| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : SURE AIR PTY LTD -v- SIMONDS [2002] WADC 229 CORAM : COMMISSIONER GREAVES HEARD : 25 OCTOBER, 19-23 NOVEMBER 2001 &
10 & 11 JUNE 2002 DELIVERED : 1 NOVEMBER 2002 FILE NO/S : CIV 1449 of 1997 BETWEEN : SURE AIR PTY LTD Plaintiff
AND
CRAIG CHARLES SIMONDS
Defendant
Catchwords: Contract of service or services - Deceit - Plaintiff engaged defendant as manager of business - Whether plaintiff employee or independent contractor - Whether defendant overpaid remuneration - Plaintiff reimbursed defendant for expenses - Expenses authorised at time of reimbursement - No evidence of mistake or fraud - Turns on its own facts
Legislation: Fair Trading Act 1987, s 9, s 10
(Page 2)
Result:
Plaintiff's claim dismissed
Judgment for the defendant on the counterclaim Representation:
Counsel:
Plaintiff : Mr B P Wheatley
Defendant : Mr A Atkinson
Solicitors:
Plaintiff : Murfett & Co
Defendant : Solomon Brothers
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Nil
(Page 3)
The plaintiff's claim 1 At all material times, the plaintiff carried on business as an air-conditioning contractor in which it supplied and installed air-conditioning equipment on domestic and commercial premises. Mr Kenneth Mesure was at all material times the managing director of the plaintiff. By par 3 of the amended statement of claim of 12 June 2002, the plaintiff alleges that by an oral agreement made in or about early June 1993 between Mr Mesure on behalf of the plaintiff and the defendant, it was agreed the defendant would provide services to the company. It is alleged the defendant's duties were to run, manage and control the plaintiff's air-conditioning business (par 4.1 of the amended statement of claim). It is further alleged it was expressly and orally agreed between Mr Mesure and the defendant that in consideration of the defendant performing his duties, the plaintiff would pay the defendant $35,000 per annum (par 4.2 of the amended statement of claim). 2 By par 4.4 and par 4.7 of the amended statement of claim, it is alleged: "4.4 The defendant would at all times during the term of the Agreement keep, maintain and preserve for the Company's business and benefit, sufficient written substantiation and documentary evidence of all expenses incurred by the defendant on the Company's behalf ('the Documents'), to enable the Company to: (a) Verify the recipient, amount, purpose and consideration (if any) in respect of each such expense; (b) Verify that such expenses were incurred by the defendant for the Company's business and benefit; and (c) Claim, so far as was permissible by law, a part or whole reimbursement of such expenses from the Commonwealth Government under the Export Market Development Grant Act 1974. …
(Page 4)
4.7 From about 14 March 1994 the defendant was paid an agreed sum of $1,624.00 or thereabouts per fortnight which included superannuation of approximately $100.18 per month (being 3% of $40,071.99 per annum) with income tax to be deducted at the PPS rate of 20%." 3 It is then alleged in par 5 of the amended statement of claim that in early February 1995 the defendant and Mr Mesure on behalf of the plaintiff terminated the agreement by mutual agreement. 4 The defendant denies the terms of the agreement between the parties and alleges in par 3 of the re-amended (substituted) defence: "3.1 By an agreement dated on or about 1 June 1993 between the plaintiff and the defendant ('the Consultancy Agreement') the defendant agreed to act as sales consultant for the plaintiff. 3.2 The Consultancy Agreement was oral and was entered into between Kenneth Frederick Mesure ('Mesure') on behalf of the plaintiff, and the defendant. 3.3 There were terms of the Consultancy Agreement, inter alia, that the plaintiff would pay the defendant the sum of $35,000 per annum plus vehicle expenses and vehicle finance repayments and telephone expenses. 3.4 The Consultancy Agreement commenced on or about 1 June 1993 and terminated on or about 1 July 1994. 4.1 By agreement dated on or about 1 July 1994 between the plaintiff and the defendant ('the Employment Agreement') the plaintiff agreed to employ the defendant as the plaintiff's manager. 4.2 The Employment Agreement was oral and was entered into by Mesure on behalf of the plaintiff and the defendant. 4.3 There were terms of the Employment Agreement, inter alia, that the plaintiff would pay to the defendant $52,000 per annum plus vehicle finance repayments.
(Page 5)
4.4 The Employment agreement commenced on or about 1 July 1994 and terminated on or about 28 February 1995." 5 By pars 6 to 8 of the amended statement of claim, the plaintiff then alleges that pursuant to the terms of the agreement as alleged by the plaintiff in the amended statement of claim, the defendant was entitled in total to receive the sum of $66,923.20 during the term of the agreement. The plaintiff alleges the defendant received $110,750.99 and was therefore overpaid $43,827.79. The alleged overpayments in issue are those contained in Scott Schedule "A". The plaintiff claims the sum of $43,827.79 under this head. 6 By pars 9 to 13 of the amended statement of claim, the plaintiff further alleges the defendant deceitfully requested Mr Mesure on behalf of the plaintiff to reimburse him for certain business expenses which are quantified in the sum of $53,398.75. The amounts claimed under this head are the subject of Scott Schedules B and C. 7 By pars 16 and 17 of the amended statement of claim, the plaintiff further alleges that the defendant has retained certain goods of the plaintiff, the subject of Scott Schedule "D". 8 By pars 18 to 25 of the amended statement of claim it is alleged: "18. Further or alternatively during the period between 9 September 1993 and 13 December 1994, the plaintiff incurred the following expenses, which the defendant in or about February or March 1995 orally advised the plaintiff to be loans to or for the benefit of the defendant.
PARTICULARS
Date | Cheque No. | Payee | Amount | 9/9/93 | 180 | Air Purification Systems | $3,000.00 | 26/11/93 | 297 | Bourne Griffiths | $551.40 | 26/11/93 | 298 | Solomon
Brothers | $1,283.95 | 17/3/94 | 445 | Air Purification Systems | $1,650.00 | 13/12/94 | 771 | Bourne Griffiths | $1,300.00 | TOTAL | $7,785.35 |
(Page 6)
19. Prior to the defendant's advice referred to in 18 above Mr Mesure, the managing director of the plaintiff and the plaintiff had no knowledge of such loans as they were not recorded by the defendant in the plaintiffs accounts as loans and were shown as business expenses of the plaintiff. 20. On 30 March 1995 the defendant paid the plaintiff the sum of $4,000.00. 21. In the event that such payments were loans, the plaintiff is entitled to be repaid the said sum of $3,785.35. 22. By letter dated 11 April 1995 the defendant's solicitors advised the plaintiff that the defendant was indebted to the plaintiff in the sum of $13,600.00 for loans to pay the defendant's liabilities when he joined the plaintiff and offered to pay the sum of $13,600.00 by two instalments of $8,600.00 within 14 days thereof and $5,000.00 to be paid on or before 30 July 1995. 23. Thereafter the defendant paid the plaintiff the sum of $5,000.00 on 8 May 1995. 24. To date, the defendant has failed or refused to repay to the plaintiff the sum of $8,600.00 or any such sum at all. 25. To date the defendant has failed or refused to repay to the plaintiff the sum of $12,385.35 being the total of the amounts referred to in paragraphs 21 and 24 above or any sum at all." 9 By pars 28 to 29 of the amended statement of claim, the plaintiff alleges the defendant incurred unauthorised expenses not for the benefit of the plaintiff. It is alleged that the defendant thereby acted deceitfully and engaged in conduct which was misleading, contrary to s 9 of the Fair Trading Act. 10 By pars 32 to 35 of the amended statement of claim, the plaintiff alleges: "32. Further and alternatively to the matters pleaded in paragraphs 9 to 31, above, the defendant was at all times during the Term:
(Page 7)
33. By reason of the matters pleaded in paragraph 32 above the defendant was at all material times a director of the Company and as a director the defendant owed duties to the Company, amongst other things, as follows: 33.1 A duty to act in good faith and in the best interests of the Company. 33.2 A duty to act honestly in the exercise of his powers and the discharge of the duties of his office as director. 33.3 A duty to exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the Company's circumstances. 33.4 A duty not to make improper use of his position as an officer or employee of the Company to gain directly or indirectly an advantage for himself or for any other person or to cause detriment to the Company.
PARTICULARS
The duty in paragraph 33.1 above is implied by common law. The duties in paragraphs 33.2, 33.3 and 33.4 above are implied by sections 232(2), (4) and (6) of the Corporations Law, respectively. 34. In breach of the duties pleaded in paragraphs 4.6 and 33 above, the defendant: 34.1 Failed in the course of discharging his duties to the Company at all times to act honestly and in the best interests of the Company.
(Page 8)
34.2 Failed to act in good faith or in the best interests of the Company. 34.3 Failed to act honestly in the exercise of his powers and the discharge of the duties of his office as director. 34.4 Failed to exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the Company's circumstances. 34.5 Made improper use of his position as a director or a person in a like position in the Company to gain directly or indirectly an advantage for himself and others and to cause detriment to the Company. By reason of: The company has suffered loss and damage. 35. By reason of each of the breaches of duty pleaded in paragraph 34 above, the Company has suffered loss and damage."
The defence 11 The defendant denies the allegations in pars 6 to 8 of the amended statement of claim and alleges by par 11 of the re-amended (substituted) defence that he received from the plaintiff $97,710.45 between 1 June 1993 and 28 February 1995 as follows:
(Page 9)
Net wages $56,529.63 Tax $19,706.24 Vehicle expenses and finance repayments $16,968.32 Phone allowance $2,105.00 Superannuation $1,929.13 Insurance $472.13 Total $97,710.45 12 Accordingly, the defendant denies he was overpaid the sum of $43,827.97 as alleged. The defendant further denies by par 13 of the re-amended (substituted) defence that he is liable to repay to the plaintiff the sums itemised in Scott Schedules "B" and "C". At par 13 of the re-amended (substituted) defence, the defendant pleads: "13. The defendant denies paragraphs 9 and 10 of the statement of claim and further says that the payments set out in Schedule 'B' to the statement of claim: 13.1 business or business related purchases and/or expenses of the plaintiff which the defendant paid and in respect to which the plaintiff agreed to reimburse and in fact reimbursed the defendant; and/or 13.2 purchases and/or expenses of the plaintiff or its director, Mesure, paid by the defendant at the request and direction of the plaintiff and in respect to which the plaintiff agreed to reimburse and in fact reimbursed the defendant; and/or 13.3 purchases and/or expenses of the defendant which the plaintiff agreed to pay; 13.4 cheques cashed by the defendant at the plaintiff's request, cash proceeds of which were given to the plaintiff; 13.5 purchases and/or expenses of the defendant which the plaintiff paid but which the parties agreed were required to be repaid by the defendant to the plaintiff;
(Page 10)
13.6 loans advanced by the plaintiff to the defendant. further particulars of which are set out in Schedule 'B" annexed hereto." 13 By par 16 of the re-amended (substituted) defence, the defendant denies that he has retained the goods the property of the plaintiff as alleged. By par 17 of the re-amended (substituted) defence, the defendant alleges the plaintiff lent him or his company the sum of $15,761.93 between 9 September 1993 and 13 December 1994, of which it is alleged the defendant has repaid to the plaintiff the sum of $9,000. 14 By pars 14 and 23 of the re-amended (substituted) defence, the defendant denies that he engaged in conduct that was deceitful or misleading and deceptive, denies that his conduct was "in trade or commerce" within the meaning of s 10 of the Fair Trading Act and alleges the plaintiff's claim is in part statute barred. 15 By par 24 of the re-amended (substituted) defence, the defendant denies that he occupied or acted in the position of a director of the plaintiff. 16 By its amended reply and defence to counterclaim, the plaintiff denies pars 3 and 4 of the re-amended (substituted) defence and alleges in par 1.1 that the defendant was never engaged by the plaintiff as an employee but was at all times engaged as the manager or controller of the plaintiff without being subject to direction in the performance of his duties by Mr Mesure. The plaintiff further alleges in par 1.2 of the amended reply that it was a condition of the defendant's engagement by the plaintiff that he would be an equal shareholder in the plaintiff with Mr Mesure and that he would pay Mr Mesure the sum of $10,000 for such shareholding. In par 1.8 of the amended reply the plaintiff alleges the defendant was not entitled to a fixed payment for vehicle expenses, vehicle finance repayments or telephone expenses as part of his fortnightly payments from the plaintiff. Otherwise by its reply, the plaintiff joins issue with the defendant about whether the defendant was entitled to the payments received and goods retained as pleaded and set out in the Scott Schedules.
The evidence for the plaintiff 17 I turn, therefore, to examine the evidence of Mr Kenneth Mesure in support of the plaintiff's claim that in June 1993 the plaintiff engaged the defendant to provide services to the plaintiff as alleged in pars 3 and 4 of
(Page 11)
the statement of claim and par 1.1 of the amended reply and defence to counterclaim and denied by par 3 of the re-amended (substituted) defence. 18 The evidence of Mr Mesure is contained in Exhibit 1 and begins at p 417 of the transcript. His evidence in Exhibit 1 was the subject of submissions in relation to relevance and admissibility. At par 17 of Exhibit 1 Mr Mesure states: "17. In or about June 1993 I agreed with the Defendant that: 17.1 He would run, manage and control the Plaintiffs' air-conditioning equipment sales business. In view of the number of entities I was involved with I was unable to personally supervise all matters including the Plaintiff's business. However monthly meetings were held where managers reported directly to me with their financial statements as referred to in 17.2 below. 17.2 At his request he would purchase a half interest in the Plaintiff company for the sum of $10,000.00. The defendant described himself as a shareholder of the Plaintiff in a letter dated 31 July 1993 to Ductline Fans. A copy of the Sure Group Managers Meeting Minutes for June is contained in the book of documents. This amount was never paid due to the defendant's lack of funds. 17.3 Commencing July 1993 the defendant would be paid at a rate of $673.08 per week or $1,346.16 per fortnight (ie $35,000.00 p.a.). Superannuation would be deducted at the rate of 3% ie $40.38 to give a gross amount of $1,305.78 per fortnight less PPS tax of 20% ie $261.16 to give a net figure of $1,044.62 per fortnight. These payments are set out in paragraph 24.1 below. This was the usual payment for managers associated with the Plaintiff. 17.4 I would continue to sign cheques for the Plaintiff as the defendant refused to be a signatory to the Plaintiff's cheque account because he told me that was how he got into problems and the legal dispute with his former business associate Peter Mahoney."
(Page 12)
19 There was no issue between the parties that on 14 March 1994 they signed the document at p 135 of Exhibit 13 which reads:
20 It was common ground between the parties that the defendant did not pay the sum of $10,000 to the plaintiff. The minutes referred to in par 17.2 are contained in Exhibit 13 at p 24. They suggest the plaintiff and defendant were present at the meeting held on 16 July 1993. They contain the statement "Craig Simonds has bought 50 per cent of Sure Air." At par 20 et seq of Exhibit 1, Mr Mesure continues: "20. The defendant subsequently described himself as a director and managing director of the Plaintiff however his directorship was not registered because of the problems he had with his former business associate Peter Mahoney. A copy of a fax dated 9/9/93 and advertising contract dated 7 July 1994 are contained in the book of documents. 21. The defendant was solely responsible for the operation and structure of the Plaintiff's business. By way of example I refer to a memorandum from the defendant to me dated 5/9/94. He also completed cheques for the payment of his entitlements and business expenses of the Plaintiff and submitted them to me for signature. I signed the cheques as submitted to me by the defendant as I considered the defendant to be a part owner of the Plaintiff's business who I trusted and at that time considered to be honest. 22. The defendant also prepared computer generated accounts for internal use by the Plaintiff. Copies of these accounts are contained in the book of documents.
(Page 13)
21 Mr Mesure gave evidence before me that the practice of the defendant was to prepare cheques for Mr Mesure to sign. He said that if it was expected Mr Mesure would be absent, he signed blank cheques. (T428) 22 Counsel for the defendant cross-examined Mr Mesure about his evidence at par 27 et seq of Exhibit 1 which reads: "27. On or about 11 October 1993 the defendant told me he needed $5,000.00. 28. He told me the Plaintiff had the money to make the payment and showed me computer print-outs that he had prepared of the Plaintiff's accounts showing that it had sufficient funds. 29. I agreed to make the payment provided I also received the same payment as the other half owner of the Plaintiff with such payment to be made to my wife Anne Mesure. 30. In view of the above I signed cheque number 201 to the defendant for $4,785.00 and cheque number 202 to my wife Anne Mesure for $4,000.00." 23 Counsel put to Mr Mesure the proposition that the plaintiff lent the defendant the sum of $4,785, which Mr Mesure denied. Counsel then asked Mr Mesure whether that payment was a gift and he replied (T474): "No, he was a 50 per cent partner of the company and he said he wanted some money and I said, 'you can have some money as long as I have the same.' It wasn't a loan, it was part of his remuneration as a partner of this company." 24 Mr Mesure said the defendant was "an owner of the company". Mr Mesure agreed with the proposition that the payment of $4,785 to the defendant was "like a distribution of profit". Counsel asked Mr Mesure if he treated it as a dividend and he replied (T476):
(Page 14)
"I treated it as a dividend to be reconciled at the end of the financial year ..." 25 Mr Mesure stated that he and the defendant agreed the defendant should be paid a gross salary of $35,000 per annum (T477). Counsel then referred to Scott Schedule "A", items 1 to 8. Mr Mesure said each of these sums was a loan to the defendant. He explained (T478): "It was just a continuation as part of the cheque signing process. I didn't rock the boat because I thought that there was a lot more to be gained." 26 Mr Mesure acknowledged (T486) the defendant claims that he agreed with Mr Mesure that he would be paid for his car and mobile phone. Mr Mesure said he "totally" disagreed with that claim. He accepted (T487) that he offered the defendant "$35,000 plus a company car plus a phone." 27 Counsel for the defendant suggested to Mr Mesure that item 2 in Scott Schedule "A" in the sum of $1,566.92 did not represent "wages overpaid" as alleged, or a loan as alleged but was payment of wages for three weeks from 1 May 1993. Mr Mesure accepted he did not know whether that was so. In relation to item 9 of Scott Schedule "A", at T494 et seq, counsel took Mr Mesure through the relevant documents, and Mr Mesure said he could not accept that no overpayment occurred as alleged, again because he did not know. In relation to item 10 of Scott Schedule "A", Mr Mesure stated (T497): "I have no idea what it's for. He was just overpaid. The cheque was presented to me and I paid the cheque." 28 Mr Mesure accepted he signed the cheque in the sum of $1,546.16, $501.54 more than Mr Mesure said the defendant was entitled to. He explained (T499): "I signed Mr Simonds' cheques as they were presented to me without checking. As foolish as it sounds today that's what I did, and I would do it today as I would do it with my other businesses, as one would do it with their wife. I just completely trusted him and if he presented me with a cheque for that then I thought it was for some expense or something he'd purchased. That was for the benefit of the company."
(Page 15)
29 Mr Mesure stated he believed Mr Simonds tricked him "big time" (T499). In relation to items 10 to 41 in Scott Schedule "A", except items 19 and 26, Mr Mesure said "he did not ask, for every cheque, what it was for" (T501). He said "on the odd occasion" (T501) he examined a cheque when he signed it, he "obviously" saw that the particular cheque was made out for more than the defendant's salary (T572). He said there was "a number of cheques" in that category. He said the defendant could have the money in excess of his remuneration, "but not as a remuneration" (T504).
30 Counsel cross-examined Mr Mesure about Exhibit 3. Mr Mesure said Exhibit 3 was prepared by an officer of the plaintiff upon information provided by the defendant. He acknowledged Exhibit 3 shows the defendant was paid $1,566.92 on 18 June 1993, the subject of item 2 of Scott Schedule "A". He added "did he do three weeks, is another matter" (T508). He agreed Exhibit 3 contains notations of payments for phone and car. He agreed Exhibit 3 records a payment of $6,000, which appeared to include four weeks' annual leave. Mr Mesure said the defendant was not entitled to annual leave (T510). 31 Mr Mesure accepted that from March 1994, he and the defendant agreed to increase the defendant's remuneration to $1,624 per fortnight. He was cross-examined about items 22 to 25 and 27 to 42 of Scott Schedule "A". The evidence of Mr Mesure was that he believed the cheques he signed in relation to these items were for the correct amount. Mr Mesure agreed that he made no mistake when he signed each cheque for $1,600 in respect of each item in Scott Schedule "A". He said he agreed with the defendant he should be paid $1,600 gross per fortnight. 32 In relation to the month of September 1993, Mr Mesure was shown document 50 in Exhibit 13 which records payments for "wages, phone, car". He said he could have read the document (T517). He continued (T518): "Mr Simonds was paid his wages, Mr Simonds was paid for some car which I've agreed to, the loan at the beginning, and Mr Simonds had some phone bills worth $200 I agreed to. ... I knew Mr Simonds took some money as a loan for the car. I've agreed to that. It went on longer than it should have done but I do not agree that it was part his remuneration." 33 Counsel for the defendant referred Mr Mesure to par 17 of Exhibit 4, being the amended statement of claim of 9 September 1997 which reads:
(Page 16)
"17. Pursuant to a loan agreement made between Mr Mesure on behalf of the Company and the defendant on about 9 September 1993 the plaintiff loaned to the defendant the sum of $3,000.00 ('the First Loan').
PARTICULARS
The agreement for the First Loan ('the First Loan Agreement') was oral and was constituted by discussions between the defendant and the plaintiff at the plaintiff's premises on or about 9 September 1993." 34 Counsel asked Mr Mesure to compare par 108.1 of Exhibit 1 which reads: "108.1 Cheque number 180 dated 9/9/93 for $3,000.00. The cheque butt originally read 'consultancy'. The word 'loan' has been written underneath in different ink. I did not agree to loan this sum to the defendant. I signed the cheque in the belief that it was a business expense of the Plaintiff." 35 Mr Mesure was unable to explain the discrepancy between the former pleading and his evidence. (T525) 36 In further cross-examination about the payment of car and telephone expenses to the defendant, Mr Mesure said he did not agree to pay the defendant's car and phone expenses (T527). He continued: "I knew he was getting a phone – some phone expenses and I knew that he was taking the money for the car ... he received those amounts but I do not agree that they were part of his remuneration ... I knew about the car payments. I didn't know about the phone payments." 37 Mr Mesure said he did not suggest to the defendant he should give his mobile phone to a friend of Mr Mesure. He said he knew the plaintiff purchased a new mobile phone for the defendant. He said he and the defendant both received what Mr Mesure called "dividends" from the plaintiff "as a partner of a company" (T530). 38 Exhibit 14 contains the plaintiff's cash disbursements journal from November 1993 to March 1995. Mr Mesure agreed he received a copy of the journal. He agreed the journal contains detail of payments of salary,
(Page 17)
motor vehicle and telephone expenses to the defendant. He agreed the entries reflected payment of the amounts stated to the defendant. In relation to the general ledger for the period between 1 July 1994 to 30 April 1995 in Exhibit 14 at p 54, Mr Mesure agreed two entries are recorded of the payment of a "car loan – C Simonds" in the sum of $1,052. At p 546 of the transcript, counsel for the defendant then referred Mr Mesure to the plaintiff's general ledger in Exhibit 14 and drew his attention to a number of entries to or for the defendant. Mr Mesure said (T550) he had not noticed the entries for the Suzuki motor vehicle before. He said he received reports such as that at p 50 of Exhibit 13 on a monthly basis. 39 Mr Mesure then denied an agreement between him and the defendant that the plaintiff should purchase two Laser motor vehicles for their respective wives. (T555) 40 The evidence of Mr Mesure in relation to Scott Schedules "B", "C" and "D" is contained in pars 84 to 108 of Exhibit 1. Mr Mesure said he signed all the cheques the subject of these schedules, many in payment of the defendant's American Express account, when he was unaware of each particular expense incurred by the defendant on his American Express account (T560). He used item 1(a) of Scott Schedule "B" as an example. He said he did not see the American Express account the subject of item 1 in Scott Schedule "B". He said he would normally authorise payment of a restaurant account such as that in item 1(a) but there were no receipts produced for any such item (T562). He expressed the opinion that accordingly they were not legitimate business expenses and added (T563) "... if we tried to show those to the Tax Department, they would say non-claimable." 41 Mr Mesure denied he was present when the defendant purchased a fax machine and a computer program for the plaintiff. He denied the defendant purchased the fax machine at his request. Between pp 557 and 592 of the transcript, Mr Mesure was cross-examined about the contents of Scott Schedules B, C and D. He said at the time he signed the cheques for reimbursement of these expenses he did not know whether each item was an expense incurred in the conduct of the plaintiff's business and at the time of giving his evidence he likewise did not know. He said he had no evidence that these items were not for the benefit of the plaintiff (T575). Mr Mesure denied that the defendant explained to him that the various items in the American Express statements were business expenses (T592). He denied that any of the items in Scott Schedule "B" were loans (T592 and T607-8).
(Page 18)
42 Counsel for the plaintiff conceded item 2 in Scott Schedule "B". Mr Mesure denied he authorised and requested the defendant to purchase a workbench, fishing tackles and an outdoor setting. He denied authorising the purchase of a dining room table. He agreed the defendant bought a bicycle which he offered to Mr Mesure.
The evidence of the defendant in support of the re-amended (substituted) defence 43 The evidence of the defendant in relation to Scott Schedule "A" is contained in the first volume of Exhibit 11 where he says at par 8 he had known Mr Mesure in the early 1980's. He met him in May 1993 at the plaintiff's offices. He said Mr Mesure told him he was looking for a new manager for the plaintiff to replace the existing manager, Mr Cottee. At par 10 of Exhibit 11, the defendant continues: "10. Mesure told me that the job would have the same salary package as Cottee was getting which was $35,000.00 per annum plus a company car and a mobile phone. 11. I told Mesure that I had my own car and that I was leasing it. I also told him that I was leasing a mobile phone. I asked Mesure whether Sure Air would be willing to pay my vehicle lease payments and my mobile phone instead of supplying me with a vehicle and mobile phone. I told him that the vehicle lease payments were approximately $585.00 per month and that the lease payments on my mobile phone were approximately $150.00 per month. I also told Mesure that my call charges on my mobile phone were around $50.00 per month. Mesure told me that Sure Air would be willing to pay those costs. 12. At the meeting I agreed to be employed by Sure Air as a sales consultant on the basis that I be paid $35,000.00 per annum and that my vehicle finance repayments of $585.00 per month and my mobile phone costs of $200.00 per month be paid by Sure Air. Mesure, on behalf of Sure Air, agreed to employ me on those terms. The agreement was oral. 13. I commence working for Sure Air in June 1993.
(Page 19)
14. When I joined Sure Air, Peter Cottee was Sure Air's manager. Peter Cottee was dismissed by Sure Air not long after I began working for Sure Air. I was not promoted to manager of Sure Air until after Cottee left. 15. Some months after I started working for Sure Air Mesure asked me if I wanted to buy into Sure Air. He offered me a 50% shareholding in Sure Air for $10,000.00. Mesure told me that if I was a shareholder I could also be a director. At the time Sure Air had not made a profit. I told him that I wanted to become a director and shareholder but that I did not have the $10,000.00. I also told Mesure that I did not think that $10,000.00 was a reasonable price as the company was not making a profit. The matter was discussed on and off over the next few months. In or about June 1994 Sure Air was doing well. I told Mesure that I wanted to become a director and shareholder and pay the $10,000.00 he was asking for but that I still did not have $10,000.00. At that time Sure Air was opening up an office in Jakarta. Mesure and I prepared marketing material in which I was described as a director of Sure Air. This was done in anticipation of me becoming a director of Sure Air. The marketing material was never finalised. I did not become a director and shareholder because I was unable to raise the funds at that time and subsequently I decided not to become a shareholder and director. 16. My Motorola Microtac mobile phone was an analogue phone and I was considering updating the phone to a digital one. Mesure told me that Terry Brown, his business associate, needed a phone and suggested that I give mine to him. Mesure said that Sure Air would get me a digital phone as a replacement and still cover the payments on the Microtac phone. I said to Mesure that I was agreeable to that but I wanted the phone debt paid out. Mesure said no. He said that he wanted to pay the phone off. I agreed to that. We subsequently went to IMP Systems on or about 24 August 1993 and Mesure purchased to digital phones, one for him and one for me (see item 2 Scott Schedule C (Part I) and the relevant statement). Sure Air paid for the cost of the phones. I subsequently gave my Microta mobile phone to Mesure.
(Page 20)
I also took out the hands free kit which I had for that phone from my Mazda and gave it to Mesure." 44 At par 21 et seq of Exhibit 11, the defendant gave evidence that in or about October 1993 Mr Mesure wanted to buy a Laser motor vehicle for his wife. He continued: "Because I was to become a director and shareholder in Sure Air, Mesure suggested that Sure Air also buy a Laser vehicle for my wife to which I agreed." 45 The evidence of the defendant is that he drove the Ford Laser and purchased a Suzuki Vitara for his wife in February 1994. At par 26 of Exhibit 11, the defendant says Mr Mesure agreed to reimburse him for the fortnightly repayments due in respect of the purchase of the Suzuki Vitara. He sets out those payments at par 27 and at par 29 continues: "29. The above car expense repayments were all authorised by Mesure because: 46 At par 32 of Exhibit 11, the defendant says that on or about 1 July 1994, Mr Mesure agreed to pay him $52,000 per annum plus his vehicle finance expenses. At par 33 of Exhibit 11 together with the wage and allowance schedule annexed, the defendant sets out the wage payments, car allowance payments and mobile phone allowance payments he received from Sure Air. At par 39 of Exhibit 11, the defendant says the amounts claimed by the plaintiff in Scott Schedule "A" are "a part of the payments summarised in the wage schedule". At par 40 of Exhibit 11, the defendant continues: "40. All of the payments set out in Scott Schedule A were made by cheques signed by Mesure. Regularly I would go to Mesure's office which was across the hall from my office and present him with a number of cheques for his signature. It was my invaluable practice to complete the
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cheque butt details at the same time that I completed the cheque which Mesure was to sign. I never gave a cheque to Mesure for him to sign without first completing the cheque butt. Mesure studied every cheque and cheque butt detail carefully before signing the cheque. He never signed a blank cheque or a cheque which did not have the cheque butt detail completed. 41. I was working at Sure Air from Monday to Friday. Working hours were between 8.00am to 5.00pm. 42. I work for Sure Air's office. Sure Air supplied me with all necessary equipment (i.e. computer, facsimile, phone etc) and stationery which I needed to carry out my work. Sure Air supplied me with a mobile phone from August 1993. I used my own car for work purposes but I was reimbursed by Sure Air for the cost of the car. For the period between October 1993 and March 1994 Sure Air supplied me with a car. 43. I spent roughly half my time in the office preparing quotes, canvassing potential customers over the phone and various other administrative duties. The other time I spent travelling to any meeting with clients and prospective customers. 44. On the odd occasion I took some work home with me and did the work after hours and on weekends. 45. I had no authority to incur costs on behalf of Sure Air without first obtaining Mesure's approval. All quotes done by me were based on profit margins set by Mesure. Mesure did not allow me to depart from those margins without first obtaining his approval. 46. In December 1994, I agreed with Mesure that I would take over Sure Air's agency with Ductline which supplied fans. I had negotiated the agency agreement between Ductline and Sure Air during my employment with Sure Air. 47. I terminated my employment with Sure Air by notice dated on or about 16 February 1995. I left Sure Air on or about 28 February 1995.
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48. Although I worked for Sure Air until 28 February 1995 I was only paid up to 14 February 1995. I am therefore owed two weeks wages which based on an annual salary of $58,000.00 comes to $2,000.00. 49. During the time that I was employed by Sure Air I took a total of 15 days holidays on the following dates; 29, 30 & 31 December 1993 4, 5, 6, & 7 January 1994 28, 29 & 30 December 1994 3, 4, 5, 6 & 9 January 1995 50. I was employed by Sure Air from the beginning of June 1993 until 28 January 1995. During that time and based on annual leave entitlements of 4 weeks per annum, I became entitled to 35 days annual leave. 51. Based on an annual income of $52,000.00 I calculate the monetary value of the 35 days annual leave not taken by me to be $4,000.00. 52. I am therefore owed $6,000, being $4,000 for annual leave $2,000.00 for wages. 53. In or about the end of 1993 I asked Mesure where my superannuation payments were being sent. Mesure admitted to me that Sure Air had made no superannuation payments on my behalf. I then rang my superannuation broker whose name was Brett, to organise for the payments of my superannuation. Brett attended at Sure Air's office in December 1993 and he met with myself and Mesure. Brett handed to Mesure a periodic direct debit authority to enable my superannuation payments to be debited directly from Sure Air's account. I recall at the time Mesure paid all of my outstanding superannuation payments also. At the meeting Brett was attempting to sell a number of insurance products. Mesure said no to all of them except for death cover insurance to be taken out by myself and my wife. Shortly afterwards Brett called me and told me that he had the direct debit
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authorities for the superannuation, but that he needed direct debit authorities in relation to the death cover. I subsequently organised the direct debit authorities." 47 The evidence of the defendant in support of pars 13 to 15 of the re-amended (substituted) defence and Scott Schedule "B" is contained in the second part of Exhibit 11 where he says at par 1, Mr Mesure frequently asked him to entertain the plaintiff's clients. He says at par 4 that Mr Mesure asked him to travel overseas and interstate on sales trips and on conferences. At par 5, the defendant says: "Mesure imposed no special conditions on me for the reimbursement of expenses other than requiring me to pay for the expenses on my American Express card and presenting him with the relevant Amex statement upon seeking reimbursement and providing a breakdown of all expenses paid for in cash." 48 At par 6 of Exhibit 11, the defendant summarises the business trips that he undertook at the request of Mr Mesure. He continues at par 7:
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flatly refused to do so and told him that I was not prepared to falsify any documentation." 49 At par 9 of Exhibit 11, the defendant explains his course of conduct in claiming reimbursement of expenses from Mr Mesure as follows: "In the case of expenses which I charged to my American Express card I would wait until I received my Amex statement and then work out which expenses were mine and which were Sure Air's. I would then go and see Mesure in his office and present the statement to him and explain which charges set out in the statement were Sure Air's. On each such occasion Mesure looked at my American Express statement and discussed the charges and then authorised for me to be reimbursed. Sometimes I wrote out a cheque to myself for the reimbursement of expenses and took it with me when I saw Mesure and he would, upon approving the reimbursement, sign the cheque. On other occasions I would see Mesure first and then write a cheque for him to sign once Mesure authorised an amount for which I was to be reimbursed." 50 The defendant returns to the relationship between Mr Mesure and him at par 11 et seq of Exhibit 11 where he says: "11. During the time that I worked for Sure Air, Mesure and I developed a fairly close working relationship. Within the first six months of working for Sure Air, Mesure wanted me to become a shareholder and director of Sure Air. 12. In the course of my employment with Sure Air, Mesure would sometimes come into my office and ask me if I would like to go on a 'Jollie' which was his term for going on a shopping spree. I would then accompany Mesure to a shop or shops whilst Mesure picked items which he wanted to buy. Mesure would pay for his purchases on his Diners Club card but on some occasions he asked me to pay for them on my American Express card on the basis that Sure Air would thereafter reimburse me for the amounts paid. Whenever Mesure requested me to pay for goods on my Amex card I did so and I was always reimbursed at a later stage. To my knowledge many expenses of a person nature which were charged on his Diners Club were reimbursed by Sure Air to Mesure.
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13. Mesure sometimes took Wayne Redfern on shopping sprees. 14. Wayne Redfern was a manger of O'Connors and Environ. Both companies were owned by the same parent company. O'Connors and Environ were large clients of Sure Air and Mesure's other companies. 15. Mesure was quite generous towards me and agreed to loan money to me when I was short of funds. On some occasions when I took my American Express statement to Mesure to seek the reimbursement of expenses I would ask him to pay for personal expenses on the basis that I would repay the cost at a later stage. Sometimes Mesure simply agreed to pay for personal expenses of mine. On other occasions he treated them as loans and made a note of them on his computer. These loans were made on a very informal basis. No terms were discussed not even a repayment date. In relation to smaller loans Mesure would often say to me that he would 'square up' a later time. Mesure kept track of all loans to me on a tracker program on his computer. From time to time Mesure would write off moneys that I owed to Sure Air on the basis of other payments that I made or other things that I did for Sure Air. Mesure sometimes had his personal expenses paid for by Sure Air. When we began to discuss my purchase of half of Sure Air I made it clear to Mesure that I was interested in doing so although I initially thought the sum of $10,000.00 was too high. Even though I had not purchased a half interest in Sure Air Mesure would sometimes say to me that he would agree to have Sure Air pay for certain expenses of mine on the basis that certain of his expenses were paid for. In effect, Mesure was already treating me as part owner of Sure Air." 51 In the remainder of the second part of Exhibit 11, the defendant gives evidence in relation to each item contained in Scott Schedule "B". Parts 3 and 4 of Exhibit 11 contain his evidence in relation to each item of Scott Schedules C and D. 52 In cross-examination, counsel for the plaintiff asked the defendant about the statement in the minutes at p 24 of Exhibit 13 that the defendant
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has bought 50 per cent of Sure Air (T824). The defendant said he was to manage the day-to-day operation of the plaintiff, which evidence he repeated at p 848 of the transcript where he said he was the manager of the plaintiff and "nothing more". Counsel asked him if he was a partner and he replied (T848): "No, nothing was signed up. We had discussed it and there was a sum of $10,000 that Mr Mesure wanted for me to become a partner and I didn't have it and I also had advised him that I would like to look and see how the business went before I committed myself." 53 The defendant denied he was a director of the plaintiff and added (T849): "There were documents that went out that Mr Mesure produced saying I was a director for his own personal benefit." 54 Counsel referred him to document number 36 in Exhibit 13 where the defendant is described as "Managing Director, Sure Air". The defendant agreed he was the author of this document and he agreed the statement was not correct. He said he was under instructions from Mr Mesure to describe himself as "Managing Director" (T849). The defendant was referred to p 171 of Exhibit 13 which he signed as "Director" of the plaintiff in an application for advertising space. At p 292 of Exhibit 13, the defendant accepted he is described as "Director" of the plaintiff in an employment separation certificate which he said was never used. The defendant agreed he was described as "Director" of the plaintiff at p 304 of Exhibit 13 in an Application for Membership for Preferred Connection Card which he signed on 14 June 1994. Page 302 of Exhibit 13 contains promotional material with a photograph of the defendant described as "Director" of the plaintiff. Finally, the defendant was referred to p 220 of Exhibit 13, which is undated, but which the defendant agreed he and Mr Mesure drew up, and which describes the defendant diagrammatically as "50 per cent" of the plaintiff. The defendant said (T852): "The reason this was done, because Assure Airconditioning was going under and we were taking on Danny Potter, so we were looking at options as to how we could restructure it." 55 At p 899 of the transcript, the defendant repeated his evidence that in June 1993, the plaintiff engaged him at an annual salary of $35,000, plus a car and phone allowance. He was referred to par 3.3 of the re-amended
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(substituted) defence and the allegation that he was entitled to receive "vehicle expenses and vehicle finance repayments". The defendant said it was agreed he should receive the sum of $585 per month for vehicle expenses. 56 Counsel for the plaintiff asked Mr Mesure why the payments for vehicle expenses, vehicle finance repayments and telephone expenses were made to him separately and he said he could not recall (T906). The defendant was cross-examined about his evidence that Mr Mesure asked him to give his mobile to Mr Brown when the plaintiff purchased a new mobile phone for the defendant. He said Mr Mesure gave the defendant's phone to Mr Brown, agreed to pay the rental on it, and to purchase a new phone for the defendant (T908). He was cross-examined about his salary increase in 1994. He said he and Mr Mesure agreed a gross salary of $2,000 per fortnight. He said Mr Mesure was incorrect to state that the agreement was $1,600 gross per fortnight. He said the agreement was $2,000 gross per fortnight plus vehicle finance expenses and telephone expenses. (T910-911) 57 Counsel for the plaintiff referred the defendant to p 138 of Exhibit 13 containing the cheque butt dated 17 March 1994 which records a cheque to Air Purification Systems for the sum of $1,650 described as "consultancy fees" which has been cross out followed by the word "loan". The defendant said this cheque was not the first payment to him of the increased salary but a loan by the plaintiff to the defendant. The defendant agreed the cheque butts at p 176 of Exhibit 13 record payments of taxation by the plaintiff on his behalf in the sum of $6,540, in addition to the defendant's entitlements under the consultancy agreement in March and April 1994. He said these payments were made because he was not "having enough tax being taken out of my salary" (T914). 58 The defendant agreed that the document at p 135 of Exhibit 13 dated 14 March 1994 makes no reference to car or phone expenses. He agreed the last 15 cheques he received from the plaintiff show a payment of $1,600 and that the cheque butts at p 172 et seq of Exhibit 13 make no reference to car or telephone expenses. The defendant said "They were still being paid separately." (T915). He said the reference on cheque butts between pp 158 and 168 of Exhibit 13 to a car allowance was his "mistake" (T915). He agreed that during the same period he also received from the plaintiff additional payments for motor vehicle repayments and expenses (T916). In relation to the defendant's evidence at par 27 and par 28 of Exhibit 11, the defendant denied that the fortnightly repayment in respect of the Suzuki Vitara car represented an overpayment by the
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plaintiff. He said Mr Mesure agreed to pay the fortnightly instalments "at the time of writing the cheque" (T918). 59 Counsel for the plaintiff referred the defendant to p 316 of Exhibit 13 and the letter dated 11 April 1995 from the defendant's solicitors to Mr Mesure. The defendant agreed the letter contains no reference to car and telephone expenses (T922). 60 The defendant was then asked about his evidence in relation to his claims for reimbursement of expenses incurred on his American Express account. He confirmed his evidence that he produced his American Express statements to Mr Mesure and went through them item by item. He agreed that the Scott Schedules and American Express statements revealed personal items on every occasion. He was asked whether a loan agreement was made with Mr Mesure on every such occasion. The defendant replied Mr Mesure put the information into his computer (T939). The defendant agreed there was no reference to such loans on any of the cheque butts for the American Express card payments. 61 Counsel for the plaintiff suggested to the defendant that he was not entitled to holiday pay pursuant to his agreement with the plaintiff and he replied (T941): "As a salary earner I was. I mean, that was part of it. I mean, I took holidays. Mr Mesure paid me to take those holidays while I was working there and at the end of the term I had a number of weeks outstanding that were not paid ... My evidence is that I was the manager and under that I would have been." 62 The defendant agreed that the alleged entitlement to holiday pay was not pleaded. He agreed he completed the document at p 292 of Exhibit 13, where he stated upon termination he was not entitled to holiday pay (T942).
What did the parties agree in June 1993? 63 The plaintiff alleges it engaged the defendant pursuant to a contract of services to manage the plaintiff's business at an annual salary of $35,000. The defendant alleges the plaintiff engaged the defendant as a sales consultant at an annual salary of $35,000 "plus vehicle expenses and vehicle finance repayments and telephone expenses". The only written evidence of any agreement between the parties is that contained in the document at p 135 of Exhibit 13, to which I have already referred. It
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appears to have been signed on 14 March 1994, some nine months after the relationship between the plaintiff and defendant began and is, in any event, distinctly unhelpful in the determination of the terms of the agreement between the parties. The evidence of the plaintiff at par 17 of Exhibit 1 and the evidence of the defendant at par 10 of Exhibit 11 was that the plaintiff employed the defendant as its manager in June 1993. I find the plaintiff employed the defendant to undertake the day-to-day management of the plaintiff's business. Further, on the evidence of the plaintiff and the defendant, I find from June 1993, the defendant managed the plaintiff's business. 64 On the pleadings, there is an issue between the parties whether the plaintiff agreed with the defendant in June 1993 to pay the defendant's vehicle finance and running expenses and mobile phone expenses. The evidence for the plaintiff, as I have explained it, establishes that from the outset, the plaintiff looked forward to the day that the defendant might acquire an interest in the plaintiff's business. In cross-examination, Mr Mesure accepted at T487 that he offered the defendant "$35,000 plus a company car plus a phone." I find that in June 1993 the plaintiff and defendant agreed that the plaintiff would pay the defendant an annual salary of $35,000 plus vehicle expenses, vehicle finance repayments and telephone expenses. Exhibit 14 is consistent with such agreement.
What did the parties agree in July 1994? 65 By July 1994, the defendant had worked for the plaintiff for 12 months. On the evidence, it is common ground that the plaintiff agreed to increase the defendant's remuneration to $52,000 per annum. There is the same issue between the parties whether the defendant was entitled in addition to vehicle and telephone expenses. Mr Mesure accepted of course that these expenses were paid to the defendant as recorded in Exhibit 14. As I have explained, his evidence was that he knew of some of the payments but he did not regard them as part of the defendant's remuneration, because he continued to look forward to the defendant acquiring an interest in the plaintiff's business and thereafter the reconciliation of any payments to which he and the defendant might be entitled. It is quite consistent with the evidence of Mr Mesure and I find that in July 1994 he agreed to continue to pay the defendant's motor vehicle and telephone expenses, as he had agreed to do in June 1993. Once again, Exhibit 14 is consistent with such agreement. 66 There is no evidence to establish the plaintiff's allegation in par 1.2 of the amended reply that it was a condition of the defendant's
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engagement by the plaintiff that he would be an equal shareholder in the plaintiff with Mr Mesure and that he would pay Mr Mesure the sum of $10,000 for such shareholding. While it is plain on the evidence of both parties already referred to that they discussed such an arrangement and the evidence of their conduct suggests they even anticipated such an arrangement, it is equally plain that they reached no such agreement and I so find. 67 On the evidence of the defendant, I find he worked for the plaintiff during normal working hours between 8.00 am and 5.00 pm, Monday to Friday. He spent half his working hours at the plaintiff's premises and the other half travelling to meet customers and prospective customers. He prepared quotations based on profit margins set by Mr Mesure. He was paid on a fortnightly basis. The plaintiff paid superannuation on his behalf. I find that the plaintiff by agreement with the defendant deducted taxation under the prescribed payments scheme. I find there was no express agreement between the parties about the defendant's leave entitlements. 68 As I have said, the plaintiff alleges the defendant was employed under a contract of services as an independent contractor. The defendant denies that allegation. He alleges he was engaged in June 1993 as a sales consultant and subsequently as the plaintiff's manager. Other than in relation to salary, on the evidence of both parties the terms on which the plaintiff engaged the defendant in June 1993 differ little from those on which the plaintiff continued to employ the defendant after July 1994. 69 There is an issue on the pleadings and evidence in this case between the parties whether the defendant was an employee of the plaintiff or an independent contractor. There is no evidence that the defendant controlled the plaintiff's business. All the evidence suggests that the defendant managed the plaintiff's business subject to the direction and authority of Mr Mesure. 70 I accept the submission of counsel for the defendant that to determine whether the defendant was an employee or independent contractor, there is no single test to be applied to the evidence. The correct approach is to consider a wide range of indicia, none of which are determinative in themselves: Stevens v Brodribb Sawmilling Co Pty Ltd (1985-86) 63 ALR 513. At 517, Mason J said (line 15): "A prominent factor in determining the nature of the relationship between a person who engages another to perform
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work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it …" 71 Mason J refers to the judgment of Dixon J in Humberstone v Northern Timber Mills (1949) 79 CLR 389 where at 404 Dixon J said: "The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions." 72 Mason J went on to observe that the existence of control, while significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The proper approach is to regard it merely as one of a number of indicia which must be considered in the determination of that question. Other relevant matters include, but are not limited, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee. 73 In Stevens v Brodribb Sawmilling Co Pty Ltd (supra) Wilson and Dawson JJ also considered the control test at 526 of the report and accepted that it is not always determinative of the issue. They went on to say at line 32: "The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of good will or saleable assets in the course of his work, the payment by him
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from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without the deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance." 74 In the present case, I accept the submission of counsel for the defendant that the sole indicia militating against the conclusion that the defendant was an employee of the plaintiff is the fact that the parties agreed that the plaintiff should deduct tax from the defendant's salary under the prescribed payments scheme. In my opinion, against all the other indicia in this case, that fact should not lead to the conclusion that the plaintiff engaged the defendant as an independent contractor. I find the defendant was an employee of the plaintiff at all material times.
Conclusions 75 It follows from the determination of the relationship between the plaintiff and the defendant and the terms and conditions upon which the plaintiff employed the defendant that the plaintiff's claim in pars 6 to 8 of the statement of claim and in Scott Schedule "A" that the defendant was overpaid the sum of $43,827.79 cannot succeed. I find the defendant was entitled to the payment to or for his benefit of the sum of $97,710.45 as alleged by par 11 of the re-amended (substituted) defence on the evidence at pars 33 et seq of Exhibit 11, the wages schedule and Exhibit 14. 76 I turn to the plaintiff's claim in pars 9 to 13 of the amended statement of claim where the plaintiff alleges the defendant deceitfully requested Mr Mesure on behalf of the plaintiff to reimburse him for certain business expenses in the sum of $53,398.75, the subject of Scott Schedules B and C, which the defendant denies at par 13 of the re-amended (substituted) defence. As I have explained, the plaintiff alleges that the defendant acted deceitfully and engaged in conduct which was misleading, contrary to s 9 of the Fair Trading Act, in that he requested the plaintiff to reimburse him for certain business expenses in the sum of $53,398.75, the subject of Scott Schedules B and C. The plaintiff alleges the plaintiff paid these moneys to the defendant in the mistaken belief they were business expenses, a belief it is alleged induced by the defendant's fraudulent misrepresentation to Mr Mesure. 77 I have already traversed the evidence of Mr Mesure and the defendant in relation to this part of the claim in Exhibits 1 and 11 respectively. I do not accept the evidence of Mr Mesure that at the
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time he signed the cheques for reimbursement of those expenses, he did not know whether each item was an expense incurred in the conduct of the plaintiff's business. I find Mr Mesure was then prepared to authorise reimbursement of all moneys claimed by the defendant, except those identified as personal loans. On the evidence of the defendant, I find Mr Mesure authorised reimbursement of payments made by the defendant for his own benefit, for the benefit of the plaintiff and for the benefit of Mr Mesure. I find on the evidence of Mr Mesure that he first alleged he had not authorised such reimbursement only after he became concerned the plaintiff might not establish the items concerned were legitimate business expenses for taxation purposes. He accepted he had no evidence they were not business expenses. It is not necessary to consider each item separately. 78 I find on his evidence and on that of the defendant that at all material times Mr Mesure knew that the payments in respect of which he signed cheques to reimburse the defendant were incurred in the course of the plaintiff's business or were personal loans to the defendant. I find that Mr Mesure on behalf of the plaintiff agreed to such loans to be reconciled at a later date. There is no evidence Mr Mesure was mistaken at the time he signed the cheques or that the defendant fraudulently induced the plaintiff to make such payments by mistake or otherwise. In the light of these conclusions, it is not necessary to determine whether it was a term of the agreement between the parties as alleged in par 4.4 of the amended statement of claim that the defendant would record all expenses incurred by the defendant. So far as it may be necessary I find in the circumstances prevailing between the parties at the time, the defendant kept an adequate record and was reimbursed accordingly. 79 I have identified but not referred to the evidence of Mr Mesure and the defendant in relation to the plaintiff's claim under pars 16 and 17 of the amended statement of claim, where the plaintiff alleges that the defendant has retained certain goods of the plaintiff, the subject of Scott Schedule "D", which claim is denied by par 16 of the re-amended (substituted) defence. The substance of this claim is once again that the defendant has obtained the benefit of goods and services either without the authority of the plaintiff or, if authorised, the defendant has retained the goods since he left the employ of the plaintiff. The defendant gives evidence in relation to each item in Scott Schedule "D" and, given the conclusions which I have already expressed in relation to the evidence in respect of the plaintiff's claims under Scott Schedules "A", "B" and "C", I conclude that the detail which the defendant provides in relation to each item lends reliability to his evidence in relation to this part of the claim (Page 34)
and I accept it. I am therefore of the opinion that the plaintiff's claim under this head also fails. 80 It follows from these conclusions that it is not necessary to consider the alternative pleas contained in pars 32 to 35 of the amended statement of claim and that the plaintiff's claim under each head fails. 81 It is finally necessary to determine the issue between the parties relating to the loans pleaded in pars 18 to 25 of the amended statement of claim and pars 17 to 19 of the re-amended (substituted) defence. The pleadings and evidence in relation to the repayment of these loans by the defendant to the plaintiff are not at all clear. On the pleadings, I conclude from par 25 of the amended statement of claim that it is alleged that there remains owing to the plaintiff the sum of $12,385.35 of which the defendant has paid the sum of $9,000. There remains owing to the plaintiff therefore the sum of $3,385.35. 82 I turn to the set-off and counterclaim by which the defendant counterclaims accrued holiday leave in the sum of $4,000 and unpaid wages in the sum of $2,000. I find it was an implied term of the agreement between the parties that the defendant should be paid holiday pay as alleged. I also find the defendant is entitled to the sum of $2,000 in unpaid wages as alleged. Accordingly, the defendant is entitled to judgment on the counterclaim in the sum of $6,000. He is entitled to set that sum off against the sum of $3,385.35 owing to the plaintiff. Accordingly, the defendant is entitled to judgment on the counterclaim in the sum of $2,614.65. 83 Accordingly, I will order that the plaintiff's claim be dismissed and that there be judgment for the defendant on the counterclaim in the sum of $2,614.65.
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