INDUSTRIAL LAW – employment agreement –appropriate calculation of commission – whether gross commission included clawback refunds – penalties for breach of provisions of Fair Work Act 2009 (Cth) and Workplace Relations Act 1996 (Cth) – whether multiple contraventions constituted one course of conduct under Fair Work Act 2009 (Cth), s 557 – application of totality principle
CONTRACTS – breach of contract in respect of underpayment of commission salary - whether ambiguity is required to consider contextual surrounding circumstances in construction of contract – whether the subsequent conduct of the parties could be considered in construing the terms of the employment agreement and the intention of the parties at the time the contract was formed
PRACTICE AND PROCEDURE – indemnity costs – whether Calderbank offer unreasonably refused
Hon K Lindgren, “The ambiguity of ‘ambiguity’ in the construction of contracts” (2014) 38 Australian Bar Review 153
Date of hearing:
8 August 2014
Place:
Sydney
Division:
GENERAL DIVISION
Category:
Catchwords
Number of paragraphs:
85
Counsel for the Appellant:
Mr M Pesman SC
Solicitor for…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Stratton Finance Pty Ltd v Webb [2014] FCAFC 110
Case
[2014] FCAFC 110
Decision Date
CaseChat Overview and Summary
Stratton Finance Pty Ltd v Webb is an Australian court decision involving a dispute between Mr Webb and Stratton Finance Pty Ltd over the calculation of Mr Webb's commission as a finance consultant and the applicability of penalties under the Fair Work Act 2009 (Cth) and the Workplace Relations Act 1996 (Cth). The court had to determine whether the commission calculation included clawback refunds, whether multiple contraventions constituted one course of conduct under the Fair Work Act, and if the refusal of a Calderbank offer was reasonable.
The legal issues in this case included the interpretation of the employment agreement, specifically clause 4 which outlined Mr Webb's commission. The court had to decide if there was ambiguity in the contract that would allow for the consideration of surrounding circumstances and the parties' subsequent conduct. Additionally, the court needed to determine whether multiple contraventions of the Fair Work Act constituted one course of conduct under section 557, and whether the refusal of a Calderbank offer was reasonable.
The court found that the employment agreement was clear and unambiguous, and thus, the surrounding circumstances and the parties' subsequent conduct could not be considered in interpreting the contract. The court also found that multiple contraventions of the Fair Work Act could constitute one course of conduct under section 557, and the refusal of a Calderbank offer was unreasonable. The court set aside certain orders made by the Federal Circuit Court and ordered new orders to be drafted, including an order providing for judgment on the contractual claim, penalties in accordance with the reasons for judgment, and costs in the manner discussed in the reasons for judgment. The parties were also instructed to be heard on the costs of the appeal if they did not agree on an order.
Orders
Orders of the court
1. Within 14 days the parties file a comprehensive draft set of orders in the following form and structure:
(1) The cross-appeal be allowed.
(2) The appeal be allowed in part.
(3) Order 1 made by the Federal Circuit Court on 2 April 2014 and orders 1 and 3 made by the Federal Circuit Court on 9 May 2014 be set aside, and, in lieu thereof, in addition to the subsisting declarations 1-8 made by the Federal Circuit Court on 2 April 2014, and in addition to order 2 made by the Federal Circuit Court on 9 May 2014, it be ordered that:
(a) [an order providing for judgment on the contractual claim]
(b) [an order providing for penalties in accordance with these reasons]
(c) [an order providing for costs in the manner discussed in the reasons for judgment]
(d) [an order providing for the costs of the appeal]
2. Proceedings be set down on a date to be fixed in consultation with the Associate of the Chief Justice for the making of orders.
3. The parties should be heard on the costs of the appeal if they do not agree on an order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
ALLSOP CJ, SIOPIS J
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Established by:
ALLSOP CJ, SIOPIS J
Mr Webb was employed by Stratton as a finance consultant in the Brisbane office of its finance broking business. Mr Webb was involved in arranging “auto finance” for customers. He was employed under an agreement dated 10 May 2006 entitled “employment agreement” on the front page of which he was referred to as the “employee”. His position was described as a “Finance Consultant”. The contract identified the person to whom he reported. It also identified his “place of employment” as the “Queensland Branch” at a business address. The “hours of work” were regulated by cl 2 of the agreement and were stated to be 8.30 am to 5.30 pm Monday to Friday. Remuneration was set under cl 4 which was in the following terms:Remuneration PackageAn agreed amount 40% gross commission on all deals settled by the Contractor, to be paid by way of gross amount of $650.00 per week less income tax and balance of agreed amount payable monthly after reconciliation, less any applicable income tax. If a shortfall occurs next month’s commission will be adjusted accordingly.Any agreed change to the Contractor’s remuneration package (or to components thereof) will be fully documented and signed by Stratton Finance and the Contractor, and such document will be deemed to form part of this agreement, and thereby supersede this agreement to the extent of any inconsistency. The first part of the appeal and the cross-appeal concern the proper construction of this clause. Clause 5 described this remuneration as “salary”, and was in the following terms:Payment of SalarySalary as outlined in section 4 will be paid by direct bank deposit into an account of the Employee’s choice on a weekly basis. Balance of agreed Commission will be paid monthly upon receipt of commission statements from all financiers. Clauses 6 to 10 dealt with annual leave, long service leave, parental leave, sick leave and work cover by reference to the “Human Resources Manual” that was referred to in cl 1 of the agreement, and by reference to Stratton’s “work-cover policy”. All these provisions stated explicitly the existence of these rights. Clause 11 dealt with “Termination of Employment”. Clause 13 expressed Mr Webb as owing duties “of fidelity and confidentiality” and also contained a restraint of trade clause (cl 13(c)) couched in terms of the period after the “employment”. Clause 14 dealt with grievances or disputes in relation to the “employment”. At the conclusion of the agreement, under the heading “Declaration”, Mr Webb signed the document as the agreed “terms and conditions of employment”. Apart from the use from time to time in the agreement of the word “Contractor” to refer to Mr Webb, there was no real attempt reflected in the document to construct a relationship other than that of employment. There was no term that sought to characterise the relationship as one of independent contractor or agent. Rather, it is clear that the agreement saw Mr Webb as an employee whose salary was determined by commission in accordance with cl 4.