Whillier v Rotec Design Limited

[2018] FCCA 1256

FEDERAL CIRCUIT COURT OF AUSTRALIA

WHILLIER v ROTEC DESIGN LIMITED & ANOR [2018] FCCA 1256

Catchwords:
INDUSTRIAL LAW – Non-payment of wages – whether applicant was an employee – finding that applicant was not an employee – application dismissed.

Legislation:

Fair Work Act 2009 (Cth), s.323

Applicant: ROBERT MICHAEL WHILLIER

First Respondent: ROTEC DESIGN LIMITED

Second Respondent: CRAIG DOYLE

File Number: BRG 519 of 2017

Judgment of: Judge Vasta

Hearing dates: 8, 9 and 10 May 2018

Date of Last Submission: 10 May 2018

Delivered at: Brisbane

Delivered on: 11 May 2018

REPRESENTATION

Counsel for the Applicant: Mr Massy

Solicitors for the Applicant: Hall Payne Lawyers

Counsel for the Respondents: Mr Copley

Solicitors for the Respondents: Mcinnes Wilson Lawyers

ORDERS

1. All outstanding applications be dismissed.

2. The if the Respondents intend to make an application for costs, they are to file and serve written submissions by no later than 4.00pm on 18 May 2018.

3. The Applicant is to file and serve their written submission in reply to the costs application by no later than 4.00pm on 25 May 2018.

4. The Court will advise the parties of a hearing date and time for the costs application during the week of 28 May 2018.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 519 of 2017

ROBERT MICHAEL WHILLIER

Applicant

And

ROTEC DESIGN LIMITED

First Respondent

CRAIG DOYLE

Second Respondent

REASONS FOR JUDGMENT

(Ex tempore)

1. On 1 February 2014, the Applicant, Michael Robert Whillier, began to do work for the Respondent company, Rotec Design Limited.  That relationship was severed on 7 July 2016. 

2. The Applicant was not paid anything except for about $6,000.00 during that two and a half years. He is claiming that the Respondent company breached s.323 of the Fair Work Act 2009 (Cth) (“the FW Act”) in that it failed to “pay him amounts payable in relation to performance of work at least monthly”.

3. For him to succeed under that section, the Applicant must prove to me that he was an employee.  From all the evidence before me, I make the following observations and conclusions.

4. Rotec was a start-up company.  It had a great idea, but not much else.  For it to get off the ground it had to have a “lot of ducks lined up in a row” and a big injection of capital.

5. It wanted to be involved in trading carbon credits.  The initial project concerned “jeepney taxis” in the Philippines.  It was explained that Rotec could supply an engine that did not emit anywhere near the amount of pollution that was currently emitted by the engines in the “jeepney taxis”.

6. What this company was proposing is that it would source the engines, fit the engines to the “jeepney taxis” for free, thereby eliminating the enormous amounts of carbon that were currently being expended by these taxis in the Philippines.  This would mean that there would be a huge number of carbon credits generated by such a scheme which the Respondent company would then own.  Those carbon credits would then be able to be traded on the European market.

7. The plan was to have an initial public offering (“IPO”), and list in London on the Tech Exchange there.  But it had to get there first.

8. The board, I am told, had at least two “heavy hitters”, Rob Borbidge, who was a former Premier of Queensland and Craig Doyle, the Second Respondent.  Mr Doyle was well known in business circles.

9. The founder of the company, who was also a director and the chief executive officer, was a person by the name of Rob Rutherford.  Mr Rutherford has since died, but all relevant events occurred whilst Mr Rutherford was still alive.  There was another shareholder by the name of Mr Doley.

10. The Applicant had been involved in managing finance for most of his working life.  He claims to have had a great deal of experience in these areas.  He had been out of work some three to four months before February 2014. 

11. The Applicant said that Mr Doley, who was working at KPMG, let him know about Rotec.  Mr Doley told him that Rotec needed some form of financial help and that Mr Whillier, the Applicant, may well fit the bill.

12. There was a meeting on 4 February 2014 between Mr Doley, Mr Rutherford and, the Applicant.  Not much is actually known about that meeting other than there were photographs taken of a whiteboard.  But what the Applicant says occurred is that there was an offer made that he, the Applicant, would come onto the company as an employee.  He would be paid accordingly. 

13. Because the company did not have any money at all, his salary would be greatly reduced to about a thousand dollars a week, but he would be given the sum of $20,000.00 in superannuation.  This arrangement was to last from 1 February to 30 June.

14. Mr Doley has not been called and I am none the wiser as to what his recollection of the meeting would be; and, as I’ve said, Mr Rutherford is no longer with us.

15. On 6 February 2014, two days later, Mr Whillier, the Applicant, sent an email to Mr Rutherford.  That email is MW4 to the Applicant’s affidavit.  It reads:

    “Rob,

    Attached is a letter of engagement following the discussions which we had earlier in the week.  I have put the title as Financial Controller.  Feel free to change that to whatever suits.  I have put the starting date as 1 February although I did a few weeks of work prior to that.  I may just need to take a few days off over the next few weeks which I will treat as being in lieu, if that suits.  When we get closer to 30 June we can review the cash position and decide whether to extend the reduced salary for a few more months.  One thing that we will need to consider, has the company got a worker’s compensation insurance policy at the moment?  It is not necessary for directors but is a requirement for employees and contractors who are caught under the umbrella of employee.  I can sort this out with Pam next week.”

16. Attached was an agreement.  Strangely enough, this agreement is on the letterhead of Rotec Design Limited.  The agreement is titled “Offer of Employment” and goes through commencement and term, duties, hours, remuneration, superannuation, summary of total package, participation in equity raising, annual leave and sick leave and business expenses.  At the end of the agreement was a place for the director, Mr Rob Rutherford, to sign.  And there is then an acceptance of offer saying:

    “I have read this letter and agree to accept the terms and conditions therein.”

17. Straight away, such an agreement seems strange because usually it is employers who send letters of offers to employees.  This is one where the employee actually drafted the letter and wrote everything and sent it to the employer to treat as the employer’s document.

18. In any event, without going through the detail of the offer of employment, one can say that it was still very vague as to the duties.  The salary considered was $150,000.00 a year plus 16.6 per cent super; that totalling $25,000.00 a year. 

19. Such a remuneration package was extremely high for a financial controller and would later be described as being over the top.  But I will come back to that sum and why it may be so high.

20. The thing to remember with this offer of employment is that there was no one from the company, Rotec, who had any input into that offer.  Mr Rutherford did not reply to this email.

21. The Applicant sent a spreadsheet on 4 March 2014, where he outlined a cash-flow projection for the company.  That cash-flow spreadsheet was sent on 4 March to both Mr Rutherford and to the Second Respondent, Mr Doyle.  It was meant to be used as a discussion with persons who were involved in the proposed IPO; those persons being in London.

22. That document is headed “Discussion draft only” however it does have, to start with, a section for salaries.  The salaries component are for RR, whom I take is Rob Rutherford;  then the next one is MW salary;  MW super;  and MW unpaid, all being references to the Applicant;  and then to another person with the initials MMcC, whom I have not told who that person is;  and then another person with the initials JX.

23. The document details that there is an expectation of money being injected through credit sales and equity raising.  It was expected between April and September for there to be a million dollars in equity raised for the company, and also credit sales of some $15,000.00 a month.

24. Notwithstanding that amount of capital injection, it was clear, just even on the cash-flow, that if there was no IPO by October, that the company was, in effect, going to run out of money.  That spreadsheet assumes some importance on the case of the Applicant because, having been sent to Mr Doyle, it clearly talks of the Applicant receiving a salary.

25. The cash-flow projections illustrate that this company was totally dependent upon cash injections because it was not trading.  It was obvious on the face of the document that there was actually no money to pay any of the salaries. 

26. The Applicant says that even though that was apparent on the face of the document, nevertheless he still asked Mr Rutherford a number of times when it was that he would be paid.

27. The legal representatives for the Applicant have attached a table to their submissions which is labelled “Annexure 1”, which, according to the table, shows that there were discussions between the Applicant and Mr Rutherford on 7 April 2014, 15 April 2014, 13 May 2014, 27 May 2014 and 29 May 2014. 

28. The Applicant claims that he spoke to the Second Respondent on 16 June 2014.  I will return to that conversation later on in these reasons, but the Applicant points to that as showing a course of conduct in which he was constantly asking about when he would be paid.

29. When the Applicant was cross-examined about these matters in this Court, he conceded on each occasion, that he was told that he could not be paid because there was no money and he would not be paid until there was moneys raised or the IPO occurred.  He accepted this on each occasion. 

30. However, when one looks at what the Applicant has said had occurred, we have a situation where he says that there was an agreement reached on 4 February 2014 and that he sent an offer of employment letter to the Respondent company, and nothing more was said other than him asking Mr Rutherford as to when he would be paid.

31. Nowhere in the affidavit does the Applicant, before 30 June, that he asked Mr Rutherford to sign that offer of employment or does he say that Mr Rutherford agreed with the terms of the offer of employment.  However, when that was put to him in evidence in this court, he claimed that Mr Rutherford had actually agreed to these terms, notwithstanding that he did not say that in two very lengthy affidavits where he has been meticulous in putting his case. 

32. In any event, by the time we get to 30 June 2014, there has been no large cash injection; there has been no initial public offering; and, it is obvious that the IPO just isn’t going to happen.  The Applicant hasn’t been paid and he isn’t going to be paid.

33. In evidence, I asked the Applicant why he just didn’t walk away at that stage, having worked for some five months and having seen that the deadlines for a number of things that he said he had agreed to, hadn’t been met and weren’t going to be met.  His answer was a strange one.  He said that he “believed in the project”.  I do not accept that as a reason why he did not simply walk away, if it were that he always believed that he was an employee and was entitled to be paid according to the agreement that he said was made.

34. Curiously, he also said in evidence – in answer to a question in cross-examination, that he had been told by Mr Rutherford that there were sufficient funds in the company to meet his salary.  I say it’s curious because that sort of conversation one would have expected to be almost front and centre in the affidavit.  It did not appear. 

35. The other thing that is curious about such a conversation is that the Applicant was the financial controller.  The Applicant was the person who had access to the funds and the books of the company.  If anyone was to know whether there was sufficient funds to meet the salary, it would have been the Applicant.

36. So from 30 June on, according to the Applicant, there were many requests for payment and the consistent response to those requests was “You’ll get paid when money is raised or when the IPO happens”.  The Applicant said in cross-examination that there were funds that were raised, and that he should have been paid.  But again, this isn’t in any of the affidavits.  Nor is there any documentation to show when funds were raised and why there was an ability to now pay salary, but it wasn’t paid.  One would have expected this, again, to have been front and centre in the affidavit.

37. The fact is that the Applicant knew the state of the company finances and he still accepted that situation.  He describes the replies to his many requests almost as Mr Rutherford “fobbing him off”.  But not once in reply to the many “fob-offs” given to him, did he say “that was not the deal”, or “my salary is not to be deferred any longer”. 

38. The Applicant completed a number of financial statements for the company where there is a note that the payments of the salaries were to be deferred, and treated as loans awaiting payment after a sufficient injection of funds or an IPO.

39. The Applicant attended many board meetings.  Not once at any board meeting did he bring up the subject of not being paid a salary.  It is incongruous that a person who knows that he is an employee, and is owed wages every month, would act like this. 

40. One must question why someone who says that they are “an employee” and that they are owed wages, has acted like this.

41. I do not accept that the answer is that he “believed in the project”, but rather, that the answer is that he knew that he was not a true employee. 

42. As I have said, the Applicant was meticulous in two affidavits detailing even inconsequential matters.  Yet he doesn’t detail that he was ever told that there was sufficient funds to meet his wages.  He didn’t ever say that Rob Rutherford had agreed to the terms of the employment offer, but he said it here giving evidence.  This was not inadvertence.

43. One thing is strange about what the Applicant now says: that Mr Rutherford had already agreed to terms. On 2 November – according to an email that is MW62 in these proceedings – the Applicant wrote this to Mr Rutherford.  The email was titled “Agreements to be approved at Board Meeting”.  Attached to it were the following documents:

    a)B Rutherford loan agreement.doc;

    b)C Doyle loan agreement.doc;

    c)C Rigby loan agreement1.doc;

    d)C Rigby loan agreement2.doc;

    e)G O’Brien loan agreement Anthem Partners.doc;

    f)Glen O’Brien loan agreement 65028.doc;

    g)Glen O’Brien loan agreement AMV loans.doc;

    h)Glen O’Brien loan agreement other loans.doc;

    i)Glen O’Brien loan agreement patent loan.doc;

    j)M Whillier loan agreement superannuation.doc;

    k)M Whillier loan agreement excl Pinnacle items.doc;

    l)Rob Rutherford loan agreement.doc;

    m)Michael Whillier – Rotec employment offer doc.docx.

44. The email read:

    “Rob,

    Here are the agreements that need to be approved by the board.  If you’re happy with them, let me know and I will bring along two copies of each for signing.  One for the party and the other for Rotec.

    Regards Michael”

45. It does not stand with the Applicant’s new evidence that Mr Rutherford had agreed to the terms of that employment offer document if the Applicant has had to send it to him again on 2 November 2015 and point out to him that this is an agreement that needs to be approved by the Board.  Mr Rutherford is the CEO and, in effect, controlling mind of the company and is a director.  Mr Rutherford could have already approved this.  And according to the Applicant he had already approved it. 

46. There was no need according to the evidence of the Applicant for such a document to be sent to Mr Rutherford again for approval because it had already been given. 

47. What that shows is that the evidence that the Applicant gave in this Court was something that he recently invented.  The collateral material does not support the contention that the Applicant now makes.  His evidence was inconsistent.  It was contrived.  He often had no answers to many propositions as to how his behaviour was consistent with being an employee. 

48. So what is the true situation?  One goes, firstly, to the affidavit of Mr Borbidge.  It was a short affidavit.  Mr Borbidge was a director for only part of the period that the Applicant was involved with Rotec; that being till August 2014.  Mr Borbidge says:

    “I was a director at the time that the applicant was introduced to Rotec and its directors.  In or about February 2014 Robert Rutherford identified with us that Mr Whillier was a person who may be able to assist Rotec with its capital raising ventures.  Rotec had previously, in 2002, had a wage claim commenced against it by a former employee regarding payment of wages.  Rotec was a company involved in fundraising for the commercialisation of technology.  Due to this Craig Doyle and myself advised Robert Rutherford that we did not want Rotec to employ any employees as the company did not have sufficient funds to make payment of any wages.  We told Mr Rutherford that any engagement of Mr Whillier by Rotec would have to be on a contractor basis whereby Mr Whillier would only be paid a specified amount of funds if Rotec was successful in its capital raising ventures and funds became available to it to make payment of that sum of money.”

49. The Second Respondent says in the last sentence of paragraph 13 of his affidavit:

    “I was aware that the applicant was providing some services to Rotec for which he would be paid if an IPO took place or Rotec undertook a successful capital raising.”

50. The explanation that is given then in these two affidavits explains the “over-the-top” salary of $150,000.00 with $25,000.00 super.  As the Second Respondent explained in his evidence:

    “Persons who get paid upon a successful IPO or successful capital raising get paid much more than they are ostensibly worth to compensate for all the time that they work for no income.”

51. This explains why the Applicant did not bring matters up with the board. 

52. This explains why the Applicant did not demand that his salary not be deferred. 

53. This explains why the Applicant accepted the situation that was totally unacceptable for an employee. 

54. This explains why the Applicant did not push for the offer of employment to be signed. 

55. But that changed in November 2015.  By that time, it is obvious to me, that the Applicant started to accept the reality that Rotec was little more than a dream; and that he was about to throw nearly two years of his life away with nothing to show for it.  He needed that offer of employment signed. 

56. Whilst there is no direct evidence, it is quite a logical inference that if one goes to that email, MW62, that all of those loan agreements were agreements that the board needed to know about.

57. This is because if the board accepted those loans, they would understand that if there is successful fundraising or an IPO, then these are the payments that the company needs to make. 

58. This is why, it seems to me, that the employment offer document was there, so that it was documented that the Applicant would be paid at that level that he had put in that document. 

59. That document was signed by Rob Rutherford on 10 November 2015, and it was signed during a board meeting.  Once it was signed the Applicant then knew that he could prima facie be classed as an employee because that document described his duties as being that of an employee. 

60. Strangely though, even though on its face it is Rotec’s document that Rotec gave to the Applicant, in reality it is the Applicant’s document that he gave to Rotec and asked Rotec to accept. 

1. Robert Rutherford did accept it.  If one looks at the document there is no general description of the position ever provided.  Then there is this very strange section under Summary of Total Package.  It reads:

   “As agreed in a meeting on Tuesday, 4 February the following arrangement will apply for the period 1 February 2014 to 30 June 2014-”

   And then it talks of the arrangement that I have previously spoken of.  It then reads this:

   “It is additionally agreed that the amount paid monthly may vary depending on cash available, the balance will carry as a loan account.  The superannuation of $20,000 is to be paid before 30 June 2014.”

2. It is this sentence that is very important:

   “It is additionally agreed that the amount paid monthly may vary depending on cash available, the balance will carry as a loan account-”

3. That sentence is very strange. The Applicant now contends that such a condition is illegal because it offends s.323.

4. Yet, it is a section that the Applicant, himself, inserted into the document.  It is a section that the Applicant, himself, insisted that the company sign.  It is obvious through what was said by Mr Doyle that the directors only accepted that Mr Rutherford sign the contract because of that particular sentence. 

5. There was no money to pay employees.  And any decision to actually employ someone would be contrary to earlier positions of the board.  The question then has to be asked:  so was this contract evidence of an intention by both the Applicant and Rotec to enter into an employee/employer relationship?  Or was it something else? 

6. Nothing had changed financially for the company.  Their ability to pay wages was still non-existent. 

7. But now the Applicant had a document that was signed by the company that put them in debt every month because it had a section drafted by the Applicant. Which the Applicant knew was the only reason that there was an agreement that was signed in the first place, but which he now says was illegal. 

8. Having such an agreement emboldened the Applicant.  On 18 January 2016, two months after this agreement was signed the Applicant demanded payment. 

9. Through a series of emails, that are marked MW73, we can see the following exchange. 

10. On 18 January 2016 the Applicant wrote to Mr Rutherford, Mr O’Brien and Mr Doyle, the Second Respondent:

    “Rob, Craig and Glen

    It is now coming on for two years since I commenced with Rotec.  During that time I have not received any payment for salary.  I have raised the matter several times in the past.  In the interim – I have paid $44,000 towards superannuation on behalf of the company, I have been reimbursed 5000 of this amount in July/August 2015 – I have made payments on behalf of the company for computer costs, stationary, and photocopier and – some $27,000 to Ian Adlington as a one-week loan which I believe was on behalf of the company.  It is now extremely urgent that I get paid some of these amounts owed to me by the company.  Please advise how soon these arrears amounts will be settled.”

11. Mr Rutherford replied:

    “Michael

    We will need to discuss your request and respond to you.”

12. That reply was on 22 January.  On 10 February at 10.12 am the Applicant wrote:

    “Rob, Craig and Glen

    Following from the below emails I can see no advancement in resolution of the matter.  I require immediate action to have amounts owing to me to be settled by the company and arrangements made for ongoing salary to be paid as and when due.  The matters which concern me greatly are: 

    (1) After a further three weeks there appears to have been no advancement on the matter, and no repayment has been made;

    (2) My financial position has been greatly compromised.  After two years of working for Rotec I am substantially out of pocket.  I have made payments on behalf of Rotec and have not been paid a salary.  I have incurred interest as a result of this situation.  Please refer to Fair Work Australia as the obligations of the company and the directors towards it employees.  I have had assurances that funding would be forthcoming “very soon” and have relied on these assurances.  To date I have received $5000 which covers a small part of expenses and interest which I have incurred on behalf of the company;

    (3) I believe the company is trading in an insolvent position.  Discussions at board meetings assess the company is able to meet its obligation as and when due, and that it has the support of creditors.  I suggest that the board re-assess the matter in light of the Corporations Act and assess the personal liabilities which may apply to each of the directors.”

    He then writes:

    “Unless I receive within seven days a substantial payment for arrears salary as well as a mutually satisfactory agreement for settling the balance of the outstanding amounts I will be left with no alternative other than to commence legal action on this matter.  In the meantime I will need to cease any further work for Rotec until I am satisfied that suitable arrangements are in place to address my situation.  I am sorry I have needed to take this stance.  I believe Rotec does have a great project and will continue to support the company once the financial matters have been addressed. 

    Yours faithfully 

    Michael Whillier”

13. About two hours and 10 minutes later, Mr Rutherford replies to the Applicant:

    “Hi Michael

    The directors will meet and revert to you, accordingly.  I understand your financial situation is difficult.  So we hope to be able to resolve this effectively and quickly. 

    Regards 

    Rob Rutherford”

14. Later that day then, the Applicant met with Mr O’Brien and Mr Rutherford at The Coffee Club, Ascot.  The only record of this meeting is from a notation that the Applicant has made. 

15. The note talks of ASIC, and change of auditors and notes the cost of the coffee.  This note is then written:

    “Craig to put in $5000 a week into company, $1000 per week – MW, RR, GOB (loan payment) – accrue rest of salary.  When substantial sums raised – (CD ex-power station – other sources), then reduce”

    and it is difficult to understand what is there:

    “…then reduce rest”

    or something of that nature.

16. The Applicant gave evidence about this notation.  He said that it was put to him that the two directors, Mr O’Brien and Mr Rutherford, would ensure that Mr Doyle put $5000.00 a week into the company and $1000.00 a week would then be given to Mr Rutherford, Mr O’Brien and the Applicant. 

17. This would be classified as a loan payment, and the rest of his salary would be accrued.  He said that he did not agree to this, and told them then that he would not agree to this. 

18. He said that they asked him to work on the 2013/2014 accounts, but he refused.  Oddly, he told the Court that he kept working notwithstanding that what he had written was not in any conditional terms, but in these terms in the email that he had sent:

    “In the meantime I will need to cease any further work for Rotec until I am satisfied that suitable arrangements are in place to address my situation.” 

19. In effect, because there were no suitable arrangements in place to address his situation, that letter meant that he had ceased any further work for Rotec.  But still he said that he did keep working.  In fact, he went to the Philippines the next month with Rotec.  And he may have been paid $1000.00 or something of that nature during that time, but he was unsure what it was he was paid. 

20. He said he still then kept working during that time.  It is difficult to accept that the parties ever felt that the terms of the contract of employment were something to which they were bound. 

21. The view that the Respondents submit that I should have of, not just this contract, but of the whole matter, is that both parties treated any amount owed by the company as a loan from the Applicant to the Respondent which would be paid only when the Respondent company raised sufficient capital or conducted an IPO. 

22. The manner in which the Applicant acted after 10 February 2016 is not consistent with a person who believed that the company was obliged to pay him wages pursuant to the contract. 

23. It is simply no explanation as to why the Applicant, after telling the Respondent he would no longer work for them until he was satisfied that suitable arrangements were in place to address this situation, would continue to work for the company when they did not make such arrangements. 

24. It seems to me that the only reasonable explanation that can be inferred out of all these facts, is that the Applicant agreed to do work at a rate far in excess of what he was worth knowing that he would not be paid until there was sufficient capital raised or an IPO was conducted. 

25. This was a calculated gamble by the Applicant which unfortunately for him did not come off. 

26. There is a claim for reimbursement of money paid by the Applicant on behalf of the company.  The first claim is for US$14,400.00 and, the second claim is for US$8000.00.  What is not in dispute is that Mr Rutherford asked the Applicant to pay these amounts.  What is not in dispute is that Mr Rutherford said that they were needed so as loan funds could be released overseas. 

27. What is in dispute is that these amounts were actually paid by the Applicant.  The documentation, which is at MW27 and MW33, infers that there has been money transferred to the accounts to which Mr Rutherford directed. 

28. But there is no proof that this money was from the Applicant.  He has not provided any bank accounts to show such transfers.  But, even if it could be shown that the Applicant did pay these monies, there is no dispute that the payment of these monies was not for the benefit of the company, but was for Mr Rutherford, personally. 

29. This was mentioned in the email of 18 January 2016 where the Applicant regarded the $27,000.00, which is the Australian equivalent to this amount of US money:

    “…some $27,000 to Ian Adlington as a one-week loan which I believed was on behalf of the company.”

30. An acceptance, it would seem, there and then as of January 2016, that such payments were not on behalf of the company, but there was that belief at the time that such payments were made. 

31. The Applicant relies upon the employment contract which says this:

    “Business Expenses

    The company will reimburse you for you reasonable out of pocket expenses pre-approved by it, following receipt of your expenses claim and satisfactory documentary evidence of the expense.  Any expense above $200 is to be agreed to by the company before being committed.” 

32. And, further, in the section marked Duties:

    “You will report to Rob Rutherford and will work under the direction of that person or such other person determined by the company.”

33. The Applicant says that at the time he complied with what he was asked to do by Mr Rutherford, he believed that this was necessary for the running of the company, and that he was simply following a direction made by Mr Rutherford.  However, that direction must be a lawful direction and in accordance with the proper conduct of the business of the company. 

34. Clearly, such a direction was not in this category. 

35. Therefore, I find that the company is not liable for the reimbursement of the monies expended by the Applicant, but Mr Rutherford would be so liable. 

36. It is a matter for the Applicant whether he wishes to make a claim against the estate of Mr Rutherford. 

37. The Second Respondent, Craig Doyle, has been the focus of this trial far more than he deserves to be.  He was a director of this company and, while he may have had substantial business acumen and a substantial bank account as well, this did not put him in any better position than any other director of the company. 

38. The Applicant commenced these proceedings in December 2016, and the only person he alleged that was accessorily liable for the company’s contraventions was Mr Doyle.  One would have thought that Mr Rutherford, Mr Borbidge, Mr O’Brien and Jenny Xian would have also been accessorily liable. 

39. There is a very clear inference that Mr Doyle has been singled out simply because the Applicant believes Mr Doyle has sufficient money to pay any judgment sum. 

40. It was alleged that the Applicant had a conversation with Mr Doyle in June 2014 in a lift. 

41. This conversation was found at paragraph 121 of the affidavit of the applicant.  This reads, in reference to 16 June 2014:

    “On the way up to this meeting in the lift Mr Doyle and I had a conversation in words to the following effect:”

    Applicant:

    “I still have not received any salary.  I am looking forward to getting paid.”

    Mr Doyle:

    “Don’t worry.  It’s all being looked after and will be happening soon.”

42. Mr Doyle denies such conversation took place.  And I do accept his evidence over the evidence of the applicant for the reasons I have already outlined.  In any event, the contents of such a conversation do not in any way show that Mr Doyle could have been cognisant of the fact that the Applicant was an employee.  The Applicant says:

    “I have still not received any salary.  I am looking forward to getting paid.”

43. As far as Mr Doyle would have been concerned, Mr Rutherford had not been paid any salary, or certainly not the full salary and certainly nothing from the company. 

44. Whoever M. McC was, had not been paid any salary. 

45. Whoever JX was, had not been paid any salary. 

46. Certainly, Mr O’Brien had not been paid any salary.  So that did not in any way distinguish the Applicant from any other person. 

47. But one would wonder why, in having the captive audience the Applicant did not say anything to the effect, “You know that the company owes me money every month and is not paying it.  I am an employee, not a contractor.  I am different to everyone else”. 

48. But there was no such conversation.  The Applicant then claims at paragraph 262 of his affidavit that:

    “Sometime during 2015 I had two phone calls from Mr Doyle.  I cannot recall the dates exactly, but believe they were sometime in April 2015 and August 2015.  We discussed progress on the company.  And I mentioned the matter of my arrears salary and superannuation, and that I needed them to be brought up to date as a matter of urgency.  He said that he agreed, and he would address the matter.”

49. Mr Doyle denies such conversations, although he admits that he did phone the Applicant on one occasion because he was looking for Mr Rutherford. 

50. The strange thing about this alleged conversation in the affidavit, is that all other conversations that the Applicant has had with anyone have been meticulously recorded and often notarised.  There were no such notes of any of these conversations.  Nor is there any specificity as to what was actually discussed during these phone calls. 

51. One would expect also that, if such phone calls had occurred, the Applicant would have been canny enough to follow-up with an email to Mr Doyle in the sorts of terms of, “Thank you very much for looking at my matter.  I look forward to you addressing these concerns”.  But according to the Applicant what is reported in the affidavit was all Mr Doyle said:

    “…he would address the matter.”

52. And yet there was no follow-up from the Applicant when there was no addressing of the matter. 

53. I do not accept that the Applicant had any conversation in a lift with Mr Doyle.  Nor do I accept that he had the two phone calls with Mr Doyle in the manner in which paragraph 262 is written. 

54. I find that these pieces of evidence are inventions by the Applicant to somehow link Mr Doyle more closely with responsibility for paying the wages of the Applicant. 

55. The Applicant criticises Mr Doyle for not taking reasonable steps to find out what the Applicant was talking about in the emails that he sent on 18 January and 10 February 2016.  But Mr Doyle did take reasonable steps.  He contacted Mr Rutherford who was not only the CEO, but was another director of the company and asked him what the meaning of the emails were. 

56. Mr Doyle says that he was informed by Mr Rutherford that everything was all right, and that Mr Rutherford would sort the matter out.  There was not much more that Mr Doyle could have done. 

57. It was put that Mr Doyle knew that the Applicant was an employee because the cash flow sheet said “as an employee”.  As I have already remarked it showed two other people as employees.  And it was well known by Mr Doyle that these two persons were not true employees, but persons who would be paid for their work upon sufficient revenue having been raised or a successful IPO. 

58. It was said that Mr Doyle ought to have known that the Applicant was an employee because he was ascribed as “CFO” in minutes of the company.  There is no explanation as to why the title “CFO” was given to the Applicant in the minutes when the document that the Applicant relies upon to base his case as an employee, only refers to him as a “Financial Controller”.  This hardly helps the contentions of the Applicant.

59. It was put that the financial reports prepared by the Applicant recorded his unpaid wages as a liability owed by the First Respondent.  That may be so, but there were other unpaid wages from other persons.  Whilst it was noted that Mr Rutherford had been paid partly, he had been paid personally by Mr Doyle, and not by the company. 

60. It was put that Mr Doyle had given a number of undertakings to keep the company afloat as illustrated in many minutes of the company.  Such undertakings were in terms as this:

    “The directors note a commitment by Craig Doyle in the short term to keep the company operational while awaiting provision of additional capital by him or through the Carbon Desk Carbon Credit future sale program.  Taking into account historical cash flow patterns, and current and anticipated events it was agreed the company was in an appropriate financial position at this point in time.  However, it was noted a further directors’ meeting would be due in the future to monitor progress.”

61. Mr Doyle explained what it was that the commitments were that he gave.  And they were a commitment not to call in the loan that he had so as to ensure that the company could pay its debts. 

62. Mr Doyle also made emergency payments for the company when asked to do so.  The Applicant attempts to somehow conflate such a commitment almost as if it were a guarantee by Mr Doyle that he would pay the Applicant’s wages because the Applicant was an employee. 

63. No such interpretation could sensibly be made of any of those undertakings by Mr Doyle. 

64. None of the things that have been pointed out would have convinced me that Mr Doyle was an accessory pursuant to s.550 if it was that I had found that the Applicant was an employee of the company at any time during this period.

65. I have found that the Applicant and the Respondent company did not ever evince an intention that the Applicant become an employee.  I have found that the Applicant and the Respondent company did not ever evince an intention that the Respondent company be bound by the terms of the “offer of employment” unless there was capital raising or a successful IPO.

66. In those circumstances, the Applicant was not an employee. Therefore, s.323 of the FW Act has no application in this case.

I certify that the preceding one hundred and twenty-six (126) paragraphs are a true copy of the reasons for judgment of Judge Vasta

Date:  23 May 2018