Tilden v JAH
[2002] WADC 53
•20 MARCH 2002
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: TILDEN -v- JAH [2002] WADC 53
CORAM: JENKINS DCJ
HEARD: 7 & 20 SEPTEMBER 2001
DELIVERED : 20 MARCH 2002
FILE NO/S: CIV 487 of 1997
BETWEEN: HELEN LOUISE TILDEN
Plaintiff
AND
PRINCE MUKARRAM JAH
Defendant
Catchwords:
Employment contract - Identity of employer - Breach of terms of contract - Assessment of damages
Legislation:
Supreme Court Act 1935
Result:
Judgment for the plaintiff
Representation:
Counsel:
Plaintiff: Mr P G Kennard
Defendant: Mr A J Power
Solicitors:
Plaintiff: Paul Kennard
Defendant: Kitto & Kitto
Case(s) referred to in judgment(s):
Attorney General for NSW v Perpetual Trustee Co (Ltd) (1951-1952) 85 CLR 237
Bostik (Aust) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20
Building Workers' Industrial Union of Australia v Odco (1991) 29 FCR 104
Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ld (1947) AC 1
Rowe v Capital Territory Health Commission (1982) 39 ALR 39
Short v J & W Henderson Ltd (1946) SC (HL) 24
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
Case(s) also cited:
Albrighton v Royal Prince Alfred Hospital [1980] 2 NSWLR 542
Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385
Baldi and Fletcher Pty Ltd v Rabmar Pty Ltd (1988) 25 IR 101
Barnes v Dawson [1962] NSWR 73
Barro Group Pty Ltd v Fraser [1985] VR 577
Cam and Sons Proprietary Limited v Sargent (1940) 14 ALJR 162
Cassidy v Ministry of Health [1951] 2 KB 343
Climaze Holdings P/L v Dyson (1995) 13 WAR 487
Federal Commissioner of Taxation v Barrett (1973) 129 CLR 395
Federal Commissioner of Taxation v J Walter Thompson (Aust) Pty Ltd (1944) 69 CLR 227
Humberstone v Northern Timber Mills (1949) 79 CLR 289
Jennings Industries Ltd v Negri (1982) 44 ACTR 9
Pioneer Concrete Services Ltd v Yelnah P/L (1986) 5 NSWLR 254
Pratt v Australian Broadcasting Corporation (1985) 10 FCR 297
Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539
The Queen v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Ltd (1951-1952) 85 CLR 138
Re Porter; Re Transport Workers' Union of Australia (1989) 34 IR 87
Vabu Pty Ltd v Commissioner of Taxation (Commonwealth) (1996) 81 IR 150
Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561
JENKINS DCJ: The plaintiff claims damages for breach of an alleged contract of employment between her and the defendant. The defendant denies that there was a contract of employment between them. Rather, he says that three companies variously employed the plaintiff during the relevant period.
The pleadings
Paragraph 1D of the amended statement of claim alleges that in October 1989 the plaintiff and the defendant entered into a contract of employment under which the plaintiff would be employed as the defendant’s personal assistant. The agreement is particularised as being partly oral and partly in writing. Insofar as it was oral it consisted of a conversation between the plaintiff and the defendant at a service station in Perth and the plaintiff’s subsequent acceptance of the defendant’s offer of employment. Insofar as it was in writing it consisted of a document entitled “Personnel Form Upon Commencement” showing a commencement date of 31 October 1989 for the employment contract.
Paragraph 2 of the amended statement of claim alleges that the terms of the contract of employment included that the plaintiff would be paid $26,500 per year, increasing in 1991 to $50,000 per year. Further that the plaintiff would be paid two months wages in lieu of notice of termination of her employment with the defendant.
Paragraph 3 of the amended statement of claim alleges that the contract of employment commenced on 31 October 1989 and terminated on 27 September 1996.
Paragraph 4 of the amended statement of claim alleges that the defendant has failed to pay wages and entitlements due to the plaintiff and claims damages for unpaid wages between 9 February and 27 September 1996, holiday pay, wages in lieu of notice and superannuation from 1 July 1993 to 27 September 1996; a total of $51,690.50 and interest.
The amended defence denies that a contract of employment existed between the plaintiff and the defendant. At paragraph 2 of the amended defence it is pleaded that at the relevant times three companies variously employed the plaintiff.
Issues at trial
At trial the issue between the parties was whether there was a contract of employment between the plaintiff and the defendant at the relevant times.
The defendant did not challenge the plaintiff’s evidence regarding the particulars of the alleged damages.
Evidence of the plaintiff
The plaintiff gave evidence that the defendant first employed her in August 1987. Her duties included bookkeeping for the office, all the office work and being the defendant’s personal assistant. This latter duty included looking after his home, his businesses, including assisting to run Murchison House station in Kalbarri, and, to a certain extent, his families. She said that she was also the defendant’s confidante and friend.
According to the plaintiff this position ceased approximately one year later when she resigned.
Approximately two months later she said she received a telephone call from Mr David Weinman, the defendant’s right hand man, saying that the defendant wanted her to return to work for him. She said that it was a condition of her return to work that she would be responsible to the defendant alone and she would not have to work in the office. She subsequently worked out of Havelock House in Havelock Street, West Perth. According to the plaintiff this was the defendant’s home, although the Murchison House Pastoral Company owned it. After a couple of months the plaintiff became ill and she ceased work. Mr Weinman later told her that her employment was no longer available.
The plaintiff said that she met the defendant at Palazzo Automotives in Northbridge in October 1989. The defendant told the plaintiff that Mr Weinman was no longer working for him. He asked the plaintiff if she would return to work for him. She said in evidence that he asked that on more than one occasion during the conversation. The plaintiff said she would have to think about it. She said that she told him that she would only return if she worked for the defendant and him alone as she had had problems with Mr Weinman in the past. She said that he said, “You have my guarantee that you will be working for me and no-one else.”
She agreed to return to work and she said that she returned to work for the defendant at his office in Emerald Terrace, West Perth which was just behind Havelock House.
She gave evidence that there was no written contract between herself and the defendant as she took his word as his bond. As far as salary went she said that the defendant said to her “name your price, name your salary” and she agreed to work at the salary she had been paid by her previous employer, namely $26,500 per year. Additionally she asked to be paid two months’ pay in lieu of termination; a condition which she said he readily agreed to. She completed a personnel form, a photocopy of which became exhibit P1. The original was not produced. The form tendered by the plaintiff evidences these conditions but does not disclose the name of her employer.
She said that she still did the bookkeeping and office duties but she also became the defendant's second in‑charge and, on rare occasions, travelling companion. She took orders only from the defendant. She conveyed the defendant’s orders to staff and on occasions was responsible for hiring and firing staff. She worked in the office with a Mr Richard Howell ("Howell"), the company accountant, but did not take orders from him. She knew Mr David Michael ("Michael") as the defendant’s aide‑de‑camp and travelling companion but considered him subordinate to her and did not take orders from him.
In 1991 she had a meeting with the defendant and Mr Javeri ("Javeri"), the chairman of the defendant’s then private estate. It was agreed at the meeting that her salary would increase to $50,000 per year or to $1,000 per week. That remained her salary to the end of her employment. This salary was paid to the plaintiff by cheques drawn on the bank accounts of various companies, which she said were the defendant’s private companies. The defendant objected to the plaintiff connecting the defendant to those companies and the plaintiff did not attempt to give evidence as to the basis of her belief. However there was later evidence regarding these relationships to which I shall refer.
During this period the plaintiff was issued with group certificates. Those group certificates name the following companies as her employers at the following times:
1/7/91-20/5/92
Murchison House Pastoral Company Pty Ltd (“Murchison House”)
21/5/92-30/6/92
Hebros (Australia) Pty Ltd (“Hebros”)
1/7/92-31/8/92
Hebros
1/9/92-30/6/93
Kingsburg Pty Ltd (“Kingsburg”)
1/7/93-30/6/94
Kingsburg
1/7/94-30/11/94
Kingsburg
1/11/94-30/6/95
Millor Trading (Australia) P/L (Millor”)
1/7/95-30/6/96
Millor
A group certificate for 1996/1997 was not tendered in evidence.
The plaintiff gave evidence about the office holders of the companies (hereinafter I shall refer collectively to Murchison, Kingsburg, Hebros and Millor as "the companies"). As ASIC historical company extracts for all but Hebros were later tendered in evidence by the defendant it is preferable that I rely on that evidence for those details.
In relation to the periods covered by the group certificates the following company information is relevant:
| Name of company | Dates | Directors | Secretary | Shareholders |
| Murchison | 1/7/91-20/5/92 | 1. Howell 2. Rock Terrance Payne | 1. Plaintiff 2. Howell | 1. Bookah Springs Pty Ltd 2. Howell 3. Doogle Pty Ltd 4. Hebros 5.Millor 6. Ragan Pty Ltd |
| Kingsburg | 1/9/92-30/11/94 | 1. Sadrudoin Javeri 2. Howell | Plaintiff | 1. Sadrudoin Javeri 2. Shanaz (Aust.) Pty Ltd 3. Howell |
| Millor | 1/11/94-30/6/96 14/6/95-27/3/96 | 1. Plaintiff - 2. Howell – up to 27/3/96 3. Rock Terrance Payne – up to 31/5/95 4. Hassamalli Javeri Sadruddin – up to 31/5/95 | 1. Plaintiff 14/6/95-27/3/96 2. Howell – up to 27/3/96 Sadruddin | 1. Howell 2. Hassamalli Javeri Sadruddin 3. Mohammad Ayub Khan |
The Historical Company Extracts do not state when these persons and entities became/ceased to be shareholders. Consequently I have listed all the members either past or present referred to in the extracts. In relation to Kingsburg, Howell is listed as being a previous member in the extract dated 26/3/01. The document referred to in the Extract as relating to Howell's membership is the annual return of 1992. As the company was only registered on 9/6/1992 it seems probable that Howell was a member at the relevant time. Javeri and Shanaz are listed as being members at 26/3/01.
"Rocky" Payne was the defendant’s driver. I have already referred to Javeri. He appears to be one and the same person as Hassamalli Javeri Sadruddin and Sadrudoin Javeri.
The plaintiff said that Murchison was responsible for the holding of the Murchison House Station in Kalbarri and that it also held the deeds to the defendant’s house in Havelock Street.
The plaintiff said that Kingsburg was primarily set up to handle the personal affairs of the defendant and to receive monies from overseas from the sale of various assets.
The plaintiff said that she was a director of Hebros and it was explained to her that its activity was primarily as the owner of the defendant’s boat, the MV Kalbarri.
The plaintiff said that Millor was used to pay the personal expenses of the defendant, including all household bills. Staff relating to the house were paid from either Millor or Murchison depending on which company had funds in its bank account at the time.
In relation to the claim for damages for superannuation the plaintiff tendered a certificate of membership in the name of Helen Tilden signifying acceptance as a member of the Colonial Mutual MasterPac Superannuation Fund under the sponsorship of Kingsburg. The contributions per month are stated to be $125. The certificate is undated.
The plaintiff said that the defendant quite often paid her salary in cash if there were no funds available in any of the company bank accounts. She said that when this occurred she recorded the income in the wages book so that taxes and superannuation could be paid as the defendant did not have a bank account in Australia. She also said that the defendant was not a registered employer in Australia.
In August 1995 at the defendant's request the plaintiff went overseas to meet him. She then returned to Perth. In December 1995 the defendant returned to Perth. In about February 1996, as funds were low because the defendant’s financial position had deteriorated significantly, the Emerald Terrace office was vacated and the plaintiff commenced working from home. The plaintiff said that she continued to do the same work. For example she accompanied the defendant on his doctor’s visits, managed his flat, his car and travel. She attended to the bookkeeping and payment of wages if there was money available. However there was little business activity as most of the defendant’s assets in Australia had been sold off.
In April 1996 the defendant left Australia and he has not since returned. This was the defendant’s first overseas trip to which the plaintiff was not privy. The plaintiff tried to contact the defendant many times. 2-3 months after he left he telephoned the plaintiff and told her that he would be back and that he would also make certain that her wages were paid.
After the defendant left Australia the plaintiff continued to act on the defendant’s behalf. She answered telephone calls, attended to his mail, saw lawyers on his behalf and tried to maintain the books of the companies.
However the plaintiff's situation was very uncertain, as she was not being paid. She requested that a letter of termination and a reference be provided. Howell told her that only the defendant had the authority to do that. In September 1996 she received a letter and reference signed by the defendant. They were accompanied by a letter from Michael dated 19 September 1996. The terms of the letter and reference are important so I will quote the substance of them in full. The letter says:
"I never thought that I would write such a letter to you, but circumstances beyond my control have compelled me to do so and in view of the uncertainty about my future I do not wish to put you in a position in which you have no security or prospects.
In view of your request to relieve you and provide a reference I am sending a letter of recommendation in regard to the excellent work you have done for me over the years.
Please return any of my personal files and papers that may be in your possession for safe keeping to Mr Howell along with a list.
I hope you will be able to find a position to your liking and which suits your temperament and I would like to thank you for all the help you have given me during your service."
The reference says:
"Ms Helen Louise Tilden has been employed by me as my Personal Assistant for the past eight years. Her duties have included the organisation and running of my Personal Office and staff, both Corporate and Household. During this time she has also carried out the responsibilities of Director and Company Secretary of six of my Private Companies.
During her service, often during periods of great stress, she has shown a great degree of capability and discretion in the handling of my affairs.
I have had to dispense with her services due to circumstances which have compelled me to do so, and I have no hesitation in recommending her as a P.A. or Secretary. She will be a great asset to any future employer."
In cross examination it was proven that in the plaintiff’s income tax returns from 1 July 1992 through to 30 June 1996 she described herself as either or both a company administrator or personal assistant. In her 1995/96 return it was solely as a personal assistant. In the same returns she recorded her employer and income consistent with the information in the group certificates to which I referred to above. In her 1996/7 return she described her main occupation as personal assistant and her employer as Dakota Pty Ltd. There is no evidence that this company was related to the defendant or the companies. It seems therefore that this was a company she worked for after her position relevant to this case was terminated.
There is no reference in these returns to the defendant. A fact the plaintiff justified by saying that she recorded her employer as the company which issued the group certificate for the relevant period, as she understood from discussions with the Taxation Office that this was the legal method.
The defendant tendered through the plaintiff various Kingsburg 1992/3 wage sheets. These were consistent with the group certificate in that they showed that Kingsburg paid the plaintiff’s wages for various periods. They also showed that Kingsburg paid Howell's and Payne’s wages. Interestingly in light of Michael's subsequent evidence they also showed that his 1992/3 wages were paid by Kingsburg.
During cross-examination the plaintiff was questioned about changes between her original statement of claim and her amended statement of claim. Whilst it is clear that there were discrepancies I do not draw any inference adverse to the plaintiff from these differences as at no time during the cross examination did she say that she had read and agreed with the original statement of claim.
Also during cross-examination the plaintiff was shown a different photocopy of the personnel form (exhibit P1) to that tendered during the plaintiff's evidence in chief. This second copy was the same as that produced by the plaintiff except on the top of the page the following words appear:
"employed by either MHPC, Hebros or Kingsburg P/L."
The plaintiff acknowledged that these words were in her handwriting and that following these words the initials of Howell appear (this document became exhibit D15). These words do not appear at the top of exhibit P1. The top of P1 starts below where these words appear on D15. The only reasonable inference to draw is that the form was photocopied in a way whereby those words were not photocopied onto the copy which became P1. The plaintiff could have done this deliberately to conceal an acknowledgement that the companies employed her or alternatively it could have been done inadvertently during the photocopying process. Despite the defendant's counsel’s suggestion to the plaintiff to the contrary, the documents do not appear to be different in any other respect. The plaintiff said that D15 was not the one that she filled in or signed. She also denied doctoring the document and denied knowing how the change occurred. There is no other evidence to rely on.
There is insufficient evidence to enable me to find that the plaintiff deliberately photocopied the original to delete the relevant words. However I reject the plaintiff’s evidence that the defence document was not the one she completed. I find that the original contained the words appearing in D15.
During cross‑examination the plaintiff admitted that at varying times the companies paid workers' compensation policy premiums based on the total amount of the wages they paid to their employees. Consequently because the plaintiff was recorded in the respective companies books as an employee they paid workers compensation premiums which were in part based on her wages.
In re‑examination the plaintiff said that she did work for Kingsburg but that she did not work for anybody in that company as a personal assistant, which is why she partially described her main wages generating occupation as company administrator in some of her income tax returns.
The defendant’s case
The defendant did not give evidence. I gave leave pursuant to s 79C of the Evidence Act 1906 for his affidavit dated 6 September 2001 to be admitted into evidence without the need for him to give evidence. However I said that given that the plaintiff had not had the opportunity to cross‑examine the defendant on the affidavit I would have to consider very carefully the weight I would give to its contents. I will return to that issue when making findings on the evidence.
In the affidavit the defendant denies ever employing the plaintiff or discussing the terms and conditions of any employment contract with her. He says that companies some of which he was indirectly involved with employed the plaintiff. He says that whilst employed she worked some of the time as his secretary, the secretary of the companies and as a bookkeeper of the companies. He says she also did work for the companies which did not relate to him.
He admits that he met the plaintiff on one occasion in or around October 1989 and that he enquired of her why she was no longer with the companies and that he did not have a problem with her.
He said that he had not seen the personnel form (ie Exhibits P1 and D15) prior to these proceedings and that he did not consent to the form.
He says that Michael has been his personal assistant since about 1994 and that to the best of his recollection the only person he has ever employed in a personal capacity while in Australia. He said that Michael and Princess Esra handle all his business affairs. According to a later defence witness Princess Esra is the defendant's first wife.
He said that he had no part in the drafting of the letter to and reference for the plaintiff. He admitted that he signed them. He said that Michael told him he had drafted them as a favour to the plaintiff. The affidavit is silent as to why, if their contents were untrue, the defendant signed them.
He said he left Australia permanently in April 1996.
Michael gave evidence that he has been the defendant's personal assistant since December 1995. He also holds a joint general power of attorney in relation to the defendant's business and legal interests in Australia, India, Turkey and Geneva. He said that he first “joined” the defendant in 1978 as the defendant's aide de camp and travelling companion. There were periods of time in the intervening years where he was not involved with the defendant. He said that the defendant had employed him personally since the end of 1995. In cross-examination he said that he was employed by Millor at the beginning of 1995 and by the defendant personally at the end of the year. He said he did not know if the defendant employed the plaintiff personally but that it was possible.
He gave evidence that he drafted the letter and reference that the plaintiff received from the defendant in September 1996. He confirmed that those documents were created because the plaintiff expressed a desire to him "to be let go" as she put it to him. She also expressed concern to him about her ability to get another job at the same salary. He felt it incumbent upon him to cushion her departure or her search for other employment.
Michael then drafted the documents and in accordance with his usual practice he sent them to the defendant with a request that he sign them. They were then returned signed to him. He said he did not know but doubted that the defendant read the documents before signing them. In cross‑examination he said that the defendant still had the documents when he first saw the defendant again after the defendant had left Australia. This was during a trip by both men to Hyderabad.
He said that he only discovered D15, the defendant's version of the personnel form, when he was looking through papers he may need to bring to Australia for the trial. He faxed a copy of it to the defendant’s solicitors on 23 August 2001, 15 days prior to giving evidence.
He said that he was now paid for his services by cheque by the private estate of the defendant's family which is jointly administered by Princess Esra Jah, the defendant's first wife, and himself. He said that he only saw the defendant approximately once every two months. However he communicated with him everyday.
Howell gave evidence that he is a retired chartered accountant. In about 1983 he was engaged to act as a director of the companies, to assist in the running of the companies and to liase with the defendant's overseas advisers. Initially he worked one day per week in Havelock Place offices. In about 1989 he moved to the Emerald Terrace Offices and attended the offices 2-4 times per week. He saw the plaintiff on those occasions.
He said that from 1989 to 1996 the plaintiff and he worked as a team. The plaintiff was the office administrator who took care of the running of the office, payroll duties, payment of accounts and the supplying of information to Howell. Howell required the information to assist him to prepare budgets and financial submissions for the companies so that in turn funds could be obtained from overseas contacts.
Howell said that his employer started off as Murchison but ended as Kingsburg after Murchison went into liquidation. In the interim depending on the flow of funds he said "we" were paid by Millor. In his view the employer varied over the period of time.
According to Howell the defendant was very remote from the day-to-day affairs of the office and that these were left up to the plaintiff and he to organise. He said it would be most unusual for the plaintiff to check with the defendant before doing something Howell asked of her. In cross‑examination he said that he did not direct the plaintiff. Rather she was a skilled person who knew how to perform her duties. He said any work the plaintiff did for the defendant was done at the request of the defendant.
Howell gave evidence of the activities of the companies. His evidence is set out in tabular form below.
Name of company
Activities
Murchison
Held pastoral leases in Kalbarri and freehold land in Kalbarri and Havelock Street, West Perth. It ran a pastoral business (cattle, sheep and goats) in Kalbarri.
Kingsburg
Financier for Murchison and provider of management services to other companies. Raised overseas funds.
Hebros
Used primarily for bringing funds into Australia. Owned a large motor launch.
Millor
Used to obtain funds from overseas for the defendant and to pay his private expenses.
Howell said that if company funds were expended for the defendant the bookkeeping entry for it would be a charge to the defendant's loan account. This is how he said the wages of someone which were identified as being the defendant's personal expense would be handled in the books. Whereas the plaintiff's wages were recorded as a company expense.
Howell did not recall telling the plaintiff that he could not terminate her employment. He said that he would have been able to provide a reference to her as a director of the companies.
Howell identified his initials on Exhibit D15, the defendant's version of the personnel form.
In cross‑examination Howell said that he did not know the source of the funds that came from overseas to the companies. When pressed he said that the defendant introduced him to the defendant's "overseas financiers, financial advisers", Javeri and Mr Pasha ("Pasha"), and that he liased with them for the supply of funds. He understood that at one time Javeri was chairman of the defendant’s private estate and that Pasha was the defendant’s private attorney. Howell said that the overseas funds sometimes went into the plaintiff's bank account and sometimes in the bank accounts of Kingsburg or Millor. They were used to pay wages.
Howell said that in addition to the work that the plaintiff did for the companies she worked for the defendant. She organised appointments and travel for him. She attended to the payment of his accounts and was his general confidante. He said he would describe her as the defendant’s personal assistant. He did not recall the plaintiff and defendant travelling together.
He said that the defendant came into the office for about an hour a day to talk to the plaintiff and that a small amount of work resulted from those visits. In re‑examination he said that the defendant was in Perth for about six months of the year. When asked to estimate the percentage of the plaintiff's time per week spent in performing work done at the direction of the defendant he said "10, 25 per cent" on days he, Howell, attended the office.
Howell said that he believed that he had the power to terminate the plaintiff' services but that he would not have done so without reference to the defendant because he knew of his request that she do work for him. He said that he believed he would have been able to terminate the plaintiff's employment as the defendant regarded him as the senior person in the office.
Howell said that the defendant could not have issued a group certificate because he was not registered and not the employer of at least 6 persons.
Howell said he recalled on one occasion the plaintiff returning from India with approximately $10,000 in cash which was entered into the companies’ wages sheets to take up some arrears of holiday pay.
The law
In Short v J & W Henderson Ltd (1946) SC (HL) 24, at pp 33, 34, Lord Thankerton, in a judgment with which the rest of their Lordships concurred, referred to four suggested indicia of a contract of service, in the sense in which that expression was used in the Workmen's Compensation Act 1925 (Imp.) (15 & 16 Geo. 5 c. 84) namely:
(a)the master's power of selection of his servant;
(b)payment of wages or other remuneration;
(c)the master's right to control the method of doing the work; and
(d)the master's right of suspension or dismissal.
He mentioned without criticism that the learned Judge below had added:
"that a contract of service may still exist if some of these elements are absent altogether, or present only in an unusual form, and that the principal requirement of a contract of service is the right of the master in some reasonable sense to control the method of doing the work, and that this factor of superintendence and control has frequently been treated as critical and decisive of the legal quality of the relationship".
In the case of Attorney General for NSW v Perpetual Trustee Co (Ltd) (1951-1952) 85 CLR 237 at 299 Kitto J said that there are three elements involved in a contract between a master and servant, in other words a contract of employment. First, the relationship must entail, on the part of the servant, obedience to order. Secondly, the obedience to orders that is required is obedience to orders in doing work. Thirdly, the doing of the work must be for the benefit of the master, that is, it must relate to his own affairs.
As to the second element, that the obedience entailed must be obedience to orders in doing work. The master's authority must extend both to ordering that the work shall be done and to directing how it shall be done.
As to the third element, the statement that the doing of the work must be for the benefit of the master does not mean that the direct benefit from the work itself must necessarily accrue to the master. He may, without altering the relationship, direct his servant to do work which will benefit another: Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ld (1947) AC 1. But the doing of work by one person must be required by another as a means whereby that other may attain his ends.
There are many judgments setting out and/or applying the criteria for distinguishing between a contract of service and a contract for services but regrettably few indicating the criteria that are indicative of a contract of employment with one master as opposed to another. In the leading case of Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at p 24 Mason J said that the right to control was a prominent factor which must be considered in determining that the nature of a relationship between a person who engages another to perform work and the person so engaged is one of employment. Other relevant criteria include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee. However all this was said in the context of determining whether a known relationship between two parties was a contract of employment or a contract for services. The criteria are not capable of being directly translated to the issue in this case, which is the determination of the identity of one of the contracting parties.
In my opinion the identity of the master in the plaintiff's contract of employment may be ascertained by considering the answers to the following questions:
(a)Who selected her?
(b)Who paid and the mode of payment of her wages and other entitlements?
(c)Who had the right to control her method of doing the work? and
(d)Who had the right of suspension or dismissal?
The answer to the third question may involve a consideration of the three issues referred to by Kitto J in Attorney General for NSW v Perpetual Trustee Co (Ltd) (1951-1952) 85 CLR 237.
If there is confusion as a result of the answers to these questions then the issue of control should be given emphasis.
(a) Who selected the plaintiff?
The plaintiff's evidence clearly establishes that it was the defendant who chose her to do the work the subject of this claim. Her version of her conversation with the defendant at Palazzo Automotives was not challenged during her cross examination.
In his affidavit the defendant denies selecting the plaintiff during the course of any conversation at the Palazzo Automotives. I am not willing to place any weight on this denial as the plaintiff did not have the opportunity to cross examine him on it.
There is no rational explanation for how she turned up to work at Emerald Terrace in 1996, other than that given by the plaintiff in evidence. I note in this respect that the defendant did not lead any evidence about this issue, despite Howell being called to give evidence.
Clearly the plaintiff did not turn up to work on her own accord. Somebody must have contacted her and offered her employment. I am satisfied both on the basis of the plaintiff's evidence and also as a matter of inference from the surrounding facts that it was the defendant who selected her and offered her employment. Further I am satisfied that he told the plaintiff that she would be working for him.
(b) Who paid the plaintiff's wages or other remuneration?
To answer this question it is necessary to look at times that are relevant to the plaintiff's claim as well as the different parts of her remuneration.
Wages and holiday pay
The plaintiff's first claim is for unpaid wages and holiday pay for the period 9/2/96‑27/9/96. The plaintiff's group certificate for 1/7/95‑30/6/96 was issued by Millor, as was her group certificate for the period 1/11/94-30/6/95. It seems therefore that Millor paid the plaintiff's wages for the 12 months prior to the date her claim for unpaid wages commences. I do not believe that it is necessary for me to consider any earlier payments.
The plaintiff's and Howell's evidence was that Millor was used to pay the personal expenses of the defendant, including all household bills. She said staff relating to the house were paid from either Millor or Murchison depending on which company had funds in its bank account at the time. Howell said that Millor was used to obtain funds from overseas for the defendant and to pay his private expenses. On this basis any work the plaintiff did for the company could be construed as relating to the defendant's affairs.
The shareholders of Millor were Howell, Javeri and Mohammad Ayub Khan. Howell described Javeri as the defendant’s overseas adviser, overseas financier and one time chairman of the defendant's private estate. The particulars of Khan were not in evidence. Howell clearly was not a shareholder for his own benefit. I find that any shareholding he had in the company was held for the benefit of the defendant.
Superannuation
The claim for superannuation covers the period from 1 July 1993 to 27 September 1996. I have already referred to a certificate of membership in the name of Helen Tilden signifying acceptance as a member of the Colonial Mutual MasterPac Superannuation Fund under the sponsorship of Kingsburg. The contributions per month are stated to be $125. The certificate is undated. However a document titled “Employer’s Report” appears to relate to a superannuation fund in the name of Kingsburg, with the sponsoring employer also being Kingsburg. The plaintiff is named as a new member of the fund. The run date on the document is 28/9/92.
Kingsburg wage sheets from September 1992 – June 1993 were tendered in evidence. These indicate that in September and October 1992 and January and February 1993 Kingsburg paid a 3 per cent superannuation contribution approximately $115.38 on behalf of the plaintiff. On the other months there are entries indicating the calculation of the contribution but no reference to a cheque number indicating it had been paid. I’m not willing to draw the conclusion that on those months Kingsburg did pay the contribution as it is clear from the sheets that Kingsburg sometimes did not pay wages owed and sometimes Millor paid them.
As I have said above it is not clear who the shareholders of Kingsburg were at this time. According to the Historical Extract they could have been any combination of Howell, Javeri or Shanaz (Aust) Pty Ltd. There is no evidence as to this latter company.
(c) Who had the right to control the plaintiff's method of doing the work?
The plaintiff's evidence was that although she did work for the companies she took orders only from the defendant. She denied that she took orders from Howell. She said that if Howell told her to do something she would refer the matter to the defendant before she did it.
Howell denied this saying that he and the plaintiff worked as a team. The plaintiff provided him with information for him to use in his job which was primarily to direct and run the companies, including liasing with the defendant’s overseas advisers. He said it was most unusual for the plaintiff to check with the defendant before doing something he asked her to do. He said that she was a professional who knew how to perform her duties. In relation to the work she did directly for the defendant he said that she did this at the request of the defendant.
I find that in respect to the work the plaintiff did directly for the defendant, the defendant controlled the method she used to do it. In respect to the work that the plaintiff did for the companies I also find that the defendant had the ultimate control over the method by which she did that work, by virtue of the fact that I find that she would have reverted to him if there was any doubt.
Clearly the plaintiff did not need day-to-day instruction in the work that she did. She had been doing it for a long time and she knew what was required of her. I am sure that if Howell asked her to do something, as long as it appeared to the plaintiff to be in the best interests of the companies and the defendant, she would have done it. However I similarly have no doubt that due to the plaintiff's understanding of her role, and Howell's understanding of it also, that if Howell requested her to do something doubtful or very unusual she would have reverted to the defendant for instruction.
I am also satisfied on the balance of probabilities, as evidenced by his view on the defendant’s role in the termination of the plaintiff, that Howell would have deferred to the defendant’s right to control the plaintiff’s method of work. That is because despite the company structure I find that Howell and the plaintiff thought, probably correctly that, the affairs of the companies were truly the affairs of the defendant. The defendant said as much in his reference for the plaintiff in which he states that her duties whilst "employed" by him have included the running of "my Personal Office and staff, both Corporate and Household" and carrying out "responsibilities of Director and Company Secretary of six of my Private Companies" (my emphasis).
(d) Who had the right of suspension or dismissal?
Obviously after April 1996 when the companies were no longer active on the defendant's behalf, the defendant had left the country and the plaintiff was not being paid, the issue of her termination needed to be determined.
Howell gave evidence that he regarded himself as having the right to issue a "termination statement" for the plaintiff because he was "a director of the company". Interestingly the Historical Company Extract for Millor indicates that both the plaintiff and Howell ceased being directors of Millor on 27 March 1996. It does not indicate who the directors were after that. Therefore his right to terminate after this date, if Millor was the employer, did not exist.
Of the other companies, Murchison was in the hands of an external controller from 1 April 1996. The administrator apparently did not believe that they had the power to control or dismiss the plaintiff as there is no evidence that they attempted to do so. Kingsburg's directors from June and November 1995 respectively were Michael and Mary Nuttall. These persons were not referred to in evidence but similarly they apparently did not attempt to exercise any alleged power to control or dismiss the plaintiff.
In contrast to his evidence about his belief in his legal power to dismiss the plaintiff Howell said that he would not do so without reference to the defendant because he "knew his request that she did work for him. If I had to I’d refer to him".
What in fact happened was that after several requests from the plaintiff, Michael drafted a letter to and a reference for the plaintiff from the defendant. They are quoted above. He sent them to the defendant to sign and he did so.
Whilst the letter does not expressly terminate her employment, that that is its intent is the only reasonable inference to draw from its language.
The defendant in his affidavit refers to this letter and the fact that Michael drafted it as a favour for the plaintiff. As I have already noted he does not say why he signed it. I can see no reason why he would have signed a letter in those terms unless the message it conveyed was true. He does not strike me as someone who would state, expressly or by inference, that he was terminating a person’s employment with him unless it was true.
The same can be said of his statements in the reference that:
1.the plaintiff "has been employed by me as my Personal Assistant for the past eight years"; and
2.she ran "my Personal Office and staff, both Corporate and Household" and "carried out the responsibilities of Director and Company Secretary of six of my Private Companies" (my emphasis).
Summary of Answers
The answer to (a), (c) and (d) is the defendant. The answer to question (b) is that Millor was the last entity to pay her wages and Kingsburg was the last entity which paid her superannuation contribution.
Defendant's Submissions
The defendant says that payment of the plaintiff's wages and other entitlements is determinative of her employment and that the evidence that the companies did pay her and that the defendant had nothing to do with those payments is overwhelming. According to the defendant a finding that he was the master in the employment relationship would fly in the face of all relevant documentation. It would lift the corporate veil and the law does not allow that.
In my opinion the question as to the identity of the contracting parties in an employer-employee relationship is a question of fact. This flows from the view that the question as to whether such a relationship exists is a question of fact: Rowe v Capital Territory Health Commission (1982) 39 ALR 39. Each case must be determined on its own facts. There is no rule that the payment of wages, other remuneration and income tax is determinative of the question. Indeed as the defendant said in his written submissions "the weight to be given to each of the relevant indicia will vary according to the circumstances and the resolution of the issue is often a matter of impression".
Rather, there is authority for the proposition that a person may be the employee of another even if another has the power of direction or control or another pays the wages: Building Workers' Industrial Union of Australia v Odco (1991) 29 FCR 104 and authorities cited therein. The authorities say that the inquiry should be whether the presumptive employer remains liable to pay the employees wages if the intermediary fails to do so. In my opinion the defendant clearly has that liability.
In most cases, even of private companies, where an individual controls the company and thus the employees he or she will do that as an employee, office holder or member of the company. In such cases the individual is merely acting as the agent of the company which is the employer. However, in this case, the defendant held no official role in the companies. There is no evidence before me to justify a finding that the role I have found he played in the hiring, controlling or firing of the plaintiff he did on behalf of the companies. If, as I have found, he did these things the only conclusion open on the evidence is that he did so on his own behalf. I have also taken into account that the relationship between the defendant and the companies is something that is peculiarly within the knowledge of the defendant and yet his affidavit does not explain the relationship.
That leaves the question of why the companies paid the plaintiff and why all the paper work indicated that they employed her? I do not think that it is necessary for me to answer that question. It may be that the defendant lent the plaintiff to the companies, it may be that there was an agreement between the defendant for the hiring of the plaintiff to the companies, it may be that the companies were merely acting as agents for the defendant in paying the plaintiff’s wages or it may be that the companies were in fact and law a sham. I am not going to determine that issue as I do not believe that it is necessary for me to do so.
The answer that the plaintiff gave was that the defendant was not a registered employer and could not be because he did not have an Australian bank account. It appears to be accepted that the defendant was not a registered group employer and therefore could not issue the plaintiff with a group certificate or pay her income taxation on that basis. Indeed Howell said that he understood that as the defendant did not have six or more employees he could not be a group employer. Again it was not challenged that the defendant did not have an Australian bank account in his name. I accept that neither of these things would have prevented the defendant from personally paying the plaintiff her wages and entitlements. Although practically it would make it difficult to do so, especially as the defendant was often out of Perth. Therefore either for one of the reasons mentioned in the above paragraph or as a matter of convenience for the defendant the companies paid the plaintiff.
In this regard I note Howell's evidence that one of Millor's roles was to pay the defendant's personal expenses. He said that if the plaintiff was regarded as the defendant’s employee her wages would have been recorded against his loan account and this was not done. However Howell also said that between 10 and 25 per cent of the plaintiff's work was done directly for the defendant. Yet all the plaintiff’s wages and entitlements were recorded as company expenses. The only inference I can draw from this is that sometimes when Millor paid the defendant’s personal expenses they were merely recorded as company expenses and not recorded against any loan account. This is possibly what occurred in this case in relation to the whole of the plaintiff's wages and entitlements. That still does not prove that Millor was the plaintiff's employer.
Howell also said that on one occasion the defendant gave the plaintiff $10,000 in cash which was put into one of the companies’ wages sheets to take up some arrears of holiday pay. I am of the opinion that this evidence supports the inference I have drawn in that there was a blending of the defendant’s personal liabilities and those of the companies.
The other question is why the plaintiff allowed the companies to pay her and completed official documents to the effect that at various times they employed her? On the plaintiff’s side I am satisfied that she would have co-operated with or done whatever she thought that the defendant wanted. This is clear not only in this respect but in the fact that she was willing to let him use her bank account on occasions. I also accept that if the companies issued her with group certificates it was logical to record them as her employer in her tax returns.
The defendant submitted that I could not conclude that he was the plaintiff’s employer as such a finding would lift the corporate veil. I do not believe that that is the case. I have not found that the plaintiff was employed by the companies and then looked behind those companies to discover who truly controlled them. In any event the decision to lift the corporate veil is almost always used to impute liability or some other lawful consequence to the members of a company. The defendant was not a member of any of the companies. Rather I have examined the evidence to determine who was the other contracting party with the plaintiff in her contract of employment. The overwhelming answer, in my opinion, is the defendant. The fact that I have found that Millor paid her does not disentitle me from making this finding.
The defendant submitted that I should rely upon the documentary evidence rather than the evidence of the plaintiff. It is of course wise to look for independent verification of a witness' testimony. However this is not a case where all the documentary evidence is against the plaintiff. The defendant's submission, in effect, asks me to ignore what the defendant said in his letter to and the reference he provided for the plaintiff. I am not prepared to do that. I have found that his own words in these documents substantially support the plaintiff's case.
A major part of the defendant’s case was the existence of exhibit D15. The defendant submitted that its existence destroyed the plaintiff's credibility. In my view it does not. That is because as I have said I am unable to find that the plaintiff deliberately doctored it in order to produce exhibit P1. Also, the plaintiff produced the document to prove the terms of her employment not the identification of her employer. The existence of D15 does not detract from the reliability of the identical terms of it and exhibit P1 to prove those terms.
I do not find, as urged by the defendant, that the plaintiff was an unreliable witness. Indeed I found the majority of her evidence to be reliable, although I acknowledge that at times she did not wish to give a direct answer to questions in cross-examination. However I am of the opinion that her reluctance can be explained by a desire not to have her answers misconstrued. When I explained to her that her counsel would have the opportunity to re-examine her she gave her evidence in a more straightforward manner.
The defendant said that it was significant that the plaintiff did not call any other witnesses. Of course the plaintiff's evidence was that only she and the plaintiff were present when the employment contract was offered and accepted. Thus there were no other witnesses to call. The absence of Javeri who apparently was present when there was an agreement to increase the plaintiff's salary is not something about which I should draw an inference against the plaintiff. The clear impression I got from the evidence was that Javeri was not an Australian resident. Also there was independent evidence of the plaintiff’s increase in salary.
The defendant also submitted that exhibit D15 proved that the defendant was not the plaintiff’s employer at the relevant times. It does not do that. One piece of evidence looked at in isolation cannot do that. When seen in the context of the other evidence its effect is not persuasive. I note, for example, that it does not mention Millor as an employer of the plaintiff. Yet Millor paid the plaintiff’s wages for the 12 months immediately prior to the plaintiff's claim for unpaid wages, holiday and termination pay. Also, the very variable identity of employer as being one of 3 entities suggests that some device was being used for the payment of wages and entitlements.
Conclusion
The uncertainty that hangs over the relationship between the defendant and the companies which paid the plaintiff in turn leads me to the view that I should not place great emphasis on the answer to question (b). Given that the answers to questions (a), (c) and (d) were the defendant, I conclude that the defendant was the plaintiff's employer at the relevant times. Therefore he is ultimately liable for the payment of her wages, holiday pay, money in lieu of notice and superannuation.
Assessment of damages
The measure of damages for breach by an employer of a term of the employment contract is the sum necessary to put the employee in the position he or she would have been in if the employer had not committed the breach: Bostik (Aust) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20.
The amended defence denies that any monies are owing to the plaintiff. However at trial there was no challenge to the plaintiff's calculation of the monies she was owed. The defence case was that the defendant did not owe her those monies. Having found that the defendant is liable I see no reason not to find that the defendant owes the plaintiff the sum she gave evidence of was owing to her made up of the following amounts:
$32,691.00 -unpaid wages for the period 9-2-96 to 27-9-96 (34 weeks @ $961.50 per week).
$4,807.50 - unpaid accrued holiday pay (5 weeks @ $961.50 per week).
$7,692.00 - 2 months wages in lieu of notice of termination.
$6,500.00 - Superannuation owing from 1-7-93 to 27-9-96 (3.25 years @ $2000 per year or 4% of salary).
$51,690.50
The plaintiff also claims interest on this sum at the rate of 8 per cent per annum from 28 September 1996 to the date of judgment. The prescribed rate of interest under the Supreme Court Act 1935 fell on 13 September 1997 from 8 per cent to 6 per cent where it has remained. Thus the plaintiff is entitled to interest on the sum of $51,690.50 at the rate of 6 per cent per annum from 28 September 1996 to the date of judgment.
I will hear counsel as to final orders.
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