Ryan Mount v Dover Castle Metals Pty Ltd, Matthew Haindl, George Tucker, Simon Tripp
[2021] FWC 6043
•30 SEPTEMBER 2021
| [2021] FWC 6043 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.365—General protections
Ryan Mount
v
Dover Castle Metals Pty Ltd, Matthew Haindl, George Tucker, Simon Tripp
(C2021/2383)
DEPUTY PRESIDENT EASTON | SYDNEY, 30 SEPTEMBER 2021 |
Application to deal with contraventions involving dismissal - General Protections Claim - Jurisdictional objection - employee v independent contractor - engagement as CEO - objective assessment of representations made - contract of employment found - subsequent conduct - no variation to employment relationship
Overview
[1] On 27 April 2021 Mr Ryan Mount applied to the Fair Work Commission (“the FWC”) under s.365 of the Fair Work Act 2009 (Cth) (“the FW Act”). Mr Mount claims that he was an employee of Dover Castle Metals Pty Ltd (“Dover”) and that he was dismissed by Dover in contravention of the General Protection provisions of the FW Act. Mr Mount also alleges Dover contravened the whistle-blower protection provisions of the Corporations Act 2001 (Cth) (Corporations Act). Mr Mount’s claim is against Dover and three personal respondents - Matthew Haindl, George Tucker and Simon Tripp - who are alleged to be accessories to Dover’s contraventions of the FW Act and of the Corporations Act.
[2] Mr Mount was engaged as the Chief Executive Officer of Dover for a period of approximately three weeks. The Respondents assert that Mr Mount was not an employee of Dover but was engaged as an independent contractor. The Respondents maintain that Mr Mount does not have legal capacity to properly make an application under s.365 because he was not an employee and therefore could not have been “dismissed” within the meaning of that section.
[3] Generally the FWC’s role in relation to applications under s.365 of the FW Act is to deal with such applications by way of conciliation or mediation under s.368 of the FW Act. If the FWC is satisfied that all reasonable attempts to resolve the dispute have been or are likely to be unsuccessful it can issue a certificate under s.368(3). Section 370 of the FW Act imposes a substantial restriction 1 upon applicants by preventing a general protections court application being made unless the FWC has issued a certificate under s 368(3)(a) in relation to the dispute.
[4] The Full Court in Coles Supply Chain v Milford [2020] FCAFC 152, (2020) 300 IR 146 (“Milford”) made the following relevant observations about the FWC’s capacity to deal with applications under s.365 and antecedent disputes about dismissal:
(a) The FWC’s non-determinative powers to deal with a dispute under s.368 are only enlivened if an application is properly made under s.365. The proper making of an application under s.365 is an essential precondition to the FWC’s authority to perform its functions under s.368 (at [51]).
(b) a dispute about whether a person has been dismissed raises an antecedent issue going to the existence of the FWC’s authority to compel an employer to participate in its conciliation processes (at [65]).
(c) it is open for a respondent to assert that there has been no dismissal, which gives rise to a dispute on that question that falls to be determined under s.365 (at [67]).
(d) that dispute must be resolved before the FWC’s powers under s.368 can be exercised at all (at [67]).
(e) the FWC is entitled to determine the limits of its authority to deal with a dispute under s.368, although it has no authority to conclusively determine those limits (at [43]).
(f) in so determining the limits of its authority the FWC may determination matters of fact (at [71]).
(g) the Federal Court or the Federal Circuit Court has the power to judicially determine whether a person is entitled to make an application to the FWC (at [74]). The FW Act establishes alternative pathways for an applicant and prospective litigant and a court might decline to recognise an “application” or resulting certificate is valid when determining an objection to competency of a legal proceeding under s.370 of the FW Act (at [75]); and
(h) the determination by the FWC is not authoritative in the sense of being final. If the FWC errs in determining a question upon which its authority depends, it will commit jurisdictional error by wrongfully denying that it has the authority to “deal with the dispute” under s.368 of the FW Act (at [79]).
[5] Given that the Respondents have challenged Mr Mount’s capacity to make a claim under s.365 of the FW Act, I must determine the limits of my authority to deal with Mr Mount’s claim and, to the extent necessary, determines matters of fact.
Procedural matters
[6] Prior to the hearing itself there were a number of procedural matters that required management. Both Mr Mount and the Respondents sought orders for production of documents, which led to disagreements about relevance, professional legal privilege and access to documents produced by third parties.
[7] Rather than confining evidence and arguments to matters that were directly relevant to Mr Mount’s employment status, both parties unnecessarily extended the time required to hear this preliminary matter by using these proceedings to ventilate serious but largely irrelevant allegations against other parties. Within Dover there were at least two camps of directors. Mr Mount sided with one camp and set the standard early for the proceedings by filing evidence of matters that collaterally alleged improper conduct against those in the opposing camp.
[8] The Respondents followed suit when they filed their evidence by similarly filing evidence pertaining to Mr Mount’s engagement, but also evidence making similar allegations against Mr Mount and those in his camp.
[9] At the hearing it was not possible to sever the relevant evidence from the rest. As a result almost all of the filed materials were admitted into evidence. Counsel for each party made formal objections to parts of their opponent’s case based on form, opinion, hearsay and the like, but in the hope of progressing the matter in a quick, informal manner that avoids technicalities (per s.577 of the FW Act) such material was admitted into evidence on the basis that counsel could address matters of relevance and weight in their respective closing submissions.
[10] In the afternoon of the business day before hearing Mr Mount filed and served three additional statements. The first morning of the hearing was consumed by the need to deal with Mr Mount’s application to rely upon this late-filed evidence. Matters were further complicated by the fact that two of the three statements contained legal advice provided to Dover. As such questions of professional legal privilege, waiver and the Commission’s ability and discretion to receive evidence filed late required significant attention.
[11] I was well assisted by counsel in working through these matters however ultimately I rejected the parts of Mr Mount’s late-filed evidence that contained references to legal opinions obtained by Dover, and the legal opinions themselves. It was not necessary to form a concluded view about Dover’s claim of professional legal privilege over the two legal opinions. Neither legal written advice pertained directly to the engagement of Mr Mount. Each advice pertained to matters being debated amongst the directors of Dover.
[12] Significantly, counsel for Mr Mount indicated that the materials were only brought to Mr Mount’s lawyers’ attention on the day they were filed – which does not reflect well on the potential relevance of the documents. That is, to the extent that either advice (about other matters) could be relevant to an issue in contest in Mr Mount’s proceedings, the relevance is likely to be somewhat tenuous. The fact that neither advice was included in Mr Mount’s evidence filed on 11 June 2021, nor his evidence on 25 June 2021, nor his evidence in reply filed on 9 July 2021, coupled with the fact that some of the interlocutory skirmishes referred to above centred upon professional legal privilege of advice obtained by warring directors, strongly suggest that the effect of these newly-found advices on the dealings between Mr Mount and Dover was minimal. Measured against the disruption to the proceedings and the potential prejudice to the Respondents, let alone the risks that privilege over the advices could be improperly lost by Mr Mount dropping them in the evidentiary hot tub at the last minute, I declined to admit them into evidence.
[13] I am required to act in a judicial manner and to observe procedural fairness in carrying out my functions, 2 and I am required to give proper consideration to each of the significant points raised by the parties.
[14] As such, I have articulated the essential grounds for reaching my decision 3, set out below what I regard to be the material evidence and arguments raised by each party and make the essential findings of fact necessary to determine the jurisdictional question before me. I also set out, in heavily abbreviated form, the sidewind allegations by each party without making any findings about the truthfulness of the allegations or the lawfulness of the conduct alleged.
The relevant events
[15] Despite requiring two days of hearing there is actually very little dispute about the important parts of the evidence: the relevant conversations were recorded and transcribed, and otherwise all relevant communications occurred by email or WhatsApp.
[16] Mr Mount has significant experience in the mining industry. In mid-February 2021 he was approached by Mr Perdikaris, who was a newly-appointed director of Dover at the time, to see if he would be interested in applying for the position of CEO of Dover. On 10 March 2021 Mr Mount met with Mr Perdikaris and another director, Mr Tripp, and discussed the possibility of Mr Mount becoming the CEO. There was no discussion at either meeting about whether Mr Mount would be employed as the CEO or whether Mr Mount would be engaged as an independent contractor.
[17] On 13 and 14 March 2021 Mr Mount attended Dover’s mining tenements in far North Queensland. Mr Perdikaris, or one of his companies, reimbursed Mr Mount for his expenses for this site visit.
[18] On 17 March 2021 Mr Mount attended a board meeting of Dover at Mr Perdikaris’ home. Mr Mount says that at this meeting a binding contract of employment was made. The meeting was recorded and the parties each tendered transcriptions of relevant parts of the recording. The material parts of the discussion are as follows:
“Mr Perdikaris: | Well, hang on a minute, if you're the guy that, once you see the data, says you know what, "I'm on", what does that package look like? |
Mr Mount: | 20k month, 1000 bucks a day, I'll do it for 12 months, I'll be acting CEO. |
Mr Perdikaris: | 20k a month – |
Mr Mount: | Yeah. |
Mr Perdikaris: | – acting CEO – what else? Is that it? |
Mr Mount: | That's it. |
Mr Perdikaris: | Okay. Give me you concerns. It's an open forum. |
Mr Mount: | Why don't I step out... [Unclear] |
Mr Haindl: | Well, first of all I think Ryan has a lot to learn about the work we've done... |
… | |
Mr Stewart: | So we're saying Ryan, you know in principle we're comfortable with that? |
Mr Perdikaris: | In principle. |
Mr Haindl: | Do a bit of due diligence. |
Mr Stewart: | Ryan, welcome, welcome back. Mate look we've had a good chat and in principle y'know we're really keen to proceed on that basis. |
Mr Mount: | Ok, good. |
Mr Stewart: | We understand that, y'know, there's data you need to interrogate, spend a bit of time with Matt, maybe put together a plan of attack and come together again after that. |
Mr Perdikaris: | But we need an answer by fuckin Friday - Monday at the latest. We need to move, so. Not that we've got anyone to jump to but fuck it we'll have to find someone if it's a thing because we've got a lot to do. We've got lawyers to fucking engage with, we're floundering around. The other sides getting frustrated. |
Mr Mount: | So just to be clear, so you're still thinking I'm subject to DD - is that right? |
Mr Haindl: | In terms of feasibility studies and... |
Mr Mount: | Look I'm saying that's the first thing I've gotta do - is get to you. It's not gonna happen in two days. |
… | |
Mr Mount: | Just to be clear, I'm saying I'm coming back to you on some of this stuff, but there's no way we're gonna get it done it two days... |
Mr Tripp: | No, but you're on board? |
Mr Mount: | I'm on board. |
Mr Tripp: | You're on board. |
… | |
Mr Stewart: | We also now need to consider Ryan's employment agreement. |
Mr Perdikaris: | Yep. |
Mr Stewart: | I - let's defer that item. I think you guys need to sit together and come up with a strategy and then we can link the responsibilities in that to - need to work through that together. So let's touch on that in a week or so. |
Mr Tucker: | Okay |
… | |
Mr Perdikaris: | You told me yesterday that you wanted the car? Isn't that what you said? |
Mr Mount | I just assumed that, yeah. |
Mr Perdikaris: | Oh you assumed it? As part of the package. |
… | |
Mr Stewart: | Ok team, consider the meeting closed, well done. |
Mr Perdikaris: | Thank you very much. Mate, welcome on board.” |
[19] At the same meeting those present discussed a number of other individuals who were paid as independent contractors for their work for Dover. The transcription of the meeting includes the following exchange:
“Mr Stewart: | So where I think things are heading there is we need to reconcile the validity of contractual arrangements, how people, y'know whether there's a contract in place or whether they actually - people qualify to be contractor, whether they to be employer - employees, sorry, and they need to have an employment agreement. Do we need to look at who's on site and then speak with an employment lawyer or do we want to go down a different path there? How do we reconcile this, do you think? |
Mr Perdikaris: | There is a - you go on Fair Work, there are about seven boxes that you've gotta tick or cross. It's as simple as that. You don't meet that criteria, they're an employee, not a contractor. So, if they're supplying their own uniform, okay that's a tick - contractor. They're supplying their own tools - tick, contractor. I can't remember the other ones but if they're not doing any of that then they're not a contractor, they're an employee And the important part about all of that is, they can always come back and sue us. So the onus is not on them, it's on the company. So the company gets sued, holiday pay – |
Mr Mount: | Super... |
Mr Perdikaris: | - super, everything needs to be paid back to them. And then, there could be an Unfair Dismissal thing as well. So we gotta be very careful how we're gonna identify and then we've gotta treat them accordingly. |
Mr Stewart: | Okay so let's - we'll take that as an action that we need to work through that process... |
Mr Tripp: | Who's going to execute that action? |
Mr Stewart: | Well, executive in the - Let's round back at that because I think that's a big, part of a bigger conversation. But we'll note that needs to be reconciled.” |
[20] The next morning, 18 March, Mr Mount sent an email in the following terms:
“Directors,
Firstly, thank you for your vote of confidence in me by way of joining your company at this transitional yet very exciting time.
Secondly, below are some draft terms for my proposed contract:
- fixed term agreement (12 months)
- $20k / month via either employment agreement or service agreement (TBA)
- all usual employment conditions - e.g. workers comp/insurance, sick, annual leave
- Mon-Fri 830 - 5pm however it is expected of CEO's to work reasonable extra hrs, if required, and at varied times including sometimes on weekends - with no overtime claimed; when on site, work hrs are 6am to 6pm (or all of day-light)
- standard clauses of good faith, no conflicts, confidentiality etc
- work out of office in Sydney however it is expected of me to travel to QLD (particularly Brisbane and the project sites), and generally anywhere in Australia, if required by the business.
- full provision of the company car; and work related costs associated to it.
- If significant value-adding milestones have been achieved in the business this year, it would be appreciated that a discussion on potential introduction to equity would be had with the Board.
…”
[emphasis added]
[21] Over the course of that day each director replied by email in positive terms to confirm their consent to Mr Mount’s proposal.
[22] On 19 March 2021 Mr Perdikaris started a further email exchange with the directors and Mr Mount, suggesting:
“… All directors have given their consent to Ryan Mounts appointment as interim CEO and his remuneration and conditions in this email to all.
In the interests of keeping and increasing the tempo of the newly appointed board Luke [Stewart] can you pls help out with an employment contract for Ryan to perouse and if happy to sign also george and Matt where are we at with handover of the company car”.
[23] Mr Stewart, who was Chairman of Dover at the time, replied by email later that day:
“I’ll work together with Ryan with a view to tabling at our next Board meeting…”
[24] Consistent with the above exchanges, Mr Stewart issued a Memorandum on 23 March 2021 tabling a long list of “matters arising” from the board meeting of 17 March 2021 and another meeting. The list included the following “actions” and signed responsibility for those actions to particular individuals:
“3. Relevant contractors to be updated to include these as a matter of urgency (assigned to Mr Mount and Mr Haindl)
…
18. Draft [Ryan Mount’s] employment agreement (assigned to Mr Stewart)…”
[25] No further work appears to have been done to prepare an “employment contract” for Mr Mount although there was some evidence of Mr Perdikaris in March asking a solicitor for a [free of charge] employment contract template for another worker that Mr Perdikaris said in evidence could have also been used for Mr Mount.
[26] Mr Mount’s engagement was terminated at some time between 6 April and 10 April – there is a dispute about the precise day that the termination was effective but that dispute does not need to be resolved in this proceeding. There was no other evidence of any conversation all communication between Mr Mount and any of the directors about the terms of Mr Mount’s engagement.
[27] However on 31 March 2021 Mr Mount sent an email to Ms Tessa Butler, who resides in London and is Dover’s only employee and who has some kind of accountancy role. Mr Mount’s first email on 31 March 2021 includes the following:
“Tessa,
Can you make the following payments:
…
3. $10k fortnightly salary / fee for me - I commenced on work with Dover on 18 March 2021; for $20k / month.
Stil need to sort out finer terms including taxes etc in coming weeks upon formal documentation. Use the attached email chain as confirmation for now. (bank details attached.”
[28] A second email sent by Mr Mount later that day including the following:
“2. I agree with you I should provide an invoice with GST, As such, see attached.”
[29] At some stage over the same day Mr Mount and Ms Butler had an exchange over WhatsApp. It is not clear precisely when the exchange occurred because the evidence before me of this exchange was screenshots from Ms Butler’s phone and the times shown on her phone could be London time. The exchange was as follows:
“Ms Butler: | Sorry Ryan, just on your payment. Are you GST registered? |
Mr Mount: | I have a company that is registered for GST if that helps ? I can provide those details if you need? |
Ms Butler: | okay. That’s fine. Just from an voicing purpose. If you are invoicing though that ABN is registered for GST will your payment be 20,000 P/M plus GST for including GST? |
Ms Butler: | Or will you be an employee? |
Mr Mount: | Plus GST |
Mr Mount: | let’s do it through the invoice for this run and I will clarify it after the weekend when the dust settles and I can clarify with Bob or a board member. |
Ms Butler: | Okay, no problem. So the payment made to you will be a total of $11,000 including GST.” |
[30] The most logical sequence for the exchanges between Mr Mount and Ms Butler is that the WhatsApp exchange occurred in between the first and second emails sent by Mr Mount that day.
[31] In one, or perhaps even in both emails sent to Ms Butler on 31 March 2021, Mr Mount sent an invoice in the name of “Balclutha Advisors ABN XX XXX XXX XXX”. The invoice included a component for GST, even though Mr Mount accepted in evidence that Balclutha Advisors is not registered for GST. The invoice was expressed to be for “services rendered from 19 to 31 Mar. 21 including review, reporting, strategy & meetings as acting CEO.”
[32] The only other potentially relevant communication was the termination letter issued by Dover to Mr Mount, dated 6 April 2021, that includes the following words:
“By resolution today of the Board of the Company, your agreement for the provision of services was terminated with immediate effect. This letter serves as notice of that termination.”
[Emphasis added]
Other evidence
[33] One person’s ‘agile and evolving’ enterprise is another person’s fast and loose disaster zone. Mr Mount’s few weeks of engagement were undoubtedly tumultuous; It may well be that in this business venture there were simply too many sharks in the one tank.
[34] There were at least two camps of directors and shareholders within Dover. At the time Mr Mount was engaged, and perhaps ever since, each camp bunkered down in their own glass house to throw rocks at the other.
[35] Mr Mount was not a passive bystander in the affray. For example, Mr Mount had a difficult history with one particular director prior to working at Dover and only a few hours after sending all directors his email on 18 March 2021 proposing terms for his engagement (referred to above) Mr Mount sent a provocative email to this one director after he was slow to arrange delivery of a company owned vehicle. The director mentioned in an email that he “had it for the last two weeks as [he] crashed [his] wife’s [car]”. Mr Mount’s response was somewhat hostile:
“Firstly, I didn’t buy the car, you guys did.
Secondly, If we can make some money out of it to be able to down grade, that sounds reasonable to me, and is already my plan.
Thirdly, you have had the car for two months now and I notice you haven’t sold it and downgraded it yet - not sure what the shareholders think of that?
Furthermore, your family matters and the family crashed car are not in the company’s interest....
Lastly, I have commenced work today in good faith that terms we agreed on would be honoured.
I will be racking up taxi bills while you delay getting me the car.
If this stuff continues, I will resign.”
[36] Mr Mount’s email drew an equally hostile response from the director 13 minutes later:
“Ryan,
I have had the car for two weeks, I didn’t buy it either and just temporarily using it and all I said was I can’t get it to you tomorrow morning but probably can by lunch.
I’m happy to get the car back to you.
If you want to throw your dummy out of the cot and quit because of the car then I can only assume you were never very interested in the job in the first place.
Don’t fucken threaten me.”
[37] As referred to above, each party led evidence of the activities that Mr Mount engaged in as CEO of Dover. Ensconced within this evidence was a range of allegations and counter allegations of inappropriate and even unlawful behaviour. I shall only briefly describe the matters raised because I do not see that they shed any substantial light on the question of whether Mr Mount was an employee of Dover.
[38] In his short tenure as CEO Mr Mount dealt with matters going to the liquidity of Dover and the alleged misappropriation of funds by Mr Mount’s predecessor CEO. Two weeks into his engagement Mr Mount was instructed by some directors to engage solicitors to undertake an investigation into alleged fraud by two other directors - Mr Haindl and Mr Tucker. Mr Mount also alleged in his evidence that in earlier years Mr Tucker provided improper information to shareholders and tried to extract a benefit for himself by offering to provide different information to the same shareholders.
[39] The Respondent parties also alleged that Mr Mount acted dishonestly, both in his former position as CEO of another company, as well as in his position as CEO of Dover. Mr Tucker also alleged that in a former position as CEO of Axiom Mining, Mr Mount wasted large amounts of money in long and expensive litigation because of his overly litigious nature and lack of judgment, that he had a bad reputation in the marketplace.
[40] Mr Tucker and Mr Tripp allege that Mr Perdikaris engaged in intimidatory conduct to achieve certain purposes, such as convincing others to appoint Mr Perdikaris as a director of Dover and convincing other directors to remove themselves from a particular meeting of the Board.
[41] In the heat of battle, and at around the time Mr Mount’s engagement was ending, one director sent an email to the other directors referring to one as a “thief and extortionist who has given up working for a living and is suckeling on the dcm titty”, another as “a deceitful little liar who has been fraudulent and has engaged in misappropriation”, and another as “the puppeteer and off coarse (sic) a corporate stand over man”.
[42] From all of the evidence of this kind I am able to find that Mr Mount had significant responsibility and discretion as the CEO during his brief but tumultuous tenure with Dover.
The law
[43] The FW Act imports the common law understanding of employment (per s.335 of the FW Act). 4
[44] The common law has traditionally distinguished between contracts of service (employees) and contracts of service (independent contractors). Though there may be an infinite variety of relationships in commercial situations5, courts and tribunals generally categorise contracts whereby work is performed into either contracts of service or contracts for service. As the High Court observed - the two central conceptions are “now too deeply rooted to be pulled out”.6
[45] Justice Buchanan in ACE Insurance Limited v Trifunovski 7 described contracts of employment as follows:
“Contracts of employment (contracts of service traditionally so-called) are contracts for personal service. Benefits and obligations of contracts of individual service of this kind are not unilaterally assignable by either party. The requirement for personal service has the effect that a contract which truly permits discharge in another fashion or by another person, is not a contract of employment. Thus, contracts with corporations, contracts with partnerships, contracts permitting unlimited delegation and contracts which do not actually compel the performance of work but pay only on results, are each prima facie not contracts of the necessary quality (although the last category is more contestable than the first three).”
[footnotes omitted]
[46] The task in distinguishing between contracts for and of services has been described as finding the "overall picture from the accumulated detail” avoiding a "mechanical approach”.8 A court or tribunal is to examine the various indicia pointing one way and the other and, in coming to a conclusion, stand back and examine the overall effect of the detailed facts found.9
[47] Contracts must be viewed as a "practical matter"10, and the reality of the relationship must be examined because to do otherwise might put workers who are in truth employees beyond the reach of the protective labour law system.11
[48] There is no single applicable test to determine whether a particular relationship is one of employment or contractor. Justice Perram’s non-exhaustive list in ACE Insurance 12 illustrates the range of matters a court might consider in this process:
“With that in mind one can at least say this: first, the distinction between an employee and an independent contractor is ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own’ (Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at 39 [40] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ citing Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210 at 217 per Windeyer J); secondly, the answers to that question are to be determined by reference to the ‘totality’ of the relationship (Hollis at 33 [24]); thirdly, a number of indicia have accreted over time in the authorities which are thought to throw light to varying degrees on the outcome without being determinative: the terms of the contract; the intention of the parties; whether tax is deducted; whether sub-contracting is permitted; whether uniforms are worn; whether tools are supplied; whether holidays permitted; the extent of control of, or the right to control, the putative employee whether actual or de jure; whether wages are paid or instead whether there exists a commission structure; what is disclosed in the tax returns; whether one party ‘represents’ the other; for the benefit of whom does the goodwill in the business inure; how ‘business-like’ is the alleged business of the putative employee – are there systems, manuals and invoices; and so on – the list is neither exhaustive nor short: see Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 24 per Mason J and 36-37 per Wilson and Dawson JJ; for application see Hollis at 42-45 [48]-[57] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ; Sweeney at 172-173 [30]-[33] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ.”
Mr Mount’s Submissions
[49] Mr Mount submitted that:
“… it is hard to conceive of a situation where a chief executive officer (CEO) of a company engaged on a full-time basis is not an employee: Anderson v James Sutherland (Peterhead) Ltd [1941] SC 203 per Lord Normand at 218; Lincoln Mills (Aust) Ltd v Gough [1964] VR 193 at 198.”
[50] Mr Mount submitted that the email of 18 March 2021 was a finding employment contract, and that even though no subsequent formal contract was put in place the essence of the contract was captured in Mr Mount’s email.
[51] Mr Mount submitted that the reference to “employment agreement or service agreement (TBA)” was equivocation in labelling the relationship, but that the substance of the relationship is determinative rather than the label attached by the parties.
[52] Mr Mount says that the nature of the work performed was consistent with what one might expect of a CEO of a small mining company. Placing this analysis through the prism of the High Court’s decision in WorkPac Pty Ltd v Rossato [2021] HCA 23, I must determine the character of the legal relationship by reference to the legal rights and obligations which constitute that relationship (at [57]), and the responsibilities and obligations contractually conferred on Mr Mount were consistent with the responsibilities and obligations ordinarily conferred on a CEO in such a business.
[53] Mr Mount says the Board maintained the right to determine the manner in which work was performed and therefore retained control over Mr Mount’s work as an employer would over an employee.
[54] Mr Mount made references, of varying force, to other factors that were indicative of an employment relationship, including:
(i) Mr Mount did not work for any other business during his time with Dover;
(ii) Mr Mount had no capacity to sub-subcontract work;
(iii) Mr Mount work at Dover’s offices and at home;
(iv) Mr Mount was projected to the world at large as the CEO of Dover rather than working in his own business;
(v) Mr Mount wore clothing supplied by Dover, being one (1) cap with a corporate logo;
(vi) Mr Mount was not required to supply any tools of trade and was reimbursed its expenses; and
(vii) Mr Mount’s efforts were intended to generate goodwill for Dover rather than Mr Mount’s own business.
[55] Mr Mount’s submission about the tax invoice he provided to Dover was as follows:
“It is anticipated that Dover Castle will rely on the invoice rendered by Ryan Mount on 31 March 2021 as evidence of a contract for services. Such an invoice is suggestive by not determinative of such a relationship. The whole of the relationship needs to be examined. The transmission of such an invoice does not change the fundamental nature of the relationship which was a relationship between the Board and Ryan Mount as CEO. Further, the invoice is not from a separate legal person. It does not interpose a company between the parties. Against the weight of the evidence that indicates an employment relationship, the invoice falls away.”
The Respondents’ Submissions
[56] The Respondents say that the relationship commenced on 18 March 2021 but that there was no evidence of an objective meeting of minds as to the characterisation of the relationship.
[57] The Respondents say that even though a number of the indicia are more likely to be regarded as pointing towards employment, when looking at the totality of the relationship one must find that it was an independent contractor relationship rather than an employment relationship.
[58] Unsurprisingly the Respondents rely heavily on the fact that Mr Mount instructed Ms Butler to pay him as an independent contractor, and that when Mr Mount was squarely asked by Ms Butler whether he regarded himself as an employee, Mr Mount’s answer was equivocal.
Consideration
[59] I have, as the authorities tell me I must, stood back and examined the overall effect of the detailed facts before me and made an assessment of the practical reality of the relationship. Having done so I am satisfied that the relationship between Mr Mount and Dover was an employment relationship.
[60] Most indicia in this matter point towards an employment relationship. In fact only two matters point against an employment and one of those is not a matter that I should properly take into account - being the fact that Mr Mount issued an invoice and was paid as a contractor (see below).
[61] In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [40] the High Court noted:
“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.” (Citation omitted)
[62] All of the relevant representations made by each party in the process of reaching a binding agreement were either oral (but recorded and transcribed) or by email. In considering the pre-contractual representations made by each party, all but one representation would have led a reasonable person in the position of the other party to believe that the relationship between Mr Mount and Dover was to be an employment relationship.
[63] The prominent representations at the Board meeting on 17 March 2021, each of which can be understood in context in the portions of the transcript reproduced above, were:
1) Mr Perdikaris’ question “Well, hang on a minute, if you're the guy that, once you see the data, says you know what, "I'm on", what does that package look like?”
2) Mr Mount’s answer “20k month, 1000 bucks a day, I'll do it for 12 months, I'll be acting CEO”
3) Mr Stewart’s indication “So we're saying Ryan, you know in principle we're comfortable with that?”
4) Mr Stewart’s statement “We also now need to consider Ryan's employment agreement … So let's touch on that in a week or so.”
[64] The reference to “Ryan’s employment agreement”, made in the same meeting where the directors discussed the “conversion” of contractual arrangements of other independent contractors to employment, would have been reasonably understood by Mr Mount to refer to an intention to engage him as an employee rather than in independent contractor.
[65] Mr Mount’s email of 18 March 2021 lists a number of proposed conditions, all of which were acceptable to Dover through its directors. Of the terms proposed by Mr Mount:
a) Almost all were consistent with an employment contract, particularly the words “all usual employment conditions - e.g. workers comp/insurance, sick, annual leave”;
b) None were inconsistent with the possibility that the parties would make an employment agreement;
c) Some were inconsistent with an independent contractor arrangement; and
d) Only one was explicitly consistent with the possibility of an independent contractor arrangement – being the indefinite reference to a “service agreement” as an option.
[66] Mr Perdikaris’ email and Mr Stewart’s email about drafting an “employment agreement” for Mr Mount were consistent with the representations made at the meeting and, even though the contract began a few days before each email was sent, the emails would have been objectively understood as confirming the existence of an employment arrangements, the precise terms of which were to be reduced to writing “in a week or so”.
[67] Mr Mount submitted that the very fact that the contract made between parties was that he would be the CEO is indicative of an employment relationship because of the duties and responsibilities of a CEO.
[68] However the two authorities relied on by Mr Mount 13 appear to address a slightly different question. In each case a director of a company was also appointed as Managing Director. The respective courts each found that the Managing Director’s tenure was pursuant to a contract of employment and could not be severed in the same way as a director. In both cases the legal status of the Managing Director as an employee was measured against the legal status of a director, rather than measured against an independent contractor. The following words of Lord Gilmour in Anderson v James Sutherland (Peterhead) Ltd, cited in Lincoln Mills (Aust) Ltd v Gough, must be understood in its context:
“… And as managing director he is a party to a contract with the company and this contract is a contract of employment; more specifically I am of opinion that it is a contract of service and not a contract for services. There is nothing anomalous in this; indeed it is a commonplace of law that the same individual may have two or more capacities, each including special rights and duties in relation to the same thing or matter or in relation to the same persons”.
[69] I accept the proposition that in the ordinary course of business a CEO carries significant duties and responsibilities, and more specifically carries significant obligations to advance the business of the company. I also accept that these obligations are consistent with a CEO working in the business of the company rather than in his or her own business. I don’t accept that only an employee can be appointed as the CEO. It is not uncommon, particularly in grouped companies, for a CEO to be an officer or employee of a different company.
[70] Mr Mount was obviously answerable to the Board as the CEO. Mr Mount submitted that this indicated that Dover controlled the work of Mr Mount.
[71] The commonly applied ‘control test’ is expressed as follows: can the person said to be the employer direct the person claimed to be a worker not only as to what the worker does but also as to how he or she does it? 14. The test was inextricably linked to notions of vicarious liability. Vicarious liability in turn derived originally from mediaeval notions of headship of a household, including wives and servants; their status in law was absorbed into that of the master.15.
[72] Over time the test has been significantly refined, most notably:
i) In Zuijs v Wirth Brothers Pty Ltd 16, a matter involving circus acrobats, the High Court recognised that duties to be performed may depend so much on special skill or knowledge that there is little room for direction or command. The High Court found that the proper consideration is the existence of a lawful authority to command the worker so far as there is scope for it; and
ii) In Stephens v Brodribb 17 the High Court observed that the control test was more suited to the social conditions of earlier times where supervision was much closer, and that in a modern post-industrial society, technological developments have meant workers often exercises a degree of skill and expertise that cannot be readily controlled. The Court observed that the common law has adapted by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, "so far as there is scope for it" (applying Zuijs v Wirth Brothers).
[73] In present times employers are regarded to have control over their employees in directing them how to perform work on behalf of and in the shoes of the employer and are vicariously liable for the employee’s conduct. By contrast independent contractors walk in their own shoes and are liable to third parties for their conduct.
[74] A principal might exercise some limited control over an independent contractor. In Hollis v Vabu the High Court referred to the New Zealand case of TNT Worldwide Express (NZ) Ltd v Cunningham 18 where the relevant relationship was found to be a contract for services despite some level of control by the principal. The control was said to be “only that degree of control and supervision necessary for the efficient and profitable conduct of the business he was running on his own account as an independent contractor”.
[75] It is also worth noting the observation of McHugh J in Hollis v Vabu Pty Ltd19 that the right to supervise or direct the performance of a task cannot transform into a contract of service what is in substance an independent contract.
[76] In Roy Morgan Research Pty Ltd v Commissioner of Taxation 20the Full Court of the Federal Court seem to accept the earlier finding that although Roy Morgan did not have control over the work of an interviewer while a respondent was being interviewed, it could exercise "ultimate control" over the interviewer’s work by declining to offer any further work after it had monitored the returned questionnaires.
[77] Similarly the Full Court found that Roy Morgan exercised relevant control by controlling the crucial steps in the work with precision. 21
[78] Mr Mount exercised a degree of skill and expertise as Dover’s CEO that could not comfortably be controlled. To the extent that the Board exercised control over Mr Mount, it exercised that control of Mr Mount’s work as he stood in the shoes of the company (compared to running his own business). On balance this aspect of the relationship is indicative of an employment relationship.
[79] I accept Mr Mount’s submission that the other orthodox indicia point towards an employment relationship, viz:
(i) Mr Mount did not work for any other business during his time with Dover;
(i) Mr Mount had no capacity to sub-subcontract work;
(ii) Mr Mount work at Dover’s offices and at home;
(iii) Mr Mount was projected to the world at large as the CEO of Dover rather than working in his own business;
(iv) Mr Mount was not required to supply any tools of trade and was reimbursed its expenses; and
(v) Mr Mount’s efforts were intended to generate goodwill for Dover rather than Mr Mount’s own business.
[80] Only two matters point against an employment relationship: the words “$20k / month via either employment agreement or service agreement (TBA)” used by Mr Mount in his email on 18 March 2021 and the fact that Mr Mount instructed Ms Butler to pay him as a contractor. I shall deal with each in turn
[81] In Mr Mount’s email outlining his proposed terms of engagement on 18 March 2021 he included a reference to “either employment agreement or service agreement”. Each director replied by email affirming their agreement with Mr Mount’s proposed terms and no director expressed any preference for either an “employment agreement” or a “service agreement”.
[82] In his evidence Mr Mount referred to earlier employment contracts with different companies where, he said, “I thought I was given service agreements in my prior roles as CEO”. Whatever was Mr Mount’s subjective intention in using those words, I accept that one objectively available interpretation of the words “service agreement” is that Mr Mount was leaving open the possibility that the parties might enter into an independent contractor arrangement.
[83] On one view of this email exchange, Mr Mount offered Dover two mutually exclusive options and Dover’s response was “I agree”.
[84] The Respondents accept that a binding agreement was made, but argue that there was no “meeting of the minds as to the characterisation of the relationship” because neither option was explicitly accepted by Dover. The Respondents’ submissions are incompatible with the orthodox binary approach applied by courts and the tribunals: that a worker is either one or the other, but not both.
[85] Despite the words used by Mr Mount and the possible ambiguity of raising two mutually exclusive options, all other representations viewed objectively establish that a binding employment agreement was made and commenced that day.
[86] On the evidence before me, I must find that an employment contract was made between Mr Mount and Dover on 18 March 2021.
[87] The subsequent emails by Mr Perdikaris and Mr Stewart regarding arrangements for the preparation of an “employment agreement” were consistent with the parties entering into an employment relationship. I do not regard these emails as conduct during the contract, even though the emails were sent a few days after the contract commenced. I instead regard these emails as steps taken by Dover as part of the process of the making of the contract itself.
[88] Another way to view the emails by Mr Perdikaris and Mr Stewart is that the emails, in referring to preparation of a written employment agreement, negated the possibility that Dover might choose to enter into an independent contractor arrangement with Mr Mount. That is, if Mr Mount’s email is read as an invitation for Dover to choose between “employment agreement or service agreement”, the two subsequent emails can be objectively understood to indicate Dover’s choice of an employment agreement.
[89] The second event that points against an employment relationship was the exchange between Mr Mount and Ms Butler by email and WhatsApp on 31 March 2021 and the subsequent payment made on invoice to Mr Mount.
[90] If the employment contract commenced on 18 March 2021 then by 31 March 2021 the parties were two weeks into the contract. I do not regard Mr Mount’s conduct on 31 March 2021 as part of the process of the making of the contract itself. The conduct/representations on this day are not of the same character as the emails from Mr Perdikaris and Mr Stewart about drafting a contract.
[91] It is theoretically possible that the contract was varied, or more precisely that the basis upon which the parties contracted was varied, but Mr Mount seems to have given the instruction to Ms Butler without any reference to any director and there is no evidence that Ms Butler was authorised to make a new agreement on behalf of Dover.
[92] As such I am unable to find that the sending of an invoice and the instruction given to Ms Butler changed the contractual relationship between the parties.
[93] In conclusion I am satisfied that Mr Mount was an employee of Dover and was dismissed by Dover within the meaning of s.365 of the FW Act.
[94] Accordingly, I find that Mr Mount’s application under s.365 was properly made and the FWC has jurisdiction to deal with Mr Mount's application under s.368 of the FW Act.
DEPUTY PRESIDENT
Appearances:
Mr A Wilson for the Applicant instructed by Mr R Gunningham of Batch Mewing Lawyers.
Mr G Fredericks of Counsel for the Respondent instructed by Mr P Almond of Paul Almond Employment Law Pty Ltd.
Hearing details:
2021.
Sydney (By Video)
July 19, 20
August 5
Printed by authority of the Commonwealth Government Printer
<PR734497>
1 Ward v St Catherine’s School [2016] FCA 790 at [3].
2 See Brett Galloway v Milena Molina and Raymond Zhai[2021] FWCFB 5419 at [22]-[27] and the cases cited therein.
3 See Tenterfield Care Centre Limited v Mrs Madeline Wait[2018] FWCFB 3844 at [26] citing Barach v University of New South Wales[2010] FWAFB 3307; (2010) 194 IR 259 at [16], Construction, Forestry, Mining and Energy Union v Collinsville Coal Operations Pty Ltd (2014) 246 IR 21 at [84] and Construction, Forestry, Mining and Energy Union v Ron Southon Pty Ltd (2014) 261 IR 194 at [30]-[31].
4 See ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532; (2011) 215 IR 143; [2011] FCA 1204 at [24], see also WorkPac Pty Ltd v Rossato [2021] HCA 23 at [109] per Gageler J.
5 Commissioner of Pay-roll Tax v Mary Kay Cosmetics Pty Ltd [1982] VicRp 87; [1982] VR 871 cited in ACE Insurance Limited v Trifunovski (2013) 295 ALR 407, [2013] FCAFC 3 at [76].
6 Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161; (2006) 227 ALR 46; (2006) 80 ALJR 900; [2006] HCA 19 at [33].
7 ACE Insurance Limited v Trifunovski (2013) 295 ALR 407, [2013] FCAFC 3 at [25].
8 Roy Morgan Research Pty Ltd v Commissioner of Taxation (2010) 184 FCR 448[2010] FCAFC 52 at [31].
9 See Roy Morgan Research Pty Ltd v Commissioner of Taxation (2010) 184 FCR 448[2010] FCAFC 52 generally at [35].
10 See Hollis v Vabu Pty Ltd (2001) 207 CLR 21; (2001) 106 IR 80, [2001] HCA 44 at [47].
11 On Call Interpreters and Translators Agency Pty Ltd v FCT (No 3) (2011) 206 IR 252 at 289; [2011] FCA 366 at [200].
12 ACE Insurance Ltd v Trifunovski (2011) 200 FCR 532 ; (2011) 215 IR 143, [2011] FCA 1204 at [29].
13 Anderson v James Sutherland (Peterhead) Ltd [1941] SC 203 per Lord Normand at 218; Lincoln Mills (Aust) Ltd v Gough [1964] VR 193 at 198.
14 Connelly v Wells (1994) 55 IR 73 at 81 per Kirby P.
15 Hollis v Vabu Pty Ltd (2001) 207 CLR 21; (2001) 106 IR 80; [2001] HCA 44 at [33].
16 (1955) 93 CLR 561; [1955] HCA 73.
17 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 28-9; [1986] HCA 1 at [19].
18 [1993] 3 NZLR 681.
19 (2001) 207 CLR 21 at 49-50, paragraph [71] where His Honour footnotes the following passage from Queensland Stations Pty Ltd v Federal Commissioner of Taxation [1945] HCA 13; (1945) 70 CLR 539 at 552.
20 Roy Morgan Research Pty Ltd v Commissioner of Taxation (2010) 184 FCR 448,[2010] FCAFC 52 at [19].
21 Roy Morgan Research Pty Ltd v Commissioner of Taxation (2010) 184 FCR 448,[2010] FCAFC 52 at [24].
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