Willigen v The Geelong Truck Company Pty Ltd
[2018] FCCA 3374
•21 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| WILLIGEN v THE GEELONG TRUCK COMPANY PTY LTD & ANOR | [2018] FCCA 3374 |
| Catchwords: INDUSTRIAL LAW – Small claim – claim for recovery of compensation in respect of unpaid wages, accrued annual leave, commission and bonus – leave granted for counsel to appear for respondents – applicant employed by respondents as General Manager – applicant consulted Fair Work Ombudsman before resigning – applicant gave four weeks’ notice of resignation– respondents contend employment terminated by mutual agreement – respondents contend termination effected by email transmitted from applicant’s computer – applicant had had left workplace – no agreement to terminate contract of employment prior to notice period – applicant absent from work during notice period – medical certificates provided for absence – applicant paid accrued entitlements as at date respondents contend employment terminated – respondents unilaterally deducted ~$1,100 from applicant’s pay – applicant made demands for payment of outstanding wages – respondents contend transmission of employment – no evidence of transmission of employment –change in duties – constructive dismissal of employment – applicant entitled to be paid wages in lieu of notice. INDUSTRIAL LAW – commission – Applicant claimed entitled to commission – disagreement as to amount of commission owed – applicant claimed commission owed for 26 transactions – applicant conceded some claims – dispute as to whether applicant earned commission for certain transactions – applicant’s efforts a real and effective cause of sales giving rise to entitlement to commission – calculations of commission adjusted on multiple occasions – respondents claimed entitlement to adjust claim for commission on account of unpaid conquest payments – applicant not affected by non-payment of conquest payments – respondents conceded certain commission claims – applicant presented with cheque in court – applicant owed balance of unpaid commission. INDUSTRIAL LAW – bonus – applicant claimed entitlement to balance of $10,000 bonus paid in instalments as agreed in meeting with sales team – respondents claimed bonus not payable because criteria not met – respondents’ denial undermined by payment of first instalment to applicant – respondents contended bonus payable by another employer – bonus payable. |
| Legislation: Fair Work Act 2009 (Cth), ss.117, 323, 548 |
| Cases cited: ACE Insurance Ltd v Trifunovski (2013) 295 ALR 407 AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173 Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54 Bahr v Nicolay [No 2] (1988) 164 CLR 604 Carr v Blade Repairs Australia Pty Ltd (No 2) [2010] FCA 688 Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 Department of Justice v Lunn (2006) 158 IR 410 Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2018] FCAFC 146 Explora Group Plc v Hesco Bastion Ltd [2005] EWCA 646 Fair Work Ombudsman v Ramsay Food Processing Pty Ltd (2011) 198 FCR 174 Federal Commissioner for taxation v Slater Holdings Ltd (1984) 156 CLR 447 Finance Sector Union of Australia v Commonwealth Bank of Australia (2001) 111 IR 241 Freehold Land Investments Pty v Queensland Estate Pty Ltd (1970) 123 CLR 418 Hawker Siddely Power Engineering Ltd v Rump [1979] IRLR 425 James v Royal Bank of Scotland; McKeith v Royal Bank of Scotland [2015] NSWSC 243 Josephson v Walker (1914) 18 CLR 691 Kucks v CSR Limited [1996] IRCA 141 L J Hooker Ltd v WJ Adams Estates Pty Ltd (1977) 138 CLR 52 Mackay v Dick (1881) 6 App Cas 251 (HL) Moneywood Pty Ltd v Salamon Nominees Pty Ltd (2001) 202 CLR 351 Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 Pan Foods Company Importers and Distributors Pty Ltd v Australia and New Zealand Banking Group Limited (2000) 170 ALR 579 Quinn v Overland (2010) 199 IR 40 Re Spanish Prospecting Co Ltd [1911] 1 CH 92 Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193 Sellers v London Counties Newspapers [1951] KB 784 Southern Foundries (1926) Ltd v Shirlaw (1940) AC 701 Stirling v Maitland & Boyd (1864) 5 B&S 840 United Bank v Ahtar [1989] IRLR 507 Upper Hunter County District Council v Australian Chilling and Freezing Company Ltd (1968) 118 CLR 429 Victoria v Commonwealth (1996) 187 CLR 416 |
| Other texts cited: Ford’s Principles of Corporations Law 14th Ed (2010) Neil & Chin, Modern Contract of Employment 2nd Ed (2017) Macken’s Law of Employment 8th Ed (2016) McMeel, The Construction of Contracts 2nd Ed (2010) Treitel, The Law of Contract 14th Ed (2015) |
| Applicant: | PETER WILLIGEN |
| First Respondent: | THE GEELONG TRUCK COMPANY PTY LTD (ACN 620 672 611) |
| Second Respondent: | INDUSTRIAL PERSONNEL PTY LTD (ACN 110 736 518) |
| File Number: | MLG 2654 of 2017 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 23 March, 9 May and 20 June 2018 |
| Date of Last Submission: | 20 June 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 21 November 2018 |
REPRESENTATION
| The Applicant: | In person |
| Counsel for the Respondents: | Mr Champion |
| Solicitors for the Respondents: | Weinberg Lawyers |
ORDERS
There be judgment for the applicant against the second respondent in the sum of $20,000.
Direct that a copy of these reasons for judgment be provided to the Office of the FairWork Ombudsman.
The application is otherwise dismissed.
There be a stay on enforcement of paragraph 1 of this Order for a period of 30 days.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2654 of 2017
| PETER WILLIGEN |
Applicant
And
| THE GEELONG TRUCK COMPANY PTY LTD |
First Respondent
| INDUSTRIAL PERSONNEL PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
Introduction
By application filed on 6 December 2017, Mr Willigen claims for the recovery of compensation for amounts that are claimed to be due in respect of unpaid wages, accrued annual leave, commission and a bonus. Mr Willigen’s claims were first made against the first respondent, The Geelong Trucking Company Pty Ltd (GTC). On the third day of the hearing, Industrial Personnel Pty Ltd (Industrial Personnel) was joined as second respondent. Having regard to the nature of the issues presented in the proceeding, I shall refer to GTC and Industrial Personnel as the respondents except where it is necessary to distinguish them.
These reasons for judgment explain why I have concluded that Mr Willigen is entitled to the relief which he has claimed.
Procedural history
On 6 December 2017, Mr Willigen filed an application and statement of claim seeking compensation for unpaid wages, annual leave, unpaid commissions and a bonus. The claim as instituted named GTC, (formerly Automotive Retail Group Pty Ltd (ARG)) as respondent. It is clear that GTC and ARG are separate legal entities. Attached to his claim were a series of documents upon which he relied in support of his claim. Most prominent amongst those documents was a series of emails and documents in support of twenty-six claims for commission.
By a Response filed on 21 March 2018, the first respondent contended that the application should be dismissed. While the Response addressed each of Mr Willigen’s claims, it is convenient to set out that Response at the point where each of those claims are considered.
The matter was listed for hearing in the small claims list on 23 March 2018. On that date, although the matter proceeded as a small claim, leave was granted for counsel to appear for GTC. The hearing did not conclude on that date and was adjourned for further hearing on 9 May 2018.
Mr Willigen did not personally attend court on 9 May 2018. Mr Willigen was unaware that the proceeding had been listed on that date but was contacted by the court and appeared via telephone link. The proceeding was further adjourned until 20 June 2018. In the course of that hearing, GTC indicated that an application may be made for the joinder of Industrial Personnel as an additional respondent. Directions were made to regulate the foreshadowed application.
An affidavit affirmed by the respondents’ director, Mr Richard Furnari, on 23 May 2018 contended that Industrial Personnel should be joined as a second respondent to the proceeding on the substantive basis that, as the subject contract of employment was made between Mr Willigen and Industrial Personnel, any liability for the claim rested with Industrial Personnel and not GTC.
On 19 June 2018, Mr Willigen filed three statutory declarations.
Although the declarations had been filed on the court portal, Mr Willigen said that he had also notified the respondents of the documents. Counsel for the respondents, however, knew nothing of their existence. He accepted that the court had a broad power to take the declarations into account but had no instructions in relation to their contents. A brief adjournment was allowed for that purpose. Following this adjournment, the respondents accepted that the first declaration, by Mr Meyer, could be admitted without objection. So too, the second declaration, of Mr Torzillo, was not objected to on the basis that it too could be addressed in closing submissions. Concerning a third declaration by Mr Stotz, it was conceded that the court had power under s 548(3) of the Fair Work Act 2009 (Cth) (Act) to admit it but it was submitted that the court should be particularly cautious about attaching weight to it in circumstances where the evidence could not be tested in cross-examination.
The hearing recommenced on 20 June 2018. On that date, Industrial Personnel was joined as second respondent to the proceeding.
Evidence was given by Mr Willigen and the respondents’ executives, Mr Furnari and Mr Till. I found Mr Willigen to be an honest and candid witness who was prepared to make concessions against his interest. Contrastingly, Mr Furnari was unimpressive. Mr Furnari chose to interrupt Mr Willigen in the course of his cross-examination. He appeared to regard the witness box as a platform from which to make speeches. He was quick to accuse Mr Willigen of dishonesty and did so in a way which evidently caught his counsel unawares. On one occasion counsel for the respondents disclaimed that fraud was any part of the respondents’ defence. Mr Till is an accountant who had recently acquired equity in GTC’s business. He described himself as the dealer principal of GTC and having been the General Manager of Industrial Personnel. Mr Till, who has been engaged in the role of dealer principal in automotive dealerships since 2002, is highly experienced in that industry. Although I found him to be frank in his evidence, I considered his evidence was, on occasion, driven by self-interest.
Background
Mr Furnari has conducted a business in the sale of new and used trucks and buses by means of various corporate vehicles. The relevant businesses were conducted in Geelong.
Mr Furnari sold Fuso brand and Hino brand trucks. He also sold both new and second hand vehicles. It appears that Mr Furnari originally conducted his business through ARG, a company in which Mr Furnari and his wife were the sole directors but not shareholders. The shareholders of ARG were at the material times, RJF Planning Pty Ltd and RJF Equities Pty Ltd.
In April 2012, Mr Willigen commenced employment with ARG. He was employed as a sales executive. Mr Willigen’s usual hours of work were Monday – Friday 8.00am – 5:30pm and Saturday from 8.00am until midday on each third Saturday of the month. Mr Willigen worked only in the sales of new trucks. His responsibility as sales executive was for the sale of new Fuso vehicles only. Other employees dealt with the sale of used vehicles and the sale of Hino vehicles – a competitor of Fuso.
The sale of new vehicles involved what were described as “Builds.” Mr Willigen explained the concept of “Builds”, describing it as a process whereby a customer would make a selection as to the particular type of truck body, various accessories and other finishes which were available so as to custom build a vehicle to the customer’s requirements. He said that the Fuso vehicles were built in Japan and that a stock was then held in Australia where the supplier would “build” a particular vehicle in conformity with the customer’s specifications. The customer’s particular preference for a particular truck body, cabin and other accessories were recorded by Mr Willigen in a quote and any resulting purchase order. A period of four – eight weeks was required in order for a vehicle to be built to the customer’s specifications.
Mr Willigen described the process of selling new vehicles as being a more technical process than the sale of used vehicles. He said that he had established a strong network of customers and was largely self-sufficient in his dealings with those customers.
Industrial Personnel was registered on 16 January 2015. Mr Funari, who is the only director and sole shareholder of Industrial Personnel, deposed that this company was incorporated to act as a service company for ARG in its operation of the Fuso dealership.
Mr Furnari and Mr Willigen executed an Employment agreement for salary employees (Agreement). The Agreement is dated 2 September 2016 but was executed by Mr Willigen on 6 September 2016. The parties to the Agreement are identified as Industrial Personnel (the Employer) and Mr Peter Willigen (the Employee).
By its terms, the Agreement provided that Mr Willigen would be appointed with effect from 5 September 2016 in the role of General Manager, Fuso Sales and Customer Development. Mr Willigen stated that he had always been given a payslip from Industrial Personnel for the past 18 – 24 months. Industrial Personnel had not been incorporated until January 2015. I accept that Mr Willigen’s payslips and his annual PAYG statements were issued after Industrial Personnel began the role of service-company for ARG.
Termination of the Fuso dealership
Mr Furnari made a decision to terminate the dealership of Fuso vehicles. Mr Furnari deposed that ARG’s Fuso dealership ended on 31 July 2017. Evidently, the termination of the Fuso dealership was not communicated immediately to Mr Willigen, its General Manager, Fuso Sales.
At the same time, Mr Furnari and his accountant, Mr Till, decided that together they should pursue the dealership of Hino vehicles. To that end, GTC was incorporated on 25 July 2017. Mr Furnari and Mr Till are each directors of GTC with Mr Furnari holding 61 ordinary shares and Mr Till holding 59 ordinary shares in that company.
Mr Furnari deposed that GTC was registered for the purpose of operating the Hino dealership.
Following the events described above, no new agreement was made or executed by the parties by way of termination or variation of the Agreement made between Industrial Personnel and Mr Willigen. Instead Mr Willigen continued to perform his responsibilities save that he was required to engage in the sale of new Hino vehicles.
The termination of the Fuso dealership became relevant for a further reason in that it had a potential bearing upon the calculation of the gross profit achieved, and in turn an effect upon the claims for commission made by Mr Willigen, in the sale of new vehicles. On the respondents’ case, one of the elements to be taken into account in calculating the gross profit on the sale of any vehicle was an item described as a ‘Conquest payment’ or ‘Manufacturer Incentive Bonus’. The relevance of these payments is explained in further detail below, however, for immediate purposes, it is necessary to recognise that the respondents put in evidence a copy of a Notice of Cross-claim which had been filed by ARG in answer to a claim which has been made against it by Mercedes-Benz Australia/Pacific Pty Ltd in the Federal Court of Australia. The cross-claim discloses that one of the bases on which ARG and its shareholders answer the claim made by Mercedes-Benz is grounded upon allegations of the non-payment by Mercedes-Benz of Conquest payments alleged to be due to ARG pursuant to the terms of the parties’ Fuso dealership agreement. For whatever reason, the respondents chose not to tender a copy of the Mercedes-Benz claim which had been made against ARG. Accordingly, the scope and nature of the allegations made against ARG are unknown.
Resignation from employment
In September 2017, Mr Willigen took a period of two weeks annual leave. When he returned from annual leave he discovered that Mr Furnari had decided to terminate the Fuso dealership. As a consequence, he was assigned responsibility for selling new Hino trucks.
Since 2012, Mr Willigen had built up a strong client relationship with persons who had purchased Fuso trucks. Although Mr Willigen had no relationship with customers for the sale of Hino trucks, in the period after returning from leave, he managed to sell 6 Hino vehicles (being sales to Fuso customers with whom he had established a relationship).
Mr Willigen decided to cease working for the respondent. Before doing so he consulted with the office of the Fair Work Ombudsman. He received advice that he was required to give four weeks’ notice in writing of the termination of his contract of employment.
As concerned the giving of notice, the respondents contend that Mr Willigen resigned by “mutual agreement” with effect from Monday, 25 September 2017. Mr Willigen contests that he did so and maintains that, consistently with the advice he had been given by the Fair Work Commission, he gave four weeks’ notice of the termination of his employment. The events which have occurred since the giving of notice have led to the claims which are made in this proceeding.
Notice of termination – 22 September 2017
On Friday, 22 September 2017, Mr Willigen went to Mr Furnari’s office and asked to speak with him. He entered Mr Furnari’s office, closing the door behind him, and explained that he had decided to resign in light of the respondents’ decision to terminate the Fuso dealership.
During this conversation, Mr Willigen told Mr Furnari that he had to give four weeks’ notice of his resignation. Discussion in relation to that topic ensued. Mr Furnari said that he thought that it would be as well for Mr Willigen to finish work on Monday, 25 September 2017. Mr Willigen responded that this was a matter for Mr Furnari but that he was required to give his employer four weeks’ notice. In the course of this discussion, Mr Willigen volunteered that he would stay on for a further week if needed to provide for an orderly transition to the person who will occupy the role as sales executive of new cars. As Mr Willigen was concerned, the meeting was cordial and ended on good terms.
Further events occurred that Friday as follows.
First, Mr Willigen sent an email to Mr Furnari, copied to Mr Till, stating:
Hi Guys.
After a long good long stint here with Richard I have decided to move on. Therefore I will give my 4 weeks notice effective as of today 22/9/17. Thanks for everything, it has been good being part of a great successful team. Im more than happy for any questions that arise for me to answer and help where possible. Certainly don’t want any animosity between us at all. I have calculated what I believe are my owing commissions and I will leave them with Lynn on Monday.
Kind regards
Peter Willigen
The Subject heading of Mr Willigen’s email was titled: Notice. His email became the first in a chain of emails, some of which are now in controversy. Mr Willigen’s email was transmitted at 4:47pm.
Secondly, by an email transmitted at 4:51pm, Mr Furnari replied to Mr Willigen’s email above (copied to Mr Till) stating:
Peter you didn’t give 4 weeks notice you agreed that would finish mutually Monday night.
Mr Furnari later retreated from this email.
Thirdly, Mr Willigen received a phone call from Mr Furnari in which he told Mr Willigen that he was not happy with him having given four weeks’ notice of termination and that he was not prepared to pay him for four weeks to sit home and do nothing. Mr Furnari then said that he wanted Mr Willigen to agree in writing that he would finish work on Monday. Mr Willigen replied that he did not agree to that request.
Fourthly, Mr Furnari sent a further email to both Mr Willigen and his co-director, Mr Till. In this email, Mr Furnari stated:
Brad as discussed with Peter he offered four weeks notice today but was happy to finish on Monday night if he was not required.
Given there is little point in him being involved Hino products should he wish to continue selling fuso at an alternative location we agreed he could finish Monday night.
If he expects four weeks notice as his notice period then he can work the four weeks out for that period.
I have rang him and advised him of same.
Mr Furnari’s above email sent at 5:03pm was confirmatory of Mr Willigen’s evidence as to the events which occurred on the afternoon of Friday, 22 September 2017. Although it is indicative of a conversation having occurred between Messrs Furnari and Till, no evidence as to that conversation was given.
Fifthly, another employee approached Mr Willigen at work telling him that he had been told to drive him home. This involved Mr Willigen being driven from Geelong to Leopold. Mr Willigen’s co-employee then drove the vehicle back to Geelong telling Mr Willigen that he would have to make his own arrangements to get to work on Monday.
Sixthly, Mr Willigen discovered that his mobile phone had been disconnected. He said that the disconnection of his phone meant that he was unable to properly perform his sales responsibilities.
Seventhly, Mr Furnari suggested that Mr Willigen had handed him a letter of resignation in the course of their meeting. He gave this evidence in the context of the parties’ discussion as to the giving of four weeks written notice. Mr Furnari then retreated from this evidence and suggested that the resignation was verbal. Asked whether Mr Willigen had sent him an email, Mr Furnari was uncertain. Instead, he said that Mr Willigen had given him some other documents although he could not quite remember what they were. His evidence was:
I think I used the words ‘We mutually agreed that he’s going to leave’ And that was the end of it.
Notably, it was Mr Furnari who first used the phrase ‘mutually agreed’.
Finally, another aspect of the parties’ dealings on 22 September 2017 is that no evidence was given that Mr Willigen had offered or been asked to agree that a sum of $1,100 should be deducted from his accrued entitlements. I find that there was no discussion in relation to this topic.
Re-assignment of duties – 25 September 2017
Mr Willigen arrived at work on Monday, 25 September 2017.
At 8:19am that morning, Mr Willigen sent Mr Furnari and Mr Till an email – the fourth and final link in the email chain concerning the subject “Notice.” Mr Willigen’s email contested Mr Furnari’s suggestion that there had been any agreement made the previous Friday that he would finish work on Monday, 25 September 2017. Mr Willigen’s email stated:
Morning Brad/Richard
As per my previous email. I’ve given four weeks notice in writing which I’m legally obliged to do. Richard suggested I finish Monday night, to which I replied “well that's up to you, I’m happy to do whatever suits you but I am obliged to give you four weeks notice”. I then stated that I would do that in writing to Brad and Richard. I do not interpret that as agreeing mutually to finish up on Monday night. I’m not doing anything outside the law or asking for anything outside the law. Only doing what I am legally obliged and entitled to do. Don’t what (sic) to argue about it all, I’m just doing what is right and do not intend to do anything wrong to this company. I will continue doing the right thing while still employed here. If you choose to keep me to four weeks then that’s fine. I will work it and help where possible.
Mr Willigen said that whilst he was at work on the Monday morning, Mr Furnari had made it very clear he was most unhappy with being given four weeks’ notice.
Then followed an email from Mr Furnari at 8.46am. The email was addressed to Mr Till and another employee, Mr Douglas. Mr Furnari’s email, which had no subject heading, stated:
Apologies for the confusion regarding Peter’s notice.
He will now work out the four weeks and will be responsible for canvassing Geelong.
It’s no point him taking on more builds but doorknocking the PMA will be worthwhile dropping brochures etc.
Brad please arrange Peter’s pay just for last week as normal.
The email from Mr Furnari was not merely significant for the apology which he proffered as to the confusion in relation to the period of notice Mr Willigen had given for the termination of his employment. It was also significant because Mr Furnari had given a direction that Mr Willigen, who was then employed with the responsibilities of a General Manager, should instead perform the duties of making door to door calls and dropping of promotional leaflets throughout Geelong and that he should now “work out the four weeks” notice.
Mr Willigen considered Mr Furnari’s email as being “the writing on the wall” and was sickened by the direction that the matter was taking.
Mr Willigen said that he was so upset by the content of Mr Furnari’s 8.46am email that he decided to leave the show room immediately. His evidence, which I accept, is that he did so within no more than 10 – 15 minutes. The significance of his departure bears upon the events which are said to have occurred immediately thereafter.
Mr Willigen said that he left his mobile phone at his desk before leaving. He said that he did so because it had been disconnected and was therefore of no further use to him.
In the course of cross-examination, the respondents put two further emails to Mr Willigen, each of which were said to have been transmitted on Monday, 25 September 2017. Neither of those documents had been annexed to Mr Willigen’s claim. Nor had they been produced to him before cross-examination.
The first bears the time 9.37am while the second bears the time 3.16pm.
The first email was sent from Mr Willigen’s computer at 9.37am and was addressed to Mr Furnari and Mr Till. Unlike his earlier emails, the Subject heading of this email was simply RE: and the email stated:
Hi again I’ve thought about what I would be doing over the next four weeks selling hino and decided that it would be better for all if I finish up by mutual agreement as at this morning. Please deduct the $1100 I owe Ryan for transporting my motorbike and trailer from my net pay.
I will leave my phone and keys with Jonathan. Thanks for the ride. All the best to everyone.
Mr Willigen squarely denied that he sent that email. I accept his denial.
The 9.37am email is notable in a number of respects. First, whereas Mr Willigen’s original email had been given the subject Notice, the subject entry of the 9.37am email was simply titled: Re:. The reference in the earlier email chain to Notice was absent. Secondly, the 9.37am email was presented as part of a chain of three emails, the first of which purported to be Mr Furnari’s 8.46am email: see at [43] above. A comparison of the emails indicates that they address different subject matters. Whilst Mr Furnari’s 8:46am email had directed Mr Willigen to drop brochures around Geelong for the ensuing four-week period, the 9.37am email instead spoke of Mr Willigen selling Hino vehicles over the next four weeks. Thirdly, there is some similarity in the language of Mr Furnari’s email sent at 4.51pm on Friday, 22 September 2017 and the 9.37am email inasmuch as:
a)the 4.51pm email used the expression “you would finish mutually Monday night”;
b)the 9.37am email spoke of it being “better for all if I finish up by mutual agreement as at this morning”;
c)whereas Mr Willigen’s emails ended with the salutation “Kind regards, Peter Willigen”, the 9.37am email did not contain any closing salutation.
Moreover, the 9.37am email spoke for the first time of an authority to deduct $1,100 from Mr Willigen’s outstanding accrued entitlements in respect of a sum he owed “Ryan for transporting my motorbike and trailer.” There was no evidence of any discussion of this sum being deducted from his accrued entitlements.
I find that Mr Willigen had left the respondents’ show room by 9.00am on Monday, 25 September 2017. I accept Mr Willigen’s evidence that his computer had been left on when he left his work. Mr Willigen was not challenged on his evidence that he left the showroom within 10 to 15 minutes after receiving Mr Furnari’s email of 8.46am. I accept his denial that he had not sent that email.
The 9.37am email had been transmitted from his computer nearly 40 minutes after Mr Willigen had left the respondents’ show room.
The respondents also produced and put to Mr Willigen a screenshot taken from Mr Furnari’s inbox on his computer. The screenshot was not a document which had been received by Mr Willigen. The respondent relied upon the screenshot as proof that the 9:37am email had been received in Mr Furnari’s inbox. One aspect of the Screenshot was that it contained reference to a variety of other emails, the subject of which included various other litigation apparently involving the respondents.
I do not need to make a finding as to the identity of the person who transmitted the 9:37am email. It is sufficient to find, as I do, that the email was not transmitted by Mr Willigen.
Later, at 3:16pm on 25 September 2017, Mr Furnari sent a further email:
Sorry I just got back to the office.
Brad that’s fine and I think is best for all parties.
Leslie please make up peter’s pay without commissions they can be assessed as units are sold and settled and he can move on with his other aspirations.
Peter thanks for your support over the years and all the best to you also in the future.
Mr Willigen said he was very upset by the events of the past two work days and consulted his local general practitioner. He obtained a medical certificate that he would be unfit to continue his usual occupation until 10 October 2017. He later obtained a further medical certificate that he would be unable to undertake his usual occupation until 20 October 2017.
While the Agreement made provision for either party to terminate Mr Willigen’s employment upon the giving of notice, the respondents did not suggest that Mr Willigen had been given such notice at any stage.
Claim for entitlements
On Tuesday, 26 September 2017, Mr Willigen was paid his accrued entitlements calculated as at Friday, 22 September 2017, including annual leave. Mr Willigen discovered that the respondent had deducted $1,106.40 with respect to the transport costs of transporting his motorcycle and trailer. He requested that that sum be reimbursed.
On 3 October 2017, Mr Willigen sent an email to the respondents’ pay officer enquiring as to the basis on which his annual leave had been paid when he had not yet served out his period of notice.
On 5 October 2017, Mr Willigen made a request of Mr Till for payment of his weekly pay and reimbursement of the said sum of $1,106.40.
Mr Willigen made further demands for payment of outstanding wages. He received no reply. Nor did he receive a response to his request that the respondent reimburse him the $1,106.40 on account of transport costs referred to above.
Mr Willigen sought and obtained the assistance of the Fair Work Ombudsman to achieve resolution of his claims with the respondent. The attempted resolution was not successful.
In the course of the Ombudsman’s involvement, the respondents maintained that Mr Willigen had left his employment on Monday, 25 September 2017 “by mutual agreement”. The use of that phrase can be seen in Mr Furnari’s emails, the email transmitted at 9.37am on Monday, 25 September 2017 and the Response filed in the proceeding.
The respondents also suggested to the Fair Work Ombudsman that Mr Willigen left the workplace “without his company vehicle”. The respondents’ explanation ignores that the respondents had taken the vehicle from Mr Willigen the previous Friday, 22 September 2017.
The respondents also detailed their position in relation to each of Mr Willigen’s claims being as follows:
a)Four weeks wages (for period of notice) – the respondents considered that the claim was ‘irrelevant’ referring to its contention that Mr Willigen’s employment had been terminated on 25 September 2017;
b)Commissions – the respondents contended that all commissions had been paid;
c)$5,000 bonus – the respondents contended that the bonus related to a previous employer and was also ‘irrelevant’;
d)Annual leave accrued in the notice period – the respondents contended this claim was irrelevant;
e)Deduction of $1,100 – the respondents contended that this sum had been deducted from Mr Willigen’s final pay pursuant to authority purportedly contained in the 9:37am email.
It is against that background that the present claims fall for determination.
Applicable principles
Division 3 of Part 4-1 in Chapter 4 of the Act provides a small claims procedure. Sub-section 548(1) prescribes the circumstances in which proceedings may be dealt with as a small claim. By force of sub-s 548(3), in the conduct of a small claims proceeding, the court is not bound by rules of evidence or procedure. Moreover, it is entitled to act in an informal manner and without regard to legal forms or technicalities.
Transmission of employment?
Having regard to Mr Furnari’s changing commercial arrangements over the period of Mr Willigen’s employment, it is necessary to consider the identity of his employer from time to time.
On the evidence, Mr Willigen was employed by ARG from the time that he commenced employment with them until 6 September 2016 when he executed the Agreement with Industrial Personnel. From that date, Mr Willigen was paid by Industrial Personnel including up to the date of his final pay.
Mr Willigen was employed pursuant to the terms of that Agreement as General Manager, Fuso Sales. Although the Fuso dealership agreement was terminated with effect from 31 July 2017, Mr Willigen was not immediately told of this development and did not know of it until he returned from leave. He then undertook the sale of Hino vehicles for some weeks before giving notice of the termination of his employment.
A contention advanced by Mr Furnari’s affidavit is that if Mr Willigen is found entitled to recover for the claims which he advances, GTC was ‘responsible’ for certain of those payments.
Mr Furnari deposed that as a result of the end of the Fuso dealership and the commencement of the new Hino dealership, employees of Industrial Personnel transferred their employment to GTC and that Mr Willigen’s employment with GTC commenced on 1 August 2017. Perhaps anticipating that this may raise questions as to accrued entitlements, Mr Furnari also deposed that:
a)Mr Willigen’s employment with Industrial Personnel “counts for the purposes of any notice entitlement under the Fair Work Act”;
b)Mr Willigen’s accrued and unused annual leave entitlement was transferred from Industrial Personnel to GTC;
c)there were no other changes to the terms and conditions of Mr Willigen’s employment;
d)Mr Willigen remained entitled to a 10% commission of Gross Profit from each sale;
e)however, there was no transfer, it was said, of obligations to make commission payments from Industrial Personnel to GTC.
The Agreement provided for the terms and conditions of Mr Willigen’s employment by Industrial Personnel including his salary, leave, commission and bonus entitlements.
Clause 17 of the Agreement addressed the subject Transmission of the Employer’s Business and described the means by which a transmission of employment might occur pursuant to that Agreement. However, transmission of Mr Willigen’s employment did not occur pursuant to this provision. Apart from Mr Furnari’s assertion, there is no evidence that there had been a transmission of Mr Willigen’s employment from Industrial Personnel to GTC. It was no part of the respondents’ case that Mr Willigen had been offered or had agreed to any such transfer.
The settled principles as to the transmission of employment support a conclusion that Mr Willigen remained an employee of Industrial Personnel from 5 September 2016 until his employment was terminated: see ACE Insurance Ltd v Trifunovski;[1] Macken’s Law of Employment.[2]
[1] (2013) 295 ALR 407, [46] (Buchanan J).
[2] 8th Ed (2016), [3.50].
In Fair Work Ombudsman v Ramsay Food Processing Pty Ltd,[3] Buchanan J held that:
A contract of employment cannot be unilaterally assigned.[4]
Subject to that principle, the common law has long recognised the possibility that an employee of one business entity might be hired, loaned or seconded to another person or business, without any change in employment relationship occurring.
[3] (2011) 198 FCR 174, [46]-[47].
[4]Citing Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014, 1018; Finance Sector Union of Australia v Commonwealth Bank of Australia (2001) 111 IR 241, [64].
If Mr Willigen established any liability for any of the claims which he advanced that liability rested with his employer irrespective of whether Industrial Personnel had hired, loaned or seconded his services to GTC.
Consideration of claims
It is convenient to address the four claims made by Mr Willigen and the evidence which has been given in relation to each of those matters.
Four weeks salary – $5,769
The respondents correctly submitted Mr Willigen’s entitlement to be paid four weeks salary depended upon whether the respondents had unilaterally terminated his employment. They were also correct in submitting that parties were free to discharge the employment contract by consent.[5] They accepted that if the respondents had unilaterally terminated the Agreement, then Mr Willigen was entitled to notice. There was no dispute that four weeks’ notice was the appropriate period of notice in the circumstances of this case.
[5] Citing Neil & Chin, Modern Contract of Employment, 2nd Ed, (2017) at [10.10].
Section 117 of the Act proscribes an employer from terminating employment without giving the prescribed notice. It was submitted, and I accept, that termination by agreement would not engage s 117.[6]
[6]Department of Justice v Lunn (2006) 158 IR 410, [10]; cf Victoria v Commonwealth (1996) 187 CLR 416, 520 (Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ).
The Response which was filed to the claim stated:
4 weeks’ salary
The Applicant’s claim for 4 weeks wages relates to a period from 22 September 2017 until 20 October 2017. On 22 September 2017 the Applicant gave 4 weeks’ notice that he intended to resign. By mutual agreement the Applicant ceased work on 25 September 2017. Mr Willigen sent an email to Mr Richard Furnari (Dealer Principal) sent on 25 September 2017 (9.37 AM): “I thought about what I would be doing over the next 4 weeks of selling Hino and decided that it would be better for all if I finish up by mutual agreement as at this morning.”
It is apparent that the respondents’ defend this claim primarily upon the email transmitted on 25 September 2017 at 9.37am.
The respondents contended that Mr Willigen had transmitted the 9.37am email agreeing that “it would be better for all if I finish up by mutual agreement as at this morning”. As I have found, that email was not sent by Mr Willigen and he was not in the respondents’ showroom at the time that email was transmitted. Mr Willigen did not transmit that email to the respondents: see at [51]-[55]. It was not his document.
Contrary to the respondents’ assertion, I find that there was no agreement whereby the parties agreed to terminate the contract of employment with effect from Monday, 25 September 2017.
Mr Willigen gave four weeks’ notice of the termination of his contract of employment. He did so on 22 September 2017. He has not been paid for that period of notice. Nor was he paid for his period of sick leave.
Further, Mr Willigen had been employed as a General Manager selling new cars for the respondents. Mr Furnari’s email sent at 8.46am on 25 September 2017, expressing apology for the confusion respecting Mr Willigen’s period of notice, gave a direction that Mr Willigen would instead “now work out the four weeks” with responsibility for canvassing Geelong and dropping off brochures. I find that the direction to do so constituted a constructive dismissal of Mr Willigen’s employment. Constructive dismissal may be effected where, as here, an employer has effected a fundamental change in the nature of the employees work.[7]
[7]Macken’s Law of Employment, [8.90] citing Hawker Siddely Power Engineering Ltd v Rump [1979] IRLR 425; United Bank v Ahtar [1989] IRLR 507; see also Quinn v Overland (2010) 199 IR 40, [101] (Bromberg J).
Relevantly, the Agreement provided[8] that Mr Willigen had the duties of General Manager, Fuso Sales and Customer Development, and that:
The Employer may change these Duties during the course of the Employee’s employment after consultation with the Employee.
Although the respondents relied upon another clause in the Agreement[9] which, it was submitted, entitled the employer to direct Mr Willigen to do whatever work was required of him, a clause of this type would be read with the clause above and, upon settled principles of construction,[10] would be conditioned by an obligation of reasonableness.
[8] By cl 1.4.
[9] See cl 2.6.
[10] See at [121]-[122] below.
There was no suggestion, and Mr Willigen was not cross-examined to the effect, that there had ever been any consultation with him about a change in his duties from General Manager, Fuso Sales and Customer Development to undertaking door knocking and handing out pamphlets in Geelong during the period of four weeks’ notice that he had given.
Clause 14.2 of the Agreement provided for the giving of notice. Mr Willigen was not cross-examined on the basis that he had not observed the obligations as to the giving of notice as expressed in that Agreement.
The respondents then challenged Mr Willigen’s failure to perform his duties as employee during that period of notice. Mr Willigen provided medical certificates for the period of his absence from work. He was not challenged that he did not have accrued sick leave for that period.
I find that Mr Willigen is entitled to be paid an amount representing four weeks wages in lieu of notice. It was common ground that if liability was made out, the amount of wages payable for four weeks was $5,769.
Annual leave – $530
The Response which was filed to the claim stated:
Annual leave
The Respondent paid the Applicant 94.12 hours’ accrued and unused annual leave as recorded in the Applicant’s final payslip. The Respondent understands that the Applicant claims additional annual leave which would have been accrued in the period of 4 weeks’ notice. The Respondent denies that any entitlement arises on the basis that the employment ended by mutual agreement on 25 September 2017.
The respondents again relied upon the supposed ‘mutual agreement’.
Mr Willigen was paid his unused annual leave which had accrued to 22 September 2017. Mr Willigen was entitled to accrue annual leave in the period 23 September 2017 – 20 October 2017. He was not paid that accrued leave. I find that Mr Willigen is entitled to be paid an amount of $530 respecting annual leave which would have accrued in that period. The sum of that entitlement was not in dispute.
Commissions – $18,795
Mr Willigen had collated a series of 26 transactions in relation to which he had lodged claims for unpaid commission. On 22 September 2017, Mr Willigen prepared Deal Profit forms for each of the outstanding claims for commission. He provided those forms to his employer. His annotations included notes as in particular cases where he had been part paid commission (‘PD’) and a balance remained outstanding.
The Response which was filed to the claim stated:
Commissions
There was an employment agreement dated 2 September 2016 (the “Agreement”). Clause 3.1 provided that the Respondent would pay the Applicant: “commission paid on new vehicles sold will be 10% of gross profits from each sale.” As to the 26 transactions annexed to the Application the Applicant has claimed 10% commission on anticipated or forecast profit at the date of sale. Almost invariably, actual profit was in an amount different from anticipated profit as actual costs varied as against forecast. The Respondent paid commission on actual profit not anticipated profit.
Mr Furnari’s position was that if Mr Willigen had an entitlement to commission on the sales of Fuso vehicles, those commissions remained the responsibility of Industrial Personnel. He deposed that:
Commissions on new transactions for Hino sales was GTC’s responsibility. In the 6 transactions (a. – z.) which make up the disputed commission entitlements, some sales documents are headed Hino Geelong (transactions: a., e., f., w., and x.). If commissions are payable on those Hino transactions, that is the responsibility of GTC. On the majority of the transactions (the Fuso transactions) any legal responsibility to pay commission remains with IPPL.
Issues contained within this ‘submission’ include whether Mr Willigen’s employment had been transferred from Industrial Personnel to GTC with his consent. Mr Furnari’s stance was to attribute liability for Fuso sales and commission to Industrial Personnel and to attribute liability for Hino sales and commission to GTC.
On the findings that I have made, Mr Willigen’s employment was not transmitted from Industrial Personnel to GTC. If Mr Willigen has an entitlement to commission on any sale it is, as Mr Furnari deposed, pursuant to the terms of the Agreement. Additionally, it is also an entitlement preserved by the applicable award.
In Part I of his Form 5 – Small Claim, Mr Willigen detailed his claims for unpaid commissions as being payable in accordance with the Act. This may be understood as a claim to enforce his award entitlements. It was common ground that Mr Willigen’s entitlement to commission was governed by the Vehicle Manufacturing, Repair, Services and Retail Award 2010 (Award).
Clause 44 of that Award contained Special provisions – persons employed principally to sell vehicles. Relevantly, clause 44.9 of that Award provided for the payment of commission. Clause 44.9(a) prescribed that the payment of commission, if any, to a vehicle sales person may be negotiated between the salesperson and their employer subject, however, to the provisions which followed. The text of cl 44.9 confirms that the parties were free to agree upon the terms which would govern their respective rights and liabilities in relation to commission but that their Agreement was subject to the provisions of cl 44.9.
Paragraph 44.9(a) of the Award relevantly provided that:
(i)-(ii) . . .
(iii) an employer will within 21 days after the last day of each month furnish a vehicle salesperson with all relevant particulars of vehicles delivered and commission earned during the preceding month and thereupon such commission or any balance thereof shall be payable;
(iv) . . .
(v) commission shall be deemed to accrue upon the delivery of a vehicle to the customer;
(vi) Where the employment of a vehicle salesperson terminate prior to the delivery of a vehicle for which they would otherwise be entitled to commission, provided the vehicle is delivered within three months of the termination they will be paid two thirds of the commission they would otherwise have received;
(vii) . . .
(viii) any sum payable under an agreement made pursuant to this subclause will be deemed to be payable under an award.
It was not suggested that parties could contract out of these obligations.[11]
[11] Josephson v Walker (1914) 18 CLR 691, 700 (Isaacs J).
The terms of cl 44 may be seen to reflect common law principles that apply to the determination of claims for commission as between principal and agent. Unless otherwise agreed, an agent was not entitled to commission in respect of transactions which took place after termination of the agency. However, the parties were free to contract on terms that the agent was entitled to commission where the order was secured before termination. In Sellers v London Counties Newspapers,[12] Singleton and Birkett LJJ held that an agent was entitled to commission on orders which had been obtained before, though not executed until after, termination of the agency. This reasoning was endorsed by the Court of Appeal in Explora Group Plc v Hesco Bastion Ltd.[13]
[12][1951] KB 784, 799, 800; cf Evershed MR diss at 795; see also Freehold Land Investments Pty v Queensland Estate Pty Ltd (1970) 123 CLR 418, 422 (McTiernan J), 438 (Walsh J, Barwick CJ agreeing).
[13] [2005] EWCA 646, [59]ff (Rix LJ, Jonathan Parker and Longmore LJJ agreeing).
The entitlement to commission has also been determined upon whether the agent’s conduct should be seen as constituting the real or effective cause of the sale: L J Hooker Ltd v WJ Adams Estates Pty Ltd;[14] Moneywood Pty Ltd v Salamon Nominees Pty Ltd.[15]
[14] (1977) 138 CLR 52, 60 (Barwick CJ), 66-68 (Gibbs J), 76-78 (Stephen J), 86-87 (Jacobs J)
[15] (2001) 202 CLR 351, [37],[45] (Gleeson CJ), [86] (Gummow J), [199]ff (Kirby J);
The precise time at which the agent becomes entitled to commission will turn upon the proper construction of the parties’ Agreement: see generally, Treitel, The Law of Contract.[16]
[16] 14th Ed, (2015) at [16-085]ff.
In the present case, cl 44.9 makes clear that a person to whom it applies is entitled to commission at the rate of 66% in the case of vehicles the delivery of which occurs within 3 months of termination of employ.
It is far from clear that Industrial Personnel complied with this clause. In particular, it is not apparent that within 21 days after the end of each month Mr Willigen was furnished with all relevant particulars of vehicles delivered and commission earned during the preceding month. The strict observance of that obligation was important because it served to crystallise Mr Willigen’s entitlement to commission.
There was no contest that Mr Willigen was entitled to commission in respect of vehicle sales where a vehicle was delivered within three months from the date of termination of his employment. Nor was there any dispute that the entitlement to commission in respect of vehicles delivered in that period was to be calculated at the rate of 66.66% of the commission which would otherwise have been payable.
Mr Willigen’s entitlement to commission accrued upon delivery of the subject vehicles. The precise dates of delivery was not established by the evidence. This is a matter which, in the circumstances, was well within the knowledge of the respondents. However, the respondents’ stance taken in relation to this issue did not challenge the fact of delivery.
Rather, the contest as to whether any commission was payable at all was presented on different bases in relation to particular sales transactions.
On the findings that I have made, Mr Willigen was terminated with effect from 20 October 2017, being four weeks after notice of termination was given. Thus, para 44.9(a)(vi) operated to confine an entitlement to commission to being paid two thirds of the commission in respect of vehicles which had been delivered within three months of the termination of employment; that is, three months of 20 October 2017. Accordingly, Mr Willigen was entitled to commission in accordance with cl 44.9(a)(vi) of the Award on vehicles which had been delivered to purchasers on or before 20 January 2018.
Mr Willigen presented 26 claims for unpaid commission. In the course of the hearing Mr Willigen abandoned some of those claims. As will appear, the respondents presented a number of objections to the claims. Mr Willigen’s Form 5 detailed the claim for commission on the basis that he was entitled to be paid commission as follows:
a) commission on paid and delivered sales 100%
b) commission on yet to be delivered sales 67%
For 20 claims, Mr Willigen pursued a claim that he was entitled to be paid 67% on outstanding sales. In the six cases where Mr Willigen’s claim was expressed as being for 100% of commission, this was because the respondents had paid him an amount in respect of commissions payable upon vehicles that had been delivered prior to the termination of his employment and he claimed to have been short changed.
Mr Willigen made a handwritten notation at the foot of each of the 26 quotes being his calculation of his commission entitlement on each respective sale. His notations included his assessment of cases where there had been a change between the forecast and actual commission where changes to particular items of cost had occurred in the period between preparation of the sales order and delivery. He also made records reflecting whether the entitlement to commission was calculated at 100% or 67% of the Deal Profit (being where he had been part paid the commission and was only making a claim for an outstanding balance).
An understanding of the claims for commission requires consideration of the manner in which a new vehicle was sold to a customer and in particular, the documentary record relating to such sales. When a customer had expressed sufficient interest in purchasing a vehicle, Mr Willigen would prepare a quote which would identify, amongst other things, the customer, make and model of the new vehicle, options, accessories and trade in. Each quote was designated a distinctive Deal Number.[17] If a quote was accepted or a sale negotiated on terms acceptable to the parties, a sales order would be prepared. Much of the information recorded in the quote would be restated in the purchase order. In all but five cases (where the Hino Geelong letterhead was used), the quote was given upon a letterhead, Fuso Geelong.[18] Mr Willigen’s evidence was that for each new vehicle which he sold, he would sign each purchase order and would obtain the customer’s signature.
[17]The matter became somewhat complicated by reason that the Deal Number which had originally been assigned to the ARG quotes and sales contracts had been assigned new Deal Numbers once the Fuso dealership had been terminated and GTC had been established. Mr Willigen accepted that the deal numbers had been changed in some cases but said that in many others there had been no change.
[18] The Hino Geelong letterhead was used in relation to transactions A, E, F, W and X.
In addition, Mr Willigen completed a form for the payment of commission. The form, called a “Vehicle Deal Profit” form, identified each deal by its designated Deal Number and, after identifying the vehicle, accessories, discounts, and licensing costs, provided a sub-total to which were added various costs and subsidies. One such subsidy was a “Manufacturer Incentive and Bonus”, also known as a “Conquest Payment”. The software used to generate the Deal Profit would calculate a grand total, including the Deal Profit on the particular sale.
Mr Willigen was entitled to commission calculated as 10% of that Deal Profit. It was common ground that the Deal Profit calculated using this software represented the anticipated profit as at the date of sale. The parties were agreed that there could, on occasions, be an increase or reduction in the costs applicable to a particular sale in the period between the date of quotation and the date of supply. Any such increase or decrease in cost would necessarily have an impact on the final deal profit made at sale. By force of cl 44.9(a)(v) of the Award, the entitlement to commission arose upon delivery of the vehicle.
In the course of giving evidence, Mr Furnari made a broad claim that he had discovered that Mr Willigen and other sales staff had grossly inflated their commission claims. He accused Mr Willigen of fraud. No attempt was made to establish the allegation by reference to any specific claim. The allegation was disclaimed by the respondents’ counsel as forming any part of the defence. I reject Mr Furnari’s evidence as to this.
GTC’s director, Mr Till, prepared his own calculation of the Deal Profit on each of the 26 claims. There were myriad adjustments between the Deal Profit calculations made by Mr Willigen on 22 September 2017 and those made by Mr Till on 21 March 2018 and subsequently thereafter.
Mr Willigen accepted that the forecast Deal Profit may be affected by the need for adjustment on account of works or other costs which it was proper to bring into account. Self-evidently, an increase in the costs of sale would decrease the gross profit on the sale. A decrease in the actual Deal Profit from that which had been anticipated would result in a corresponding decrease in the commission that was payable for that sale. The respondents sought to rely upon such increased costs in several respects so as to support the contention that no commission was payable.
The propriety of the respondents’ claimed increased costs was in contest.
Although the Agreement prescribed that the entitlement to commission was to be calculated at the rate of “10% of Gross Profits from each sale”, it did not define the expression “Gross Profit”. Clause 44.9 of the Award and in particular, the expression Gross Profit, should be construed in a practical way and in the manner which is likely to have been understood by the relevant industry and industrial relations environment in which it was to operate.[19] The principles which govern the construction of commercial contracts apply to employment contracts.[20] In Carr v Blade Repairs Australia Pty Ltd (No 2),[21] Tracey J stated:
The same principles which govern the construction of commercial contracts have application to contracts of employment: see Riverwood International Australia Pty Ltd v McCormick.[22] Commercial contracts should, as Kirby J held in Pan Foods Company Importers and Distributors Pty Ltd v Australia and New Zealand Banking Group Limited,[23] “be construed practically, so as to give effect to their presumed commercial purposes and so as not to defeat the achievement of such purposes by an excessively narrow and artificially restricted construction.” An interpretation which accords with a broad approach will be preferred to one which does not: see Upper Hunter County District Council v Australian Chilling and Freezing Company Ltd.[24]
[19]Kucks v CSR Limited [1996] IRCA 141, [4] (Madgwick J); Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241, [96] (Kirby J), [129] (Callinan J); Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2018] FCAFC 146, [56]-[58], [74], [78] (Rares and Barker JJ).
[20]Carr v Blade Repairs Australia Pty Ltd (No 2) [2010] FCA 688, [44] (Tracey J); Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193, 204–5 (Lindgren J), 217 (Mansfield J).
[21] [2010] FCA 688, [44].
[22] [2000] FCA 889; (2000) 177 ALR 193 at 204-5 (per Lindgren J), and 217 (per Mansfield J).
[23] [2000] HCA 20; (2000) 170 ALR 579 at 584.
[24] [1968] HCA 8; (1968) 118 CLR 429 at 437 (Barwick CJ).
Upon those principles, I consider that cl 44.9 of the Award and cl 3 of the Agreement should be construed against the matrix of mutually known facts which gave rise to the employment relationship and as two honest businessmen would understand their terms.[25] The respondents accepted that a businesslike interpretation was appropriate.
[25]Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 at 300 (Isaacs J); AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd [2006] VSCA 173, [80] (Nettle JA, Maxwell P and Bongiorno AJA agreeing).
I construe Gross Profits in the Agreement as being represented by the value of the sale less costs of goods sold.[26] The respondents submitted, correctly, that the concept of profit was no more precise than the amount of gain made by a business.[27] The fact of such imprecision necessarily involves recognition that the components which may be included or excluded in the calculation of gain or the quantum of those components of cost may be inherently debatable. It will, in part, be a question of fact whether an item of cost or its quantum, is properly attributable to the costs of goods sold in relation to a particular sale. The question whether an item of cost ought properly be brought into account in the calculation of profit will also depend upon the context in which the question is raised. For example, the learned authors of Ford’s Principles of Corporations Law, recognise that questions may arise whether it is appropriate to include gains or losses not directly connected with the routine conduct of a business. Relatedly, the authors observe:
If the ascertainment of profit concerned only the proprietors of a business, they would be free to adopt any practice they liked. However, the ascertainment of profit for dividend is a matter of concern for creditors of the company who would not want to be prejudiced by returns of capital to shareholders disguised as dividends. (emphasis added)
While the topic under consideration there related to dividends, the difficulty identified by the learned authors is of wider application.
[26] Hoggett et al, Accounting 9th Ed at p 827.
[27]Citing Ford’s Principles of Corporations Law, 14th Ed (2010) at [18.130] citing Re Spanish Prospecting Co Ltd [1911] 1 CH 92, 98 (Fletcher Moulton LJ). However the statement of principle in Re Spanish Prospecting has been described as a guide rather than dictum: Federal Commissioner for taxation v Slater Holdings Ltd (1984) 156 CLR, 460 (Gibbs CJ).
There was generally no dispute in relation to the value of the vehicle being sold, the difficulty in the present case arose from the respondents’ inclusion of additional costs, which it was submitted, comprised part of the costs of goods sold. An example of the respondents cost increases can be seen in the case of the first claim where the “Administration fee” being charged by the respondents had been increased from $1,694 to $2,430.99. Such an increase in administration fees would thereby decrease the amount of deal profit and commensurately, reduce the amount of Mr Willigen’s claim for commission. Whether I should accept those ‘adjustments’ is a matter for individual consideration of particular claims for commission.
Moreover, part of the difficulty in addressing the issue was the paucity of underlying detail to support the conclusion that the increase in costs was referrable to costs actually incurred by the respondents in the period between the placing of the purchase order and the date of delivery. For example, when Mr Furnari was pressed to identify particular cases in which significant costs had been incurred, he stated:
Which one? Brad can you help me? I don’t remember the names?[28]
Mr Furnari then suggested that he had recently discovered a bill of $10,000 for a rental truck which had supposedly been incurred in relation to one of the subject claims for commission. And yet no attempt was made to tender that bill in evidence or to put it to Mr Willigen.
[28] The reference to Brad being a reference to his co-director, Mr Till, who was present in court.
When giving evidence in relation to these claims, Mr Furnari said that since closing the Fuso dealership, he had left the day-to-day operation of GTC to Mr Till and that he was dependent upon him for the information relating to its affairs.
Mr Till had prepared a spreadsheet which was said to summarise accurately the true position respecting the 26 claims for commission. An immediate difficulty in the acceptance of this approach was that the spreadsheet changed on not one but three occasions. Why in those circumstances, the final spreadsheet should be accepted as accurate is a matter upon which I have reflected.
Mr Till’s spreadsheets were arranged so as to identify each claim, the customer, vehicle details and contained calculations of commission together with notes in relation to each sale. Mr Till’s description of the commission included the following: purported commission; purported paid commission; actual paid commission; actual deal profit; commission and amount payable expressed as a percentage of deal profit.
While Mr Willigen’s claim was for a total sum of $18,795, the final calculation made by Mr Till was, correctly, for a sum of $18,027.
By way of overview, four other features of the original spreadsheet calculation may be noted. First, Mr Till’s spreadsheet identified five transactions in which he calculated that a loss had been incurred and so extinguished the deal profit on the entirety of those transactions. Secondly, Mr Till’s spreadsheet identified 13 transactions in which it was said that no deal profit had been made. The reasons why no deal profit had been made were given in the evidence. Thirdly, the first spreadsheet identified six transactions in which a negative sum was identified as being the commission payable on the sale. The result of this calculation indicated that Mr Willigen owed money to the respondents.
The respondents’ documentary evidence bearing upon the claims for commission was arranged in a tabulated folder, marked A – Z. Some issues were common to several claims. Other issues overlapped the claims. My findings in relation to the commission claims as follows.
Claim A – GDP Industries.
The respondents contended that this sale had been effected not by Mr Willigen but by another salesperson, Mr Griffin. Mr Willigen accepted that the administrative task of preparing the quote for the customer had been prepared by a subordinate, Mr Griffin, but insisted that he had personally effected the sale and that he had signed the sales contract. His evidence was convincing that he was definitely the person who had concluded this sale and signed the contract. He said that the purchaser was a long term customer and that he had “done the deal.”
While the respondents tendered a folder containing documents relating to each of the 26 claims, no attempt was made to include the executed sales contract or purchase order in those documents.
I accept Mr Willigen’s evidence that he signed that purchase contract and effected this sale. The respondents contended that this sale had been achieved, not by Mr Willigen but by other sales personnel, Mr Griffin, who was not called. Mr Willigen gave evidence that he had effected this sale. It was within the power of the respondents to adduce the sales contracts in evidence. Mr Willigen’s evidence was that he had signed those contracts. I accept that he made this sale and is entitled to the commission payable in respect of it. I reject the respondents’ defence that Mr Willigen had no entitlement to the commission on this sale. I find that Mr Willigen’s efforts in relation to this transaction constituted a real and effective cause of the sale.
Claims B-D, G-O, Q-U & Y – Conquest payments
During the respondents’ cross-examination of Mr Willigen it was initially said that there was no challenge to claims B, C and D. However, when Mr Till gave evidence, he was taken to the folder of documents relied upon to prove the calculations in the respondents’ spreadsheet from which it emerged that Mr Till had deducted a further cost of $1,000 from the deal on account of a Conquest payment which, he said, had not been paid. While Mr Willigen had claimed commission based upon a grand total of $2,523.77, Mr Till had made an annotation to this total stating $1,523.77 which he confirmed reflected a reduction of the grand total on account of non-payment of the Conquest payment.
Mr Till’s evidence was that this amendment or recalculation of the deal profit in relation to the transaction under Tab B was an example of the approach which he had taken in all cases where the Conquest payment had not been received. He also agreed that the non-receipt of the Conquest payments represented the single largest issue which separated the parties and which had ‘eaten into anticipated profit.’ On the approach taken by the respondents in relation to the non-receipt of Conquest payments, Mr Till had reduced the grand total of each Deal Profit to reflect that the respondents had not been paid that Conquest payment.
The respondents’ defence to this series of claims was summarised in the notes in Mr Till’s spreadsheet: New Entity – No Manufacturer Bonus Paid. The respondents’ position was not that the vehicles had not been delivered or that the sales were not completed, but that there was no Gross Profit because the entitlement to payment of the Conquest payment had not been paid by the manufacturer, Mercedes-Benz.
As stated above, the respondents tendered a copy of the Notice of Cross-claim in proceedings commenced in the Federal Court of Australia by Mercedes-Benz against ARG and others, including RFJF Investments Pty Ltd. By its cross-claim, ARG pleaded that it had been appointed and authorised by Mercedes-Benz to market and sell Fuso trucks and products in certain defined market areas and that it had been reappointed to do so by a further agreement made in 2015.
While the cross-claim advanced a number of causes of action, relevantly, ARG made a claim for unpaid Conquest payments which, it alleged had accrued to it in the period February – August 2017. It claimed the sum of $647,262 in respect of unpaid Conquest payments and that Mercedes-Benz was indebted to it for that sum. Schedule D to the Cross-claim comprised 3 pages which detailed the Conquest payments for which ARG claimed to be entitled to payment.
Before me, the respondents said that each of the claims above were included in the schedule of unpaid Conquest payments. I was not taken to the detail of the documents which would support that conclusion.
Mr Willigen contended that the non-payment of those Conquest payments was contractually an issue between ARG and Mercedes-Benz and that he was not affected by the private contract between those parties. I accept that submission. The impact of the private contractual arrangements between those parties was res inter alios acta the relations of Industrial Personnel and Mr Willigen under their Agreement.
It is of no little significance that in the litigation with Mercedes-Benz, ARG maintains that Mercedes-Benz has a legal liability to it for those unpaid Conquest payments: see further below at [161]-[166].
It follows that I reject the defence that these Deal Profits were reduced on account of the non-payment of Conquest payments.
Claim E – B&A Andropoulos
The respondents’ cross-examination of Mr Willigen was that claim E was challenged, in part, by reason of a cost incurred in flying a person from the Melbourne to Mildura together with a bus trip.
Mr Willigen said that the customer had come to the place of delivery, collected the vehicle and driven it back.
Mr Till’s amended spreadsheet contained further items said to be items of additional cost which had reduced the grand total of the Deal Profit – FEA (Front end alignment), Driver, Gull Bus FM Melb to Geelong and Airfare FM Mildura to Melb – Driver return. In the context of these types of additional costs, Mr Till’s refrain when giving evidence was to the effect that “[t]he numbers don’t lie.” His answer deflected attention from the anterior question whether the costs which he had included were appropriately allocated as costs of sales in the ascertainment of gross profit in the context of the claims for commission.
As appears at [146] above, the respondents also contended that they had incurred extra cost by reason that this truck had been built incorrectly.
No documentary evidence was tendered to support the respondents’ version of events. They should have been in a position to adduce cogent evidence on the point and failed to do so. The respondents’ counsel candidly said that he would not tender the airline tickets and did not do so. I accept Mr Willigen’s evidence in relation to this issue.
Mr Willigen questioned Mr Till in relation to this transaction. He asked why the deal number had changed from the original quote to the Vehicle Deal Profit form which was located under Tab E. Mr Till seemed to suggest that the change was due to the closure of the Fuso dealership and the need to transfer the Fuso contracts across to GTC. Mr Willigen pressed Mr Till to explain why so many added costs had been included in the Vehicle Profit form when they did not appear in the contracts. When the detail of the costs was examined, it emerged that a number of additional items were being supplied which had not been included in the original order. For example, the vendor had ‘thrown in’ a camera to appease the customer over the difficulties in supply. Mr Willigen challenged these as being misclassified as ‘costs’ which were added to the original purchase order. The net effect of Mr Till’s evidence was that the truck had not been built to specification so as to be capable of carrying six palletised loads. Mr Till was in no doubt that the vehicle had been built by Prestige Truck Bodies and said that the quote had a measurement for six pallets but that when built:
. . . it wasn’t wide enough to be a six-palette truck. So they built it to their spec because their factory floor just does what it says but it wasn’t six-palette. Had it not had six-palette written on it somewhere we probably would have been in a bit of trouble because the quote matched the invoice. (emphasis added)
On the whole of that evidence, the responsibility for failure to build the vehicle in conformity with the quote so that it had a six-palette capacity did not fall to Mr Willigen. If GTC incurred additional costs as a result of the failure by Prestige Truck Bodies to build a vehicle with a six-palette capacity in conformity with Mr Willigen’s quote, those are not costs to be included in the calculation of his entitlement to commission.
Claim F – H&E Transport
The respondents’ cross-examination of Mr Willigen was that Claim F was challenged, in part, by reason that the deal had been done by Ryan McLeod. Mr Willigen responded that Mr McLeod was employed in relation to used vehicle sales and that it was he, Mr Willigen, who had sold the vehicle to H&E Transport. Mr Willigen also responded that this version of events had never been put to him by the respondents earlier.
Evidence was called from Mr Ryan McLeod, who has been employed in the respondents’ used vehicle department for 12-13 years. His evidence was that he had sold the subject vehicle to H&E Tranport and in doing so had asked for and been given assistance by Mr Willigen. When asked who had identified the new vehicle, he stated that “It was combined between myself and Mr Willigen.” He said that Mr Willigen had recommended the particular new model for the sale and had been responsible for setting the price. Mr McLeod was unable to say whether Mr Willigen had sent the quote for the proposed sale to the purchaser. Mr Till gave no evidence as to this transaction.
Mr McLeod did not work in new, but was employed to sell used, vehicles. I find it more probable that the sale was effected by Mr Willigen. On the face of the contemporaneous documents, Mr Willigen was the person who had generated this sale. I accept Mr Willigen’s evidence in relation to this claim. I conclude that his efforts in achieving the sale of this vehicle constituted a real and effective cause of the sale.
Claims G-O – Transfer of purchase orders (& Conquest payments)
Each of these claims had involved the customer, Flowcrete.
The issues raised in relation to this series of claims overlapped with the claims affected by Conquest payments considered above. However, an additional feature of these claims warrants consideration.
It was contended that no commission was payable since these trucks had never been delivered. This defence concealed the circumstances in which the suggested non-delivery had occurred. In cross-examining Mr Willigen, it was put that the respondents considered these claims to be loss making by reason that ARG would not receive a Conquest payment in respect of the sale of these Fuso vehicles. When it was suggested that Mr Willigen wouldn’t have known anything about this, he responded that he in fact did know a good deal about it. He said that Mr Furnari had sold the vehicles via the Murwillumbah Truck Company.
In the course of the evidence it emerged that ARG had concluded it would never be paid the Conquest payments on the sale of Fuso vehicles and so would make a loss on those sales if it completed those contracts in accordance with its contractual obligations. Instead, ARG determined to transfer or assign these contracts to Murwillumbah Truck Company because it was a dealer with an ongoing Fuso dealership and so would be paid the Conquest payment on the completion of the sale.
Mr Willigen denied that the result of those sales meant that the Murwillumbah Truck Company, rather than ARG, had made the profit on those sales. Mr Willigen’s evidence was that Murwillumbah Truck Company had paid ARG a fee on those sales. This was denied.
Mr Furnari said that the Murwillumbah Truck Company was operated by a mentor and close friend and his son, Messrs Steve and Josh Bedser. He said that he had contacted the father, and then the son, and made arrangements for the contracts to be transferred to the Murwillumbah Truck Company and that he had then directed Mr Willigen to make the necessary administrative arrangements to transfer the sales. Yet he said that Mr Willigen’s evidence to having completed the paperwork was a complete fabrication. Mr Willigen gave evidence that he had completed an extensive amount of paperwork on behalf of the respondents to arrange for these purchase orders to be completed by the alternate supplier. Mr Furnari also said that Mr Willigen had not completed any paperwork in relation to these matters. Mr Willigen’s evidence was that these purchase orders were in fact fulfilled and the vehicles delivered.
In re-examination, Mr Furnari then said that he had investigated the matter and that the reason these Conquest payments had not been made was by reason of Mr Willigen having failed to complete properly the various forms which were needed to secure payment from Mercedes-Benz. This case had never been put to Mr Willigen. He further said that the Conquest payments would not be made to ARG because the Fuso dealership had been terminated. Mr Willigen was permitted to further cross-examine Mr Furnari, whose evidence was that the respondents’ retained a documentary record of every request for a Conquest payment. No documents were produced to support a conclusion or demonstrate the respondents’ contention respecting any flaws or misconduct on Mr Willigen’s part in relation to Conquest payments.
Mr Till, who gave evidence in relation to this issue, said that he wouldn’t pour over the detail but that the money from the Conquest payments never came into the business. He glossed over what he described as the Conquest problems. He said that the Conquest payment was higher than the profit and that:
. . . a commercial decision was made to move these trucks to a dealer that would get the payment and, therefore, have the sale as a profitable position.
Mr Till accepted that the quote for these sales had been written up by Mr Willigen. He said that the sale of these trucks would be at a loss (apparently because of the anticipated non-payment of the Conquest payments) but that the respondents had to proceed with the sales as the vehicles “were too far in build.” Mr Till said that he had just bought into the business and that it couldn’t afford the loss on completing the sales in circumstances where the Conquest payments would not be made. Mr Till said that the loss would have been ~$30,000 to $40,000. He said that for this reason:
We made a decision to move them to a business where – where there would be a profitable outcome.
Mr Till described the nature of the transaction in which the subject vehicles were transferred by the respondents to the Murwillumbah Truck Company. He said that it was an everyday type of transaction in which stock was transferred by Mercedes-Benz from one dealer to another. In the result, Mr Till said that the dealer which took the stock assumed the liability for paying out a bailment facility to Mercedes-Benz. Mr Till said that the respondents derived no income from these sales.
Mr Willigen challenged Mr Till with some conviction as to why the claimed deductions on account of Conquest payments had not been made in a more timely way. In particular, he pointed out that the claimed entitlement to reduce the Deal Profit had been known by the respondents months earlier, yet had only been included as a cost of sales by means of handwritten annotations on the subject claims. Mr Till’s response was that he didn’t “want to manipulate the numbers. They are what they are.” Mr Willigen’s point about the belated reliance on Conquest payments gained traction from the fact that ARG’s Cross-claim was dated 18 September 2017 and from the fact that the respondents had made detailed entries of claimed additional costs within the body of the Vehicle Deal Profit forms in relation to other transactions: e.g. Tab E.
Critically, Mr Till then said that although the Conquest payments had not been received, they were being accounted for by way of an internal loan recorded in the balance sheet which, he said, was the correct way to handle that value. Mr Till stated further that:
If that conquest money was to appear then this deal would show as 2753 is. Internally, on our balance sheet we have an amount of $1,000 for this particular deal showing as a loan account to Fuso Australia for that money that would come in. So although the deal is showing that profit, there is money being owed from the manufacturer to offset that [loan] on the balance sheet.
Later Mr Till said that he thought he could “decide what accounting procedures happen within the dealership.” I asked and he stated:
You say you reserve to yourself to decide what the accounts contain and what they don’t? Yes. I don’t think it’s from (sic) Mr Willigen to question why that $1,000 is still sitting there. I’ve explained what the variance is. How we account for that internally is up to us, I would have thought.
. . . .
So at the moment, they still remain on the books? Of course. . .
Mr Till’s evidence confirms that the respondents consider Fuso (i.e. Mercedes-Benz) has a legal liability to pay the Conquest payments. This evidence undermines the respondents’ position that those payments are not payable by Mercedes-Benz in relation to these transactions.
The respondents did not call any witness from Murwillumbah Truck Company. They produced no documents in relation to those sales.
The respondents submitted that it did not affect the result because objectively they would have made no profit on these sales had they been completed by ARG rather than Murwillumbah Truck Company.
Mr Willigen maintained that each of these vehicles had been delivered. He tendered without objection, a statutory declaration by Mr Torzillo, a director of Flowcrete who stated that he had entered into nine purchase orders with Mr Willigen for the delivery of trucks and that those trucks had been delivered. Mr Furnari’s response was that Mr Torzillo was a part of Mr Willigen’s fraud on the respondents – an alleged fraud which was disavowed as being relevant to the determination of this claim.
When Mr Torzillo’s statutory declaration was put to Mr Till, he denied that the vehicles had been sold by Mr Willigen and stated that they had been delivered by the Murwillumbah Truck Company. In my view, Mr Willigen’s efforts constituted a real and effective cause for the achievement of these sales.
The respondents submitted that they had not been guilty of any disentitling conduct. The respondent’s decision to unilaterally transfer these purchase orders to Mr Furnari’s mentor does not, in my opinion, afford a proper basis to deny Mr Willigen his entitlement to commission. Each of the parties was under implied obligations not to prevent the fulfilment of a condition upon which the entitlement to commission depended and to take steps to procure that the condition was fulfilled.[29] In Stirling v Maitland & Boyd,[30] Cockburn CJ stated:
If a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative.
And see Ansett Transport Industries (Operations) Pty Ltd v Commonwealth;[31] Bahr v Nicolay [No 2];[32] Southern Foundries (1926) Ltd v Shirlaw.[33]
[29]Mackay v Dick (1881) 6 App Cas 251 (HL); McMeel, The Construction of Contracts, 2nd Ed (2010), [10.58].
[30] (1864) 5 B&S 840, 852; 122 ER 1043.
[31] (1977) 139 CLR 54, 102 (Aickin J diss’)
[32] (1988) 164 CLR 604, 646 (Brennan J).
[33] (1940) AC 701, 717 (Lord Atkin).
The respondents’ conduct in transferring the purchase orders to the Murwillumbah Truck Company was the antithesis of the observance of such obligations. Mr Willigen was not in breach of the Agreement and was entitled to insist on its performance. Whether or not it was open to the respondents to transfer the purchase orders, it is not open to them to rely upon the transfers as a means of denying Mr Willigen’s claim to commission. The respondents’ stance of suing for recovery of the Conquest payments and at one and the same time of retaining them as an asset on the balance sheet undermines their suggestion that the payments were not payable by Mercedes-Benz. If they chose for their own commercial reasons to transfer the subject purchase orders, it is not a factor which they can rely upon in answer to Mr Willigen’s claims.
Claim P and Z – Vic Freight Express
This customer, Vic Freight Express, had entered two contracts.
Concerning the first vehicle, the respondents’ cross-examination of Mr Willigen was that the customer had refused to take delivery of the vehicle. Mr Willigen denied that this was the case. He said that the difficulty arose from the respondents’ refusal to honour the agreed trade-in of $32,000 and said that such refusal arose from ARG’s termination of the Fuso Dealership. Mr Willigen said that the respondents in fact had the new truck ready for delivery but despite the fact that the trade-in vehicle had been delivered, GTC was refusing to accept the trade-in and that this had resulted in litigation with Vic Freight Express.
He further said that to his knowledge the customer had paid for the vehicle and was now incurring the costs of effecting repayments on it. A declaration which was made by a director of Vic Express, Mr Meyer, was admitted without objection and stated that he had originally ordered two trucks from Mr Willigen and further: (1) one delivery was cancelled due to unavailability; (2) he had taken delivery of the other vehicle.
Mr Willigen’s evidence was that the customer had both paid for the truck and delivered the vehicle which was to be the subject of the trade-in. His evidence was that GTC had attempted to reduce the amount of the trade-in which had been negotiated at the time the purchase order had been placed. In the result, the purchaser had both paid for the vehicle and delivered the trade-in vehicle but not been supplied the truck.
Concerning the second vehicle, the respondents’ cross-examination was that the deal remained open, there had been no delivery and so no entitlement to commission had crystallised within the three months of termination of the contract of employment. Apart from the matters above relating to non-completion of the first sale, Mr Willigen was unable to provide further evidence in relation to this second sale.
Mr Furnari gave evidence that he conducted all trade-in inspections and said that he had inspected the vehicle which was the subject of the disputed trade-in with Vic Express. He said that when the vehicle was delivered for trade in some 12 weeks after the purchase order had been signed, he had seen that the engine light was on, indicating that it had a significant problem. He had offered the purchaser some $6,000 on the trade in but this proposal had been rejected and a stalemate ensued.
In further cross-examination, Mr Furnari agreed that a service report had been obtained in relation to the trade-in vehicle. His answer was: “Great story but its untrue.” He later denied knowledge of the service report.
The respondents did not attempt to prove the existence or extent of any damage arising from the engine light inspection.
In the end, Mr Furnari’s evidence was that because he had terminated the Fuso dealership he was unable to secure reimbursement for the engine light problem under a Fuso warranty.
Not without hesitation, I conclude that these transactions have not been completed and accordingly the claim for commission is not made out.
Claims Q, R, S, T, U and V – Freight Equipment
Mr Till confirmed that the respondents’ defence to these claims also rested on the non-payment of the Conquest payments.
Mr Till also said that in the case of the transaction at Tab R, there had been an added after-market accessory – being an extended wheel base – which had been added to the transaction. Mr Willigen also pressed Mr Till to agree, and he did agree, that the reference to ‘rear to air’ and ‘air lines’ and ‘ABS’ was a reference to the same brake system.
In the course of questioning Mr Till, it was demonstrated that the respondents had claimed additional costs which in fact duplicated costs that had already been included in the original quote. Mr Till’s fall-back position was that he was not a truck salesman and only knew what the numbers added up to. Given an opportunity to clarify the apparent duplication in costs, Mr Till said that he couldn’t comment.
Similarly, Mr Willigen pressed Mr Till to accept that the transaction under Tab R had provided an initial costing of $8,900 for a wheelbase extension which had in fact had an actual cost of $6,000. On that basis, Mr Willigen pointed out that the addition of yet further costs for a wheel base extension was unjustified. And when Mr Till again responded that he “could only tell you what the costs are”, Mr Willigen observed that he was doing no more than being asked to comment on the data which he, as an accountant, had entered in the Vehicle Deal Profit forms.
Mr Till also said that the transactions under Tab R and Tab V were in fact the same transaction. On reflection, Mr Willigen accepted that the transaction under Tab V should be removed from his claim.
Save as to the concession as to the transaction under Tab V, I reject the respondents’ defence to these claims. I do so for the reasons given earlier in respect of Conquest payments: see at [121]-[123], [141], [164]-[172].
Claims W and X – All U Want Building Supplies
The respondents’ defence to these claims was based upon non-delivery.
Mr Willigen insisted that the client was ‘Dying to get hold of them’ but accepted he did not know the reasons for non-delivery and was prepared to abandon these claims for commission.
However, on the third day of the hearing, Mr Till gave evidence that the sale of those trucks had been completed. He produced a cheque for $771.23 (being the amount of the commission that was claimed) and it was handed to Mr Willigen.
Overview of commission claims
Contrary to the respondents’ submissions, Mr Willigen did not submit that he was entitled to commission based upon the Deal Profit form. Instead, he accepted that there may be occasions on which the costs of sales varied between the date of the purchase order and the date of delivery. What he contested was the nature of the additional costs which the respondents brought forward as costs that should be added as part of the cost of goods sold for the purposes of these commission claims.
Mr Willigen has established an entitlement to be paid the commission on the sales claimed under Tabs A-Z inclusive, save for the commissions claimed in relation to the transactions under Tabs P and V-Z.
Those other claims to commission were abandoned or have been paid.
On this basis the total of the commission claims that are made out is $13,485 (i.e. Total claims: $18,027 less claims P, V-Z of $4,542).
Bonus – $5,000
Mr Willigen claimed an amount of $5,000 due for by way of bonus from the 2016 year but not yet paid.
The Response provided by the respondents to the Fair Work Ombudsman’s request for information was not that the bonus was not payable, but rather that “this bonus relates to a previous employer and is irrelevant”. At the hearing no attempt was made to support that contention. The Response which was filed to the claim stated:
Bonus
The Applicant claims a bonus for 2016 of $5,000.00. The bonus was not payable because not all criteria set out in clause 3.1 of the Agreement for the payment of the bonus were met.
Clause 3 of the Agreement, which was titled Salary/Wages, provided that Mr Willigen would continue employment on a salary of $75,000 per annum (excluding superannuation) together with a “bonus/commission structure”. Clause 3.1 stipulated that a bonus of $5,000 would be paid annually where certain criteria had been met.
At the hearing, the respondents relied upon one of the criterion to the entitlement to payment of a bonus being as follows:
Finance Penetration: at least 30% of all Fuso truck and bus sales for each month have been financed internally.
The phrase Finance Penetration was not defined by the Agreement. Mr Willigen said that he had never been questioned at any stage in relation to finance penetration. I accept that evidence.
The respondents submitted that the entitlement to a bonus depended upon 30% of monthly Fuso truck and bus sales being sold on terms which provided for the purchaser to acquire the vehicle and “being financed internally”. The respondents chose to please that not all the criteria in cl 3.1 had been satisfied. No evidence was adduced by the respondents to make out the contention that this hurdle had not been met.
Mr Willigen’s evidence was that the entitlement of sales staff to payment of a bonus in the 2016 financial year had been settled in the course of a meeting attended by Mr Furnari and himself together with two other sales staff, Mr Garrett Griffin and Mr Andrew Stotz.
Mr Willigen’s evidence was that the staff bonuses payable in the 2016 financial year had been discussed openly and agreed at this meeting. He said that Furnari agreed to pay him a $10,000 bonus in that year which would be paid in two instalments:
(a)an immediate payment of $5,000, and;
(b)a further payment of $5,000 following the completion of the sale of two buses which were pending.
Mr Willigen’s evidence was that the sale of the two buses referred to above had been completed well before he had gone on leave.
Mr Willigen said that he was paid the first $5,000 instalment and that this was credited directly to his bank account.
Confronted with this evidence the respondents changed tack. They no longer contended that the bonus was not payable for the reason initially assigned; namely, that any bonus had been payable by another employer and was accordingly ‘irrelevant’.
Instead they produced a payslip for the week ended 27 February 2017 which proved the fact of payment of $5,000 by way of bonus and contended that this payment constituted a discharge of the obligation. Quite how the earlier denial of liability was justified was not explained.
When giving evidence, Mr Furnari then accepted that a payment of $5,000 had been paid to Mr Willigen in respect of the bonus. Mr Furnari said that:
And I paid that in – in – retrospectively in error. Because what I did find out in early 2017 is that Mr Willigen, along with two of his sale – one of his sales comrades, fabricated sale figures and profitability figures, which they did regularly.
Why Mr Furnari had allowed Mr Willigen to remain in employment from the time of discovery of the suggested fabrication was not explored.
Mr Furnari agreed that he had been present in court when Mr Willigen had given evidence of the conversation during which he had agreed to pay the three employees a bonus. Initially, he did not deny the conversation, instead stating that “I don’t recall any such discussion.” When Mr Furnari resumed giving evidence on the third day of hearing he then moved from a position of having no recall of the discussion and flatly denied that any such conversation had occurred. Again, he insisted that Mr Willigen’s evidence as to the conversation was “a complete fabrication”.
In re-examination, Mr Furnari stated that he had held a conversation with Mr Stotz in which he had agreed to pay him a $5,000 bonus. Mr Furnari said that he could not recall when the conversation took place. In the circumstances that Mr Furnari was examined in relation to his dealings with Mr Stotz, I have taken his declaration into account.
Mr Stotz’s declaration was essentially supportive of Mr Willigen’s claim for $5,000 being the balance of the bonus which Mr Furnari had agreed to pay. Mr Stotz declared that the payment of a bonus of $10,000 was dependent upon the sales team achieving the sale of two buses, which sales were achieved. Mr Stotz declared that he was present during a discussion held in February 2017 at which Mr Furnari, Mr Willigen, Mr Griffin and himself had been present. He declared that while Mr Furnari had decided to pay Mr Griffin and himself a bonus of $5,000, he had also agreed to pay Mr Willigen a bonus of $10,000. I accept the submission of counsel for the respondents that I should be cautious in relation to Mr Stotz’s declaration in circumstances where he was not called and I do not give it decisive weight; however, I am entitled to and do consider the version of events to which he has declared.
Mr Willigen asked Mr Till whether he had had a conversation with him about the payment of this bonus and that he had been asked to speak to Mr Furnari about it. Mr Till said that he knew nothing about it.
Counsel for the respondents accepted that on Mr Willigen’s evidence, another employee, Mr Griffin, had also been a party to the conversation relating to the bonus in which Mr Stotz had been a party. He said that Mr Griffin would not be called to give evidence but clarified that he was no longer an employee of the respondents. Mr Furnari said that Mr Griffin had recently left the respondents’ employment. I do not infer from the failure to call Mr Griffin that his evidence would not have assisted the respondents’ case.
I am satisfied that a meeting occurred between Mr Furnari and the sales staff at which it was agreed Mr Willigen would be paid a $10,000 bonus payable by two instalments each of $5,000. The payslip produced by the respondents on the third day of hearing undermined their original denial that any bonus was payable and lent some support to Mr Willigen’s evidence that he was to be paid a bonus of $10,000 of which half remains unpaid. While the payment had constantly been described as a bonus it is necessary to recognise that the entitlement to that $10,000 arose out of the discussion with Mr Furnari and was separate from the express terms of the Agreement. In substance, Mr Furnari agreed that in consideration of Mr Willigen and the other sales staff achieving the sale of the two buses he would pay each of them a bonus which, in Mr Willigen’s case, was a bonus of $10,000. Those buses were sold and, despite Mr Furnari’s agreement to do so, the second payment necessary to pay Mr Willigen a total bonus of $10,000 has not been paid.
Insofar as it might have been said that the entitlement to a bonus turned upon the exercise of discretion,[34] I am satisfied that that discretion had been exercised in favour of Mr Willigen and that the bonus was payable in accordance with the parties’ agreement.
[34]Cf James v Royal Bank of Scotland; McKeith v Royal Bank of Scotland [2015] NSWSC 243, [223]-[224] (McDougall J); [2016] NSWCA 36.
Given the series of shifts in position in relation to the claim for the balance of the bonus of $5,000 coupled with the evidence of the bank statement proving payment of the initial instalment of $5,000, I am satisfied and prefer the evidence of Mr Willigen over that of Mr Furnari that he agreed to pay him a $10,000 bonus in respect of the 2016 financial year, half of which has been paid. In the circumstances, I do not regard the Agreement as governing the entitlement to this bonus because I accept Mr Willigen’s evidence that the quantum of the 2016 bonus had been negotiated and settled at a meeting between Mr Furnari, Mr Willigen and the two other employees.
Unauthorised deduction – $1,106.40
Mr Willigen rightly complained of the respondents’ unilateral deduction[35] of the sum of $1,106.40 from amounts which were owing to him in relation to the costs of transportation of his motorcycle from his pay in contravention of s 323 of the Act.[36]
[35] Macken’s Law of Employment 8th Ed (2016), [10.50].
[36] Section 323 is a civil penalty provision.
Mr Champion for the respondents quite properly noted that this item was no part of the existing claim and that it was open to Mr Willigen to pursue a claim under s 323 of the Act to recover that sum. I agree.
Accordingly, it is not for me to further consider or identify the persons who were concerned in the decision to make that unauthorised deduction from Mr Willigen’s pay.
Since Mr Willigen has already abandoned so much of his small claim as exceeded the statutory cap of $20,000 and as the issue of this unauthorised deduction was not the subject of this claim, I do not take it into account in determining the relief to which he is entitled.
However, I will direct that a copy of this judgment be transmitted to the office of the Fair Work Ombudsman.
Conclusion
There will be an order that the second respondent pay Mr Willigen a sum of $20,000 made up as follows:
Item Amount Wages $ 5,769 Annual leave $ 530 Commission $13,485 Bonus $ 5,000 Sub-total $24,784 Statutory cap[37] $20,000
[37] See s 548(2)(a).
I certify that the preceding two-hundred and twenty (220) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 21 November 2018
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