Steve Stefadouros v TNT Australia Pty Ltd T/A TNT Express

[2015] FWC 8017

[2015] FWC 8017

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Steve Stefadouros
v
TNT Australia Pty Ltd T/A TNT Express
(U2015/3758)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 20 NOVEMBER 2015

Application for relief from unfair dismissal.

[1] Mr Steve Stefadouros lodged an application alleging his termination by TNT Australia Pty Ltd was unfair. TNT objected to the application alleging that it had no contractual relationship with Mr Stefadouros and he was not its employee.

[2] The application was heard by the Fair Work Commission on 4 September 2015 and on 11 September 2015, after the hearing, but before a decision was issued, Mr Stefadouros discontinued his application.

[3] On 26 September 2015 TNT filed an application for costs under s.400A and s.611 of the Fair Work Act2009 (the Act).

Submissions of TNT

[4] TNT submitted that Mr Stefadouros’s application had no reasonable prospects of success as there was no contractual relationship between it and Mr Stefadouros. The contractual relationship was between Outside Logistics Pty Ltd and TNT. Mr Stefadouros was a Director of Outside Logistics. TNT submitted that Mr Stefadouros did not produce any evidence that the contract between TNT and Outside Logistics was a sham and Mr Stefadouros admitted in cross examination that he was running a business. TNT submitted that the documents produced by Mr Stefadouros also showed that he was running a business.

[5] TNT submitted that Mr Stefadouros knew from 12 March 2015 that TNT objected to his application on jurisdictional grounds. TNT submitted I could draw an inference from Mr Stefadouros’s late discontinuing of his application that he was aware that his application had no reasonable prospects of success.

[6] TNT submitted that had Mr Stefadouros complied with the notice to produce it would have been apparent that he was running a substantial business and he should have discontinued at an earlier date.

[7] TNT submitted that it filed its costs application within the 14 days provided for in s.402 of the Act.

Submissions of Stefadouros

[8] Mr Stefadouros submitted that he genuinely believed he was an employee of TNT. At the commencement of the hearing I cautioned Mr Stefadouros that he could be potentially be subjected to penalties and taxation liabilities if he were found to be an employee. Mr Stefadouros submitted that he was unaware that he could have discontinued the proceedings at that point. After the hearing Mr Stefadouros obtained further advice and discontinued prior to judgement being given. Mr Stefadouros submitted that he was an ordinary truck driver and not an expert in these matters.

[9] Mr Stefadouros submitted that it was not apparent to him that he had no reasonable prospects of success. It was submitted that he had an arguable point of law that needed a resolution. Mr Stefadouros did not distinguish between himself and Outside Logistics. It was submitted that Mr Stefadouros did not find out that TNT objected to his application on jurisdictional grounds until the conciliation conference on 26 May 2015. He did not receive TNT’s submissions outlining its arguments until 21 August 2015. Mr Stefadouros submitted that he was genuinely confused about his status. It was submitted that TNT did not give Mr Stefadouros a copy of the Owner Drivers and Forestry Contractors Act2005 information booklet and had he been given this it may have helped him understand the concept of an employee.

[10] It was submitted that Mr Stefadouros would have discontinued earlier if he had been given “proper” information about the meaning of an employee.

[11] Mr Stefadouros submitted that the notice to produce was served on 18 August 2015 and was returnable on 20 August 2015. Outside Logistics sought a variation to the order which was forwarded to the Acting Panel Head who determined that it should be dealt with by the Presiding Member. A mention was held on 2 September 2015 and a confidentiality order issued. Mr Stefadouros submitted that he was entitled to seek to have the order varied and it was not apparent to him that his application was to be decided on the basis of the documents sought in the orders. Mr Stefadouros did not consider the documents to be highly prejudicial to his case.

[12] Mr Stefadouros also challenged the basis on which TNT could claim costs as the persons representing TNT were employees of TNT.

The Legislative Framework

[13] The Commission has the discretion to award costs against a party if certain preconditions are met.

[14] Section 611 of the Fair Work Act 2009 (the Act) provides as follows:

(1) A person must bear the person’s own costs in relation to a matter before the FWC.

(2) However, the FWC may order a person (the first person) to bear some or all ofthe costs of another person in relation to an application to the FWC if:

(a) the FWC is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or

(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.

[15] Section 400A of the Act provides as follows:

(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.
(2) The FWC may make an order under subsection (1) only if the other party to the matter has applied for it in accordance with section 402.
(3) This section does not limit the FWC’s power to order costs under section 611.

Should it have been reasonably apparent to Mr Stefadouros that his claim had no reasonable prospects of success?

[16] In Baker v Salva Resources Pty Ltd 1a Full Bench summarised the approach to be taken in relation to section 611(2)(b) of the Act as follows:

“[10] The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:

● should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis, rather than a subjective test [Wodonga Rural City Council v Lewis, PR956243, at para 6]; and
● a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless [Deane v Paper Australia Pty Ltd, PR932454, at paras 7 and 8] or so lacking in merit or substance as to be not reasonably arguable. [A Smith v Barwon Regional Water Authority, [2009] AIRCFB 769 at para 48].”

[17] I accept that Mr Stefadouros was on notice since 12 March 2015 when TNT lodged its objection that TNT alleged he was not an employee of TNT. I do not accept that Mr Stefadouros only became aware of TNT’s position at the conciliation conference.

[18] I also accept that Mr Stefadouros knew that there was a contract between Outside Logistics and TNT and that he performed work pursuant to that contract.

[19] The test of whether it should have been reasonably apparent to Mr Stefadouros that his claim had no reasonable prospect of success is an objective test. That Mr Stefadouros believed he was an employee is not the test.

The following matters were not in dispute at the hearing.

[20] Mr Stefadouros submitted a CV to TNT that advised he had 20 years in transport logistics. He advised that he had experience as an owner driver. In that CV he advised that was the owner of a clean six pallet 2005 van. 2

[21] It was Mr Stefadouros evidence that he was interviewed by Mr Robert Hutchinson for work with TNT. 3 It was his evidence that he was told at this interview that TNT were “looking for owner drivers at this time.”4 Mr Stefadouros gave evidence that “he was asked to become an entity (Pty Ltd Company) in order to successful in obtaining the job offered.”5 Mr Stefadouros said he was not offered an opportunity to be engaged as a sole trader.6

[22] Mr Stefadouros exhibited an email from Mr Hutchinson sent to him after the interview. That email advised him that TNT required him to have Public Liability Insurance, Marine Cargo Insurance and Business Registration. 7 It further advised that he was required to fill in a different application form. The application forms were not in evidence before me.

[23] On 19 February 2010 Outside Logistics was incorporated and Mr Stefadouros was a Director of the company and he and his wife were equal shareholders.

[24] Payments were made by TNT to Outside Logistics but paid to Mr Stefadouros’s personal bank account. 8

[25] The rates paid by TNT to Outside Logistics were calculated based on the hours of work performed by Mr Stefadouros. There was an hourly rate for the first eight hours worked and time and half for the first two hours and double time thereafter. In addition a productivity bonus was paid. 9

[26] Mr Stefadouros worked full time hours at TNT except when he was on leave. 10

Mr Stefadouros was required to attend work at a particular time and TNT controlled the manner in which he performed work. Mr Stefadouros’s work was supervised by TNT. Mr Stefadouros was required to follow TNT’s policies and procedures. 11 Mr Stefadouros was required to sign in and sign out from work.12

[27] Mr Stefadouros advised that he did not perform work for any other company. 13 It was submitted that he had no capacity to work for anyone else and he did not subcontract any work.14

[28] Mr Stefadouros said he did not have a separate place of work nor did he advertise his services at large.

[29] The truck driven by Mr Stefadouros did not have any signage. 15

[30] TNT supplied Mr Stefadouros with stationary, gloves, sunblock and tape. 16 Mr Stefadouros was required to wear a uniform provided by TNT.17

[31] Mr Stefadouros was required to apply for leave and have any leave approved. 18 No additional monies were paid to Outside Logistics or Mr Stefadouros for any period of time Mr Stefadouros was not available to perform work.

[32] TNT did not deduct tax from monies paid to Outside Logistics nor did it pay any superannuation contributions for Mr Stefadouros.

[33] Mr Stefadouros provided a vehicle to Outside Logistics and Outside Logistics paid money for use of the truck. 19

[34] Outside Logistics taxation records disclosed that in 2010 it made a loss. In that year Mr Stefadouros was not paid any personal service income. In the financial year ending June 30, 2011 the company business expenses were 99.8% of income. When monies paid as personal services income paid to Mr Stefadouros was excluded business expenses were 77.7% of income. In 2012 business expenses were 99.8% of income (73% when personal service income is excluded). In 2013 business expenses were 100% of income (67% when personal service income is excluded).

[35] From 2012 Outside Logistics taxation returns disclosed deductions for monies paid as wages.

[36] Outside Logistics was registered for GST and completed business activity statements. Mr Stefadouros was not employed by Outside Logistics but it paid him personal services income from 2011.

[37] Outside Logistics paid workers compensation insurance in 2011, 2012 and 2013.

[38] Mr Stefadouros made workers compensation claim against TNT in 2010 and TNT’s insurer accepted liability for the claim.

[39] Mr Stefadouros declared business income as part of his personal income tax declaration in 2014. He declared his income from Outside Logistics as Managing Director and he declared business income in his own name from motor vehicle hiring. In addition, he declared other business income.

[40] Mr Stefadouros in cross examination accepted that he was conducting a business.

Matters in dispute.

[41] There was a dispute about whether Mr Stefadouros was entitled to supply other drivers if he was not available.

The factors that weigh in favour of Stefadouros being an employee are as follows:

[42] Mr Stefadouros worked under the supervision of TNT and was required to follow detailed procedures determined by TNT.

[43] There was no evidence that Mr Stefadouros maintained a separate place of work or advertised his services to the world at large.

[44] Mr Stefadouros was required to wear a uniform supplied by TNT.

[45] While Mr Stefadouros had the right to work for others but given the work provided by TNT this was not a practical reality.

[46] Mr Stefadouros did not advertise his services to the world at large.

[47] Outside Logistics was paid for work performed by Mr Stefadouros on the basis of the hours he worked. Work in addition to eight hours was paid at overtime rates.

[48] Mr Stefadouros did not create goodwill.

The factors which weigh against finding that Stefadouros was an employee are as follows:

[49] Mr Stefadouros was not offered and did not accept employment with TNT.

[50] The contract was between TNT and Outside Logistics.

[51] While Mr Stefadouros performed work under the supervision of TNT this supervision was consistent with the contract entered into between TNT and owner drivers and it was put that this control was “…essential in order that its business be efficiently operated.” 20 No submission to the contrary was made.

[52] Mr Stefadouros provided a vehicle, albeit via an arrangement with Outside Logistics for the performance of work. The cost of this was substantial.

[53] Outside Logistics had the right to subcontract the work with the agreement of TNT. However there was no obligation under the contract for the Outside Logistics to provide a particular driver.

[54] TNT did not have the right to suspend or dismiss Mr Stefadouros. It was entitled under the contract with Outside Logistics to terminate the contract.

[55] TNT did not deduct taxation from monies paid to Outside Logistics.

[56] Outside Logistics paid worker’s compensation insurance, public liability insurance and marine cargo insurance.

[57] Mr Stefadouros was not paid a wage by TNT. Outside Logistics was paid monies for work performed by Mr Stefadouros.

[58] Mr Stefadouros was not provided with paid holidays or sick leave by TNT.

[59] Whilst it was submitted that the work performed by Mr Stefadouros was not a profession, trade or distinct calling, I disagree. The work of a truck driver involves considerable skill.

[60] Outside Logistics spent the majority of the remuneration received on business expenses. Those business expenses included wages paid to another employee.

Neutral factors

[61] Mr Stefadouros relies upon the acceptance of his workers compensation claim by TNT’s insurer in 2010. I do not consider this to be determinative. No submissions were made about the obligations to make payments under the relevant workers compensation legislation. TNT submitted that the decision to pay compensation was not a decision of TNT and therefore there can be no suggestion that they accepted that they had any liability to Mr Stefadouros.

Consideration.

[62] I accept that Mr Stefadouros is not a sophisticated party. He did not have independent representation at the hearing. I accept that he did not see any material difference in the work he performed and that performed by employees of TNT.

[63] However, the test is an objective one and the question of whether a person is an employee or a contractor is a matter that turns on the facts of the case.

[64] The determination of whether a person is an employee or a contractor is not one without difficulty. The existence of a third party is not determinative. The NSW Court of Appeal in Vabu No 1 21 found that couriers engaged by Vabu Pty Ltd were not employees. The High Court in Vabu No 222 considered that case but did not overrule it when it decided that bicycle couriers engaged by Vabu Pty Ltd were employees. It distinguished its findings in part because there had not been specific evidence about bicycle couriers in the earlier case as evidence had only been called about the expenses incurred by couriers using light commercial or domestic type motor vehicles.

[65] There is no suggestion that the method of engagement, the degree of control, or method of payment or the terms of the contracts for bicycle couriers differed from that of motor vehicle or motorbike couriers. A distinguishing factual feature was that the High Court found that bicycle couriers did not incur considerable expense in providing and maintaining bicycles whereas the earlier court decisions had found that the couriers had incurred very considerable expenses in supplying and maintaining their vehicles.

[66] In this matter there were factors which weighed in favour of a finding that Mr Stefadouros was an employee and some that weighed against such a finding. That Mr Stefadouros may not have in fact been an employee does not mean that his claim that he was an employee was unarguable. I therefore am not satisfied that it should have been reasonably apparent that he had no reasonable prospect of success.

[67] S.400A of the Act empowers the Commission to award costs if there was an unreasonable act or omission by Mr Stefadouros in connection with the conduct or continuation of the matter which caused TNT to incur costs.

[68] I am unable to find that Mr Stefadouros’s response to the notice to produce was unreasonable. A notice to produce was issued on 12 August 2015. It was returnable on 20 August 2015. The notice was not received by Mr Stefadouros until 18 August 2015 and on that date Mrs Stefadouros on behalf of her husband sought additional time to comply; sought a variation to the notice and did not consent to TNT being able to inspect the documents. Further it is difficult to see how the earlier production of the documents would have caused Mr Stefadouros to discontinue the application earlier. These documents were in the possession of Mr Stefadouros. He knew or must be taken to have known what his and Outside Logistics taxation arrangements were.

[69] I do not accept that the delay impeded TNT’s preparation.

[70] I am also unable to find that Mr Stefadouros’s late filing of the notice of discontinuance was unreasonable. At the hearing of the matter I cautioned Mr Stefadouros that if he were found to be an employee he may have committed an offence under Australian Law. I explained to Mr Stefadouros that different taxation arrangements apply to companies as opposed to employees. Had Mr Stefadouros been represented he would have had the relevant advice prior to the hearing. That he was unaware of the potential implications for himself and Outside Logistics in making this claim reflected his lack of sophistication in such matters. That he subsequently discontinued his application does not mean that he accepted that he had no reasonable prospects of success.

[71] In the event that I am wrong and it should have been reasonably apparent that he had no reasonable prospect of success Mr Stefadouros submitted that TNT was not able to recover costs because Mr Moulton was not a lawyer or a paid agent.

[72] Despite seeking the opportunity to reply to those submissions TNT did not address this matter. In this matter TNT was self represented. There is no evidence that it was represented by an employed lawyer. 23 However a witness is entitled to the ordinary witness fees. 24 Item 1402 of Schedule 3.1 of the Fair Work Regulations 2009 (the Regulations) provides that a witness who is remunerated by in his occupation by wages, salary or fees is entitled to the amount lost by the attendance at the Commission. There is no evidence before the Commission that Mr Francis lost any remuneration as a result of his attendance at the Commission. Item 1402 of the Regulations, provides for the payment of travel expenses for a witness who resides more than 50 kilometres from the Commission and there is no evidence that Mr Francis resides more than 50 kilometres from the Commission and hence no monies are payable for travel expenses. I would therefore in any event have made no order for costs.

[73] The power to award costs under both s.400A and s.611 of the Act is discretionary. Even had I found, that it should have been reasonably apparent that Mr Stefadouros’s claim had no reasonable prospect of success, I would not in my discretion ordered him to pay costs. While I accept that the test is an objective test the reality of the situation cannot be overlooked. The line between an employee and independent contractor is one a lay person has difficulty understanding. Mr Stefadouros is not a sophisticated person. It was clear that he deferred to his wife and accountant in relation to his business. Mr Stefadouros did not have a company when he approached TNT for work. He established the company so that he could get the work. I accept that TNT made a legitimate business decision to not in this instance engage drivers as as employees but that does not alter the fact that from Mr Stefadouros’s perspective there was no difference in the work he would perform as an independent contractor than he would perform as an employee. I am unable to conclude that Mr Stefadouros bought this application for any reason other than he thought he was unfairly dismissed.

[74] I therefore dismiss TNT’s application for costs.

DEPUTY PRESIDENT

 1   [2011] FWAFB 4014

 2   Exhibit R1

 3   Exhibit A1 at [6]

 4   Transcript

 5   Exhibit A1 at [6]

 6   Ibid at [17]

 7   Ibid at Attachment A

 8   Ibid at [21]

 9   Exhibit R5

 10   Exhibit A1 at [24]

 11   Exhibit A1 at [20]

 12   Ibid at [27]

 13   Ibid at [21]

 14   Ibid at [21]

 15   Ibid at [22]

 16   Ibid at [23]

 17   Ibid at [26]

 18   Ibid at Attachment V

 19   Exhibit R3

 20   Australian Air Express Pty Ltd v Langford [2005] NSWCA 96 at [77]

 21   Vabu Pty Ltd v Commissioner of Taxation (1996) 33 ATR 537

 22   Hollis v Vabu Pty Ltd (2001) CLR 21

 23   Maleknia v University of Sydney[2015] FWCFB 4002 at [13]

 24  Paul Hill v L E Stewart Investments Pty Ltd[2014] FWC 5588 at [12]

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