Theodorou v Ord Minnett Holdings Pty Ltd

[2024] FedCFamC2G 530

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Theodorou v Ord Minnett Holdings Pty Ltd [2024] FedCFamC2G 530

File number(s):

SYG 1229 of 2021

Judgment of:

JUDGE MANOUSARIDIS

Date of judgment:

12 June 2024

Catchwords:

INDUSTRIAL LAW – whether applicant who was employed by respondent as a Private Client Adviser was covered by cl B6 of Schedule B to the Banking, Finance and Insurance Award 2010 (Award) – held covered – whether commission payments respondent made to the applicant could be set off against obligations respondent had to make payments under the Award – set off not available – declarations of contravention made.

Legislation:

Corporations Act 2001 (Cth) ss 763A(1), 763B(1), 766A, 766B, 911A, 911B, 916A, 946A(1), 947B, 947C

Fair Work Act 2009 (Cth) ss 12, 16(1), 16(2), 44(1), 45, 46(1), 46(2), 47, 48(1), 87, 90, 99, 116, 136, 137, 143, 147(3), 535(1), 535(2), 535(3)

Fair Work Regulations 2009 (Cth) regs 1.09, 1.12, 3.42

Banking, Finance and Insurance Award 2010 cls 4.1, 4.2, 13.1, 13.2, 20.1, 24.3, Sch B, B.6

CommSec Award 2006 cls 4.1, 9    

Cases cited:

ACE Insurance Ltd v Trifunovski (No 2) [2012] FCA 793

Australia and New Zealand Banking Group Limited v Finance Sector Union of Australia [2001] FCA 1785

Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435

Brown v Listaglen Pty Ltd [1994] IRCA 158

Christopher Barker & Sons v Commissioners of Inland Revenue [1919] 2 KB 222

Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337

Finance Sector Union of Australia v Comsec Trading Limited and Others - PR960317 [2005] AIRC 637

Kucks v CSR Ltd (1996) 66 IR 182

Miles v Wakefield Metropolitan District Council [1987] AC 539

Minister of State for the Army v Dalziel (1944) 68 CLR 261

Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415

Poletti v Ecob [1989] FCA 492

R v Darling Island Stevedore & Lighterage Co Ltd ; Ex parte Halliday and Sullivan (1938) 60 CLR 601

Ray v Radano [1967] AR (NSW) 471

Re City of Wanneroo v Michael Lindsay Holmes [1989] FCA 369

Steal v Smith (1817) 1 B & Ald 94

Sunrise Brokers LLP v Rodgers [2015] ICR 272

Vines v Djordjevitch (1955) 91 CLR 512

Wolfer v Computer Associates Pty Ltd [1995] IRCA 185

WorkPac Pty Ltd v Rossato [2020] FCAFC 84

Division:

Fair Work

Number of paragraphs:

165

Date of hearing:

19 and 20 October 2022, and 1 December 2022

Place:

Sydney

Counsel for the Applicant:

Mr A Britt

Solicitor for the Applicant:

WilliamsonBarwick

Counsel for the Respondent:

Mr J Darams

Solicitor for the Respondent:

Lander & Rogers Lawyers

ORDERS

SYG 1229 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

EVANGELOS ROBERT THEODOROU

Applicant

AND:

ORD MINNETT HOLDINGS PTY LIMITED ACN 062 323 728

Respondent

ORDER MADE BY:	JUDGE MANOUSARIDIS
DATE OF ORDER:	12 JUNE 2024

THE COURT DECLARES THAT:

1.By failing to pay to the applicant on a weekly or, in the alternative a fortnightly or, in the alternative, a monthly basis the minimum salary at the rate provided for by cl 13.1(a) of the Banking, Finance and Insurance Award 2010 (Award), the respondent contravened cl 13.1(a) of the Award and, therefore, s 45 of the Fair Work Act 2009 (Cth) (FW Act).

2.By failing to pay to the applicant annual leave loading as provided for by cl 24.3 of the Award, the respondent contravened cl 24.3 of the Award and, therefore, s 45 of the FW Act.

3.By failing to pay to the applicant at his base rate of pay for ordinary hours of work when the applicant took annual leave, as required by s 90 of the FW Act, the respondent contravened s 44 of the FW Act.

4.By failing to pay to the applicant at his base rate of pay for ordinary hours of work when the applicant took personal or carer’s leave, as required by s 99 of the FW Act, the respondent contravened s 44 of the FW Act.

5.By failing to pay the applicant at his base rate of pay for ordinary hours of work during public holidays, as required by s 116 of the FW Act, the respondent contravened s 44 of the FW Act.

6.By failing to provide the applicant’s employee record within 14 days after the applicant, by his solicitor’s letter dated 6 April 2021, requested that it do so, the respondent contravened reg 3.42(3) of the Fair Work Regulations 2009 (Cth).

THE COURT ORDERS THAT:

7.The matter be listed for directions at 9:30 am on 26 June 2024.

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).

REASONS FOR JUDGMENT

INTRODUCTION	[1]
ORD MINNETT’S WEALTH ADVICE BUSINESS	[9]
Mr Deva’s evidence	[10]
The Information Memorandum	[13]
Statement of Advice and Client Profile Form	[16]
Regulation of provision of financial services	[24]
Findings	[31]
MR THEODOROU’S EMPLOYMENT	[35]
March 2012 Mr Theodorou commences employment	[35]
8 March 2012 – Mr Theodorou completes an application for “Authorised Representative”	[40]
Employment Contract	[44]
19 June 2015 - Mr Theodorou appointed financial services representative	[51]
Tasks specified by marketing profile	[52]
Mr Theodorou’s evidence of the work he performed	[54]
Ms van Daalen’s evidence	[64]
Mr Deva’s evidence	[68]
Some Findings	[72]
Remuneration	[75]
CLAIMS BASED ON AWARD	[77]
Statutory provisions and principles of construction	[78]
Background to the Award	[83]
Principles of construction of awards	[92]
Construction of Clause B6	[94]
Determining whether a person is covered by Clause B6	[99]
Onus of proof	[104]
The pleadings and parties’ submissions	[112]
The pleadings	[112]
Issues arising on the pleadings	[117]
Parties’ submissions	[118]
Determination of the issues	[120]
Work performed by Mr Theodorou	[120]
Did Mr Theodorou’s work fall within Clause B6?	[121]
Does the Proviso apply?	[124]
Conclusion	[133]
CLAIMS UNDER NES	[135]
SET OFF	[138]
Principles	[141]
Parties’ submissions	[151]
Determination	[153]
CLAIMS UNDER REG 3.42	[160]
DISPOSITION	[164]

INTRODUCTION

1. The respondent (Ord Minnett) is a member of a group of companies, one or more of which provides or provide a range of financial services.[1] These include personalised investment advice and full-service broking Ord Minnett provides as part of its Wealth Advice business.[2]

   [1] In these reasons, unless stated otherwise, any statement about or concerning “Ord Minnett” will be about or will concern either Ord Minnett itself or the relevant company within the Ord Minnett group of companies that will render the statement true.

   [2] Affidavit E R Theodorou 24.12.2021, [12]; exhibit ERT-1, tab 4, pages 69, 70. For ease of expression I will refer to Ord Minnett’s business in the present tense, but on the basis that this is intended to apply to the period of Mr Theodorou’s employment with Ord Minnett.

2. Ord Minnett conducts its Wealth Advice business through employees who hold the title of “Private Client Adviser”. The applicant, Mr Theodorou, was employed by Ord Minnett from 1 March 2012 to 13 December 2019, initially in the position of “Private Client Adviser” and, from 2 April 2013, in the position of “Associate Adviser” although, as I find later, Mr Theodorou came to perform the functions of a Private Client Adviser, at least for the period that is relevant to this proceeding.

3. In this proceeding Mr Theodorou claims that the Banking, Finance and Insurance Award 2010 (Award) covered his employment with Ord Minnett, because he performed tasks, or occupied the position, of the sort described in clause B6 of Schedule B to the Award (Clause B6); but that, at least from 1 July 2015 to 13 December 2019, Ord Minnett failed to pay him amounts to which he became entitled under the Award and, for that reason, Ord Minnett contravened s 45 of the Fair Work Act 2009 (Cth) (FW Act). Mr Theodorou also claims that Ord Minnett failed to pay him amounts which became due under a number of “National Employment Standards” (NES) provided for by the FW Act; and, for that reason, Ord Minnett contravened s 44 of the FW Act. More particularly, Mr Theodorou claims that, in breach of s 90, s 99, and s 116 of the FW Act, Ord Minnett did not pay him annual leave, personal or carer’s leave, or his base rate of pay for ordinary hours of work during public holidays.

4. Ord Minnett denies the Award covered Mr Theodorou’s employment. It contends that Mr Theodorou did not perform tasks that fell within Clause B6. Ord Minnett further contends that, even if Mr Theodorou did perform such tasks:

   (a)Clause B6 does not apply to employees who:

   (i)because of the nature or seniority of their role, were not traditionally covered at all by awards; or

   (ii)perform work that is not of a similar nature to work that has previously been regulated at all by awards;

   (b)Mr Theodorou’s role as an employee of Ord Minnett was that of a stockbroker, or the work he performed as an employee of Ord Minnett was in the nature of work that was performed by a stockbroker; and

   (c)Mr Theodorou has not discharged the burden Ord Minnett submits lies on him to prove that the nature and seniority of his role while employed by Ord Minnett was traditionally covered by an award at all, or that the work he performed in that role had previously been regulated at all by awards.

5. Ord Minnett accepts that if, as Mr Theodorou claims, his employment was covered by the Award, it will have failed to comply with the terms of the Award and, moreover, it will have breached s 90, s 99, and s 116 of the FW Act. Ord Minnett, however, contends it is entitled to set off amounts it had paid Mr Theodorou under his contract of employment against any amounts it may be held to be liable to pay Mr Theodorou under the Award, and under s 90, s 99, and s 116 of the FW Act. Ord Minnett otherwise contends that if the Award did not apply to Mr Theodorou’s employment, Mr Theodorou was employed as a “pieceworker” within the meaning of reg 1.12 of the Fair Work Regulations 2009 (Cth) (FW Regulations), and that, during the periods of his employment in which he became entitled to payments under s 90, s 99, and s 116 of the FW Act, Ord Minnett paid to Mr Theodorou the amounts it was obliged to pay him on the footing that he was a pieceworker, and that his base salary was the amount calculated in the manner prescribed by reg 1.09 of the FW Regulations.

6. Mr Theodorou also claims that Ord Minnett contravened reg 3.42 of the FW Regulations because Ord Minnett, contrary to that regulation, failed to comply with Mr Theodorou’s request that it provide an employee record relating to Mr Theodorou within 14 days after he made that request.

7. The principal questions that arise, therefore, are whether Mr Theodorou’s employment or position fell within the terms of Clause B6 and, therefore, his employment was covered by the Award and, if not, whether Ord Minnett in any event breached s 90, s 99, or s 116 of the FW Act. The determination of these questions largely turns on the identification of the position Mr Theodorou held; the tasks Mr Theodorou performed as an employee of Ord Minnett; and the proper construction of Clause B6. As will appear later, however, the parties have made their submissions largely on unarticulated assumptions about the proper construction of Clause B6. This has had two consequences. The first is that the parties made submissions by reference to matters that did not directly address the text of Clause B6. The second is that the parties did not acknowledge the possibility that Clause B6 contains a proviso, and the parties therefore did not make submissions about the nature of the proviso, and whether the proviso was relevant to the allocation of the burden of proof of the matters provided for by Clause B6.

8. These reasons are arranged as follows:

   (a)First, I will set out the evidence that relates to, and I will make findings about, the nature of Ord Minnett’s business or businesses, and the regulatory environment that governs the conduct of Ord Minnett’s business or businesses.

   (b)Second, I will identify the contracts of employment under which Ord Minnett employed Mr Theodorou, and set out the evidence relating to, and make findings about, the work Mr Theodorou performed.

   (c)Third, I will consider Mr Theodorou’s claims based on Ord Minnett’s alleged contraventions of the Award. To be in a position to consider those claims, it will be necessary to set out the statutory provisions that are relevant to the determination of Mr Theodorou’s claims; identify the basic principles relevant to construing awards; and set out the background to the making of the Award, and in particular the making of the version of Clause B6 that is relevant to this proceeding. It will also be necessary to consider the proper construction of Clause B6, and the consequences of the proper construction on the allocation of the burden of proof.

   (d)Fourth, I will consider Mr Theodorou’s claims based on Ord Minnett’s alleged breaches of s 90, s 99, and s 116 of the FW Act.

   (e)Finally, I will consider Mr Theodorou’s claims based on reg 3.42 of the FW Regulations.

   ORD MINNETT’S WEALTH ADVICE BUSINESS

9. There are three principal items of evidence that describe Ord Minnett’s Wealth Advice business.

   Mr Deva’s evidence

10. The first is the evidence given by Mr George Deva, who is a director of Ord Minnett Ltd (a subsidiary of Ord Minnett), and who occupies the position of “Head of Private Wealth”. Mr Deva deposes as follows (emphasis added):[3]

    The Respondent is a wealth management company. Its business is centred around providing full-service stockbroking to its clients. Full-service stockbroking means that our advisers offer advice on buying and selling equities, making recommendations, providing and conducting research, and creating tailored investment plans for our clients. This can be contrasted to online-only or execution-only stockbrokers, which offer no recommendations or advice regarding the appropriateness of their customers’ investment decisions.

    [3] Affidavit G Deva 28.03.2022, [7]

11. Mr Deva says that the full range of services Ord Minnett offers include “Private Wealth . . . whose Private Client Advisers primarily provide advice on stockbroking on ASX . . . and international exchanges on all the major stock markets around the world”; advice on investments; research; corporate finance; institutional broking; intermediary service; private capital; and “the administration of portfolios (delivered through platforms owned by the Respondent such as Portfolio Administration and Reporting Service [PARS] or the Unified Managed Account [UMA])”.[4] Mr Deva further says:[5]

    In addition to providing full-service stockbroking, the Private Wealth arm of the Respondent also provides advice on portfolio construction, superannuation and self-managed superannuation funds, estate planning, significant investor visas, deceased estates and sequential equities strategy. These additional services leverage on the Respondent’s expertise in providing advice and producing its own research on equities.

    [4] Affidavit G Deva 28.03.2022, [9]

    [5] Affidavit G Deva 28.03.2022, [10]

12. Mr Deva does not refer to marketing or other documents it is reasonable to expect Ord Minnett has issued or published which describes its Wealth Advice business, and the services it offers through that business. As will appear in a moment, however, there are documents in evidence which show that although Ord Minnett does provide through its Wealth Advice business “[d]omestic and international full-service broking and securities trading”, it is but one of the services it provides, the others being direct investment advice, portfolio management, and portfolio administration and managed accounts.[6] For these reasons, Mr Deva’s evidence is of limited value in identifying the nature of Ord Minnett’s business, and in particular, the nature of its Wealth Advice business.

    [6] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 70, [2.4]

    The Information Memorandum

13. The second item of evidence that describes Ord Minnett’s Wealth Advice business is a document titled “Information Memorandum” (Information Memorandum) that was prepared by Ord Minnett Investments Limited in around the second half of 2019 in support of an invitation to persons to apply for fully paid ordinary shares in that company.[7] The Information Memorandum provides a detailed description of Ord Minnett’s businesses as at 30 June 2019; and I find it constitutes the best evidence of the nature of the businesses Ord Minnett conducted, at least as at around 30 June 2019 and, by inference, from at least around 2013. The Information Memorandum states as follows:

    [7] Affidavit E R Theodorou 24.12.2021, [12]; exhibit ERT-1, tab 4

    (a)Ord Minnett is an Australian based financial services firm offering clients a diverse range of services encompassing two broad subsectors of the “financial services industry”, these being “Private Wealth Management”, and “Corporate Advisory and Equities”.[8]

    [8] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 58, [1.1]

    (b)Whilst Australian investors have access to a range of investment opportunities, “the primary focus of Ord Minnett is providing investors access to investment products via equity markets both domestic and global”.[9]

    [9] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 58, [1.2]

    (c)The Australian Private Wealth industry is serviced by a broad range of financial service providers, offering an extensive range of financial services with the goal of assisting clients in achieving their financial objectives. These services generally comprise of investment advice, securities broking, financial planning, and portfolio management for individuals, trusts, self-managed superannuation funds, non-for-profit organisations, and other private clients.[10]

    [10] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 59, [1.3.1]

    (d)Operators in the Australian Private Wealth sector are “typically segmented into four primary groups, being Banks, Stockbrokers, Independently managed Super funds and Independent financial advisers”.[11]

    [11] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 59, [1.3.1]

    (e)Ord Minnett has become one of Australia’s leading financial services companies, “advising clients on all aspects of finance including full-service stockbroking, financial planning, funds management, portfolio services and corporate finance”.[12]

    [12] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 68, [2.2]

    (f)Ord Minnett’s operations are split into three key operating segments, these being “Wealth Advice”, “Capital Markets”, and “Other lines of business”.[13] The Information Memorandum contains a table that provides information in relation to each of the three segments of Ord Minnett’s operations, with the Wealth Advice segment including the following information:[14]

    [13] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 69, [2.4]

    [14] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 70, [2.4]

Business segment

Wealth Advice

Description

Private Client Adviser network

Services

·     Direct investment advice

·     Portfolio management

·     Domestic and international full-service broking and securities trading

·     Portfolio administration and managed accounts

Primary clients

Retail and Wholesale investors

. . . .

. . . .

Segment % of FY19 revenue

79%

(g)In its Wealth Advice business, Ord Minnett provides personalised investment advice and full-service broking primarily to wholesale and retail investors, and seeks to build long-term trusted relationships with clients.[15] Ord Minnett has an experienced team of over 213 Private Client Advisers across a network of officers in 10 locations and distribution partnerships across key Australian major cities.[16]

[15] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 70, [2.4.1]

[16] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 70, [2.4.1]

1. The Information Memorandum notes that “Wealth Advice revenue is generated from a number of sources and is both recurring and transactional in nature”, and the Information Memorandum identifies the two principal sources of revenue, namely, “Brokerage fees”, and “Platform advice fees”,[17] which it describes as follows:[18]

   •Brokerage fees - this includes a fee for service for financial and investment advice, brokerage commissions, and other ancillary fees related to the above activities. Broker fees provide leverage to the market and contributed approximately 37% of net revenue generated by Wealth Advice in FY19.

   •Platform advice fees - this includes ongoing advisory fees calculated as a percentage of assets under advice and other ancillary fees. Platform advice provides stability of earnings and contributed approximately 51% of net revenue generated by Wealth Advice in FY19.

   [17] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 74

   [18] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 74

2. The word “platform” that appears in the phrase “[p]latform advice fees” refers to information systems or “platforms” that include the platforms Mr Deva identifies in his affidavit, namely, the “Portfolio Administration and Reporting Services” (PARS) platform, and the “Unified Managed Accounts” (UMA) platform. The Information Memorandum describes these platforms as follows:[19]

   Ord Minnett platform services

   Ord Minnett operates two main portfolio administration platforms: 1) Portfolio Administration and Reporting Services (PARS) which is a non-custody solution and 2) Unified Managed Accounts (UMA) which is a Custody solution.

   PARS is a portfolio management service that provides clear, accurate and timely investment portfolio information, and via its administrative capabilities allows the client and Private Client Adviser to manage investments more effectively. PARS is a full-service administration and reporting service, operating as an individually managed account and is focused on complementing the ongoing advice process for high net worth and ultra-high net worth clients. An important benefit of PARS is the option of managed discretionary account services which permits Private Client Advisers to make trading decisions on behalf of their clients, in addition to traditional non-discretionary services.

   An alternative non-custody service operated by Ord Minnett is the Online Asset Reporting Service (OARS). Similar to PARS in that this service provides clients with comprehensive and detailed end-to-end reporting and information online, OARS allows clients to retain control of their investment administration.

   The types of clients that use either PARS or OARS are typically high net worth individuals, SMSFs, companies, trusts and charities.

   The UMA platform is an advanced trading and reporting system that is a white-labelled custodial service. The UMA platform provides Private Client Advisers with a number of tools and investment options (including managed portfolios) that allows them to manage clients' investment strategy and remains aligned to their individual circumstances, investment needs and objectives. The UMA also incorporates efficient administrative services on the investments within the platform.

   Both PARS and the UMA reduce the administration burden associated with investing and provide clients with detailed, efficient and regular reporting. Both solution have 24 hour on-line access that allows clients to view their portfolios and provides access to multiple reports.

   [19] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 4, page 72

   Statement of Advice and Client Profile Form

3. The third item of evidence that is relevant to identifying the nature of Ord Minnett’s Wealth Advice business is a “Statement of Advice” that was issued by Ord Minnett in December 2014 to a potential client pursuant to the regulatory requirements I identify later in these reasons.[20] (I will refer to this “Statement of Advice” as “SOA”; but I will also use “SOA” to refer to statements of advice in general.) Mr Theodorou was cross-examined on the SOA on the basis, which Mr Theodorou appeared to accept, that it is a representative example of SOAs that Ord Minnett issued in the course of its business. I find that the SOA is a representative example of SOAs Ord Minnett issued during Mr Theodorou’s employment.

   [20] Exhibit B

4. The SOA was attached to a covering letter issued by an employee within Ord Minnett’s “Client Services”. The first sentence refers to “information that has been provided regarding your Client Profile”. The “Client Profile” is a form described as a “Client Profile Form” (CPF) Ord Minnett gave to prospective clients requesting the client to provide information that is relevant to assessing the client’s (risk) profile. There is in evidence a July 2020 version of the CPF, and it is open to infer that this is in substantially the same form as the CPF Ord Minnett used in its Wealth Advice business during Mr Theodorou’s employment.[21] The CPF described its purpose as follows (emphasis in original):

   The Australian Securities and Investments Commission (ASIC) which is the regulatory body that regulates us, enforces strict rules as to how advice can be given.

   These rules mean that before giving personal advice Ord Minnett must examine details such as your current financial situation, your personal and financial objectives, as well as your attitude to risk.

   Accordingly we appreciate you assisting us in completing this Client Profile Form entirely and accurately.

   . . .

   Please note: If this form is not completed we can only provide you with “general” advice, which is advice that does not address your individual needs. Ord Minnett Limited accepts no liability for any advice given on the basis of inaccurate or incomplete information.

   [21] Affidavit M van Daalen 28.03.2022, [27]; exhibit MVD-1, tab 27, page 72

5. The CPF contains a number of questions with alternative answers the person completing the CPF must select. A score is allocated to each answer, and the total scores are aggregated to reveal one of five investor profile scorecards, being “Defensive”, “Moderate”, “Balanced”, “Growth”, and “High Growth”. The “Growth” profile, for example, is described as follows:

   You are a Growth investor, probably earning sufficient income to invest most funds for capital growth. Prepared to accept higher volatility and moderate risks, your primary concern is to accumulate assets over the medium to long term. You require a balanced portfolio, but more aggressive investments may be included.

6. The letter attaching the SOA stated that it enclosed, among other things, “our advice”, and the information on which the advice was based. The letter further stated that Ord Minnett is “one of the most highly respected names in the stockbroking industry” and that:

   In addition to our traditional stockbroking advisory and dealing services we can provide comprehensive advice in relation to superannuation, retirement planning and portfolio management, utilising a broad range of products and platforms.

7. The SOA stated that Ord Minnett had determined that “an assessment of your circumstances and attitude to risk and have determined that you are a Growth Investor”. The advice the SOA gives in relation to that assessment includes the following (emphasis added):

   Our advice is to look at investing into a diversified mix of primarily growth assets comprising equities and managed investments. You might also consider using derivatives to enhance returns on your equities holdings. Your adviser will be able to assist you in selecting suitable investments for your portfolio.

   It is possible that your attitude to risk may change due to changing circumstances or as your knowledge of particular investments increases. We therefore recommend that you meet with your adviser periodically to review your risk profile.

8. The SOA then set out “our products”, these being shares (Australian and international), fixed interest investments, managed funds, margin lending, and derivatives (exchange traded options), noting that “[y]our Ord Minnett adviser will be authorised to deal in and give advice on some or all of the above products and this [SOA] will provide recommendations in relation to these”. The SOA then described in a little detail each of Ord Minnett’s “products”. In the section headed “Our Investment Approach”, the SOA states as follows (emphasis added):

   Given our history and our comprehensive research capabilities, Ord Minnett advisers have a natural affinity for listed investments over other investment products and your Ord Minnett adviser is likely to have a preference for using shares to structure a portfolio that will enable you to reach your investment goals.

9. Under the heading “Advice Limitations”, the SOA stated the following (emphasis added):

   Ord Minnett Limited provides ‘scaled advice’ which is advice that relates to a specific area of your investment needs. In effect, this means that we will be advising you on the investment of a portion of your total assets into primarily share market investments.

   This approach can be contrasted with the traditional financial planning advice model where advice is provided on all aspects of a client’s financial circumstances and a full financial plan is prepared.

   . . . .

   It may be that a full financial planning service will be of benefit to you in which case we would strongly recommend that you speak to your adviser about the financial planning services we can provide through our sister company Ord Minnett Financial Planning Pty Limited.

   In addition you may be interested in speaking to your adviser about Ord Minnett's Portfolio Services which include:

   - Portfolio Administration & Reporting Service (PARS): This is our full service platform and is highly recommended for private clients who expect the very highest levels of service excellence. PARS takes care of administration, enabling your Adviser to manage your portfolio cost effectively.

   - Online Asset Reporting Service (OARS): An effective solution for clients who want a reporting-only service that provides the essential asset valuation, tax and income tracking functionality to efficiently manage their portfolio.

10. After providing information on the investor’s relevant personal circumstances, risks, the opening of an Ord Minnett cash management trust, fees and commissions, and relationships and associations, the following appeared under the heading “Next steps”:

    We strongly recommend that you contact your adviser to discuss the implementation of your investment strategy. Your adviser will be able to answer any questions that you have and will be able to provide you with product information, research and advice specific to your needs.

    Regulation of provision of financial services

11. Each of the services Ord Minnett provides through its Wealth Advice business is a “financial service” within the meaning of s 766A of the Corporations Act 2001 (Cth) (Corporations Act). That means that Ord Minnett’s Wealth Advice business is subject to the disclosure and other requirements prescribed by Chapter 7 of the Corporations Act; and it is necessary to describe the main features of those regulatory requirements as they apply to Ord Minnett because those requirements may be relevant to identifying and characterising the tasks Mr Theodorou performed when Ord Minnett employed him.

12. The expression “financial service”, as defined in s 766A of the Corporations Act, includes providing “financial product advice”, and dealing in a “financial product”. “Financial product” is defined in s 763A(1) of the Corporations Act to mean “a facility through which, or through the acquisition of which, a person”, among other things “makes a financial investment” or “manages financial risk”. Under s 763B(1) of the Corporations Act, a person (investor) makes a “financial investment” if:

    (a)the investor gives money or money’s worth (the contribution) to another person and any of the following apply:

    (i)the other person uses the contribution to generate a financial return, or other benefit, for the investor;

    (ii)the investor intends that the other person will use the contribution to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated);

    (iii)the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even if no return or benefit is in fact generated); and

    (b)the investor has no day‑to‑day control over the use of the contribution to generate the return or benefit.

13. “Financial product advice” is defined in s 766B(1) of the Corporations Act to mean:

    a recommendation or a statement of opinion, or a report of either of those things, that:

    (a)is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or

    (b)could reasonably be regarded as being intended to have such an influence.

14. Subsection 766B(2) of the Corporations Act provides there are two types of financial product advice, namely, “personal advice”, and “general advice”. Subsection 766B(4) provides that “[g]eneral advice” is “financial product advice that is not personal advice”; and “personal advice” is defined in s 766B(3) to mean:

    financial product advice that is given or directed to a person (including by electronic means) in circumstances where:

    (a)the provider of the advice has considered one or more of the person’s objectives, financial situation and needs (otherwise than for the purposes of compliance with the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 or with regulations, or AML/CTF Rules, under that Act); or

    (b)a reasonable person might expect the provider to have considered one or more of those matters.

15. Under s 911A of the Corporations Act a person (Principal) who carries on a financial services business must hold an Australian financial services licence (AFSL) covering the provision of the financial services the Principal provides. A Principal, however, may provide financial services covered by the AFSL it holds through another person (Representative) who does not hold an AFSL; but the Principal may only do so if the requirements of s 911B of the Corporations Act are met. Relevant to Mr Theodorou’s employment with Ord Minnett is s 911B(1)(a) of the Corporations Act, which provides:

    A person (the provider) must only provide a financial service in this jurisdiction on behalf of another person (the principal) who carries on a financial services business if one or more of the following paragraphs apply:

    (a) these conditions are satisfied:

    (i)the principal holds an Australian financial services licence covering the provision of the service; and

    (ii)the provider is an employee or director of the principal or of a related body corporate of the principal; and

    (iii)the provider is not an employee or director, or authorised representative, of any other person who carries on a financial services business and who is not a related body corporate of the principal; and

    (iv)the provider is not an employee or director, or authorised representative, of a related body corporate of a person of the kind mentioned in subparagraph (iii) . . .

16. Section 916A of the Corporations Act prescribes the means by which a Principal may authorise a person to be a Representative:

    (1) A financial services licensee may give a person (the authorised representative) a written notice authorising the person, for the purposes of this Chapter, to provide a specified financial service or financial services on behalf of the licensee.

    (2) The financial services specified may be some or all of the financial services covered by the licensee’s licence.

    (3) An authorisation under subsection (1) is void to the extent that it purports to authorise a person to provide a financial service:

    (a)       that is not covered by the licensee’s licence; or

    (b) contrary to a banning order or disqualification order under Division 8; or

    (c)       in contravention of subsection 921C(2).

    . . . .

    (4) An authorisation may be revoked at any time by the licensee giving written notice to the authorised representative.

17. The Corporations Act imposes disclosure and other obligations on a “providing entity”. These include the obligation imposed by s 946A(1) to give “the client a [SOA] in accordance with” subdivisions C and D. Where the providing entity is a Principal who holds an AFS, that entity must provide an SOA that contains the information prescribed by s 947B of the Corporations Act; and where the reporting entity is an authorised representative s 947C prescribes the contents of the SOA the authorised representative must provide. These include a “statement setting out the advice”, and “information about the basis on which the advice is or was given”.

    Findings

18. The nature and elements of Ord Minnett’s Wealth Advice business during Mr Theodorou’s employment may now be stated. The business, or at least the core of the business, consisted of Ord Minnett’s offering to prospective clients a range of financial products and, if accepted, providing to the client any one or more of the financial products it so offered. The financial products Ord Minnett offered to provide to any particular potential client was contained in a SOA Ord Minnett issued to that potential client on the basis of information the potential client provided to Ord Minnett. Whether the potential client would in fact acquire any of the financial products identified in the SOA depended on whether the potential client would decide to contact an adviser Ord Minnett employed, and if so, accept the advice the adviser would give to the potential client.

19. From this description, Ord Minnett’s Wealth Advice business may be viewed as consisting of three broad elements.

    (a)The first was giving advice to clients, consistently with the SOA Ord Minnett had issued to the client, about the investments the client may consider making, having regard to the criteria and goals the client had set in relation to making his or her investments. The advice given in these circumstances might be termed “direct investment advice”, being the expression the Information Memorandum uses. This advice was given both at the time the client first decided to acquire a portfolio of securities through Ord Minnett, and at any other time the client decided to acquire or sell securities.

    (b)The second element is Ord Minnett’s giving effect to the decisions the client made about what investments he or she should consider making. This would include Ord Minnett buying and selling shares and other financial products (at least to the extent such financial products could be acquired by Ord Minnett as agent for the client). It would also include Ord Minnett’s entering into its information systems details of the investments Ord Minnett had made on the instructions of the client.

    (c)A third element is Ord Minnett, though its information systems, generating information that is relevant or potentially relevant to the client’s deciding whether he or she should hold or sell all or some securities he or she has made, or whether to acquire additional securities, having regard to the client’s criteria and goals for having made the investments; and Ord Minnett conveying such information to the client, and providing advice to the client in the light of that information. The information and accompanying advice Ord Minnett conveyed to the client in these circumstances may be termed as “ongoing advice” or “platform advice”, being the service for which the Information Memorandum states Ord Minnett received “ongoing advisory fees”. More briefly, the third element of Ord Minnett’s Wealth Advice business may simply be described as “monitoring” or “portfolio management”, the latter being the words used in the SOA.

1. In short, Ord Minnett’s Wealth Advice business principally consisted of advising clients about the range of financial products it might be appropriate for a client to acquire, given the client’s financial circumstances, goals, and criteria; giving effect to decisions clients make to buy or sell securities, after having obtained advice from Ord Minnett; offering clients one or more of Ord Minnett’s portfolio services, and in particular access to the portfolio management services provided through the PARS platform on the basis of which Ord Minnett monitors and advises clients; where a client accepts being provided with one or more of Ord Minnett’s portfolio services, Ord Minnett’s providing such services, which consisted of Ord Minnett managing the client’s portfolio of investments in the course of which Ord Minnett advises clients about or in connection to whether, given any relevant information that has arisen, the client should maintain or alter the portfolio of investments he or she holds. Ord Minnett provided these services substantially through the Private Client Advisers it employed.

2. In its counsel’s written submissions, Ord Minnett submits it “is a wealth management company with its business centred around providing full-service stockbroking to its clients”, which means “that its advisors offer advice on buying and selling equities, making recommendations, providing and conducting research and creating tailored investments to its clients”.[22] This reflects the evidence Mr Deva gave which I have already found to have limited value in identifying the nature of Ord Minnett’s Wealth Advice business. The documents in evidence show that Ord Minnett describes its Wealth Advice business broadly. The Information Memorandum identified the services the Wealth Advice business provided as direct investment advice, portfolio management, domestic and international full-service broking and securities trading, and portfolio administration and managed accounts. Moreover, the Information Memorandum distinguished between “[b]rokerage fees” and “[p]latform advice fees”, and noted that the majority of the Wealth Advice business’s revenues were derived from “[p]latform advice fees”.

   MR THEODOROU’S EMPLOYMENT

   [22] Outline of Respondent’s Closing Submissions, [33]

   March 2012 Mr Theodorou commences employment

3. Mr Theodorou commenced employment with Ord Minnett on 1 March 2012 as a “Private Client Adviser” on the terms set out in a letter dated 20 February 2012 from Ord Minnett to Mr Theodorou (2012 Employment Contract).[23] Mr Theodorou held a Bachelor of Commerce (Economics and Finance Specialisations), which he completed in 2003, and an Honours Degree of Bachelor of Commerce (Accounting and Finance Specialisations), which he completed in 2004.[24] Further,[25] in 2008 Mr Theodorou had completed “training courses in PS146 (later RG146) in Generic Knowledge and Specialist knowledge in Securities and Managed Investments with a skill requirement at the tier 1 level with the Securities & Derivatives Association”; in 2008 Mr Theodorou had completed the Accredited Derivatives Adviser Training Level 1 and 2 with Kaplan; and in 2010 Mr Theodorou had completed training courses in “RG146 in specialist knowledge for Margin Lending at the tier 1 level with the Stockbrokers Association of Australia in 2010”.[26]

   [23] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 1

   [24] Affidavit E R Theodorou 24.12.2021, [3]

   [25] Affidavit E R Theodorou 24.12.2021, [14]

   [26] RG146 is a reference to “Regulatory Guide 146” issued by the Australian Securities & Investments Commission titled “Licensing: Training of financial product advisers”. As noted in the document itself, its purpose is to set out “minimum training standards that apply to advisers and how advisers can meet these training standards”. A copy of RG146 is exhibit A.

4. Although the 2012 Employment Contract provided that Mr Theodorou would be employed in the position of “Private Client Adviser”, it does not identify the tasks Mr Theodorou was employed to perform. The tasks he was required to perform, however, may be inferred, first, from the nature of the business Ord Minnett conducted (which I have described above); and, second, by the structure of the remuneration Ord Minnett had agreed to pay to Mr Theodorou, as provided for by cl 6.1 of the 2012 Employment Contract (emphasis added):

   6.1.1 The methodology of calculating your remuneration is based on the standard commission structure for Private Client Advisers. This methodology may change from time to time and notice will be given to you of any such changes. Please refer to the Ord Minnett Holdings Commission Schedule on the intranet for the latest version.

   6.1.2 For the first three month period Ord Minnett agrees to provide you drawings calculated at the rate of $50,000 (gross) per annum, inclusive of superannuation guarantee contribution (current rate is 9%) and subject to deduction and withholding of PAYG tax (Guarantee period).

   6.1.3 At the end of this guarantee period, if you have produced business which has generated commissions in excess of your drawings, you will then be paid the commission earnings in excess of drawings amounts already paid to you. Please refer to the attached Appendix, Ord Minnett Holdings Commission Schedule, for details of the current commission arrangements.

   6.1.4 For this guarantee period, you will not be liable for any residual commission deficit to drawings. At the conclusion of this period you will revert to the standard commission arrangements.

   6.1.5 Ord Minnett Holdings will deduct from the payment any non-cash benefits selected by you (and any associated Fringe Benefit Tax) under the Ord Minnett Holdings packaging scheme.

   6.1.6 Ord Minnett will pay your guaranteed drawings, as monthly instalments by electronic transfer to an account nominated by you, by the 15^th day of each month, after deduction of all taxes and other applicable deductions. Drawings are paid monthly in arrears.

   6.1.7 Your guaranteed drawings includes an allowance for overtime, accordingly, no overtime payments or other additional payments will be payable to you .

   6.1.8 After the end of your guarantee period, subsequent commissions will be paid to you monthly in arrears. Each calendar month's commissions will be paid to you by the 15^th day of the subsequent month (after deduction of taxes and other applicable deductions).

   6.1.9 All drawings, salaries and commissions noted above are inclusive of the superannuation guarantee contribution.

5. The “attached Appendix” referred to in cl 6.1.3 is as follows (underlining in original):

   Ord Minnett Holdings Pty Limited (“Ord Minnett”)

   Commission Schedule 1 July 2010

   Please note, in the Ord Minnett Commission Schedule, the term Adviser is synonymous with Financial Planner

Annual Gross Revenue	Adviser Commission Share
0 - $250K	40%
$250K - $400K	45%
$400K - $600K	50%
$600k - $1m	55%
$1m+	60%

Definitions

1.        Adviser Commission Share is calculated by applying the % share rate to revenue generated in each revenue tier.

2.        Annual Gross Revenue represents the Adviser share of Revenue recorded on Shared Adviser Codes.

3.        Annual Gross Revenue relates to Revenue generated from 1 July to 30 June the following year.

4. The following items are deducted from Annual Gross Revenues

(a)       Rebates to Third Parties

(b)       Transaction costs for International trades

(c)       Execution costs for ESOP and non-standard business transactions

5. Annual Gross Revenue excludes the Adviser Service Fee charged on each account in Ord Minnett Prime Portfolios. This will continue to be paid 100% to the Adviser

6. Adviser Commission share is inclusive of Superannuation Guarantee Contribution (SGC).

1. Ms van Daalen, the current branch manager of Ord Minnett’s Victorian operations, annexed to her affidavit what she describes as a position description for a “Private Client Adviser”.[27] That is a document dated November 2018, and includes the following:

   [27] Affidavit M van Daalen 28.03.2022, [14]; exhibit MVD-1, tab 6, page 36

   POSITION DESCRIPTION

   TITLE:  Private Client Adviser

   SPECIALTY:             Equities

   . . . .

   1. The Role

   Ord Minnett Private Wealth Advisers are highly specialised and are qualified to provide personal financial advice to individuals and Superannuation funds. The purpose of the Equities Adviser speciality role is to partner with Ord Minnett Financial Planner specialists, so that clients are provided with a holistic approach to their finances. Advisers will take into account all facets of direct investment options and managed funds, options & derivatives, retirement & estate planning, risk minimisation (insurances) and wealth creation. (Based on accreditation)

   Implicit in this will be service quality, funds under management fee based approach (rather than commission based brokerage) and compliance adherence.

   2. Major Activities

   •Lead management & joining the Financial Planner in prospect/client meetings to provide Direct Investment advice in a professional, confident and ethical manner. Providing practical advice and market intelligence to help clients make more informed financial decisions.

   •Creating a suggested investment portfolio & buy/sell recommendations to include in an overall strategy written by the Financial Planner.

   •Presenting with the Financial Planner the suggested strategy & statement of advice (SoA) to prospect/client.

   •Supervising and ensuring all facets of client sign up are completed.

   •Regularly monitoring the client's financial activity and maintaining regular contact for consultation

   •Through relationship management and informal education, increase the knowledge base of advisers by sharing ideas and strategies.

   •Keeping up-to-date with company announcements, market movements, legislative requirements, product offerings, compliance standards and industry trends

   •Building an activity pipeline via current equity only account holders and through external relationships and referrals.

   •Promoting or assisting in the promotion of Ord Minnett’s private wealth financial services. This may be by participating in client presentations, client lunches or seminars.

   •Maintenance notes of all conversations and advice to clients in Ord Minnett CRM system.

   . . . .

   4. Key Performance Indicators

   •Adviser partnership success

   •Number of client meetings undertaken

   •Measurable uplift in client commission to FUM conversion

   •Number of networking relationships resulting in client referrals.

   •Number of clients & revenue generation

   •Satisfactory Adviser compliance reviews

2. Ms van Daalen does not say anything about how or when this document was created; and in particular, whether it is a draft of an earlier document that existed at the time Mr Theodorou commenced his employment with Ord Minnett. In those circumstances, I am not prepared to rely on this position description as evidence of the intended roles of a “Private Client Adviser” as at the time Mr Theodorou commenced his employment with Ord Minnett on 1 March 2012.

   8 March 2012 – Mr Theodorou completes an application for “Authorised Representative”

3. On or shortly before 8 March 2012 Ord Minnett provided to Mr Theodorou a document headed “Ord Minnett Representative/Authorised Representative Application” under which appeared the following (emphasis added in first paragraph).[28]

   Please Read Carefully

   Please find an attached application form for becoming a Representative or Authorised Representative (“Representative”). You are required to be a Representative if you are giving advice to clients or taking orders from clients, on behalf of a company that holds an Australian Financial Services License.

   In order to be a Representative pursuant to the Corporations Act an internal application is required. Could you please complete this application immediately and return it to the Compliance Department. If you have any questions please contact . . . .

   No activities, which would constitute dealing in securities or options, or providing advice to clients on any financial product, should be made until the application is approved and you are appointed as a Representative.

   [28] Affidavit E R Theodorou 24.12.2021, [18]; exhibit ERT-1, tab 7, page 141

4. The next page of the document is headed “Ord Minnett Compliance Welcome Starter Pack”, and identifies six documents that comprise the starter pack. One of the documents is a “Representatives/Authorised Representatives Application”. Mr Theodorou completed that application form on 8 March 2012.[29] Effective from that date, Mr Theodorou was appointed authorised representative of Ord Minnett Limited to “advise on the following product areas”:[30]

   [29] Affidavit E R Theodorou 24.12.2021, [18]; exhibit ERT-1, tab 7, page 163

   [30] Affidavit E R Theodorou 24.12.2021, [18]; exhibit ERT-1, tab 7, page 170

   •Provide financial product advice

   •Derivatives

   •Derivatives -All

   •Managed Investment Schemes

   •Managed Investment Schemes, including IDPS

   •Securities

   •Securities

   •Margin Lending Facility

   •Standard Margin Lending Facility

5. Another of the documents that comprised the starter pack is titled “Advice”.[31] It provides a definition of “advice”, and the definitions of “personal advice” and “general advice” given in s 766B(3) and (4) respectively of the Corporations Act.

   [31] Affidavit E R Theodorou 24.12.2021, [18]; exhibit ERT-1, tab 7, page 151

6. Sometime in 2012 Ord Minnett’s Victorian State Manager, Mr Wright, informed Mr Theodorou that, in order to provide advice on equities in “Self-Managed Super Funds”, Ord Minnett required Mr Theodorou “to complete RG 146 in specialist knowledge for Superannuation at Tier 1 level subject with the Stockbrokers Association of Australia”. Mr Theodorou enrolled and completed that subject in June 2012.[32] Mr Theodorou says that he understood that RG 146 required him to complete “Core 2 (Ethics)”; but he does not recall completing “an ethics subject at that time called Core 2 (Ethics) or having any discussions with management about an ethics subject”.[33]

   [32] Affidavit E R Theodorou 24.12.2021, [14]

   [33] Affidavit E R Theodorou 24.12.2021, [15]

   Employment Contract

7. From about 2 April 2013 Mr Theodorou was employed in the position of “Associate Adviser” pursuant to the terms set out in a letter dated 21 February 2013 from Ord Minnett to Mr Theodorou (Employment Contract).[34] Mr Theodorou does not give any evidence about the circumstances in which he entered into the Employment Contract.

   [34] Affidavit E R Theodorou 24.12.2021, [5]; exhibit ERT-1, tab 2

8. Clause 3 of the Employment Contract provided that Mr Theodorou would attend the “2013 Associate Adviser Program”, being an “intensive 6 month program, with a minimum of 2 days per month of face to face training and weekly tutorials”, and that Ord Minnett would set “[a]ctivity and performance hurdles” which would include the following:

   . . . telephone prospecting levels (minimum of 15 contacts of new prospects per day), face to face meetings (minimum of 2 face to face meetings with new prospects per week), number of clients opening a PARS, CMT or Equities account, signing of funds under advice or management* (minimum increase of $1 Million per month), Gross Revenue (minimum gross revenue from all sources of $5000 in month 7, $10,000 in month 13, $20,000 in month 25). Failure to reach the activity and performance hurdles set by Ord Minnett may result in the termination of your employment, as per Clause 16.5.4 of this contract.

   *Funds under advice or management would include CHESS Holdings (including those held at Leveraged Equities), CMT balances, fixed interest, managed funds, wrap accounts (where Ord Minnett was the nominated licence holder) assets held under custody by Ord Minnett.

9. Clause 6.1 of the Employment Contract provided for Mr Theodorou’s remuneration. Under that clause Ord Minnett agreed that up to 1 October 2014 it would pay Mr Theodorou a salary of varying amounts, inclusive of superannuation guarantee contributions. As from 1 October 2014, Ord Minnett agreed it would pay remuneration as follows:

   6.1.4 After the first eighteen month period, commencing 1 October 2014, salary payments will cease and the methodology of calculating your remuneration is based solely on the standard Ord Minnett Commission Schedule. This methodology may change from time to time and notice will be given to you of any such changes. Please refer to the Ord Minnett Holdings Commission Schedule on the intranet for the latest version.

   6.1.5 Ord Minnett Holdings will deduct from the payment any non-cash benefits selected by you (and any associated Fringe Benefit Tax) under the Ord Minnett Holdings packaging scheme.

   6.1.6 Ord Minnett will pay your guaranteed salaries by electronic transfer to an account nominated by you, by the 15th day of each month, after deduction of all taxes and other applicable deductions. Commissions will be paid monthly in arrears.

   6.1.7 All salaries and commissions noted above are inclusive of the superannuation guarantee contribution. It is noted that the superannuation guarantee rate is currently 9% until 30 June 2013; however the rate is legislated to increase on 1 July 2013 and to further increase on each 1 July thereafter until 1 July 2019. The superannuation guarantee component of any salaries and commissions will reflect the rate relevant at the time of payment. This may result in a decrease in the taxable component of any salary and commission.

10. The “Ord Minnett Holdings Commission Schedule” is the same as the “Appendix, Ord Minnett Holdings Commission Schedule” that is attached to the 2012 Employment Agreement.

11. Clause 4 of the Employment Contract concerned award coverage as follows:

    4.1If your position is covered by the terms of an Industrial Instrument including an Award, Agreement, or any preserved or transitional provisions under applicable legislation (Industrial Instrument), nothing shall be taken as incorporating the Industrial Instruments as a term of your employment.

    4.2      If there is a conflict between the terms and conditions of this agreement and any more favourable provisions in any Industrial Instrument applying to your employment, the provisions of the relevant Industrial Instrument will apply to the extent that they are more favourable.

12. In her affidavit Ms van Daalen asserts that Mr Theodorou’s being offered a contract to be employed as an “Associate Advisor” was a demotion, and she bases this assertion on “my discussions with the state manager at the time of [Mr Theodorou’s] commencement” of employment with Ord Minnett.[35] Mr Theodorou, in his second affidavit, says that in 2013 the State Manager, Mr Giannakopoulos, offered Mr Theodorou to join Ord Minnett’s Associate Adviser Program. Mr Theodorou also says that his business card, email signature, and marketing material produced by Ord Minnett described Mr Theodorou as a “Private Client Adviser”.[36]

    [35] Affidavit M van Daalen 28.03.2022, [15]

    [36] Affidavit E R Theodorou 21.04.2022, [26], [28]

13. It is apparent from the terms of the Employment Contract that its purpose was to require Mr Theodorou to undergo the “2013 Associate Adviser Program”, being an “intensive 6 month program, with a minimum of 2 days per month of face to face training and weekly tutorials”, and that Ord Minnett would set “[a]ctivity and performance hurdles”. It is open to infer, and I find, that the Employment Contract contemplated that if Mr Theodorou would meet the “[a]ctivity and performance hurdles”, Ord Minnett would keep him employed, and he would be entitled to earn the commissions provided for in the “Commission Schedule 1 July 2010”, which was the same as the schedule to the 2012 Employment Contract under which Mr Theodorou was employed as a Private Client Adviser. It is open to further infer, therefore, and I find, that Mr Theodorou met the activity and performance hurdles, and that Ord Minnett consequently employed him as a Private Client Adviser without reflecting that fact by requiring or suggesting to Mr Theodorou that he sign a new agreement where his position is described as a Private Client Adviser.

    19 June 2015 - Mr Theodorou appointed financial services representative

1. By letter dated 19 June 2015 Ord Minnett informed Mr Theodorou that he had been authorised to act as a financial services representative of Ord Minnett Financial Planning Pty Ltd pursuant to s 911B(1) of the Corporations Act.[37] The letter stated that the authority allowed Mr Theodorou “to provide advice to clients of Ord Minnett Limited with respect to the following financial products”. The letter identified one product, namely, “Financial Planning” which, in turn, was stated to include “[a]ll products and advice on Licence Authorisation”. The relevant licence issued on 19 June 2015 provided that Mr Theodorou could advise “on the following product areas”.[38]

   [37] Affidavit E R Theodorou 24.12.2021, [18]; exhibit ERT-1, tab 7, page 165

   [38] Affidavit E R Theodorou 24.12.2021, [18]; exhibit ERT-1, tab 7, page 169

   •Provide financial product advice

   •Deposit and Payment Products

   •Deposit and Payment Products - Non-basic Deposit Products

   •Government Debentures, Stocks or Bonds

   •Government Debentures, Stocks or Bonds

   •Life Products

   •Investment Life Insurance Products

   •Life Risk Insurance Products

   •Managed Investment Schemes

   •Managed Investment Schemes, including IDPS

   •Retirement Savings Account Products

   •Retirement Savings Account Products

   •Securities

   •Securities

   •Superannuation

   •Superannuation - All

   •Margin Lending Facility

   •Standard Margin Lending Facility

   Tasks specified by marketing profile

2. According to Mr Theodorou, when he commenced his employment, Ord Minnett provided him a marketing brochure to use when promoting himself to clients or potential clients.[39] The brochure included the following statements (emphasis added):[40]

   Evan joined Ord Minnett in 2012 as a Private Client Adviser. He has built his career on a sound financial advisory footing with over 10 years of direct investment experience in global financial markets at . . . .

   Evan prides himself on his level of professional service, quality of advice and personal commitment to his client’s financial needs. A disciplined investment management process and balanced advice are at the cornerstone of Evan’s wealth management offering.

   Evan earned . . . [and] is also an Accredited Derivatives Adviser, Level 2, and is authorised to trade securities globally.

   [39] Affidavit E R Theodorou 24.12.2021, [11]; exhibit ERT-1, tab 3. In evidence given under cross-examination, Ms van Daalen said that  the document was a “generic document that all advisors utilise . . . from marketing” – T124.30

   [40] Affidavit E R Theodorou 24.12.2021, [11]; exhibit ERT-1, tab 3, page 46

3. The brochure further stated that “[a]s your Private Client Adviser, I can provide a comprehensive range of services”, and the brochure sets out the services Mr Theodorou could provide. These included “Full-service Stockbroking” (which included, among other things, “[i]ndependent advice and tailored investment solutions”); “Financial Planning and Structuring Advice” (which included superannuation, estate planning, and retirement planning), and “Active Portfolio Management” (which included “Regular investment ideas and strategies”).

   Mr Theodorou’s evidence of the work he performed

4. In his first affidavit Mr Theodorou described the work he performed at Ord Minnett under two headings. The first is the “Advice-based business model”. Here Mr Theodorou says he administered “a business model that predominantly involved providing holistic personal financial advice to retail and wholesale clients based on their risk profile, financial position, financial needs, goals, and objectives”.[41] The process started by a client preparing a client profile document for Mr Theodorou, which would then be provided to Ord Minnett’s operations staff who would enter the information into the Ord Minnett “system” which, in turn, would generate a SOA that would be sent to the client.[42] After an SOA was sent, Mr Theodorou recorded any further advice in a record of advice.[43]

   [41] Affidavit E R Theodorou 24.12.2021, [19]

   [42] Affidavit E R Theodorou 24.12.2021, [21]

   [43] Affidavit E R Theodorou 24.12.2021, [22]

5. Mr Theodorou says he generated approximately 65-70% of his revenue by charging an asset-based fee “on client assets under advice on the” PARS and UMA platforms; approximately 10-15% of his revenue by charging clients full brokerage rates on share transactions (being usually 1% of the value of the prices), approximately 10% of his revenue by placing “execution only trades”, (these being the buying or selling of shares without providing any advice), and 5% of his revenue by selling Australian Bank Hybrid Securities, IPOs or Listed Investment Companies.[44] In summary:[45]

   Most of my revenue was generated through providing personal advice based work (up to 85%), whilst providing execution only services and selling equity capital raisings (IPO’s, Australian Bank Hybrid Raisings, and LIC’s) accounted for only 15% of total revenue. The breakdown provided in this paragraph is based on my best recollection of the breakdown contained in the commission statements that I received from Ord Minnett.

   [44] Affidavit E R Theodorou 24.12.2021, [26]

   [45] Affidavit E R Theodorou 24.12.2021, [26]

6. Mr Theodorou received every month a document titled “Adviser Commission Statement” (ACS) which recorded the revenue generating activities he engaged in, the revenues his activities generated, and the commission that was payable to him. It would be instructive to set out an ACS Ord Minnett issued to Mr Theodorou for October 2019, which I find to be a typical example of the ACSs Ord Minnett issued to Mr Theodorou throughout his employment:[46]

   [46] Affidavit E R Theodorou 24.12.2021, [27]; exhibit ERT-1, tab 8, page 185

Adviser Commission Payable – Month	$
Adviser Commission Share	4,454.40
Deductions, Additions and Adjustments	0.00
Adviser Commission Payable	4,454.40
Commission Amount Payable	4,454.40
Less: Superannuation Guarantee Contribution	-386.45
Net Adviser Commission Payable	4,067.94
Annualised Information
Gross Revenue – YTD	43,821.01
Gross Revenue – Annualised equivalent	131,463.04
Effective Commission Rate based on annualised revenues (%)	40.00%
Adviser Commission Share YTD	17,528.41
Less: Commission Previously Paid	13,074.01
Adviser Commission Share for Month	4,454.40
Gross Revenue – Month
Product	Revenue ($)
Equity AUD Trades	4,221.85
International Equity	597.48
Margin Lending – Other Providers	147.61
Other External Products	0.12
Platform Fee	-347.95
Portfolio and Reporting Services (Partner)	5,823.98
UMA – HUB 24	692.90
Total Gross Revenue – Month	11,135.99

1. Mr Theodorou says he was authorised to provide financial planning services to clients and, when required, he provided superannuation switching advice.[47] Mr Theodorou also assisted in preparing insurance advice for clients.[48]

   [47] Affidavit E R Theodorou 24.12.2021, [29]

   [48] Affidavit E R Theodorou 24.12.2021, [30]

2. Mr Theodorou also gave evidence under re-examination about a number of aspects of the work he performed. First, he gave the following evidence about the work he needed to perform to develop a book of clients:[49]

   You really need to be able to build and foster relationships with referral partners, so accountants, bankers, private bankers, mortgage brokers, finance lenders. And you really need to be out there to foster those relationships, and then once you do have clients, you know, getting referrals down that path as well, and doing – being – you know, being a part of associations and going to events and doing a lot of things down that line as well.

   [49] T54.25

3. Second, Mr Theodorou gave the following evidence of what work he performed in relation to persons who had been referred to him by existing clients:[50]

   Well, the client that’s referring you is obviously trusting you with their finances, and when they introduce you to another friend of theirs or someone that they know that could use your services, they will – it will be a warm introduction. And then, you know, I will run them through what I do as an advisor to manage their wealth and help them through any financial issues that they may have. And, yes, look, it’s a nice way to go about approaching the business. It’s – it’s all about relationships, and, you know, when people, you know, appreciate you, that they refer to their friends and people that they know and people that they think could use help with their wealth management.

   [50] T54.40

4. Third, Mr Theodorou said he would contact clients who had elected to go onto the PARS platform every month, and that the following was involved in such contact:[51]

   Well, on occasion it was about asset allocation and investment. On a lot of other occasions it’s just about, you know, discussing being, like, a behavioural coach, because you’re dealing with markets and, you know, you need to keep people in – in a good way about their investments. You know, you’re talking about their family. You’re talking about how their life is, what their lifestyle goals are. You know, you’re educating them about all things financial.  And, you know, I think it’s really important to, you know, become a trusted advisor with them. And that’s – you know, the conversations are about much more than, you know – you know, buy this or sell that. It’s really about, you know, we’ve got this strategic allocation. We’ve got this long-term strategy, and we’ve got to stick to it, and along the way we need to – you need to manage that relationship so that you can get the outcome that the client needs.

   [51] T55.10

5. Fourth, Mr Theodorou described what he did in assisting a potential client to complete a CPF, and he gave the following evidence about what he did after Ord Minnett issued a SOA:[52]

   So after they’ve received exhibit B, we present them with the portfolio proposal, the asset allocation, in line with their risk profile, and we – we just discuss how we’re going to, you know, manage risk going forward, you know, based on how – their time horizon, what they’re looking to achieve, how we’re going to invest. I will put that together, and then we will get off and start investing in – in the portfolio.

   [52] T56.15

6. Fifth, Mr Theodorou gave the following evidence of the work he performed in managing a “book of clients”:[53]

   Once you had a book of clients, who was responsible for it?---I was.

   And what did that actually involve?---Managing all of those relationships personally, and looking after all those clients’ wealth as – you know, the role is to have as many relationships as you can and look after as many clients as you can, and they are – you know, you’re their guardian, and they come to you, and their relationship is with me, and they don’t – that’s what they know of the advice piece, and they don’t know anyone else that, you know, at the firm. It’s we’re the relationship manager to them. And I think it sort of come – yes, I think it comes back to also, if I see a need for advice, and I feel like I can bring someone else in and broaden that experience, I will bring them in, because I think I’m discharging my duties as a financial advisor to, you know, get the best and – and – and look after the client based on what they want. So, yes, looking after clients is – is key.

   [53] T57.15

7. Mr Theodorou was cross-examined about the tasks he performed; and the effect of the evidence he gave under cross-examination is accurately summarised in the following passage from ORD Minnett’s counsel’s written submissions:[54]

   [Mr Theodorou’s] position was one where he was responsible for providing services to a group (or book) of clients, essentially by himself, but together with a financial planner for a “handful” of clients. Otherwise, no other adviser was employed to assist him to provide those services to his group or book of clients. [Mr Theodorou] had access to an administrative/desk assistant to help him. That was a resource he shared with several other advisers. [Mr Theodorou] was not responsible for hiring the desk assistant. [Mr Theodorou] did not have any power to hire or fire the desk assistant. The desk assistant reported to another Ord Minnett employee. The maximum fees and charges applicable to the clients serviced by [Mr Theodorou] were set by Ord Minnett. [Mr Theodorou] was not required to prepare an annual budget for his book of clients. [Mr Theodorou] did not have to prepare and was not responsible for preparing a profit and loss statement for that group of clients. [Mr Theodorou] did not have to prepare a balance sheet for that group of clients. [Mr Theodorou] was given no allocation to entertain his clients and he paid for any entertainment expenses himself.

   [54] Outline of Respondent’s Closing Submissions, [40] (references omitted)

   Ms van Daalen’s evidence

8. In her affidavit Ms van Daalen says that “[f]undamentally, Advisers provide personal financial advice to clients on the buying and selling of equities”; and that:[55]

   [55] Affidavit M van Daalen 28.03.2022, [7]

   Most of their day is spent:

   (a)       providing clients with financial advice on equities;

   (b)producing appropriate documentation to record any advice they have given, usually through statements of advice or records of advice;

   (c)       order placement and trade management;

   (d)       monitoring the share market;

   (e)reviewing research, usually produced by the Respondent's in-house Research team; and

   (f)       business development.

9. In responding to this part of Ms van Daalen’s affidavit, Mr Theodorou says that, based on his experience while at Ord Minnett, advisers provided personal financial advice to clients on the buying and selling of equities, and a number of other classes of assets, including unlisted securities, managed funds, and exchange traded funds, listed and unlisted stapled securities.[56]

   [56] Affidavit E R Theodorou 19.04.2022, [12], [13]

10. Ms van Daalen further says that:[57]

    Advisers do not exercise any business managerial or people management responsibilities in their role; their role is entirely revenue-generating. While Advisers may be supported by Advisor Assistants. Advisor Assistants report to me as the Branch Manager. The things that Advisor Assistants commonly do to assist Advisers include administration support, order placement on an execution only basis and trade management. Advisers do not make decisions relating to the administration and conduct of part of the Respondent’s business.

    [57] Affidavit M van Daalen 28.03.2022, [8]

11. Ms van Daalen has annexed to her affidavit what she describes as “a report generated by [Ord Minnett’s] Compliance team relating to the sources of [Mr Theodorou’s] revenue between the FY2015 and FY2020”. Ms van Daalen referred to this report as a basis for deposing that some 0.18% of the revenue Mr Theodorou generated related to “financial planning work”.[58] The report, however, is useful because it identifies the largest sources or revenues Mr Theodorou generated for Ord Minnett. The consistently highest source of revenue was derived from “PARS Partnership”, and the consistently second highest was revenue generated from “Equities”. This is apparent from the following table of the percentage of total revenue these activities generated in 2016, 2017, 2018, and 2019:

    [58] Affidavit M van Daalen 28.03.2022, [25]; exhibit MVD-1, tab 21, page 66

2016 ($121,152)	2017 ($114,601)	2018 ($127,333)	2019 ($116,442)
Equities	38%	33%	28%	33.67%
PARS Partnership	41%	48%	49%	30.90%
UMA hub 24	8%	6%	6%	5.74%

Mr Deva’s evidence

1. Mr Deva says that, based on his experience with Ord Minnett, and in the financial services industry, the “principal purpose of the role of a Private Client Adviser” is “to be engaged in the practice of stockbroking, rather than as a financial planner”. Mr Deva says he relies on Ord Minnett’s “core service being full-service stockbroking”, Ord Minnett’s “current and historical position as a leading stockbroking firm in Australia”, Ord Minnett’s “significant participation . . . in the ASX”, and “the primary responsibilities and duties of [Mr Theodorou’s] role, which was to provide full-service stockbroking to [Ord-Minnett’s] clients”.[59] Mr Deva acknowledges that the title “stockbroker” is “less common in recent years”, but, he says, he does not believe “this has fundamentally transformed the nature of the role of Private Client Advisers employed by [Ord Minnett] from stockbroking to financial planning”.[60] Mr Deva also provides an opinion on “the difference between financial planners and stockbrokers”. One of the differences is as follows:[61]

   stockbrokers are experts in providing advice using equities and direct investments to allow clients meet their current and long-term financial goals, whereas financial planners would generally use indirect investments or managed funds as their investment strategy to achieve the same goal

   [59] Affidavit G Deva 28.03.2022, [12]

   [60] Affidavit G Deva 28.03.2022, [13]

   [61] Affidavit G Deva 28.03.2022, [14]

2. There are a number of difficulties with Mr Deva’s evidence. First, apart from referring in general terms to his experience, Mr Deva does not identify any evidentiary or other basis for the opinion that “stockbrokers are experts in providing advice using equities and direct investments to allow clients meet their current and long-term financial goals”. That is a difficulty because it does not reflect the traditional understanding of the work a stockbroker performs, which Rowlatt J described in 1919 as follows:[62]

   It seems to me that what a stockbroker does is to buy and sell a commodity on the market. It is true he does not expect to have to pay for it himself or to be responsible ultimately to satisfy the contract himself, as he is a buyer and seller in the market for an undisclosed principal to whom he looks to indemnify him from liability. It does not seem to me that that is a profession within the meaning of this section. The stockbroker is remunerated by a commission which he receives from his principal, the person who takes the liability off his shoulders.

   [62] Christopher Barker & Sons v Commissioners of Inland Revenue [1919] 2 KB 222, at page 229

3. A second, and greater, difficulty is that Mr Deva does not explain why, if in truth the principal purpose of the role of a “Private Client Adviser” is “to be engaged in the practice of stockbroking, rather than as a financial planner”. Ord Minnett described the position Mr Theodorou occupied as “Private Client Adviser” or “Associate Adviser”, rather than “stockbroker” or some other title that included “stockbroker” or “stockbroking”. The inference that is available to be drawn from the position Mr Theodorou occupied not being described as “stockbroker”, or some other description that included “stockbroker” or “stockbroking”, is that such description would not have accurately described the functions Mr Theodorou was engaged to perform. I find that Ord Minnett appointed Mr Theodorou as a “Private Client Adviser” and “Associate Adviser”, and represented him to the world as a Private Client Adviser, rather than a “stockbroker”, because Ord Minnett itself recognised that the tasks Mr Theodorou was engaged to perform, although they included tasks stockbrokers perform or traditionally performed, would extend to the performance of tasks that went beyond those performed by a stockbroker. That is apparent from the following passage from the SOA which I have already quoted (emphasis added):

   In addition to our traditional stockbroking advisory and dealing services we can provide comprehensive advice in relation to superannuation, retirement planning and portfolio management, utilising a broad range of products and platforms.

1. Clause 4.1 of the CommSec Award bound CommSec and “all employees employed in the classifications set out in this Award”. The classifications were set out in cl 9. These were divided into three classes – “CS1 (Team Member/Processing/Operations)”, “CS2 (Team Leader/Specialist/Adviser)”, and “CS3 (Manager/Advanced Specialist)”; and cl 9.2 identified “descriptors” by reference to which the roles of employees were to be determined. The “descriptors” consist of a general statement of the role, followed by examples of what fell within the roles. Relevant to Mr Theodorou’s claims are the examples of the CS1 and CS2 roles. These include, within classification “CS1”, “Customer/Client Service Officer (Broking)”; and, within classification “CS2”, “Adviser (for example: Financial, Risk, Investment, Private Client)”.

2. Ord Minnett submits there is no evidence that the CommSec Award regulated the type of work Mr Theodorou performed while employed with Ord Minnett.[129] That submission is made without reference to the employee classifications provided for in the CommSec Award. The role of “Adviser” and, to the extent Mr Theodorou sold and bought shares on behalf of clients, the role “Customer/Client Service Officer (Broking)”, together accurately cover the role, or at least a substantial part of the role, Mr Theodorou performed as an employee of Ord Minnett.

   [129] Outline of Respondent’s Closing Submissions, [34]

3. Ord Minnett also submits that the CommSec Award cannot be regarded as an award that traditionally covered persons who performed the role Mr Theodorou performed because “a tradition is a long-established custom passed on from generation to generation”.[130] That may be the ordinary meaning of “tradition”, but the relevant inquiry concerns the proper construction of the expression “traditionally covered at all by awards”, which must be determined in the context in which this expression was included in Clause B6. That context is the decision of Smith DP, who, in the passage I quoted in paragraph 91 of these reasons, made it clear that the Proviso was not meant to exclude a person who had already been covered before the removal by the AIRCFB on 16 November 2009 of the exemption rate that had been included in cl 13.2 of the Award. Smith DP said that by adopting the course he did, namely, to add the Proviso, “the Award will not apply to those, who because of their seniority of their role, were not covered by awards”, and that, in “taking this course I am satisfied that in a very real sense the variation will not remove employees from coverage as those employees should not have been covered in the first place” (emphasis added). Thus, “traditionally covered at all by awards”, as these words appear in the Proviso, were intended to refer to all awards that were on foot immediately before the Award came into effect, and whose coverage was replaced by the coverage provided by the Award.

   [130] Outline of Respondent’s Closing Submissions, [33]

4. Thus, even if Mr Theodorou’s role or activities were those of a stockbroker, the work he performed as an employee of Ord Minnett is not of a nature that was not regulated at all by an award; and his role was not one that was not “traditionally covered at all by awards”, as I have construed that expression. Thus, if Mr Theodorou were to bear the onus of proving that the Proviso did not apply to his employment, he would have discharged that burden.

   Conclusion

5. I am satisfied that the Award covered Mr Theodorou’s employment with Ord Minnett. That means that, subject to any set off to which Ord Minnett may be entitled, Ord Minnett failed to comply with the following clauses of the Award:

   (a)Clause 13.1(a) of the Award, which provides that the Employer must pay a “full-time adult employee . . . a minimum rate for their classification as set out in the table below”, the minimum rate for a Level 6 classification being a minimum annual salary of $56,290 at a minimum weekly rate of $1,082.50.

   (b)Clause 24.3 of the Award, which provides for the payment of a 17.5% loading for annual leave.

6. There is in evidence a report prepared by “Acknowledge Accounting” (Calculation Report) that has calculated the minimum wages and annual leave loading to which Mr Theodorou would have been entitled under the Award for the period 1 July 2015 to 13 December 2019.[131] Ord Minnett has not submitted that the calculations are incorrect, and I am therefore prepared to find the calculations are correct.

   [131] Affidavit A G Barwick 23.12.2021, [17]; annexure AGB-13

   CLAIMS UNDER NES

7. It is common ground that if the Award applied to Mr Theodorou’s employment, he would have been entitled to receive amounts pursuant to s 90, s 99, and s 116 of the FW Act. Section 90 provides as follows:

   (1)If, in accordance with this Division, an employee takes a period of paid annual leave, the employer must pay the employee at the employee’s base rate of pay for the employee’s ordinary hours of work in the period.

   (2)If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

8. “Annual leave” is a reference to the entitlement to annual leave provided for by s 87 of the FW Act. The expression “base rate of pay” of an employee is defined in s 16(1) of the FW Act to mean “the rate of pay payable to the employee for his or her ordinary hours of work”. That is subject to s 16(2), which applies to a “pieceworker”. Given the findings I have made, it is not necessary to consider whether Mr Theodorou was a “pieceworker”.

9. The Calculation Report has calculated Mr Theodorou’s annual leave entitlements, untaken annual leave entitlements, public holiday entitlements, personal or carer’s leave entitlements, and compassionate leave entitlements. Ord Minnett has not submitted that the calculations are incorrect, and I am therefore prepared to find the calculations are correct.

   SET OFF

10. Mr Theodorou claims he is entitled to be paid the amounts for the work he performed from 1 July 2015 to 13 December 2019 based on the rates specified in the Award. Mr Theodorou claims these amounts total $245,483.96.[132]

    [132] Statement of Claim, schedule

11. Mr Theodorou accepts that a credit of $14,437.14 should be given to Ord Minnett, being a payment Ord Minnett made on 18 September 2019.[133] In his affidavit Mr Theodorou refers to this payment as a “top-up payment”, and says he received it after the completion of a management buyout of Ord Minnett, as contemplated by the Information Memorandum. The payslip that accompanied the payment, however, refers to the payment as commission. Mr Theodorou, however, does not allow for the crediting of the commissions Ord Minnett paid him.

    [133] Affidavit E R Theodorou 24.12.2021, [59]; exhibit ERT-1, tab 11, page 195

12. Before I consider the parties’ competing submissions, it will be necessary to refer to the relevant principles.

    Principles

13. Cases have arisen where an employer who is covered by an award has paid an employee which is covered by the award amounts to discharge liabilities under a contract of employment without reference to the obligations the employer has under the award; and the question that courts have had to consider is whether the payments employers made to discharge obligations under the contract of employment may also be taken to discharge obligations the employer has under the award. The determination of that question has turned on, first, identifying the obligation under the award it is said the employer did not in fact intend to discharge, and the contractual obligation the employer did intend to discharge; and, second, considering whether the two obligations coincide or are of the same kind. The nature of the inquiry is illustrated by the following passage from the judgment of the Full Federal Court in Australia and New Zealand Banking Group Limited v Finance Sector Union of Australia.[134]

    It will usually be easy to determine whether there is a coincidence between particular award entitlements and the contractually agreed purpose. Take the case of an agreement for payment of wages of $1,000 per week to an employee who has an award entitlement to receive wages of $800 per week. Discharge of the contractual obligation will clearly also discharge the obligation to pay wages imposed by the award. On the other hand, take the first example offered by Sheldon J, where an employer agrees to pay a clothing allowance. It is no answer to a claim for underpayment of wages to say there was no award obligation to pay a clothing allowance. Similarly with Sheldon J's second example: it is no answer to an overtime claim to say the employee has received an over-award payment in respect of ordinary time.

    [134] Australia and New Zealand Banking Group Limited v Finance Sector Union of Australia [2001] FCA 1785, at [46] (Black CJ, Wilcox and von Doussa JJ)

14. The reference to Sheldon J is a reference to his Honour’s judgment in Ray v Radano, a decision of the Industrial Commission of New South Wales;[135] and it will be necessary to say something about Sheldon J’s judgment because in Poletti v Ecob the Full Federal Court held it was “appropriate that this Court should apply the principles discussed by Sheldon J. in Ray v. Radano”.[136]

    [135] Ray v Radano [1967] AR (NSW) 471

    [136] Poletti v Ecob [1989] FCA 492, at [45]

15. In Ray v Radano the majority held that where an employer, under an agreement not made by reference to an applicable award, paid an amount on account of wages at a rate higher than the amount provided for by the award, but did not pay overtime as required by the award, the employer was entitled to credit against his liability to pay overtime the above-award wages the employer paid the employee. The majority explained what this practically meant with the following illustration:[137]

    For the purpose of illustration let us imagine the following hypothetical case: a worker under his contract of service was promised $60 for 40 hours’ work per week when the appropriate award fixed the price or rate for 40 hours work per week at $40; the worker worked 45 hours in a particular week but was still paid his usual wage of $60. In such a case the worker, if he so desired, would be entitled to bring an action in a civil court to recover for the extra 5 hours worked in the week in question, but he would not be entitled to obtain an order under s. 92 unless the amount which would have been due to him under the award exceeded $60.

    [137] Ray v Radano [1967] AR (NSW) 471, at page 475

16. The plurality in Ray v Radano was of the view that the position would be otherwise if the contract provided for the payment for some other purposes not covered by the applicable award, say, fares or a uniform allowance. Here, the plurality said that the amounts paid for these purposes could not be considered “in determining the correct balance due to” the employee for wages.[138] Sheldon J, however, took a different approach. In his Honour’s view, no payment made on account of a promise beyond that provided in the award - what Sheldon J described as an “extra-award payment”or a payment made for “a promise extraneous to the award obligation” - could be set off against the employer’s obligations under the award.[139]

    To put it in more concrete terms, if the award rate for 40 hours work is $40 with overtime payable in addition but the employer agrees to pay a uniform allowance of $5 per week, it is common ground that it is no answer to a claim under s. 92 for $40 ordinary time and $5 overtime worked to show that in fact $45 went into the employee’s pocket. If this is so, I regard it as equally no answer if he got $45 only because the employer agreed to pay him that amount for no more than 40 hours work. In each case, as I see it, the employer cannot allocate to one subject matter what he has already paid in pursuance [to] a promise related to another subject matter.

    [138] Ray v Radano [1967] AR (NSW) 471, at page 475

    [139] Ray v Radano [1967] AR (NSW) 471, at pages 478 and 479

17. Sheldon J, referring to the example of the majority, also said (emphasis added):[140]

    I regard it as a departure from the provisions of s. 92 and, indeed, a contradiction in terms if an amount ($20 in the illustration) promised and paid as an excess over one part of the award entitlement can be used as if it had been a payment in fulfilment of another part of the award obligation. This involves re-allocating an amount promised to, and earned by the complainant, in respect of subject A (40 hours work) to meet a claim in respect of subject B (5 hours overtime). This would be striking a false balance, not a true one, under s. 92, because it is not a balance between the ‘price or rate’ fixed by the award and payment made in respect thereto. It also involves, as I see it, a repudiation of the contract in order to reduce the balance due under the award. So, in essence, my view is that because s. 92 restricts what can be claimed to the award obligation, set-offs must also be restricted to payments which are referable, expressly or by implication, to the award obligation. If a complainant cannot enhance his claim under s. 92 because of private contract, neither can a respondent use private contract to reduce it.

    [140] Ray v Radano [1967] AR (NSW) 471, at page 479

18. The Full Federal Court in Poletti also referred to the decision of the Industrial Commission of New South Wales in Pacific Publications Pty Ltd v Cantlon.[141] The question in that case was whether a payment the employer had described as a “special gratuity” could be set off against the award obligation of the employer to pay redundancy. The Commission upheld the Industrial Magistrate’s decision that it could not. In a passage quoted by the Full Federal Court in Poletti, the Commission said:[142]

    The company clearly appropriated the payment, at the time of making it, as a “special gratuity” in the special circumstances of the retrenchments then occurring and not as a payment in respect of any obligation which had arisen or might arise under cl 12.

    [141] Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415

    [142] Pacific Publications Pty Ltd v Cantlon (1983) 4 IR 415, at page 421

19. After referring to Sheldon J’s judgment in Ray, and Pacific Publication, the Full Federal Court in Poletti said:[143]

    It is to be noted that there are two separate situations dealt with in the passage from the judgment of Sheldon J which has been quoted and in the reasoning of the Commission in Pacific Publications. The first situation is that in which the parties to a contract of employment have agreed that a sum or sums of money will be paid and received for specific purposes, over and above or extraneous to award entitlements. In that situation, the contract between the parties prevents the employer afterwards claiming that payments made pursuant to the contractual obligation can be relied on in satisfaction of award entitlements arising outside the agreed purpose of the payments. The second situation is that in which there are outstanding award entitlements, and a sum of money is paid by the employer to the employee. If that sum is designated by the employer as being for a purpose other than the satisfaction of the award entitlements, the employer cannot afterwards claim to have satisfied the award entitlements by means of the payment. The former situation is a question of contract. The latter situation is an application of the common law rules governing payments by a debtor to a creditor. In the absence of a contractual obligation to pay and apply moneys to a particular obligation, where a debtor has more than one obligation to a creditor, it is open to the debtor, either before or at the time of making a payment, to appropriate it to a particular obligation. If no such appropriation is made, then the creditor may apply the payment to whatever obligation or obligations he or she wishes.

    [143] Poletti v Ecob [1989] FCA 492, at [42]

20. Poletti and other cases were referred to by Perram J in ACE Insurance Ltd v Trifunovski (No 2) where his Honour noted that those authorities “establish two propositions”, namely:[144]

    (a) if by the contract between the parties they have agreed that a payment will be made over and above an award payment or that a payment will be made that is extraneous to an award payment then the employer is prevented from claiming that the payment made pursuant to the contract may be set up as a discharge of its obligation under the award; and

    (b)if in a situation of outstanding award entitlements an employer pays an employee a sum of money and designates it as being for a purpose other than the award payment the employer may not later claim that it has paid the award entitlement.

    [144] ACE Insurance Ltd v Trifunovski (No 2) [2012] FCA 793, at [25]

21. In WorkPac Pty Ltd v Rossato White J reviewed the authorities and summarised the principles as follows:[145]

    a) the issue may require the application of the parties’ contract: Poletti v Ecob at 332. If they agree that a sum of money is paid and received for a specific purpose which is over and above or extraneous to an award entitlement, the contract precludes the employer from later seeking to rely on the payment as satisfying an award obligation which is outside the agreed purpose of the payment: ibid. If the payment was made for the purpose of satisfying the kind of award obligation sought to be satisfied, it may be brought into account as satisfaction or part satisfaction of that obligation. If it was paid for some other purpose, then the employer cannot bring the payment into account: Discount Lounge Centre at [23]. Stated more generally, an employer cannot later reallocate an amount agreed to be paid to an employee in respect of subject A (for example, ordinary hours of work) to meet a claim in respect of subject B (for example, overtime): Ray v Radano at 478‑9 (Sheldon J); Pacific Publications at 419; Discount Lounge Centre at [57]. The focus is on the purpose of the payment. If it arises out of the same purpose as the award obligation, it can be set off: ANZ v FSU at [48]‑[52]. I will refer to this as the “Contractual Principle”;

    (b) the issue may involve application of the common law principles concerning payment by a debtor to a creditor: Poletti v Ecob at 332‑3. When there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than satisfaction of the award entitlement cannot be regarded as having satisfied the award or enterprise agreement: ibid. I will refer to this as the “Designation Principle”;

    (c)close regard must be had to the character of the payment on which the employer relies for the claimed set off and the purpose (usually, the agreed purpose) for which it was made; and

    (d)the purpose for which a payment was made will be a question of fact in each case. It may be express or may be implied from the parties’ agreement or from the employer’s conduct: James Turner at [21(3)]. The “designation and appropriation” are matters to be determined by reference to the whole of the evidence: ANZ v FSU at [56].

    [145] WorkPac Pty Ltd v Rossato [2020] FCAFC 84, at [865]

22. Also relevant (because Ord Minnett relies on it) is the following passage from the judgment of Wheelahan J in WorkPac (my emphasis):[146]

    If the payments under the contracts were directed to the same purpose as, or at least had a close correlation to, an obligation under the Fair Work Act to make a payment, then they may be taken into account in satisfying the statutory obligations: ANZ v FSU at [50]-[54].

    [146] WorkPac Pty Ltd v Rossato [2020] FCAFC 84, at [1008]

    Parties’ submissions

23. Ord Minnett submits that it is entitled to set off against any liability it might have under the Award the commissions it paid Mr Theodorou. Ord Minnett submits as follows:

    (a)Whether Ord Minnett is entitled to set off the commissions it paid to Mr Theodorou is to be answered by considering the purpose for which Ord Minnett paid Mr Theodorou the commissions, and the purpose of the relevant award obligations so that, if the purpose of the payment of the commissions is the same as, or has a close correlation to the obligation under the Award, the commissions may be taken into account.[147]

    (b)The purpose of the minimum rates under the Award is to compensate employees for the ordinary hours they work; and the commissions Ord Minnett paid Mr Theodorou was for the same purpose; it was compensation for the work Mr Theodorou was required to do under the Employment Contract.[148]

    (c)Further, Ord Minnett made the commission payments for the purpose of satisfying “the kind of award obligation sought to be satisfied or at the very least a close correlation to the award obligation”.[149]

    [147] Outline of Respondent’s Closing Submissions, [45]

    [148] Outline of Respondent’s Closing Submissions, [46. a. b.]

    [149] Outline of Respondent’s Closing Submissions, [46.c.]

1. Mr Theodorou, on the other hand, submits that a commission payment is not a salary. He relies on the decision of Murphy JR in Brown v Listaglen Pty Ltd,[150] and Boon JR in Wolfer v Computer Associates Pty Ltd.[151] In those cases it was held that commissions did not fall within the meaning of “relevant wages” for the purposes of s 170CD(1)(b) of the Industrial Relations Act 1988 (Cth).

   [150] Brown v Listaglen Pty Ltd [1994] IRCA 158

   [151] Wolfer v Computer Associates Pty Ltd [1995] IRCA 185

   Determination

2. The question to be determined is whether the payments Ord Minnett made to Mr Theodorou to discharge the obligations that accrued under the Employment Contract to pay commissions “were directed to the same purpose as, or at least had a close correlation to, an obligation under the [Award] to make a payment”. As I noted earlier, that requires, first, identifying the nature of the contractual obligation Ord Minnett discharged by making the commission payments, and the nature of the obligation under the Award Ord Minnett submits the making of the commission payments should be taken to have discharged, and second, determine whether the obligations should be characterised as being of the same kind, or directed to the same purposes. These questions are to be determined by reference to the nature of the obligation themselves.

3. The obligations the Award imposed on Ord Minnett are those specified in cl 13.1, namely, to pay a “full-time adult employee . . . a minimum rate for their classification as set out in the table below”, the minimum rate for a Level 6 classification being a minimum annual salary of $56,290 at a minimum weekly rate of $1,082.50. Clause 20.1 of the Award provided that:

   Employees must be paid their salaries weekly or fortnightly as determined by the employer or monthly if mutually agreed. Where payment is made monthly it must be on the basis of two weeks in advance and two weeks in arrears.

4. The obligation the Award imposes on employers, therefore, is to pay employees regular and equal amounts of money either weekly or fortnightly (at the election of the employer), or monthly, if the employer and employee agree, provided the monthly payment is made two weeks in advance and two weeks in arrears. Further, given the employer’s obligation is to pay wages or salary, the payment must be in consideration of that for which wages and salaries are paid, namely service, including being ready and willing to serve. Dixon J identified what an employee must do to earn a wage or salary in Automatic Fire Sprinklers Pty Ltd v Watson:[152]

   A contract for the establishment of the relation of master and servant falls into the same general category of agreements to pay in respect of the consideration when and so often as it is executed, and is, therefore, commonly understood as involving no liability for wages or salary unless earned by service, even though the failure to serve is a consequence of the master's wrongful act.

   It is, of course, possible for the parties to make a contract for the payment of periodical sums by the master to the servant independently of his service. . . . But, to say the least, it is not usual. The common understanding of a contract of employment at wages or salary periodically payable is that it is the service that earns the remuneration and even a wrongful discharge from the service means that wages or salary cannot be earned however ready and willing the employee may be to serve and however much he stand by his contract and decline to treat it as discharged by breach. . . .
   . . .

   Some difficulty has been felt in saying what is the service which carries wages. The wages are incident to the subsisting relationship of master and servant. A master who sends his servant upon a holiday upon full pay can be sued for wages under the contract, although not on a common count for work and labour done. They also serve who only stand and wait. Difficulties, too, arise from the fact that a refusal to work on the part of a servant, who neither leaves his master’s service nor is discharged, may disentitle him to wages for the period of the refusal. That is for non-fulfilment of the conditions by which wages are earned. But, broadly speaking, it is enough to say that wages are for the service reasonably demanded under a subsisting relationship of master and servant. That relationship may be ended by the servant forsaking the master or the master discharging the servant, although the act of the one or of the other amounts to a breach of contract.

   [152] Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435, at pages 465-466

5. “Service”, in the context of a contract of employment, does not necessarily mean the actual performance of work. That is apparent from Dixon J’s reference to an employer being liable to pay wages to an employee whom the employer has sent on a holiday on full pay. These observations reflect an important incident of a contract of employment, namely, an employee’s being obliged to obey his or her employer’s lawful and reasonable directions that fall within the scope of the employee’s employment, which may include a direction not to work, or to work in particular ways;[153] and the observations also reflect the general rule of the common law that, subject to any contrary express term, an employer does not generally have a duty to provide actual work for an employee to perform.[154]

   [153] R v Darling Island Stevedore & Lighterage Co Ltd ; Ex parte Halliday and Sullivan (1938) 60 CLR 601, at pages 620-621

   [154] Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337, at page 342: “Ordinarily an employee cannot demand to be given work and the obligation of the employer is limited to payment of the agreed remuneration” (Meagher, Handley, Cripps JJA). The common law itself provides a number of exceptions to the general rule.

6. The principle that governs an employee’s right to remuneration, as Underhill LJ noted in Sunrise Brokers LLP v Rodgers,[155] is succinctly stated in the headnote to Miles v Wakefield Metropolitan District Council, as follows:[156]

   [A]n employee’s right to remuneration depended on his doing or being willing to do the work that he was employed to do and if he declined to do that work the employer need not pay him.

   [155] Sunrise Brokers LLP v Rodgers [2015] ICR 272, at page 278 ([18])

   [156] Miles v Wakefield Metropolitan District Council [1987] AC 539, at page 540

7. Ord Minnett’s obligation under the Employment Contract to pay Mr Theodorou commission, however, was not an obligation of the same kind as the obligation it had under the Award to pay the minimum salary to Mr Theodorou. The obligation to make the commission payments did not regularly accrue on Mr Theodorou’s performing, or being willing to perform, that which he had been engaged by Ord Minnett to perform. Its liability to pay commissions accrued, in part on Mr Theodorou’s entering into some transaction on behalf of a client, and in part on the value of the portfolio his book of clients had from time to time. In the words of Sheldon J in Ray, Ord Minnett’s payment of commissions under the Employment Contract to pay commissions were “extra-award” payments,or payments made for “a promise extraneous to the award obligation[s]”.

8. For these reasons, I am not satisfied Ord Minnett is entitled to set off any of the commission payments it made under the Employment Contract against the obligations it had to pay Mr Theodorou the minimum salary provided for by the Award.

   CLAIMS UNDER REG 3.42

9. Mr Theodorou also claims that Ord Minnett contravened reg 3.42 of the FW Regulations because Ord Minnett, contrary to that regulation, failed to comply with Mr Theodorou’s request that it provide an employee record relating to Mr Theodorou within 14 days after the request was made.

10. Regulation 3.42 of the FW Regulations was made for the purposes of s 535(3) of the FW Act, which provides that the regulations “may provide for the inspection of those records”, being employee records the employer must make and keep for seven years pursuant to s 535(1), and being in such form, and containing such information of the sort prescribed by the regulations pursuant to s 535(2) of the FW Act. Reg 3.42 provides:

    (1) For subsection 535(3) of the Act, an employer must make a copy of an employee record available for inspection and copying on request by the employee or former employee to whom the record relates.

    (2) The employer must make the copy available in a legible form to the employee or former employee for inspection and copying.

    (3) If the employee record is kept at the premises at which the employee works or the former employee worked, the employer must:

    (a) make the copy available at the premises within 3 business days after receiving the request; or

    (b) post a copy of the employee record to the employee or former employee within 14 days after receiving the request.

11. By email sent on 6 April 2021 Mr Theodorou’s solicitor requested Ord Minnett to post a copy of Mr Theodorou’s  “employee record” by no later than 5 pm on 20 April 2021 or, alternatively, to email that record. [157] By letter dated 20 April 2021 Ord Minnett’s solicitor informed Mr Theodorou’s solicitor that Ord Minnett would not be in a position to meet Mr Theodorou’s request because “our primary instructor responsible for collating those documents is currently away on annual leave”.[158] After further correspondence passed between Mr Theodorou’s and Ord Minnett’s solicitors, Ord Minnett’s solicitors provided the documents on 29 April 2021.[159]

    [157] Affidavit A G Barwick 23.12.2021, [4]; annexure AGB-1

    [158] Affidavit A G Barwick 23.12.2021, [6]; annexure AGB-3

    [159] Affidavit A G Barwick 23.12.2021, [9]; annexure AGB-6

12. I am satisfied Ord Minnett contravened reg 3.42(3) of the FW Regulations.

    DISPOSITION

13. I propose to make declarations to the following effect:

    (a)By failing to pay to Mr Theodorou on a weekly or, in the alternative, a fortnightly or, in the alternative, a monthly basis the minimum salary at the rate provided for by cl 13.1(a) of the Award, Ord Minnett contravened cl 13.1(a) of the Award and, therefore, s 45 of the FW Act.

    (b)By failing to pay to Mr Theodorou annual leave loading as provided for by cl 24.3 of the Award, Ord Minnett contravened cl 24.3 of the Award and, therefore, s 45 of the FW Act.

    (c)By failing to pay to Mr Theodorou at his base rate of pay for ordinary hours of work when Mr Theodorou took annual leave, as required by s 90 of the FW Act, Ord Minnett contravened s 44 of the FW Act.

    (d)By failing to pay to Mr Theodorou at his base rate of pay for ordinary hours of work when Mr Theodorou took personal or carer’s leave, as required by s 99 of the FW Act, Ord Minnett contravened s 44 of the FW Act.

    (e)By failing to pay Mr Theodorou at his base rate of pay for ordinary hours of work during public holidays, as required by s 116 of the FW Act, Ord Minnett contravened s 44 of the FW Act.

    (f)By failing to provide Mr Theodorou’s employee record within 14 days after Mr Theodorou, by his solicitor’s letter dated 6 April 2021, requested that it do so, Ord Minnett contravened reg 3.42(3) of the FW Regulations.

14. I will list the matter for directions at 9:30 am on 26 June 2024 for the purpose of making orders for the payment of compensation, and to set the matter down for hearing on penalty.

I certify that the preceding one hundred and sixty-five (165) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis.

Associate:

Dated:       12 June 2024