Tancred v Shallam Pty Ltd

[2023] FedCFamC2G 777

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

Tancred v Shallam Pty Ltd [2023] FedCFamC2G 777

File number(s):

SYG 1494 of 2018

Judgment of:

JUDGE BAIRD

Date of judgment:

24 August 2023

Date of corrigendum

11 October 2023

Catchwords:

INDUSTRIAL LAW – general protection – contract of employment – whether first applicant employee of the first respondent in franchised pool service business – respondents deny employment – contend partnership – no written agreement – totality of relationship – indicia of employment – whether second applicant employee or volunteer – held each of applicants was an employee of first respondent in relevant period – accessorial liability of second respondent – breaches of Fair Work Act 2009 (Cth) (FW Act), National Employment Standards and modern Award – General Retail Industry Award 2020 (Cth) – contraventions established flowing from finding of employment relationship – contraventions of ss 44, 45, 357, 536, 537 of the FW Act – respondents to pay compensation pursuant to s 545 of FW Act – application substantially allowed

Legislation:

Evidence Act 1995 (Cth), s 136

Fair Work Act 2009 (Cth) ss 11, 13, 14, 44, 45, 55, 90, 117, 357, 535, 536, 541, 545, 546, 550, 793

Fair Work Regulations 2009 (Cth)

Partnership Act 1892 (NSW) ss 1, 2

Cases cited:

C v Commonwealth of Australia [2015] FCAFC 113; (2015) 234 FCR 81; (2015) 327 ALR 195; (2015) 252 IR 471

Connelly v Wells (1994) 55 IR 73; (1994) 10 NSWCCR 396

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 398 ALR 404; (2022) 312 IR 1

Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 (CLR) 95

Ezy Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134; (2018) 360 ALR 261

Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365

Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45; (2015) 256 CLR 137

Hollis v Vabu [2001] HCA 44; (2001) 207 CLR 21

Hollis; Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16

JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76

Leach v Prestige Real Estate Services Pty Ltd [2022] FedCFamC2G 1022

ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; (2022) 398 ALR 603; (2022) 312 IR 74

Division:

Division 2 General Federal Law

Number of paragraphs:

394

Date of last submission/s:

27 July 2022

Date of hearing:

16-20 November 2020, and 19 February 2021

Place:

Sydney

Counsel for the Applicants:

Ms H Blattman KC

Solicitor for the Applicants:

Hicksons Lawyers

Counsel for the Respondents:

Mr C Simpson

Solicitor for the Respondents:

Baker Mannering & Hart

ORDERS

SYG 1494 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

MATTHEW TANCRED

First Applicant

KELLIE NAGEL

Second Applicant

AND:

SHALLAM PTY LTD (ABN 49 126 994 232)

First Respondent

STUART HALLAM

Second Respondent

ORDER MADE BY:	JUDGE BAIRD
DATE OF ORDER:	24 AUGUST 2023

THE COURT:

1.DECLARES that the first applicant, Mr Matthew Tancred was a full‑time employee of the first respondent, Shallam Pty Ltd, from 4 January 2016 up to and including 23 October 2017.

2.DECLARES that the second applicant, Ms Kellie Nagel, was an employee of Shallam working on a on a part time basis undertaking:

(a)cleaning work at the Premises in the period 7 February 2016 to 14 February 2017 for an hour once a week, and in the period from 14 February 2017 to 23 October 2017 for an hour once every 4 weeks, and

(b)administrative and financial work for 9 hours each week from 14 July 2016 to 14 February 2017.

3.DIRECTS within 14 days, or such other period as the Court determines after consultation with the parties, the parties are to confer and submit to Judge Baird’s Chambers a minute of proposed declarations and orders, including as to the calculation of quantum, and pre‑judgment interest, to give effect to these reasons for decision to the extent not provided for by paragraphs 1 and 2 above, that the applicants have first carriage of the draft minutes, and that in the event agreement cannot be reached the parties submit separate proposed minutes.

4.LISTS the proceeding for a case management hearing on a date convenient to the parties for the purposes of making of final declarations and orders, and for any consequential and other matters, and to program the further conduct of the proceeding.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

CORRIGENDUM

JUDGE BAIRD

1. In the course of complying with paragraph 3 of the orders I made on 24 August 2023, and as foreshadowed by [375] of my reasons for judgment delivered that day, the parties have drawn to my attention a transcription error I made in the reasons at [27], and consequentially, at [375], and jointly request that the error be corrected.

2. I have reviewed those paragraphs of the reasons and am satisfied that my finding at [27] as to the appropriate classification under the General Retail Industry Award 2010 [MA000004] of Ms Nagel’s employment by Shallam Pty Ltd undertaking cleaning work did not reflect the parties’ agreement communicated to the Court by email dated 22 April 2021, and as foreshadowed at [375], the parties agreed different classifications under the Award applied to Ms Nagel’s employment undertaking cleaning work and doing financial and administrative tasks.

3. Accordingly, I make the following corrections to the reasons:

   (a)In the first sentence at [27] of the reasons the phrase ‘and is as a Retail Employee Level 4/ Clerical Officer Level 2, rather than at Level 1’ is deleted, and replaced with the text ‘and is at Level 1’.

   (b)The text of [375] of the reasons, which before correction read:

   As to the appropriate level of the Award, see above at [27]. I apprehend that the consequence is that the appropriate classification of Ms Nagel’s employment is under the Award, as a Retail Employee Level 4/ Clerical Officer Level 2. I so find. I note however, that the Quantum schedule also sets out the rates for a Level 1 employee. The reason for both rates is not apparent. Should my finding on the appropriate classification be a matter that requires correction, I invite the parties to confer, and to provide a short note explaining the matter and any differing positions they have.

   is deleted, and replaced with the following:

   As to the appropriate level of the Award see above at [27]. The parties are agreed that the appropriate classification of Ms Nagel’s employment is under the Award, in respect of cleaning work is at Level 1, and in respect of financial and administrative tasks, as a Retail Employee Level 4/ Clerical Officer Level 2. I so find.

4. Accordingly, pursuant to r 17.05(2)(e)-(h) of the Federal Circuit and Family Court of Australia Division 2 (General Federal Law) Rules 2021, I provide this corrigendum to my judgment of 24 August 2023.

I certify that the preceding four (4) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment herein of Judge Baird.

Associate:

Dated:       11 October 2023

INTRODUCTION	[1]
National system employer and national system employees	[7]
General Retail Industry Award 2010	[8]
Mr Hallam was aware of the FW Act, the Award and their application	[9]
The principal issue	[10]
Provisions of FW Act alleged contravened	[19]
Quantum sought	[23]
Summary of outcome of the proceeding	[31]
THE PARTIES	[33]
The applicants	[33]
The Iluka / Radara subdivision development	[35]
The respondents, related entities, franchise agreements and dealings	[37]
H2YO!	[41]
Swell Finance	[43]
Brief overview of the Poolwerx business	[44]
PLEADINGS, PROCEDURAL MATTERS AND THE HEARING	[47]
The pleadings	[47]
The hearing of the evidence and submissions	[52]
Overview - the witnesses at hearing	[54]
Credit	[58]
Mr Tancred	[60]
Ms Nagel	[61]
Mr Hallam	[62]
THE EVIDENCE – FINDINGS OF FACT	[63]
The applicants’ witnesses	[65]
The respondents’ witnesses	[81]
MR TANCRED’S INVOLVEMENT IN THE POOLWERX BUSINESS	[104]
Background - the period prior to December 2015	[105]
The December 2015 meetings and conversations	[109]
Mr Tancred’s account	[110]
Mr Hallam’s account	[113]
The Falls Festival	[117]
December 2015 interactions – what is not in dispute	[120]
Mr Tancred maintained payment was tied to settlement of the Iluka development	[122]
Mr Tancred formally commences in the Poolwerx business	[125]
Correspondence concerning the parties’ relationship	[129]
The June 2017 letters	[130]
June 2017 partnership proposal letter	[134]
June 2017 package letter	[136]
The parties accounts of their meeting and exchange of the June 2017 letters	[139]
Discussion – provision of June 2017 letters	[147]
23 June 2017 letter	[151]
Email exchange 28 and 29 June 2017	[152]
Discussion - the June 2017 letters, meetings and email exchange	[155]
Mr Hallam sets up H2Yo! and enters subsequent Poolwerx franchise	[160]
The period July-September 2017	[163]
Lismore Profile Pools purchase and increase in partnership buy-in amount	[164]
Fiji Poolwerx franchisee convention – 27 to 30 August 2017	[172]
September 2017 offer of part payment of buy-in amount	[175]
October 2017 termination of working relationship and withdrawal of partnership offer	[180]
Mr Tancred’s account	[181]
Mr Hallam’s account	[182]
October 2017 termination letter	[184]
Other matters evidenced	[194]
Mr Tancred and Mr Hallam’s roles	[194]
2016 lease over the Premises	[200]
Poolwerx Corporation franchise partner of the year award for 2016	[208]
Poolwerx business indicia and relevant financial and regulatory matters	[209]
Email addresses and email signatures	[211]
Payments made to Mr Tancred in the Period	[216]
Statement of payment – 23 June 2017 letter	[224]
Mr Hallam’s payments to himself	[230]
Superannuation payments and return of capital	[230]
Other payments made by Mr Hallam from Poolwerx business bank accounts, control of other bank accounts	[234]
Financial position and dealings through H2Yo!	[242]
Quantum of Mr Tancred’s claim	[244]
Fleetmatic records	[249]
Evosus evidence	[252]
Mr Tancred’s evidence of hardship	[257]
MS NAGEL’S WORK IN THE POOLWERX BUSINESS	[259]
Cleaning the Premises	[260]
Financial and administrative duties	[266]
Ms Nagel’s evidence of hardship	[292]
Quantum of Ms Nagel’s claim	[293]
RELEVANT LEGISLATIVE PROVISIONS AND LEGAL PRINCIPLES	[300]
Partnership	[301]
Employment	[303]
DISCUSSION AND CONSIDERATION	[319]
1. Mr Tancred’s claim	[319]
What the parties agreed in December 2015	[320]
An employee relationship	[322]
June 2017 events	[328]
There was no partnership on foot	[330]
Mr Tancred’s hours of work - submissions and consideration	[338]
The Falls Festival 2015	[347]
Statutory and Award entitlements, alleged contraventions of FW Act	[348]
Contraventions of FW Act with respect to Mr Tancred	[351]
Sham contract – contravention of s 357 of the FW Act	[353]
Mr Tancred’s claim for damages for pain and suffering	[361]
2. Ms Nagel’s claim	[364]
The relationship between Shallam and Ms Nagel was an employment relationship	[365]
NES and Award apply to Ms Nagel	[372]
Ms Nagel’s hours of work and regularity of employment	[373]
Contraventions of the FW Act with respect to Ms Nagel	[376]
Ms Nagel’s claim for damages for pain and suffering	[378]
3. Mr Hallam’s involvement in Shallam’s contraventions	[379]
DISPOSITION AND NEXT STEPS	[389]

REASONS FOR JUDGMENT

Judge Baird

INTRODUCTION

1. This is an application pursuant to the general protection and other provisions of the Fair Work Act 2009 (Cth) (FW Act), brought by the first applicant, Mr Matthew Tancred, and the second applicant, Ms Kellie Nagel, for orders and compensation in relation to each of their alleged employment by the first respondent, Shallam Pty Ltd, and against the second respondent, Mr Stuart Hallam as the controlling mind of Shallam, as liable for Shallam’s contraventions pursuant to s 550 of the FW Act.

2. Relevantly, at least in the period from 2015 up until about August 2017, Shallam, as trustee of the S W Hallam Discretionary Trust, trading as ‘Poolwerx Ballina Byron’ (generally identified as ‘Poolwerx Northern Rivers’), conducted business as a ‘Poolwerx’ franchisee in the areas of Ballina, Byron, Lennox Head and Lismore (the Poolwerx business).  Shallam ran the Poolwerx business from premises located at Shop 3, 44‑48 Byron Street in Lennox Head, New South Wales (Premises).  On 17 September 2017, further to a franchise agreement dated 24 August 2017, H2Yo! Pty Ltd (also referred to in the evidence as H2YO!), another company set up by Mr Hallam, became the franchisee thereafter operating the Poolwerx business, with Shallam and Mr Hallam as guarantors.

3. Mr Tancred commenced working in the Poolwerx business on 28 December 2015.  Initially, at Mr Hallam’s request he assisted Mr Hallam at the Falls Music Festival in Byron Bay which took place from 28‑31 December 2015.  The Falls Festival hosted a water park with multiple large inflatable pools, which it appears the Poolwerx business set up and monitored for water health during the Festival.  Mr Tancred formally commenced work in the Poolwerx business on 4 January 2016 working out of the Premises.

4. Mr Tancred’s working arrangement in the Poolwerx business, and thus with each of Shallam and Mr Hallam (and from September 2017, with H2Yo!) ended on 23 October 2017 when Mr Hallam handed Mr Tancred a letter terminating the working arrangement and informed Mr Tancred that he had to return all keys for the Premises and all communication devices, and was no longer entitled to access any business email accounts or software systems.

5. It is not in dispute that Mr Tancred worked in the Poolwerx business, through the period 28 December 2015 to 23 October 2017 (the Period), and that he received a total of $71,000 over the Period.  During the Period, Mr Tancred was described as Poolwerx’s ‘business manager’ and ‘retail manager’ in public facing written communications.

6. It is common ground that Ms Nagel, Mr Tancred’s life partner, performed work in the Poolwerx business from February 2016 to March 2017, and thereafter continued cleaning the Premises every 3 or 4 weeks until 23 October 2017.  Ms Nagel asserts that she agreed with Mr Hallam (or alternatively Mr Tancred, acting with actual or ostensible authority of the respondents) to work for Shallam in the Poolwerx business, and did work for Shallam, undertaking cleaning duties as required from about January 2016, and from June 2016 also performing financial and administrative tasks for the Poolwerx business on the basis that she would be paid for the hours she worked.  Ms Nagel received no remuneration for the work she did in and for the Poolwerx business. 

   National system employer and national system employees

7. Shallam is a national system employer for the purposes of s 14 of the FW Act so far as it employed or usually employed individuals.  H2Yo!, similarly, is a national system employer for the purposes of s 14 of the FW Act.  There is no issue in the proceeding that if Mr Tancred or Ms Nagel, or both, are found to be employees of Shallam, they were each a ‘national system employee’ as defined in s 13 of the FW Act. Accordingly, if Mr Tancred or Ms Nagel, or both is found to be an employee, pursuant to s 43(1)(a) of the FW Act, the minimum terms set out in the National Employment Standards (contained in Part 2-2) will apply to their terms of employment. Section 44(1) of the FW Act provides that an employer must not contravene a provision of the National Employment Standards. 

   General Retail Industry Award 2010

8. The applicants claim that as employees of Shallam working in the Poolwerx business at all material times they were covered by the General Retail Industry Award 2010 [MA000004].  As I expand upon below, the respondents ultimately did not dispute that should an applicant be found to be an employee, they were covered by the Award.

   Mr Hallam was aware of the FW Act, the Award and their application

9. The respondents accept that at all material times, Mr Hallam was aware of the existence of the FW Act, that all employees of Shallam were covered by the FW Act, that Mr Hallam was aware of the existence of the Award, and that employees of Shallam were covered by the Award. 

   The principal issue

10. The principal question in this proceeding is whether or not each of the applicants were employees of Shallam.  The applicants say they were.

11. The respondents deny any breach of any provisions of the FW Act or the Award on the basis that Mr Tancred and Ms Nagel were not employees of Shallam at any time, and therefore are not entitled to the general protections provided in the FW Act, nor were they covered by the Award.

12. The respondents defend the proceeding as concerns Mr Tancred’s claim contending that Shallam, by its representative Mr Hallam, and Mr Tancred entered into an oral agreement in December 2015 pursuant to which Shallam and Mr Tancred were partners in the Poolwerx business – carrying on a business in common with a view to profit; Mr Tancred was not engaged as an employee of the business.  There is no written contract, whether of employment, or of partnership, or otherwise.

13. As concerns Ms Nagel, the respondents claim that she was working gratuitously to support Mr Tancred in the Poolwerx business.  The respondents say that she was at all times a volunteer.  There is no written contract governing Ms Nagel’s performance of work in the Poolwerx business.

14. More particularly, the respondents plead in their Defence that in December 2015, Shallam (by Mr Hallam) and Mr Tancred entered into an oral agreement under which Mr Tancred acquired a 49% share (as I discuss below, in the evidence the percentage share asserted varied between 50% and 47‑49%) in the Poolwerx business for $50,000, and that Shallam provided “interest free vendor finance” to Mr Tancred with respect to that payment.  They plead that under the terms of that “vendor finance” Mr Tancred agreed to make two repayments, the first of $20,000 on or before 31 March 2016, and a second repayment of $30,000 to be paid on or before 31 December 2016, and “that the agreement between them was to be reflected in a further agreement to be entered into on the first repayment being made”. 

15. It is not in dispute that Mr Tancred did not make any payments of the above amounts, or any other amounts to the respondents, or either of them.

16. Whilst the respondents deny any employment, deny each of the contraventions pleaded, and dispute the quantum of the applicants’ respective claims and the bases of their calculations (and deny their claims to damages for pain and suffering), it does not appear to be in real dispute that if the respective applicant – Mr Tancred or Ms Nagel – is found to have been an employee, then:

    (c)they were entitled to certain payments and other conditions of work pursuant to the National Employment Standards set out in the FW Act and the Award;

    (d)they were not paid those entitlements or provided those conditions; and

    (e)Shallam has breached the FW Act and the Award in failing to pay those entitlements and to provide those conditions. 

1. Whilst pleading that Mr Tancred and Shallam were engaged as partners in the Poolwerx business, and Ms Nagel was a volunteer, the respondents submit it does not ultimately matter whether the agreement between the parties can be legally characterised as a partnership, or a partly performed agreement to form a partnership, or something else.  The question is whether the contractual agreement between the parties can be characterised as one of employment.  If not, the respondents say the applicants’ claim must fail, regardless of what legal characterisation might otherwise be given to the agreements between the parties and the parties’ status at a particular point in time. 

2. The applicants bear the onus of establishing their employment.  The applicants say that the Court cannot find that the applicants were not employees without having concluded that they were something else.  There are only two possibilities put before the Court in Mr Tancred’s case – employee or partner.  So too in Ms Nagel’s case, there are only two possibilities put before the Court – employee or volunteer.  The applicants submit that the relationships must be positively characterised not simply to give personal certainty or to understand the basis on which their case has been accepted or rejected, but also because the methodology applied by the Court is a weighing of characteristics which may individually point to one conclusion or another and which is not complete until the Court has reached the answer as to whether the applicants are employees or partner and volunteer respectively.

   Provisions of FW Act alleged contravened

3. In overview, and non‑exhaustively, Shallam’s alleged contraventions of the FW Act in respect of each applicant include breaches of multiple clauses of the Award and resultant contraventions of s 45 of the FW Act, including contrary to the clauses of the Award underpayments and non‑payments of wages (for and at the relevant rates for ordinary time, overtime, Saturday and Sunday time, and for public holidays worked), failing to provide rest and meal breaks, and to pay allowances for breaks, failing to inform the applicants of the status of their respective engagements, failing to make contributions to their respective superannuation accounts, contraventions of s 536 of the FW Act by failing to provide each of the applicants with payslips within one day, and contraventions of s 535 of the FW Act by failing to keep records as required under the Fair Work Regulations 2009 (Cth).

4. In respect of Mr Tancred’s alleged employment, he further alleges Shallam has contravened s 44 of the FW Act (by failing to pay accrued but untaken annual leave on termination in breach of s 90, and failure to provide 2 weeks’ notice on termination, in breach of s 117(1)), of s 45 and the Award by failing to pay annual leave loading on accrued but untaken annual leave, and contravened s 357 of the FW Act by its conduct in mid‑2016, and also on 23 October 2017, by Shallam’s officer Mr Hallam representing in letters to Mr Tancred that the contract of employment under which he performed work in the Poolwerx business was a contract for services (that is, sham contracting).  Whilst the applicants rely on Shallam’s conduct in ‘mid‑2016’, as I explain below (at [129], [147] and [224]-[227]), I am satisfied that the undated letter that the applicants allege constitute that conduct – asserting that payments made by Shallam to Mr Tancred were ‘contractor income’ - was written and emailed by Mr Hallam on 23 June 2017, referable to the financial year ending 30 June 2016.

5. The applicants allege that Mr Hallam was involved in each of Shallam’s contraventions of the FW Act within the meaning of s 550 of the FW Act, and accordingly has contravened each of the above provisions by Shallam’s contraventions.

6. The applicants allege 26 contraventions of the FW Act by Shallam, and 26 contraventions by Mr Hallam. The applicants seek declarations pursuant to s 545(2) of the FW Act against Shallam that it contravened each of ss 44, 45, 357, 535, and 536 of the FW Act; and against Mr Hallam pursuant to s 550 of the FW Act, in that he was involved in each of Shallam’s contraventions of each of ss 44, 45, 357, 535, and 536 of the FW Act.

   Quantum sought

7. At and after closing submissions the applicants served and subsequently have filed detailed amended quantum schedules of Mr Tancred’s and Ms Nagel’s claims to unpaid wages and other employee entitlements, calculating compensation under itemised heads of compensation: Quantum Schedules filed 27 July 2022, being a copy of schedules provided to Chambers by email on 12 May 2021, further to leave granted by consent on 6 May 2021.  These Quantum Schedules update previously filed and served quantum schedules and the schedules to the initiating statement of claim. 

8. The compensation claimed by each applicant includes a sum of general damages for pain and suffering.  The amounts sought also include a calculation for pre-judgment interest, which appears to be up to the date of filing the applicants’ closing submissions.  If either or both the applicants are successful in any respect, at the least, pre‑judgment interest will require to be recalculated and updated.

9. The respondents dispute quantum, and in respect of the claims for damage for pain and suffering further submit that there is no causal link in Mr Tancred’s claim between the alleged contraventions and the claimed damage for pain and suffering, and that Ms Nagel’s claim for such damage similarly is untenable.

10. Pursuant to the Quantum Schedules (which in respect of Mr Tancred’s claim appears to be a copy of the amended schedule served with closing submissions) the compensation sought by Mr Tancred as at 12 May 2021 is $233,105.59 (which is net of the $71,000 he was paid in the Period), of which $30,000 is for pain and suffering, plus pre‑judgment interest of $39,340.56 (at 5.5% per annum from 23 October 2017, apparently to 15 January 2021) and further accruing to judgment.

11. Following an issue raised in oral closing submissions, the parties reached agreement that if Ms Nagel is found to be an employee, the appropriate classification of her employment undertaking cleaning work is under the Award, and is as a Retail Employee Level 4 / Clerical Officer Level 2, rather than at Level 1.  They advised the Court accordingly by email dated 22 April 2021.  The consequence is that the overall assessment of Ms Nagel’s claim reduced from that sought in written closing submissions by $2,585.22 (excluding interest).  The Quantum Schedules set out that revised assessment.

12. Pursuant to the Quantum Schedules, the revised quantum of compensation sought by Ms Nagel as at 12 May 2021 (further to the above post‑hearing agreement) is $31,235.72, of which $15,000 is sought for pain and suffering, plus pre-judgment interest of $6,363.53 (at 5.5% per annum from 5 March 2017, apparently to 15 January 2021), and further accruing to judgment.

13. The applicants also seek penalties pursuant to s 546 of the FW Act, and, conventionally, reserve their position as to the range of penalties until the determination of the question of liability.  The applicants foreshadow that should they be successful on liability they will submit that that each of the contraventions pleaded should be the subject of a separate pecuniary penalty order, noting (as I have said above) that they plead 26 contraventions by Shallam, and 26 contraventions by Mr Hallam.

14. The applicants also wish to be heard on the issue of costs, at the appropriate time.  I assume the respondents will also wish to be heard on costs.

    Summary of outcome of the proceeding

15. For the reasons that follow, I have concluded that:

    (a)Mr Tancred was employed by Shallam during the Period from 4 January 2016 up to and including 23 October 2017; and

    (b)Ms Nagel was employed by Shallam on a part time basis undertaking:

    (i)cleaning work at the Premises in the period 7 February 2016 to 14 February 2017 for an hour once a week, and in the period from 14 February 2017 to 23 October 2017 for an hour once every 4 weeks, and

    (ii)administrative and financial work for 9 hours each week from 14 July 2016 to 14 February 2017,

    and accordingly

    (c)that in respect of each applicant, Shallam has contravened the FW Act, and Mr Hallam is liable for Shallam’s contraventions pursuant to s 550 of the FW Act. 

    It follows that the respondents are liable to pay compensation to each of the applicants in the amounts to be calculated on the basis I explain below, and pre‑judgment interest.

16. I have further concluded that there ought to be declarations and orders substantially as sought by the applicants, and I will direct the parties’ to confer and bring in proposed short minutes of order to give effect to my reasons.

    THE PARTIES

    The applicants

17. Mr Tancred was in his early to mid-40s at the time he worked in the Poolwerx business.  He holds formal qualifications in real estate and office administration (each described as equivalent to a Certificate III).  Prior to his involvement with the Poolwerx business, Mr Tancred was employed by the real estate business ‘Professionals Lennox Head’ as Business Manager.  As at the swearing of his first affidavit on 1 February 2019, he was unemployed.  As at the final hearing, he had commenced employment at a not‑for‑profit organisation.

18. Ms Nagel was in her late 30s - early 40s at the relevant times.  She holds an advanced diploma in remedial massage therapy, and a Certificate III in real estate.  She owns and operates a small business in remedial massage therapy.  She worked in that business prior to, during, and following her work in the Poolwerx business.

    The Iluka / Radara subdivision development

19. As at December 2015, and throughout the Period, Mr Tancred was involved in a land subdivision and sale project with his father at Iluka, New South Wales through a company referred to as ‘Radara’.  At least initial development approval for subdivision into 5 residential blocks had been obtained prior to the parties’ December 2015 discussions, with certain engineering and civil works conditions and terms to be fulfilled.  Mr Tancred’s evidence is that there were a number of people managing different aspects of the work, and his father dealt with some of them, and he with others.  The parties refer to this project variously as the ‘Iluka’ and ‘Radara’ development or project. 

20. Mr Tancred says that payment of the $50,000 to buy into the Poolwerx business was at all times tied to the completion of the Iluka development.  It is not disputed that throughout the Period project completion was subject to ongoing delays.  Mr Hallam was kept informed of the progress of the project.  Mr Hallam disputes that payment of the $50,000 was tied to the completion of the Iluka development.

    The respondents, related entities, franchise agreements and dealings

21. As I have adverted to at [2] above, Shallam was a Poolwerx Corporation Pty Ltd franchisee, conducting the franchise as ‘Poolwerx Northern Rivers’ (in the Defence the respondents admit it traded as Poolwerx Ballina Byron). 

22. Shallam is the trustee of the Trust, and conducted the Poolwerx business for the benefit of the Trust.  The Trust was established on 21 August 2007.  Mr Hallam is the primary beneficiary of the Trust. 

23. Mr Hallam’s affidavit evidence is that in 2007 through the Trust he purchased ‘Poolwerx Lennox Head’ for $97,500 and entered into a franchise agreement ‘with them’.  On 12 September 2012 Poolwerx Corporation and Shallam (as trustee for the Trust) entered into a written franchise agreement for ‘Poolwerx Ballina‑Byron’ commencing 17 September 2012, for an initial term of 5 years, which agreement is in evidence (2012 franchise agreement).  Under the 2012 franchise agreement, Mr Hallam was guarantor for Shallam.  The franchise marketing area was Ballina‑Byron and Lismore postcode suburbs.  The business names listed in the 2012 franchise agreement were ‘PoolWerx Ballina‑Byron’ and ‘PoolWerx Lismore’.  The 2012 franchise agreement remained on foot until H2Yo! became the franchisee in September 2017 (see below).

24. Mr Hallam is the sole director, secretary, and shareholder of Shallam.  It is not in dispute that at all material times Mr Hallam was acting within the scope of his actual or apparent authority as director of Shallam.

    H2YO!

25. Mr Hallam is also the sole director of H2Yo!, which company he obtained registration of on 29 June 2017 through his accountant.  Shallam is the sole shareholder of H2Yo!.  Mr Hallam’s evidence is that he set up H2Yo! to facilitate changing the structure of the Poolwerx business. 

26. Pursuant to written franchise agreement dated 24 August 2017 in evidence (2017 franchise agreement), since 17 September 2017, H2Yo! has been the Poolwerx Corporation’ franchisee trading as ‘Poolwerx Ballina‑Byron’ and ‘Poolwerx Lismore’ conducting the Poolwerx business formerly conducted by Shallam from the Premises.  In the 2017 franchise agreement, Mr Hallam is named as the manager of the franchise, and Shallam and Mr Hallam are named as guarantors of H2Yo!.  Mr Hallam also warrants that he is the beneficial owner of H2Yo!.  Mr Tancred is not a party to the 2017 franchise agreement, nor named in it (whether as manager, guarantor, or otherwise).

    Swell Finance

27. Mr Hallam also operated a mortgage broking business called ‘Swell Finance’ with a partner.  That partner is not named.  Mr Hallam said that he started Swell Finance in 2009.  In cross‑examination, Mr Hallam said that the income or profits from the partnership that operates Swell Finance came into the Trust. He said, however, that it had a separate bank account than the one Shallam had for the Poolwerx business. The evidence revealed a considerable intermingling of funds however, with Mr Hallam making a number of significant transfers out of the Poolwerx business ANZ bank account in June and July 2017. See further below at [238].

    Brief overview of the Poolwerx business

28. The Poolwerx business sold pools, spas, chlorinators, pool and spa filters, pool and spa heating, miscellaneous pool and spa related products, and provided pool and spa maintenance services in the Northern Rivers area of New South Wales.  The business’ services included regular pool and spa servicing to both residential and commercial pools, green pool cleaning, holiday pool services, and pool pump and equipment repairs and replacements.

29. At all material times the Poolwerx business was conducted from the Premises.  Initially – it appears prior to 2012 - it had been run out of Mr Hallam’s house.  The Premises also operated as a retail shop.  Although there was some dispute between the parties whether for the months of March to August 2016, whilst the Premises was being redeveloped, the Poolwerx business then operated at that location as a site office only and not also as a retail shop, I am satisfied on the evidence that the business continued to have a physical retail presence at the Premises whilst the site was being redeveloped.  The business also had a depot/storage space in Ballina.

30. I have defined the Poolwerx business in [2] and use that term so defined throughout these reasons.  However, the parties were not always clear in their evidence nor counsel in their submissions as to what they meant by their use of the terms ‘Poolwerx’, the ‘Business’, the ‘business’, and ‘Shallam’, which they often used interchangeably and without making clear what they meant by their use.  Where the context does not make clear what the witness or party intends, I have endeavoured to use the expression that the witness or party has used, notwithstanding any resultant lack of clarity. 

    PLEADINGS, PROCEDURAL MATTERS AND THE HEARING

    The pleadings

31. The applicants commenced this proceeding by way of originating application and statement of claim, each filed on 25 May 2018.  Pursuant to orders I made on 22 June 2018, the applicants filed an amended application, and an amended statement of claim on 5 July 2018. 

32. On 7 August 2018, the respondents filed their Defence to the amended statement of claim.  The respondents have not filed any subsequent defence. 

33. On 22 October 2020, I granted leave to the applicants to file and serve a further amended application and further amended statement of claim lodged with the Court’s Registry on 9 October 2020.  On 18 November 2020, after hearing from both parties, I granted leave to the applicants to file and serve a second further amended statement of Claim in the form handed up to Court (by email) which brought the pleading into conformity with evidence given by Ms Nagel in cross‑examination.

34. By the Claim, the applicants added two paragraphs by way of alternative pleading: in substance that (in the alternative to Mr Hallam) Mr Tancred, acting with actual or ostensible authority of the respondents, on about 21 June 2016 offered and Ms Nagel accepted employment in the Poolwerx business performing financial and administrative tasks, and secondly, that shortly before 5 September 2016, he requested Ms Nagel perform those duties at the Premises, and they agreed she would do so two days a week on the basis she would be paid without delay.  I excused the respondents from filing any defence to the Claim (as an amended claim) if their defence to those additional allegations was limited to denials.  No defence to the Claim has been filed.

35. Accordingly, I have proceeded on the pleadings as constituted by the Claim, and the Defence, and that the allegations introduced in the Claim on 18 November 2020 are denied.  As I have said, the applicants seek the quantum specified in the updated Quantum Schedules.

    The hearing of the evidence and submissions

36. The hearing on liability took place over 6 days comprising 5 days of hearing of evidence in November 2020, and a day of oral closing submissions in February 2021.  I conducted the hearing as a hybrid hearing, both in person and via audio‑visual‑link (AVL), during New South Wales’ continuing response to the COVID‑19 pandemic.  For the hearing of the evidence I sat in the Court in Sydney, and presided via AVL in the courtroom at the Court constituted in the State court building located at 29‑31 Molesworth Street, Lismore, New South Wales, where the parties and their respective legal representatives, including counsel, appeared in person.  With the exception of three of the respondents’ witnesses (Ms Brown, Mr Jamieson and Mr Shanahan) who gave evidence via AVL entirely remotely, all witnesses who were cross‑examined were present in person at the Court in Lismore, and appeared by AVL before me. 

37. Counsel and the parties’ legal representatives then appeared by AVL before me (sitting at the Court in Sydney) on 19 February 2021 to make oral closing submissions.  Counsel thereafter provided a short note clarifying the employment status of workers in the Poolwerx business.  As I have noted above, the applicants subsequently served and filed the Quantum Schedules.  More recently, counsel for the respondents drew my attention to the High Court decisions of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 398 ALR 404; (2022) 312 IR 1 (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; (2022) 398 ALR 603; (2022) 312 IR 74. Whilst I invited counsel to make further submissions having regard to Personnel Contracting and Jamsek, on 29 August 2022 the parties have jointly advised that they do not wish to make any further submissions.

    Overview - the witnesses at hearing

38. At hearing the parties read the evidence of 18 witnesses, 17 of whom counsel cross‑examined.  Each of Mr Tancred, Ms Nagel and Mr Hallam gave evidence, and called supporting witnesses, including staff and former staff members of the Poolwerx business.  I have considered the witnesses’ written evidence, the transcript of their oral evidence, and refreshed my recollection by reviewing my contemporaneous notes. 

39. As regards Mr Tancred and Mr Hallam, it suffices to observe that they dispute each other’s versions of most conversations and most of their interactions.  As regards Ms Nagel, on the one hand, and Mr Hallam on the other, whilst Mr Hallam does not accept the conversations Ms Nagel alleges, and says that Mr Tancred got her involved in working in the Poolwerx business, he merely agreed, he does not dispute that she did the work.

1. Ultimately, the focus of the parties’ cases was on what was said and done by Mr Tancred, Ms Nagel, and Mr Hallam, and in respect of some reports of data extracted from the Evosus business and back office system, their summary and analysis, as qualified by Ms Hallam in cross‑examination.  The evidence of the other witnesses was broadly supportive of the case of the party that called them, save as impugned in cross‑examination, as I note below.

2. In sum, excepting Ms Hallam (identified below at [82]), the non‑party witnesses gave evidence of their working in, and/ or interactions with the Poolwerx business and Mr Tancred and Mr Hallam in the Period, or shortly afterwards, and, to the extent they had any interactions with Ms Nagel, also Ms Nagel.  These supporting witnesses’ evidence is limited in scope, and having regard to the authorities, is limited in import. 

   Credit

3. In closing submissions, counsel took different approaches to the witnesses’ credit; Ms Blattman for the applicants submitted that credit was relevant, and that Mr Hallam, in particular was not a credible witness, whilst Mr Simpson for the respondents submitted that credit was not an issue, and made no submissions as to credit.

4. In sum, I consider that the applicants and most of the supporting (that is, non‑party) witnesses made a genuine attempt to assist the Court by giving evidence honestly, and that they frankly answered questions asked of them.  I have identified the exceptions to this general finding below in these reasons.

   Mr Tancred

5. I consider that Mr Tancred made a genuine attempt to assist the Court by giving evidence honestly and to the best of his recollection, and that he frankly answered questions asked of him in cross‑examination, making concessions as appropriate.  I found him an honest and credible witness, willing to make concessions.  Save as I state, I accept his account.

   Ms Nagel

6. I consider Ms Nagel gave her evidence honestly, and to the best of her recollection.  I found Ms Nagel an honest and credible witness.  I accept her account.

   Mr Hallam

7. To my observation, noted at the time of his giving evidence at hearing, Mr Hallam was an evasive and self‑serving witness.  On contentious matters, where Mr Hallam’s account is not supported by objective, contemporaneous records, or the evidence of disinterested witnesses, I do not accord Mr Hallam’s evidence great weight.  Generally, save as I identify otherwise, where there is a dispute as to what was said as between Mr Tancred and Mr Hallam, I prefer and accept Mr Tancred’s account to Mr Hallam’s account.

   THE EVIDENCE – FINDINGS OF FACT

8. In these reasons, the witnesses’ employment, business activities, locations and like details are current as at the dates of their affidavits, unless I state otherwise.

9. Unless the context makes clear otherwise, my stating in this and the following sections of my reasons without qualification a fact is a finding of the fact I state.

   The applicants’ witnesses

10. The applicants called Mr Tancred and Ms Nagel, and 4 former employees of Shallam in the Poolwerx business:

    (a)Mr Tancred affirmed two affidavits read at hearing, dated 1 February 2019, and 17 May 2019; 

    (b)Ms Kellie Nagel affirmed two affidavits read at hearing, dated 1 February 2019, and 9 May 2019;

    (c)Mr Matthew Gillam, owner of a pool and spa maintenance business called ‘Pelican Pool Care’, and trade qualified pool and spa technician.  He was employed by Shallam as a senior pool technician from about September 2016 to about September 2018, one of 4 pool technicians then employed at the Premises.  Mr Gillam was a former Poolwerx franchisee in Surfers Paradise.  Mr Gillam affirmed two affidavits read at hearing;

    (d)Mr Gregory John Imbree, a trade qualified electrician, and owner operator of a lawn maintenance and property slashing business.  Mr Imbree was employed by Shallam from October 2016 to August 2018 as a pool and spa technician, initially 3 days a week as a casual employee, and then full time as a permanent employee.  He affirmed two affidavits read at hearing;

    (e)Mr Jamie Arthur Burford, a pool and spa technician for Summerland Pools in Alstonville.  Mr Burford worked for the Poolwerx business in a casual capacity, mostly working full time hours, from February 2013 until May 2016, when he was “let go” by Mr Tancred.  Mr Burford affirmed one affidavit read at hearing; and

    (f)Mr Kenneth Owen Smith, a trade qualified tiler, and certificate holder in security operations.  Mr Smith was employed by Shallam as a pool and spa technician from August 2015 until October 2017.  He affirmed one affidavit read at hearing.

11. As I have adverted to above, the witnesses called for the applicants variously gave evidence of their roles, the tasks they undertook, the hours they worked, and their interactions with Mr Tancred and Mr Hallam and those men’s roles, tasks and hours worked in the Poolwerx business.  They gave evidence of how the parties described each other and themselves.  Their evidence supported and substantiated the applicants’ evidence.  Each of the applicants’ supporting witnesses’ evidence was generally confirmed in cross‑examination.

12. Mr Gillam gave evidence that Mr Hallam introduced Mr Tancred to him in October 2016, when he was interviewed for the job, as “my right hand man” and “my manager”.  He reported to Mr Tancred daily, but understood from Mr Hallam that Mr Hallam had the “ultimate say”.

13. Mr Gillam worked on average 40 hours a week (Monday to Friday), and 50 hours a week during the summer peak season.  Mr Gillam observed Mr Tancred working most evenings after 5pm, and as late as 9pm, and regularly receiving phone calls from him after 5pm.  He met Ms Nagel when he started, and noticed she worked a couple of days a week.

14. Mr Imbree gave evidence that Mr Tancred introduced himself as the manager and one‑day‑soon‑to‑be partner in the Poolwerx business, that Mr Hallam was the franchise partner, responsible for all his pay and stuff, and had the final say.  Mr Imbree said that Mr Hallam was seldom in the shop – on average once a week, and then only fleetingly each time, and the only interaction he had with him was asking for payslips, putting in leave requests, querying his pay (underpayment of leave loading) and chasing his employment contracts.  Following Mr Tancred’s dismissal, however, Mr Hallam was regularly in the shop, working with Ms Haydon (identified below at [90]).

15. Mr Imbree worked on average 45 hours a week, and in peak summer between 55 and 60 hours a week.  Mr Imbree gave evidence that Mr Tancred worked “incredibly long hours”, and of often driving past the Premises in the evenings after family dinners out, or stopping to get petrol and observing Mr Tancred still at work anywhere between 7pm and 10pm midweek, and after 5pm on Saturdays, and present on Sundays.  On a regular basis he took calls from Mr Tancred after hours.  He describes a meeting at the time of Mr Tancred’s departure from the business in which Mr Hallam said he had “let Matt go” and that it had been “coming for a long time”.

16. Mr Imbree described seeing Ms Nagel doing administrative and financial duties working in the shop (the Premises) two days a week during school hours on Tuesdays and Thursdays until her mother died, and that Ms Nagel had responsibility for the technician run‑sheets for a time, and would speak to him about them to complete client invoices.

17. In reply, Mr Imbree confirmed his evidence, that Mr Hallam’s attendance at the Premises was erratic and infrequent, expanded upon Mr Imbree’s experience of Mr Tancred’s diligence, and responded to statements by respondents’ witnesses’ in their affidavits, including Ms Haydon.

18. Mr Burford gave evidence about working in the Poolwerx business for nearly 3 years.  He recounts Mr Hallam in October 2014 proposing he do a traineeship, stating that Mr Burford would get guaranteed hours, and Mr Hallam would not need to pay him as much, and of reluctantly signing the documentation.  He states the traineeship did not work out, and agreed in cross‑examination he was not keen on it.  He was never given any Award, National Employment Standards or Fair Work information sheet, and stated that Mr Hallam was erratic and infrequent in issuing payslips and payments.

19. Mr Burford recalled Mr Hallam introducing Mr Tancred into the business by advising that Mr Hallam was restructuring how things were done and stating Mr Tancred was coming in to help him out on the admin side.  He did not recall Mr Tancred ever being referred to by a position or title.  Mr Tancred was the person who terminated his casual employment, and his impression that he was just following orders from Mr Hallam.  Mr Burford says this did not come as a surprise, having been threatened by Mr Hallam 3 months earlier that this would happen when the work slowed.  Mr Burford gave evidence of having to follow up Mr Hallam to get his separation certificate, and pressing him for his untaken annual leave. 

20. Mr Smith recalls that during his period of employment with the Poolwerx business, he rarely saw Mr Hallam at the Premises.  Prior to Mr Tancred’s time, whilst Mr Hallam prepared the approximate job sheet listing for the week, Mr Burford handed out the run sheets in the morning, and Ms Brown (identified below at [85]), the office administrative assistant, assisted at the end of the day with finishing and completing close outs.  Mr Smith recounts that in the entire 26 months he worked at Poolwerx, he received 5 payslips, despite numerous requests.  He recounts instances of not being paid, of not taking meal breaks, of late pay, and of disputes with Mr Hallam regarding getting paid.  He attaches an email of one such instance.  He was never given any Award, National Employment Standards or Fair Work information sheet. 

21. Mr Smith recounts in early 2016 Mr Hallam introducing Mr Tancred to the staff to the effect that “… Matt is going to help re‑structure the business and get it going again.  Matt will be looking after the admin and the shop.  You will all pick up your job sheets and your chemicals in the morning from Matt, and will do close outs in the afternoon with Matt”.  (I note that Mr Smith’s recollection is to similar effect as Mr Burford’s.)  Whilst Mr Smith was not aware of Mr Tancred ever being given a title, Mr Smith attested that he and others referred to Mr Tancred as the Lennox Head shop manager.  Mr Smith gave evidence of his observations of the long hours Mr Tancred worked, and what he did, and of being called by him after hours and on weekends about work matters.  He thought it was common knowledge among the staff that there was some type of business arrangement that was to occur between Mr Hallam and Mr Tancred.

22. Mr Smith describes the work Ms Nagel did at the Premises in the Poolwerx business, substantiating her account, and to the same effect as Mr Burford’s evidence.

23. Mr Smith described a heated row with Mr Tancred over chemicals in September 2017, and that Mr Smith stormed away.  He states that Mr Hallam subsequently rang him and told him he, Mr Hallam, was the owner, and that Mr Smith should have had it out with him.  Mr Smith and Mr Hallam then met, and spoke about that incident, and Mr Smith’s other frustrations about pay and work matters.  Mr Smith describes receiving mixed directives.  He resigned shortly thereafter. 

24. Mr Smith also describes being approached by Mr Hallam to give evidence in the proceeding that Mr Tancred was a partner, which he declined.  He states that despite not maintaining a civil relationship with Mr Tancred, it appeared that Mr Tancred had also been a victim of Mr Hallam’s exploitative approach.  Mr Smith responds to and refutes Mr Hallam’s evidence and that of the respondents’ employee witnesses.

25. In cross‑examination Mr Smith confirmed his evidence, stated that he had been in business himself, and said that what he observed of Mr Hallam was not how Mr Smith would operate a business.  Mr Smith clarified that there were no ‘toolbox’ staff meetings held by Mr Hallam when he worked there.

    The respondents’ witnesses

26. The respondents called Mr Hallam and 11 other witnesses.  Aside from Mr Hallam, each witness swore one affidavit read in the proceeding.  Mr Hallam swore two affidavits read at hearing, the first sworn 31 March 2019, and the second sworn 6 June 2019.

27. Ms Louise Rosalind Hallam is Mr Hallam’s sister.  She has over 20 years’ experience in data analysis, from 2017 has been employed with a large software development company, initially as regional consulting director, and resides in Queensland. 

28. Ms Hallam exhibited to her affidavit 4 Evosus system audit reports selected from the Evosus business system used by the Poolwerx business, and a data analysis summary she created.  She selected the reports with Mr Hallam’s assistance, and summarised one of them based on his instructions of types of activities.  Ms Hallam’s evidence is relevant to the applicants’ claims of hours worked. 

29. In cross‑examination Ms Hallam readily conceded that the data she exhibited was incomplete, that there were other categories of report she did not summarise or analyse, and that there were limitations identified in the exhibited material.  These matters adversely impact the reliability and usefulness of the material she exhibited.

30. Ms Jade Brown was formerly employed in the Poolwerx business from August 2013 until her employment was terminated by Mr Tancred in mid‑August 2016.  Ms Brown’s role involved administration tasks (banking, invoicing, accounts payable and receivables) and some sales.

31. In cross‑examination Ms Brown qualified her affidavit evidence.  She agreed that when she challenged Mr Tancred about him terminating her employment rather than Mr Hallam, Mr Tancred told her Mr Hallam had asked him to have the meeting with her, that he had been hired to manage the business, and it was one of the unfortunate tasks of being a manager.  She accepted his explanation.

32. Mr Travis Clarke is a licensed plumber, and the owner of ‘Swell Plumbing’ business in Lennox Head, who since 2007 has become a close family friend of Mr Hallam, seeing him at least every fortnight.  Mr Clarke’s written evidence was that in late 2015 Mr Hallam said the Poolwerx business was going well, but was starting to get too much, and he was thinking of bringing in a partner.  Mr Clarke said that after Mr Tancred started, Mr Hallam described him as being “a partner in the business now.  He just has to pay into the business”, and that Mr Clarke was aware that Mr Tancred had not paid Mr Hallam.  Mr Clarke also gave evidence of doing some plumbing work for the Iluka development in August 2017, and asserted he was not paid on invoice, and had to chase payment.

33. Under cross‑examination Mr Clarke conceded that he had not disclosed in his affidavit that his business had to undertake rectification works for the plumbing work he did for the Iluka development, because it detracted from the image he was trying to convey of Mr Tancred as dishonourable.  Mr Clarke agreed that “of course” he said in his affidavit what he thought might help Mr Hallam’s case.  Mr Clarke’s evidence in cross‑examination cast significant doubt on his motives and his truthfulness.  I do not consider him a credible, or reliable witness.

34. Mr Matthew Gollan has been the landlord of the Premises since 2012 through a corporate vehicle. Mr Gollan swore one affidavit dated 25 March 2019, admitted subject to a limitation pursuant to s 136 Evidence Act 1995 (Cth). He gave evidence regarding a new lease of the Premises granted to Shallam in the first part of 2016, and his earlier assumption that Mr Tancred was an owner in the business. Mr Gollan was not required for cross‑examination.

35. Ms Janene Louise Haydon joined the Poolwerx business in January 2017 as a bookkeeper and administration assistant, and worked there until a few weeks before the hearing.  She remains friends with Mr Hallam.  Prior to her employment in the Poolwerx business, and a break from the industry, Ms Haydon had worked at the pool retail business Profile Pools for 20 years until 2015, mostly as shop manager of the Byron Bay store. 

36. Ms Hayden’s hours of work were 8:45am to 5pm, Monday to Friday.  In her affidavit Ms Hayden described aspects of the operation of the Poolwerx business, stated that Mr Hallam was out of the store (the Premises) a lot working with commercial clients, criticised Mr Tancred’s performance in several respects, including his support of the technicians, and his work ethic and attendance, and also complained about some instances of Ms Nagel’s attendance.  Ms Hayden stated that commencing in March 2017, she was given the job of closing out with the technicians, which had been Mr Tancred’s job prior to that date. 

37. Under cross‑examination Ms Haydon agreed that Mr Tancred was a hard worker.  From her answers it became apparent that Ms Hayden’s criticisms were largely speculation.  Ms Haydon’s evidence in cross‑examination cast significant doubt on the veracity of her evidence, and her behaviour.  I do not consider her a credible or reliable witness.

38. Mr Dale Ashley Jamieson is the wholesale manager of Lifestyle Spas and Banff Spas, based in Victoria, and since August 2016 an occasional supplier of spas to customers of the Poolwerx business.  Mr Jamieson described various discussions with Mr Tancred about his status in the business, and the fact that he was an owner.  His written evidence is that he first met Mr Hallam and Mr Tancred in person in November 2016, at which time Mr Hallam said “This is Matt Tancred, he is working in the business with me”.  He recalls that in April-May 2017 he rang Mr Hallam to ask “What’s going on with Matt, is he an owner of the business?”, to which Mr Hallam replied “Yes, we are now fifty-fifty in the business …”.  In cross‑examination Mr Jamieson was clear “Absolutely 100% put my life on it” that Mr Hallam said fifty-fifty.  In this respect, Mr Jamieson’s evidence contradicted Mr Hallam’s claim to have a majority share.

39. In his affidavit, Mr Jamieson made certain criticisms about Mr Tancred in relation to organising a stall at the Lismore Outdoor and Leisure Show in July 2017 (Lismore Show).  Those criticisms are contradicted by Mr Tancred’s evidence in reply, and the documentary evidence exhibited to Mr Tancred’s reply affidavit.  Whilst I do not consider that anything turns on the issue of the Poolwerx business’s participation at the Lismore Show, I am satisfied by the documentary evidence that the respondents’ witnesses’ criticisms of Mr Tancred’s participation are unfounded.

40. Mr Craig Douglas McDonald was a former owner of two Poolwerx franchises for the period 2004 and 2013, and since late 2013, an accounts manager employed by Aquatic Elements, a wholesaler of pool chemicals, including to Poolwerx franchisees until 2018.  Mr McDonald has known Mr Hallam since 2007, and helped him with his business, including visiting councils, and obtaining commercial contracts.

41. Mr McDonald gave evidence that Mr Hallam introduced Mr Tancred to him at Quattro restaurant in early 2016, by saying “Matt and I are in the process of going into partnership with one another in the Poolwerx Lennox Head Franchise.  Matt will be a half owner”, and of dealing with Mr Tancred in relation to the Poolwerx Lennox Head account, as well as Mr Hallam.  Mr McDonald asserted that at a golf round in Fiji at the Poolwerx annual franchisee conference in August 2017 Mr Tancred introduced himself as “an owner in the business”.  In cross‑examination Mr McDonald conceded that he did the introductions, saying “This is Matt from Lennox, he works with Stu”.

42. Ms Jessica Tahnee‑Leigh Pye is an administration and sales assistant employed in the Poolwerx business who commenced employment in mid‑October 2017, just before Mr Tancred ceased working there.  Ms Pye gave brief evidence of being interviewed by Mr Tancred in September 2017, and him saying he was an owner of Poolwerx.

43. Mr Joshua Michael Saad has been an employee of the Poolwerx business since early July 2016, when he commenced as a fulltime technician.  He became store manager at the Poolwerx Lismore store in September 2017.  At the time of his affidavit he was employed as a senior pool technician.  Mr Saad was employed by Mr Tancred, and gave evidence that Mr Tancred described himself and Mr Hallam as business partners.  In cross‑examination Mr Saad exhibited a lack of recollection and was vague in his answers.  Accordingly, I give little weight to Mr Saad’s evidence.

1. Mr Damian Shanahan has been a Lennox Head resident since 1990, and a customer of the Poolwerx business since shortly after it opened.  Mr Shanahan gave brief evidence of a conversation with Mr Tancred at the Premises in early May 2017, in which he recalled the latter described himself as “one of the owners” of the business.

2. Mr John Casey was accountant for Mr Tancred during the Period, and it transpired during the hearing also for Mr Hallam, with whom he was friendly.  When pressed in cross‑examination he disclosed that he and Mr Hallam had been on an overseas holiday together, adding that there were other people also on the trip.  Mr Casey gave evidence of an informal ‘kerbside’ conversation he had with Mr Tancred in 2016, in which Mr Tancred advised he was buying into the business, but as he did not have the capital to pay yet it would be finalised when he got money from the Iluka development, and described the monthly amounts to be paid to him as “drawings”. 

3. Mr Casey exhibited to his affidavit email correspondence with Mr Tancred in 2019 in which the two expressed different recollections, and also the applicants’ taxation returns for 2016, which documents he had produced under subpoena.  In the 2016 taxation return, Mr Casey described Mr Tancred’s income as “casual earnings”.  In cross‑examination, Mr Casey sought to explain the inconsistency between the income statement in the 2016 taxation return, and the earlier conversation he claimed to have had with Mr Tancred, as a lapse of memory.  In response to cross‑examination, Mr Casey disclosed that he had some 400 clients, and had between 1 and 10 conversations a day with clients at the time of his claimed conversation.

4. Mr Tancred denied having the conversation as described by Mr Casey, and denied describing his monthly payments as drawings.  There is considerable force in Ms Blattman’s submission in closing that Mr Tancred’s recollection, as a matter personally concerning him, is to be preferred to Mr Casey’s recollection of an informal conversation with one of his many clients, over 3 years’ prior to giving evidence. 

5. In the circumstances, and observing that the label parties place on their relationship is seldom determinative, I place greater weight on the evidence of the 2016 taxation return, than on recollections several years later of a conversation in 2016 between Mr Casey and Mr Tancred.

   MR TANCRED’S INVOLVEMENT IN THE POOLWERX BUSINESS

6. I next turn to the parties’ evidence of the dealings between Mr Tancred and Mr Hallam and Mr Tancred’s participation in the Poolwerx business, before turning to the evidence relating to Ms Nagel’s claim. 

   Background - the period prior to December 2015

7. Mr Hallam and Mr Tancred first met in about 2006 when Mr Hallam, recently arrived from regional Victoria, worked for Westpac, Ballina, and arranged finance for Mr Tancred’s parents for a local property purchase.  In around 2011, Mr Hallam arranged funding through Swell Finance for Mr Tancred and Ms Nagel, it appears for their purchase of a residential block of land at Lennox Head.  The two men kept in touch over the following years. 

8. Commencing in May 2015, Mr Hallam attempted to sell the Poolwerx business.  He states that Swell Finance was occupying more of his time, and it was getting too hard to juggle both businesses.  He made initial enquiries of a Mr Mike Geddes, then franchise development manager at Poolwerx Corporation, who handled the sale and purchase of Poolwerx Corporation franchises.  On 18 May 2015, by email Mr Geddes informed Mr Hallam that he had an unnamed contact interested in purchasing a Poolwerx franchise, and requested that Mr Hallam urgently prepare and provide to him certain paperwork.

9. In May 2015, Mr Hallam phoned Mr Tancred to arrange a coffee.  Discussions unfolded over the next few months, during which time Mr Hallam offered to sell the Poolwerx business to Mr Tancred for $100,000.  In about June 2015, they met to discuss the proposal.  Mr Tancred requested Mr Hallam provide him with information regarding the Poolwerx business.  Mr Hallam sent Mr Tancred the financial documents he had prepared for Mr Geddes.  Mr Tancred says that all he was ever provided by Mr Hallam were two sheets in evidence: a profit and loss statement for the Trust for the period ending 31 December 2014 (with FY 2014, and FY 2013 figures), and a document headed ‘cash flow – custom (ex GST) 01/07/14 – 30/04/15)’.  After discussions with Ms Nagel, Mr Tancred declined to proceed.

10. Mr Hallam states that in November 2015 he purchased a client list of 30 additional clients from ‘Byron Bay Pool Services’ for $14,300 including GST.  He did not exhibit any material substantiating this purchase.

    The December 2015 meetings and conversations

11. In December 2015, Mr Hallam approached Mr Tancred over the phone, and they then met several times.  Mr Hallam proposed selling Mr Tancred a share of the Poolwerx business.  Whilst they agree they met, Mr Hallam and Mr Tancred disagree about when and where they met, what they said, and what happened.  On Mr Tancred’s account they had two material conversations before Mr Tancred commenced working in the Poolwerx business, one on about 14 December 2015 at a local café - Quattro Restaurant, and the second on about 17 December 2015 at Mr Hallam’s home.  Mr Hallam says the first conversation was an unidentified number of conversations occurring over about 10 days from 14 December 2015 variously at his home and a different café – For Shaw Café, and that Mr Tancred’s second conversation took place on about 15 December 2015 also at that café.

    Mr Tancred’s account

12. Mr Tancred’s account of the first conversation he says took place - when they met on around 14 December 2015 - is that Mr Hallam said as follows:

    Mr Hallam:I really need help, I can’t keep doing what I am doing I need time to focus on my finance business.  Would you come on board for half the business for $50,000?  We can sort the money out whenever, it’s not about the money, what I really need is your time and effort in the business, the business needs someone to care.

13. Mr Tancred says he discussed Mr Hallam’s proposal with Ms Nagel.  Ms Nagel’s evidence is that he did so.  Mr Tancred says that on around 17 December 2015, he and Mr Hallam met again, this time at Mr Hallam’s home, at approximately 2:45pm.  Mr Tancred recounts the following conversation:

    Mr Tancred: Kell [Ms Nagel] and I have discussed your situation and your offer and we would like to help.

    Mr Hallam:Thanks mate, I really need your help, and I think we can make a right go of the business together.

    Mr Hallam:Are you ok with the 50/50 split between you and I?

    Mr Tancred: Yep, Kellie and I are all good with that, but as you know, due to my property stuff with Radara being delayed, we will need to sort the payment out at a later date.

    Mr Hallam:Mate, it’s not about the money, it’s about getting the operational help I need now.  I can’t run this business on my own.  We can figure the money and Partnership stuff out later, would you be good to start first thing in the new year?

    Mr Tancred: Not a problem.

    Mr Hallam:I think that would be the best as we can get Christmas and New Year out of the way and start a fresh on say Monday the 4^th of January.

    Mr Tancred: That sounds fine I’m looking forwarded to getting in to it and helping sort things out.

    Mr Hallam:Thanks heaps mate, I’m really grateful you have decided to come onboard.

14. Mr Tancred attests that Mr Hallam also briefly mentioned – and he believes it was during the above conversation – that Mr Hallam ran the business under a trust.  He says that the conversation went along the following lines:

    Mr Hallam:I run the business through my trust SW Hallam Trust.  I also run my finance business through here as well.  So when we are ready to do the partnership I will have to change it all, as its too messy keeping all under this trust.

    Mr Tancred: That’s fine, we can sort out the new company identity later.

    Mr Hallam’s account

15. Mr Hallam says their first conversations (as I have said above, he attests to conversations in the plural, but does not provide any specific details) at his house / local café were as follows:

    Mr Hallam:Every time I spend time in the shop working on the business it suffers on the road.  Then when I am on the road all the time the admin side of things suffers.  Would you be interested in coming in as a partner where you would oversee the admin side of things, run the HR, get the boys going each morning and at the end of the day and be free to work on your other business interests as well?  We are going to have to deal with designing a brand new purpose built shop.

    Mr Tancred: I’m interested, I’ll consider it.

    Mr Hallam:I have already offered you the business for a $100K if you were to take over the finance on the vehicles, so I am thinking $50K for your share.  That was before I paid for the new clients.  I would like that to come back to me at some stage.

    Mr Tancred: Yep.  As you know, I don’t have the money at the moment, but its owed to me from the sale of the Pros.  [Mr Hallam says by ‘the Pros’ Mr Tancred was referring to the Professionals Real Estate business.]

    Mr Hallam:You’ll get back to me soon?

    Mr Tancred: Yes I will.

16. Mr Hallam says the conversation that Mr Tancred says occurred on about 17 December 2015 (see above) took place at For Shaw Café and was to the following effect:

    Mr Hallam:The buy in will be for $50,000.00 and you will be a partner with me having a slight majority share.

    Mr Tancred: Yep.

    Mr Hallam:I am happy for you to pay the $50,000.00 in instalments of $20,000.00 due by the end of March this year and then the remainder by the end of December.  This will give you time to sort out the final monies owed to you from your business sale.  

    Mr Tancred: That’s fine.

    Mr Hallam:The business will require a change in structure and a new franchise agreement will need to be drawn up, but we will not go to the cost of doing that until you have paid me the first instalment.  At that time, we can tell Poolwerx and the staff what’s going on.  Are you OK with that?

    Mr Tancred: Yes, that makes sense.

    Mr Hallam:The business will cover the cost of the re‑structure but if there is any GST or other costs that will be additional for you to pay.

    Mr Tancred: No worries.

17. Mr Hallam says on this occasion they also said the following:

    Mr Hallam:From the start we will take equal draws of $2500.00 each per month and split the profits equally.

    Mr Tancred: Yep.

    Mr Hallam:When do you want this to start?  I think about first day back after New Year’s.

    Mr Tancred: I’ve got visitors so that would suit.

    Mr Hallam:Where do you want to start?

    Mr Tancred: I think it best, I do a review of how everything operates and who does what on a daily basis.  I will do a staff profile and personality profile of each staff member.  This will help me with managing the staff and work out who is pulling their weight.

    Mr Hallam:That sounds like a good idea.  Let me talk to the staff first so they know what’s going on.  I will tell them when they come back after the Christmas break, that you’re the business manager.  This is until you pay the first instalment.

18. Mr Hallam says that they then shook hands and agreed that they would see each other in the New Year.

    The Falls Festival

19. Just before Christmas Mr Hallam rang and asked Mr Tancred to help him out at the upcoming Falls Festival in Byron Bay, which had a water park that required multiple large inflatable pools.  The parties differ as to what was said.  There is no dispute however that Mr Tancred commenced working at the Falls Festival on 28 December 2015. 

20. Mr Tancred says Mr Hallam rang and said: 

    Matt, I know that we agreed last week to you starting in January, however, I just can’t [get] everything done in time for Falls Fest, can you help me out?  Can you start on the 28^th, to run the big pools at Falls?

    Mr Tancred replied:

    Mate, look, I’ll talk to Kell as her family is here.  We have things planned, but I’ll talk to het [sic] and see what I can do.

    Mr Hallam then said:

    Mate, if you could that would be really good, it’s just me and I can’t do it on my own.  

    and:

    Mate, I really need you.  I’m stuck, I have no‑one else who can do this.

    Mr Tancred said he would get back to him, spoke to Ms Nagel, and called Mr Hallam and let him know he could help at Falls Festival.

21. Mr Hallam disputes that he had any difficulties with getting people to help.  Mr Hallam says that he had done the Festival by himself the year before, but with difficulty.  He says he had friends and other franchisees who would come and help, but as the Festival was shortly before Mr Tancred was starting, he rang Mr Tancred and said:

    Matt, I’ve got the Falls Fest coming up.  Do you want to help out with that?  It will introduce you to pool chemistry and it will also be a good [sic] for cashflow if we are doing the work rather than paying wages.

    December 2015 interactions – what is not in dispute

22. As I have said, there is no contemporaneous written record of what was said, nor what was agreed or alleged to have been agreed orally by Mr Tancred and Mr Hallam in December 2015.  Notwithstanding their different accounts, the parties are agreed that in one or more conversations in or around mid‑December 2015, Mr Hallam approached Mr Tancred with an offer to sell to him an interest in the ‘business’ for the sum of $50,000.  Mr Tancred says the share was to be a 50/50 split, whilst Mr Hallam says he said he – Mr Hallam – would have a slight majority.  On either account, there was no proposal that Mr Tancred was going to make any payment at that time – payment would be delayed. 

23. The parties are also agreed that whichever version of their conversations occurred, in conversations in December 2015 Mr Hallam and Mr Tancred discussed a proposal that Mr Tancred would buy in to become a partner in the Poolwerx business, however neither party further identified what they intended by that expression.  Following from the discussions the parties had commencing in May 2015, I consider that it is reasonable to infer that business was the Poolwerx business, but that there was no discussion what was to be sold or acquired.  See further below, my consideration and determination of the claim.

    Mr Tancred maintained payment was tied to settlement of the Iluka development

24. In cross‑examination the respondents’ counsel, Mr Simpson put to Mr Tancred that the payment terms between him and Mr Hallam stipulated that part payment of the consideration amount in the sum of $20,000 was to occur within a few months of their conversations in December 2015.  Mr Tancred consistently maintained that the payment was at all times linked to completion of the Redara project /Iluka development:

    Mr Simpson:    And it’s the case that in the conversation [second conversation in December 2015], you went on to discuss when that 50,000 might be paid? ---No.  Not to my recollection.

    Mr Simpson:    You discussed with him that you would pay $20,000 within a few months and the rest by the end of December 2016? ---No. That was never discussed. 

    Mr Simpson:    Do you say, Sir, that there was no discussion at the time about when the 50,000 might be paid? --- No, there was not. 

    …

    Mr Simpson:    So you had a discussion in December 2015 about the payment of the $50,000.  And you say you said it was tied to Redara, right? --- Correct.

    Mr Simpson:    And then you had a discussion in June 2017, that I’ve just taken you to, correct? --- Yes.  The discussion we were just talking about.  Yes.

25. Mr Tancred adhered to his written evidence.  He was adamant that at all times, commencing in their conversations in December 2015, and thereafter, including subsequently in their meeting in June 2017, payment of the $50,000 was linked to the completion of his Radara project, and further, that he continually updated Mr Hallam of the progress of this project during the Period:

    So, I made it clear that at all times the payment was directly tied to Redara and the settlement of the block in Iluka.

26. Mr Tancred was not challenged about the discrepancy between his evidence and Mr Hallam’s evidence on the percentage share discussed (50% / 47-49% share). 

    Mr Tancred formally commences in the Poolwerx business

27. As I have said, on 4 January 2016, Mr Tancred commenced working at the Premises in the Poolwerx business.

28. Mr Tancred says that sometime between 28 December 2015, and 2 January 2016, Mr Hallam said to him:  “I am telling everyone, including all the staff, you’re the business manager.” And that Mr Tancred responded:  “that’s fine, I understand”.  Mr Hallam does not dispute that in January 2016 he introduced Mr Tancred to the staff of the Poolwerx business as Poolwerx’ business manager.  The evidence of the supporting witnesses who then worked in the business is to substantially the same effect.  I so find.

29. Mr Tancred says that sometime in early 2016 Mr Hallam told him that he had told some close people like his sister Ms Louise Hallam, and a friend Mr Travis Clarke (of ‘Swell Plumbing’), what he had offered Mr Tancred, and that “We can tell everyone later when all our stuff is sorted out with Poolwerx when its all finalised.”  Mr Tancred also attests that from time to time, about quarterly, up until at least June 2017, Mr Hallam would direct him not to tell anyone of their proposed partnership, and that Mr Tancred said he understood.  He says Mr Hallam said to the effect:

    Mate, until this is all stitched up, you can’t say anything to anyone.  Especially Poolwerx.  If they get a whiff of this I will be in all sorts of trouble. 

    and

    You’re not a partner anyway until the agreements are done, so if anyone asks, you’re the business manager and you work for me.

30. Mr Hallam does not dispute that he told Mr Tancred not to say anything to the Poolwerx management until payment was made.  Whilst Mr Hallam does not respond to Mr Tancred’s affidavit evidence of the above conversations, I do not read that lack of response as agreement, as Mr Hallam’s case is that the partnership was agreed and that at no time was Mr Tancred employed in the Poolwerx business. 

    Correspondence concerning the parties’ relationship

31. There is minimal documentation of the parties’ relationship in the Period (I exclude from this observation, emails relating to day to day matters).  In their evidence the parties’ draw attention to the following:

    (a)two letters of the same date in June 2017 issued by Mr Hallam under Poolwerx business letterhead;

    (b)an undated letter enclosed with an email sent by Mr Hallam on 23 June 2017 which states Mr Tancred received $15,000 ‘contractor income’ for the financial year ending 30 June 2016 (by agreement, correcting a typographical error of ‘2015’). This is the letter that the applicants plead was conduct in ‘mid‑2016’ in contravention of s 357 of the FW Act, it appears incorrectly dating the conduct alleged by that typographical error (see [20] above);

    (c)an email exchange between them on 28 and 29 June 2017; and

    (d)letter of termination dated 23 October 2017.

    I consider each of the above items of correspondence in the course of the following chronology of the parties’ relationship and events.

    The June 2017 letters

32. Mr Tancred attests to having various discussions with Mr Hallam about the proposed partnership and his buy-in into the Poolwerx business during the Period.  He states that the terms of the proposed partnership changed a number of times during the Period, however, the partnership never eventuated. 

33. Relevantly, the parties are agreed that in June 2017 Mr Tancred received two related letters of the same date from Mr Hallam, each on a version of the Poolwerx business’ letterhead, and that Mr Hallam handed the letters to Mr Tancred in person.  For convenience I refer to the letters collectively as the June 2017 letters, and individually by reference to their primary subject matter as the June 2017 partnership proposal letter for the one letter, and the June 2017 package letter for the other letter. 

34. Two copies of the June 2017 letters were admitted into evidence, one copy exhibited by Mr Tancred to his first affidavit, and one copy exhibited by Mr Hallam to his first affidavit in response.  There is no dispute that the June 2017 letters were provided to / received by Mr Tancred in June 2017, nor as to their substantive content (which content is relevantly the same, noting that the parties’ respective copies bear different dates, and the letterheads and signature blocks differ as between the copies), however Mr Tancred and Mr Hallam disagree when (27 or 28 June 2017, and 12 June 2017, respectively) and in what circumstances they were provided, what they said, and what transpired at the time, and in and around that time. 

1. The respondents’ submission must be rejected.

2. I am satisfied that Mr Tancred was an honest and credible witness.  It is reasonable to infer from Mr Tancred’s evidence of his role and tasks undertaken before the technicians arrived, and after the shop at the Premises closed at 5:00pm, from the evidence of the other staff summarised above, and I find, that commencing on 4 January 2016 during the working week Monday-Friday Mr Tancred was regularly at the Premises and working by 6:45am-7:00am and did not finish work at the Premises before 6:00pm at the earliest.  The evidence was that the Premises were open on Saturdays from 9:00am until 1:00pm, and I am satisfied that Mr Tancred generally worked those hours, excepting the cricket season (October to Easter), when he generally left work at approximately 12:30pm.

3. I am satisfied that Mr Tancred’s evidence and, subject to the limitations I have identified at [247] that of the applicants’ former employee witnesses, is supported by the GPS Fleetmatic evidence, limited although it is, and is not challenged by the Evosus material.

4. As to other, and more, documentary substantiation, the documentation suggested by the respondents are their business records, and thus within the respondents’ possession, power or control, and well able to be produced by them in answer to Mr Tancred’s evidence of his usual work hours and routine.  I accept the applicants’ submission that those records would not have assisted the respondents to refute Mr Tancred’s claim.

5. Having regard to the above, I consider that the present is a case where the applicants’ cannot produce precise evidence of the hours Mr Tancred worked, but have adduced sufficient evidence to enable the Court to make findings based upon estimation, having regard to Mr Tancred’s evidence of his daily habits and practice, that of the other witnesses, the Fleetmatic records, and the Evosus material, taking into account their identified limitations. 

6. Accounting for the seasonality of the Poolwerx business, and of Mr Tancred’s activities (e.g., Saturday cricket), attendance to the chores of everyday life, and the imprecision inherent in estimates of time, in the circumstances, I find that Mr Tancred worked an average of 65 hours a week, being 12 hours each day Monday to Friday, and 5 hours on Saturday, commencing on 4 January 2016 up to and including 23 October 2017.  Further, I do not accept as reasonable Mr Tancred’s claim (as I apprehend it), that he worked public holidays as if each was an ordinary week day.  In respect of any public holidays claimed worked, I allow a 5 hour day.  I acknowledge that Mr Tancred gave evidence that on occasions he also worked on the occasional Sunday, and in my finding based on estimation I have taken this matter into account in the total hours I have determined Mr Tancred worked, and I do not make a finding that Mr Tancred worked on a Sunday.

   The Falls Festival 2015

7. I have concluded earlier that Mr Tancred was employed in the Poolwerx business from 4 January 2016 until 23 October 2017.  It does not appear to be disputed that Mr Tancred also worked at the Falls Festival from 31 December 2015 until 2 January 2016 (according to the Quantum schedule).  The evidence establishes that this arrangement was in addition to the agreement the parties had reached earlier in December 2015 that Mr Tancred would start in the Poolwerx business at the Premises in the New Year, on 4 January 2016.  I consider the Falls Festival arrangement was entirely separate, and that Mr Tancred attended as a volunteer, in anticipation of his commencement in the Poolwerx business on 4 January 2016.  I so find.  It follows that I have not included the period before 4 January 2016 in my findings of hours worked.

   Statutory and Award entitlements, alleged contraventions of FW Act

8. It follows from my conclusions above that Mr Tancred was an employee of Shallam that he was also a national system employee, and that the National Employment Standards (NES) apply.

9. Further to the evidence that I have accepted of the nature of the Poolwerx business, and Mr Tancred’s role in the business, I am satisfied that the Award applies to Mr Tancred and that he was a full time Retail Employee Level 6, for the purposes of the Award.

10. As a full time employee, it follows that Mr Tancred is entitled to payment by Shallam of superannuation into his nominated superannuation fund.

    Contraventions of FW Act with respect to Mr Tancred

11. The breaches of the FW Act alleged against Shallam consequent upon finding an employment relationship with Mr Tancred were, in sum of the following provisions (see above [19]-[20], [22]):

    (a)contravening multiple terms of a modern award – the Award, prohibited by s 45 of the FW Act;

    (b)making a representation (or representations) that Mr Tancred was an independent contractor, in contravention of s 357 of the FW Act;

    (c)failing to keep records as required under the Regulations, in contravention of s 535 of the FW Act;

    (d)failing to provide payslips in contravention of s 536 of the FW Act;

    (e)contravening provisions of the NES prohibited by s 44 of the FW Act, by:

    (i)failing to pay accrued but untaken annual leave on termination in breach of s 90 of the FW Act; and

    (ii)failing to provide 2 weeks’ notice on termination, in breach of s 117 of the FW Act.

12. It follows from the above conclusions that Shallam has contravened the FW Act by failing to make the Award or NES available to Mr Tancred, inform him of the nature of his employment, pay for hours worked including Saturdays, public holidays (where worked) and overtime, pay for accrued by untaken annual leave or leave loading, pay in lieu of notice of termination, pay superannuation, provide and pay for rest and meal breaks and allowances, provide payslips, and that it failed to keep records required under the Regulations.

    Sham contract – contravention of s 357 of the FW Act

13. The applicants plead that Shallam (per Mr Hallam) in the letter sent 23 June 2017 (see above at [20],[129], [149], [151] and [224]-[229]) by stating that ‘contractor income paid from Poolwerx to Matthew Tancred for financial year ending 30/06/2015 [as corrected, being 30/06/2016] was $15,000.  I also confirm that there was no GST claimed on this amount’ made representations meeting the elements of the strict liability sham contacting offence set out in s 357 of the FW Act. The applicants further plead that the provision of the termination letter dated 23 October 2017 likewise meets the elements of s 357 of the FW Act, in that it states that Mr Tancred had been paid as a contractor, and was not entitled to accrual of leave or superannuation, and that if he wished to continue being employed he would be paid contracting fees until the end of November 2017 (see above, letter at [184]).

14. In the Defence the respondents deny the above allegations, rely on their pleading of a partnership, and deny Shallam’s contraventions. They have not pleaded the limited statutory defence available in s 357(2) of the FW Act. Beyond the pleading, the respondents have not engaged with the contentions that Shallam contravened s 357 of the FW Act. 

15. Section 357 of the FW Act provides:

    (1)A person (the employer) that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services under which the individual performs, or would perform, work as an independent contractor.

    Note: This subsection is a civil remedy provision (see Part 4-1).

    (2)Subsection (1) does not apply if the employer proves that, when the representation was made, the employer:

    (a)did not know; and

    (b)was not reckless as to whether;

    the contract was a contract of employment rather than a contract for services.

16. The prohibition in s 357(1) is against an employer making a particular representation concerning the character of the contract, which exists or would exist between the employer and the employee as a contract of employment, under which the employer performs or would perform work. The content of the prohibited representation is that the contract of employment is or would be a contract for services under which the employee performs or would perform work as an independent contractor: see Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] HCA 45; (2015) 256 CLR 137, at [1].

17. I have held that Shallam employed Mr Tancred. Accordingly, for the purposes of s 357 the existence of an employment relationship has been resolved in favour of Mr Tancred. The employment was current when the 23 June 2017 letter was issued, and had been regarding the earlier period to which the letter related. On its face, the 23 June 2017 letter made a representation that Poolwerx Northern Rivers engaged and paid Mr Tancred as an independent contractor. At those relevant times (date of the letter and period to which it related), Shallam was Mr Tancred’s employer, the franchisee conducting the Poolwerx business, using the Poolwerx Northern Rivers name, and the author of the letter, Mr Hallam, its sole officer. I am satisfied that Shallam made that representation.

18. In the circumstances, I am satisfied that Shallam by the representations made in the letter sent 23 June 2017 contravened s 357 of the FW Act. 

19. As to the termination letter dated 23 October 2017, I am satisfied that the representations I have summarised above at [341] were made by the letter.  The termination letter is on Poolwerx letterhead.  It is written and auto‑signed by Mr Hallam, as ‘Poolwerx Northern Rivers’.  By 23 October 2017, however, H2Yo! was the franchisee conducting the Poolwerx business.  At this time H2YO! paid Mr Tancred his monthly payments. 

20. Accordingly I am not persuaded that Shallam by the representations made in the termination letter dated 23 October 2017 contravened s 357 of the FW Act.

    Mr Tancred’s claim for damages for pain and suffering

21. As I have adverted to earlier in these reasons, at [24]-[26], Mr Tancred’s claim for compensation includes an amount for pain and suffering.  I have summarised Mr Tancred’s evidence of hardship at [257]-[258].

22. The applicants submit that a substantial amount should be awarded.  They submit that it was not the termination alone that was causative, but that Mr Tancred worked in the business for almost nothing.  In so far as his hurt and distress occurred on the termination of his employment (the termination letter), they submit the causal link is still present with the contraventions.  The termination letter brought home the realisation that Mr Tancred had not been fairly paid for the work he had done to that date, and all that he had given up in consequence, yet there was no partnership to show for it.

23. I am not persuaded by the applicants’ submissions.  Mr Tancred’s evidence is that it was the termination letter and ongoing unemployment that impacted and had the effect on him – “almost indescribable”.  To the extent that the termination letter brought home the futility of his effort over the Period, Mr Tancred’s claims for breach of the FW Act is for underpayments and the like, it is not for termination of his employment.  Whilst he attests to the hardship he and Ms Nagel experienced in 2016 and 2017, I am not persuaded that they warrant an award of an amount for pain and suffering in addition to payment for hours worked and loadings, pay in lieu of notice, and the like as sought in the Claim.  I decline to award any sum for pain and suffering.

    2.          Ms Nagel’s claim

24. I turn next to Ms Nagel’s claim.

    The relationship between Shallam and Ms Nagel was an employment relationship

25. The applicants submit that a contract of employment between Shallam and Ms Nagel arose in January 2016, when Mr Hallam asked her to undertake cleaning for the Poolwerx business, responding to her observation that the Premises really required someone to clean on a regular basis.  The respondents submit that the arrangement was at all times a voluntary one.

26. I am satisfied that when the arrangement was made that Ms Nagel clean the Premises a term was implied into the arrangement that Ms Nagel would be remunerated for her work, for the following reasons:

    (a)I am satisfied Mr Hallam asked Ms Nagel to do the work , she did not volunteer;

    (b)the work was required on a regular basis of a commercial premises which was the site of a for‑profit business, and which in the ordinary course would be undertaken by a paid cleaner;

    (c)there is evidence that the work was not being done by a staff member, one of whose tasks it was to clean the Premises;

    (d)when that staff member was sacked, no other person working in the business was nominated to undertake the cleaning;

    (e)the term is capable of clear expression – that Ms Nagel would be paid for her work;

    (f)that Ms Nagel be paid is not contradicted by any other term; it is reasonably necessary for the reasonable or effective operation of the contract in all the circumstances.

27. In relation to Ms Nagel’s performance of financial and administrative tasks, the above analysis is also applicable.  All the necessary steps were taken by Mr Hallam to enable Ms Nagel to do the work, such as training, system access, and provision of folders of the work to be done.  Mr Hallam directed she work from home initially (minimising face to face contact with Ms Brown at the Premises, whose work he expressed dissatisfaction), and subsequently, directed Ms Nagel do the financial and administrative tasks for the Poolwerx business on‑site, at the Premises.  As to the timing of Mr Hallam’s request that Ms Nagel change her place of work and work at the Premises, I consider it relevant to the characterisation of Ms Nagel’s relationship as an employment relationship that this direction occurred shortly after Ms Brown was terminated, and from then until January 2017, excepting Ms Nagel, no other person was nominated to assist with the financial and administrative tasks required to be done in the Poolwerx business.

28. I find that Ms Nagel did agree to deferred payment for her work when she commenced doing the invoicing in late June 2016, however I am not thereby persuaded that Ms Nagel waived any entitlement to be paid by the Poolwerx business.  I find that she did not waive her entitlement, rather temporarily she forbore to press it.  I find further that Ms Nagel agreed to come into work in the store at the Premises on the basis that she would be paid at the time, and not on a deferred basis. 

29. I have accepted Ms Nagel’s evidence of her conversations with Mr Tancred first, in June 2016, and secondly, in September 2016.  That evidence is consistent with, and supported by her affidavit evidence of the conversations with Mr Hallam in the office at the Premises in October 2016.  It is also consistent with Mr Hallam’s evidence under cross‑examination of his conversations with Mr Tancred, to the extent that he acknowledged that Ms Nagel should be paid.

30. It follows I do not accept the respondents’ submission that Ms Nagel worked in the Poolwerx business merely on a loose arrangement involving a hope or expectation that the business might one day be in a position to start paying her; that the arrangement was the kind of loose, goodwill based arrangement entered into by or involving family members or those in close personal relationships where reliance is placed on that relationship rather than the potential for recourse to the Courts in the event of dispute. 

31. The conclusion I have reached, is that the nature of the relationship between Shallam and Ms Nagel performing cleaning duties and performing financial and administrative tasks for the Poolwerx business in the relevant periods, objectively viewed is one of employer and employee.  It does not follow from the circumstances in which Ms Nagel’s services for the Poolwerx business were sought that Ms Nagel worked as a volunteer.  She did not.

    NES and Award apply to Ms Nagel

32. It follows from this conclusion that Ms Nagel was an employee of Shallam, that she was also a national system employee and that the NES apply.  It was agreed between the parties that if Ms Nagel was found to be an employee, the Award applied to her.  I find that Ms Nagel was covered by the Award at the relevant times.

    Ms Nagel’s hours of work and regularity of employment

33. As to the hours and days worked by Ms Nagel, I have set out my findings above at [298] and [299].

34. As is apparent from Ms Nagel’s evidence and my findings as to her hours and days worked, Ms Nagel worked regular or semi‑regular days and hours both as a cleaner, and doing financial and administrative tasks.  I accept Mr Simpson’s submission on behalf of the respondents in oral closing that if I accept the regularity of her work days and hours over time as Ms Nagel claims, and as I have, her employment was as a permanent part time employee under the Award, and not as a casual employee.  I agree, and I so find.

35. As to the appropriate level of the Award, see above at [27]. I apprehend that the consequence is that the appropriate classification of Ms Nagel’s employment is under the Award, as a Retail Employee Level 4/ Clerical Officer Level 2. I so find. I note however, that the Quantum schedule also sets out the rates for a Level 1 employee. The reason for both rates is not apparent. Should my finding on the appropriate classification be a matter that requires correction, I invite the parties to confer, and to provide a short note explaining the matter and any differing positions they have.

    Contraventions of the FW Act with respect to Ms Nagel

36. The breaches of the FW Act alleged against Shallam consequent upon finding an employment relationship with MS Nagel were, in sum of the following provisions (see above [19], [22]):

    (a)contravening multiple terms of the Award, prohibited by s 45 of the FW Act;

    (b)failing to keep records as required under the Regulations, in contravention of s 535 of the FW Act;

    (c)failing to provide payslips in contravention of s 536 of the FW Act.

37. It follows from the above conclusions that Shallam has contravened the FW Act by failing to make the Award or NES available to Ms Nagel, inform her of the nature of her employment (including whether casual, or part time), pay for hours worked including Sundays (under the Award, or at all), pay superannuation, provide payslips, and that it failed to keep records required under the Regulations.

    Ms Nagel’s claim for damages for pain and suffering

38. Ms Nagel seeks damages for pain and suffering in the sum of $15,000. Ms Nagel’s evidence regarding this claim is set out above at [292]. The emotional and financial toll she attests to evidences her concern for Mr Tancred and his involvement in the Poolwerx business, and financial stress. Ms Nagel’s evidence is also, however, that she never broached the subject of payment for cleaning, and that she was also prepared to defer any payment for any work she did prior to coming to work in the Premises in about August 2016, and that after about 14 February 2017, she worked at most 1 hour every 3-4 weeks. In the circumstances, I am not persuaded that Ms Nagel’s evidence gives rise to any reasonable basis for an award of an amount for pain and suffering. I decline to award Ms Nagel any sum for pain and suffering.

    3.          Mr Hallam’s involvement in Shallam’s contraventions

39. The next matter for determination is whether Mr Hallam was involved, for the purposes of s 550 of the FW Act, in any of the contraventions of the FW Act by Shallam.

40. Section 550(1) of the FW Act provides that a person who is involved in a contravention of a civil remedy provision of the FW Act is taken to have contravened that provision. The relevant civil remedy provisions are ss 44, 45, 357, 535 and 536 of the FW Act.

41. Section 550(2) defines when a person is involved in a contravention, relevantly:

    (2)A person is involved in a contravention of a civil remedy provision if, and only if the person:

    (a)has aided, abetted, counselled or procured the contravention; or

    (b)has induced the contravention, whether by threats or promises or otherwise; or

    (c)has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

    (d)has conspired with others to effect the contravention.

1. Also relevant is s 793 of the FW Act which relevantly provides that any conduct engaged in or on behalf of a body corporate by an officer, employee or agent of the body corporate, within the scope of their actual or apparent authority is take for the purposes of the FW Act to have been engaged in also by the body corporate. Section 793 operates to deem the conduct of Mr Hallam to be that of Shallam, and there is no barrier to him also being held to have been involved as an accessory to the same conduct.

2. The applicants in their written submissions rely on White J’s analysis of the principles in relation to s 550 accessorial liability in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [176] to [179], cited with approval by the Full Court in Ezy Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134; (2018) 360 ALR 261 at [11], which may be summarised as follows:

   (a)in order to aid, abet, counsel or procure the relevant contravention, the person must intentionally participate in the contravention with the requisite intention – actual knowledge of the ‘essential matters; which go to make up the events, whether or not the person knows that those matters amount to a contravention to the FW Act; and

   (b)in order to be ‘knowingly concerned’ the person must have engaged in some act or conduct which ‘implicates or involves him or her’ in the contravention so that there be a ‘practical connection between’ the person and the contravention.

3. The applicants plead in the Claim at [150], that Mr Hallam was responsible for deciding and /or implementing decisions that determined that:

   (a)Mr Tancred and Ms Nagel were not informed of the terms of their engagement and whether they were full‑time, part‑time or casual;

   (b)Mr Tancred and Ms Nagel were not paid for all hours worked, including for work performed on Saturdays and Sundays, and on public holidays;

   (c)Ms Nagel was not paid;

   (d)Mr Tancred was paid the amounts I have recorded earlier in these reasons (and no other amounts);

   (e)no superannuation contributions were made to a superannuation fund for Mr Tancred and Ms Nagel’s respective benefit;

   (f)Mr Tancred was not afforded meal allowances when he worked overtime;

   (g)Mr Tancred was not provided with rest and meal breaks;

   (h)Mr Tancred and Ms Nagel were not given payslips;

   (i)no records were made and kept by Shallam in accordance with the records required to be made and kept under the Regulations in respect to Mr Tancred and Ms Nagel;

   (j)at the conclusion of Mr Tancred’s employment on 23 October 2017, Mr Tancred was not paid any amount for accrued but untaken annual leave or any amount in respect to annual leave loading;

   (k)Mr Tancred was not given two weeks’ notice of termination in writing or paid any moneys in lieu of notice of termination;

   (l)the Award and the NSW were not made available at or near the Premises;

   (m)the letter sent 23 June 2017 was written and provided to Mr Tancred; as was the termination letter dated 23 October 2017 (I have set out this last in my words rather than using the cross‑referencing adopted in the Claim).

4. Whilst the respondents plead a bare denial in response, further to the statement of agreed facts, as I have adverted to at [9], the respondents admit that Mr Hallam was aware of the existence of the FW Act, that all employees of Shallam were covered by the FW Act, that Mr Hallam was aware of the existence of the Award, and that the Award covered employees of the Poolwerx business.  The respondents disputed Mr Hallam’s accessorial liability in a sentence on opening submissions, but made no submissions regarding his liability in either written or oral closing submissions.

5. Mr Hallam is the sole director, secretary and shareholder of Shallam, which in turn conducted the Poolwerx business for the benefit of the Trust, of which Mr Hallam is the primary beneficiary (see above at [40], [38]).  As the sole director, secretary and shareholder of Shallam, and as the evidence establishes, Mr Hallam is the controlling mind of Shallam.  The evidence establishes that Shallam’s contraventions of the FW Act and the Award emanated from Mr Hallam’s acts and omissions, given effect by Shallam.

6. For the above reasons, applying the principles I have summarised above I am satisfied on the evidence that Mr Hallam by his acts and conduct directly procured, and was knowingly concerned in and party to each of Shallam’s contraventions that I have found established. 

7. It follows, and I find, Mr Hallam is a person involved in the contraventions of the civil remedy provisions by Shallam within the meaning of s 55(2) of the FW Act, and by reason of s 550(1) of the FW Act, is taken to have contravened ss 44, 45, 357, 535 and 536 of the FW Act as has Shallam.  I will make declarations to this effect.

   DISPOSITION AND NEXT STEPS

8. For the reasons set out above, I have found that the applicants’ claims largely succeed.  Each of Shallam and Mr Hallam has contravened the FW Act.  The applicants are entitled to most of the relief sought in the Claim, save as I have stated in these reasons.

9. It follows that compensation pursuant to s 545(2) of the FW Act must be paid by Shallam and Mr Hallam in relation to their contraventions of ss 44, 45 and 357 of the FW Act substantially in the nature and sums foreshadowed in the Claim at [157] and the Quantum Schedules, to the extent I have found established. 

10. I will make declarations today that each of the applicants were employees of Shallam substantially as I have set out at [31(a) and (b)] in these reasons.

11. I will direct the parties to confer and if possible submit to my Chambers a minute of proposed declarations and orders, including as to the calculation of quantum, to be made to give effect to these reasons for decision to the extent not provided for above, within 14 days or such other period as the Court determines after consultation with the parties.  I direct that in the first instance the applicants have the carriage of the draft form of declarations and orders, and the calculations of quantum.  If the parties are not able to reach agreement, they should submit separate forms of proposed declarations and orders.

12. The applicants have sought pre‑judgment interest pursuant to s 547 of the FW Act. Presently I see no reason why such interest should not be ordered to be calculated and paid to the date when the final orders giving effect to these reasons are made. I direct that the applicants have the carriage of the calculation of pre‑judgment interest in the first instance.

13. I will list the matter for a case management hearing to a date to be fixed for the purpose of making final declarations and orders, and for any consequential matters, including any timetable for submissions and hearing as to costs if pressed, and to program the further conduct of the proceeding in relation to the penalties, if any, that should be imposed on the respondents for the contraventions of the FW Act identified in these reasons for decision. 

I certify that the preceding three hundred and ninety-four (394) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird.

Associate:

Dated:       24 August 2023