents specified in clause 4.2.2.  It did not do so.  It did not contain the address of the employee.  It did not provide the classification in which the employee was to be employed.  It did not expressly specify that the employee was to be remunerated on a commission only basis.  Its terms were ambiguous.  The meaning of the expression “fully refundable” in the letter of appointment is unclear.  It did not provide the period in which commission was to be paid.  It did not provide for a reversal. 

2. The failure of the letter of appointment to conform to the requirements as to contents in clause 4.2.2, however, does not necessarily invalidate the agreement.  Clause 4.2.5 provides that if either the employer or the employee fails to comply with all the provisions of clause 4.2 in relation to the requirements and registration of letters of appointment, that failure to comply will not, prima facie, invalidate the remaining provisions of the letter of appointment.  But in this case, the failure to provide expressly and unambiguously for remuneration on a commission only basis necessarily invalidates any term of the agreement for commission only remuneration. 

3. Second, the letter of appointment contravened clause 5.3 of the NAPSA.

4. That is not the end of the matter. As can be seen, clause 5.3 of the NAPSA provided that any agreement for remuneration on a commission only basis had to conform to prescribed criteria. The agreement between the appellant and the respondent did not meet all of those criteria. The parties had not negotiated a reversal rate or what debits would apply to a reversal rate. While the parties had not sought or obtained approval of the commission only remuneration by the IRCSA, that does not matter. Clause 35(1) of Part 3 of Schedule 8 of the WRA provides that where a NAPSA confers a power on a State industrial authority such as the IRCSA, that authority is not to exercise that power after 27 March 2006. Accordingly, the failure to seek or obtain approval of the commission only agreement from the IRCSA is irrelevant to the validity of the agreement.

5. Clause 5.3 was part of a scheme of protection for employees who were offered employment in the real estate industry on a commission only basis.  There was a clear intention on the part of the award maker to invalidate any agreement for commission only employment if the criteria prescribed by clause 5.3 was not satisfied. 

6. Accordingly, as the requirements for commission only employment prescribed by the NAPSA were not satisfied, there was no valid agreement for commission only employment between the appellant and the respondent. 

7. The learned magistrate erred in his consideration of this issue.  First, he directed his attention to the Real Estate APCS.  As I have concluded, the Real Estate APCS did not apply to the appellant’s employment.  Secondly, he failed to consider the relevant test prescribed by the NAPSA. 

8. As I have concluded, there was no valid agreement between the parties for commission only employment, that is sufficient to dispose of the appeal.  The absence of a valid agreement for commission only employment deprives the respondent of any right to claim for monies alleged to be owing pursuant to the agreement.  The learned magistrate erred in upholding its claim.

9. For the sake of completeness, however, I should indicate my conclusions in relation to the remaining grounds of appeal. 

   Construction of the employment agreement

10. The appellant submitted that the learned magistrate erred in construing the contract of employment.  He submitted that the learned magistrate should have found the contract did not provide for remuneration on a commission only basis, but provided remuneration on the basis of the payment of wages supplemented by commission earnings. 

11. The purpose of the construction of contracts, including contracts of employment, is to ascertain, by reference to the words used, in the factual matrix in which the parties dealt with one another, what an objective person in the position of the parties would reasonably understand them to have intended.  This is the objective theory of contract.[3]

    [3]    Taylor v Johnson (1983) 151 CLR 422.

12. In Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[4] Mason J (as he then was) confirmed the centrality of the parol evidence rule to the objective theory of contract.   He said:[5]

    The broad purpose of the parol evidence rule is to exclude extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiation, to subtract from, add to, vary or contradict the language of a written instrument. 

    [4] (1982) 149 CLR 337.

    [5] (1982) 149 CLR 337 at 347.

13. He explained that the rule is subject to the following exception:[6] 

    The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning.  But it is not admissible to contradict the language of the contract when it has a plain meaning.  Generally speaking, facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although … if the facts are notorious, knowledge of them will be presumed.

    It is here that a difficulty arises with respect to prior negotiations.  Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract.  To the extent to which they have this tendency they are admissible.   But insofar as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations, they are not receivable.  The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make.  They are superseded by, and merged in, the contract itself.  The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. 

    [6] (1982) 149 CLR 337 at 352.

14. As Mr Justice Holmes of the US Supreme Court wrote extracurially:[7]

    [P]arties may be bound by a contract to things which neither of them intended, and when one does not know of the other’s assent … [T]he making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs, - not on the parties’ having meant the same thing but on their having said the same thing.

    (Emphasis in original)

    [7]    Holmes, “The Path of the Law”, (1897) 10 Harvard Law Review 457 at 463-464 cited with approval in Byrnes & Anor v Kendle (2011) 243 CLR 253 at 285 [100].

15. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[8] the High Court said:[9]

    This Court … has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined.  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. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.[10]

    (Footnote added)

    [8] (2004) 219 CLR 165.

    [9]    Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40] affirming Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22].

    [10] Affirmed in Byrnes & Anor v Kendle (2011) 243 CLR 253 at 284 [98].

16. In Investors Compensation Scheme Ltd v West Bromwich Building Society[11] Lord Hoffmann explained the approach of the English courts in the following terms:[12]

    I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v Simmonds [1971] 3 All ER 237 at 240–242, [1971] 1 WLR 1381 at 1384–1386 and Reardon Smith Line Ltd v Hansen-Tangen, Hansen-Tangen v Sanko Steamship Co [1976] 3 All ER 570, [1976] 1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of ‘legal’ interpretation has been discarded. The principles may be summarised as follows.

    (1)    Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

    (2)    The background was famously referred to by Lord Wilberforce as the ‘matrix of fact’, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

    (3)    The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

    (4)    The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax:  see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] 3 All ER 352, [1997] 2 WLR 945.

    (5)    The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in Antaios Cia Naviera SA v Salen Rederierna AB, The Antaios [1984] 3 All ER 229 at 233, [1985] AC 191 at 201:

    ‘… if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.’

    [11] [1998] 1 WLR 896.

    [12] [1998] 1 WLR 896 at 912-913.

17. The principles outlined by Lord Hoffmann were succinctly summarised in Bank of Credit and Commerce International SA v Ali[13] by Lord Bingham of Cornhill:[14]

    To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intentions the court does not of course inquire into the parties’ subjective states of mind but makes an objective judgment based on the materials already identified.

    [13] [2002] 1 AC 251.

    [14] [2002] 1 AC 251 at 259.

18. These observations have been repeated in relation to the construction of commercial contracts.  In Lake v Simmons[15] Viscount Sumner observed:[16]

    Every one must agree that commercial contracts are to be interpreted with regard to the circumstances of commerce with which they deal, the language used by those who are parties to them, and the objects which they are intended to secure.

    [15] [1927] AC 487.

    [16] [1927] AC 487 at 509.

19. These words were drawn on in McCann v Switzerland Insurance Australia Ltd,[17] where Gleeson CJ observed:[18]

    A policy of insurance, even one required by statute, is a commercial contract and should be given a businesslike interpretation. Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure.

    (Footnotes omitted)

    [17] (2000) 203 CLR 579.

    [18] (2000) 203 CLR 579 at 589.

20. In Pacific Carriers Ltd v BNP Paribas[19] the High Court stated the general principles in regard to the construction of commercial contracts in the following terms:[20]

    The case provides a good example of the reason why the meaning of commercial documents is determined objectively:  it was only the documents that spoke to Pacific.[21]  The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean.[22]  That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction.[23]  In Codelfa Constructions Pty Ltd v State Rail Authority of NSW,[24]Mason J set out with evident approval the statement of Lord Wilberforce in Reardon Smith Line Ltd v Hansen‑Tangen:[25]

    In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.

    [19] (2004) 218 CLR 451.

    [20] (2004) 218 CLR 451 at 461-462.

    [21] Wilson v Anderson (2002) 213 CLR 401 at 417 – 419 [7] – [10].

    [22] Gissing v Gissing [1971] AC 886 at 906; Christopher Hill Ltd v Ashington Piggeries Ltd [1972] AC 441 at 501; ABC v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540.

    [23] Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896; [1998] 1 All ER 98.

    [24] (1982) 149 CLR 337 at 350. See further Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436 at 445 [39]; 186 ALR 289 at 301.

    [25] [1976] 1 WLR 989 at 995 – 996; [1976] 3 All ER 570 at 574.

21. The principles of construction applicable to commercial contracts are also applicable to employment contracts which must be construed in a practical and business like way.[26]  The meaning of an employment contract, like a commercial contract, is determined objectively.[27] 

    [26] Concut Pty Ltd v Worrell (2000) 176 ALR 693 at 708.

    [27] Courts must however, always bear in mind the nature of the contract in interpreting its terms.  This is particularly so with an employment contract, which unlike many commercial contracts which are complete on their face, may evidence a failure on the part of the parties to spell out many of its terms in writing see Hawkins v Clayton (1997-98) 164 CLR 539 per Deane J at 572 - 573.

22. This analysis of the relevant principles must be read subject to the High Court’s observation in Royal Botanic Gardens and Domain Trust v South Sydney City Council[28] that it was unnecessary to determine whether Lord Hoffman and Lord Bingham took a broader view of the admissible “background” than was taken in Codelfa and that until that determination is made by the High Court, other Australian courts, if they discern any inconsistency with Codelfa should continue to follow Codelfa. The reference by the High Court in Royal Botanic Gardens to Codelfa is to be understood as referring to the requirement, set out by Mason J, with the concurrence of Stephen and Wilson JJ, that the court may only have regard to the surrounding circumstances and object of the transaction where the language of the contract is ambiguous or susceptible of more than one meaning.  Evidence of surrounding circumstances is not admissible to contradict the language of the contract when it has a plain meaning.  Where the issue is which of two or more possible meanings is to be given to a contractual provision the court looks to the objective framework of facts within which the contract came into existence and to the parties’ presumed intention in this setting. 

    [28] (2002) 240 CLR 45 at 62 – 63 [39].

23. This approach has most recently been confirmed in Byrnes v Kendle[29] and Western Export Services v Jireh International.[30]

    [29] (2011) 243 CLR 253.

    [30] (2011) 282 ALR 604.

24. The concept of ambiguity referred to by Mason J in Codelfa is not without its difficulties.  The disjunctive reference to language which is ambiguous or susceptible to more than one meaning suggests that the concept of ambiguity is broader than the concept of a word or phrase susceptible of more than one meaning.   This may reflect an intention to include concepts of patent, latent and inherent ambiguity.   The dictionary definition of “ambiguous” includes the following meanings: “open to various interpretations”, “equivocal”, “doubtful”, “uncertain”, “having a double meaning”, “obscure”, “indistinct”, and “lacking clarity”.[31]In Gardiner v Agricultural and Rural Finance Pty Ltd[32] Spigelman CJ said that ambiguity “… extend[s] to any situation in which the scope and applicability of the formulation [is], for whatever reason, doubtful.”[33]  In my view, the Mason J formulation in Codelfa is directed to circumstances in which an exclusively textual analysis of the language of a contract produces uncertainty as to the meaning of the contractual provision. 

    [31] Macquarie Dictionary, Revised 3rd ed.

    [32] [2007] NSWCA 235.

    [33] [2007] NSWCA 235 at [12].

25. I accept the submission of the appellant that the term of the contract concerning remuneration is ambiguous.  The words in the letter of appointment, “We are offering you $2,000 net per fortnight – fully refundable, 45 % of commission earned plus superannuation 9 % paid into the fund of your choice …” is inherently ambiguous.  When reference is had only to the text of the contract, the language of the offer is capable of conveying more than one meaning.  It is not clear whether what is refundable is the $2,000 net per fortnight or the difference between the advance and commission in any relevant pay period or over the term of the contract which on its face is for an indeterminate period.  Further, what is the meaning of a nine percent super contribution?  Nine percent of what?  Is it referring to $2,000 net or $2,000 gross or the actual commission earned and again, if so, over what period? The ambiguity could have been avoided if the parties had employed the pro forma letter of appointment in Schedule 3 of the NAPSA or, at least, had adopted the language of that document, in particular, the reference to “commission only” payment.   This conclusion permits recourse to the surrounding circumstances for the purpose of interpretation. 

1. When regard is had to the evidence before the learned magistrate of the discussions between the parties leading to the execution of the letter of appointment, there can be no doubt that any ambiguity in the language of the document is resolved in favour of the construction adopted by the learned magistrate, namely, that this was a contract for remuneration on a commission only basis, albeit subject to the payment of an advance of $2,000 net per fortnight to be set off against commissions earned. 

2. The learned magistrate accepted the evidence of Mr Spring and Ms Tuffnell in preference to that of the appellant.  Mr Spring gave evidence that the appellant was introduced to him by Ms Tuffnell.  He offered the appellant employment on a commission only basis.  The appellant told Mr Spring he was happy to work on a commission only basis but he asked for an advance against commission because there would be a delay before he would receive any commission in his new position.  It was agreed he would be paid $1,000 net per week. 

3. Ms Tuffnell gave evidence that the appellant was known to her through the industry.  He had expressed to her his dissatisfaction with his current employment and she had invited him to meet Mr Spring.  She was present at the initial meeting.  She had told the appellant that all sales persons employed by the respondent worked on a commission only basis.

4. I should add that in construing the letter of appointment, the learned magistrate appears to have had regard to the post contractual conduct of the parties.  This is impermissible.[34]  Nonetheless, to the extent the learned magistrate has done so this has not led him into error in the actual construction of the letter of appointment.

   [34] Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 at 582 [35]; James Miller & Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583 at 603.

   As a matter of fact there were no monies owed

5. The appellant submitted, in the alternative, that the learned magistrate had erred in concluding that the advances paid to the appellant by the respondent exceeded the commissions he earned.  This submission was propounded on the basis that the proper calculation of any liability to pay to the employer the difference between advances made and commissions earned, was to be calculated on a net basis.  Thus, it was argued, the terms of the contract did not oblige the appellant to repay to the respondent PAYG taxation contributions made by the respondent to the ATO on behalf of the appellant.  Neither did it oblige the appellant to repay to the respondent superannuation contributions made by the respondent on behalf of the appellant.  The appellant submitted that once allowance is made for these monies, there is no debt.

6. The respondent submitted that this was not an argument put at the trial, and the appellant is bound by the conduct of his case before the learned magistrate.  

7. In University of Wollongong v Metwally (No. 2)[35] the High Court said that the general rule is that a party is bound by the conduct of his case at the trial, and it is only in the most exceptional circumstances that he will be allowed on appeal to raise a new argument which, deliberately or inadvertently, he failed to put during the hearing.  However, the principle is not absolute.  Where the argument involves a question of law only, or all the relevant facts have been established beyond controversy in the court below, it is open to the appeal court to hear and determine the argument.[36]

   [35] (1985) 59 ALJR 481.

   [36] Water Board v Moustakas (1988) 180 CLR 491 at 497.

8. In my view, the submission does not involve a question of law only.  Mr Hanna, counsel for the appellant, submits that, nonetheless, all the evidence relevant to this point was before the Court.  It is not clear to me that this is necessarily so.  It is not clear that all the relevant facts have been found because this was not a defence that was put at trial.  Accordingly, I would not be disposed to entertain the argument.  I add, however, that on the evidence available, I consider the argument to be misconceived.  The liability of the appellant under the agreement is not a liability to repay only the net advances.  Where the respondent has, in accordance with its legal obligations as the employer, deducted income tax from the advances it made to the appellant and remitted those payments to the ATO, these are monies which the appellant was liable to repay to the respondent pursuant to the terms of the contract, if these payments exceeded his commission earnings.  The same proposition is good in respect of superannuation contributions. 

9. Nonetheless, because of the conclusion I have reached in relation to the effect of the NAPSA, no liability to make these payments on the part of the appellant to the respondent ever arose. 

   Conclusion

10. I would allow the appeal.   I would set aside the judgment in favour of the respondent.  I would dismiss the respondent’s claim.  I will hear the parties as to the costs of the appeal and the trial.