Woodwinds @ Benwerrin v Hodder - [2014] QCAT 141

CITATION:

Woodwinds @ Benwerrin v Hodder [2014] QCAT 141

PARTIES:	Woodwinds Farm Pty Ltd t/as Woodwinds @ Benwerrin (Applicant)
v
Julie Hodder (Respondent)

APPLICATION NUMBER:

MCDO131-13

MATTER TYPE:

Other minor civil dispute matters

HEARING DATE:

15 January 2014

HEARD AT:

Coolangatta

DECISION OF:

Adjudicator Bertelsen

DELIVERED ON:

9 April 2014

DELIVERED AT:

Brisbane

ORDERS MADE:

1. The Respondent pay to the Applicant the sum of $12,303.92.

CATCHWORDS:

Ownership of horses – responsibility for feed and expenses for personally owned horses – misrepresentation as to ownership – responsibility for payment for feed and services for personally owned horses – outside ambit of employment – contractor arrangement – failure to pay

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Erica Bates, Director

RESPONDENT:

Julie Hodder

REASONS FOR DECISION

Application

The applicant Woodwinds Farm Pty Ltd (‘Woodwinds Farm’) claims $11,403.98 for a debt owing being unpaid invoices relating to agistment fees, spelling fees, horse feed, farrier and chiropractic services and other treatments and services for various thoroughbred horses provided to the respondent Julie Hodder by Woodwinds Farm at Benwerrin, Kerry Valley, Beaudesert.

Background and Evidence

Erica Bates is the managing director of Woodwinds Farm a family owned and operated thoroughbred breeding, spelling and pre-training facility. The business is operationally conducted by Shannon Bates, Erica Bates’ son and his wife Rebecca Bates. A number of trainers stable their horses at Benwerrin providing income for the family business. In September 2011 one such trainer Laurie Richardson scaled down his operation leaving some 20 odd stables available. Rather than rent the stables to another trainer it was decided to encourage clients of the business to retain their horses at Benwerrin with an in-house trainer thus increasing the return for each occupied stable.
Ms Hodder had been training horses in Kempsey NSW. Ms Hodder had sent one of her brood mares to be serviced by a Benwerrin stallion in 2011. Erica Bates had encouraged a couple of business clients to send horses to Ms Hodder to be trained by her at Kempsey. Ms Hodder expressed to Ms Bates a desire to relocate her training operation from Kempsey at about the same time as Erica Bates as looking for an in-house trainer.
Ms Bates offered Ms Hodder $1,000 per week together with accommodation and paid electricity to be an in-house trainer at Benwerrin. Erica Bates asserted the terms of the agreement, entirely oral, were:
a)    that Ms Hodder would relocate her training operation to Benwerrin;
b)    that Ms Hodder would be employed to train horses for Woodwinds Farm and Woodwinds Farm’s clients at Benwerrin;
c)    that Ms Hodder’s employment would include training horses for clients introduced by Ms Hodder;
d)    that Woodwinds Farm would be responsible for all costs including feed for its own horses, clients horses and clients horses introduced by Ms Hodder;
e)    that Woodwinds Farm would invoice clients for training of horses and derive an income from that;
f)     that Woodwinds Farm would provide the necessary physical assistance/staff for care of all horses including Ms Hodder’s own horses;
g)    that Ms Hodder would pay for all expenses relating to her own horses;
h)    that, though not expressed, impliedly Woodwinds Farm would not charge Ms Hodder stable rent for her own horses or shares in horses nor the use of facilities and sawdust.
These terms were predicated, according to Erica Bates on Ms Hodder’s representation that she had about nine horses in work and a couple spelling; that a number of clients who owned these horses were agreeable to Ms Hodder bringing these horses to Queensland; that the majority of Ms Hodder’s horses were owned by her client’s; that the training fee of $1,000 per week required 10 paying horses in stables to make the arrangement financially viable.
Ms Hodder stated she entered into an agreement to train race horses as an in-house trainer at Benwerrin commencing 26 December 2011; that as a licensed trainer she would move her training activities to Woodwinds Farm; that she would train horses owned by Woodwinds Farm and Woodwinds Farm client’s as well as any horses currently in her care for outside owners to be invoiced by and payment to be made to Woodwinds Farm; that as there were a number of horses owned by her she was to be permitted as a term of the agreement to be able to have such horses fully stabled and cared for at no cost to her on the basis that any prize money earned would be split 50/50 between her and Woodwinds Farm, the purpose being to cover costs incurred by Woodwinds Farm in the meantime.
Erica Bates stated that she and Ms Hodder needed to work out how Ms Hodder was going to pay for the feed for her share of horses and decided such could be worked out when Ms Hodder arrived at Benwerrin; that at no time did she say or lead Ms Hodder to believe that Woodwinds Farm would pay expenses or feed for Ms Hodder’s own horses; that Ms Hodder did not provide the ownership breakdown or names of her horses that arrived at Benwerrin in November/December 2011 until late January 2012; that of the 12 horses that arrived from Kempsey Ms Hodder owned or leased shares totalling the per horse equivalent of 8.1 and she Erica Bates owned or leased 0.95 of a per horse equivalent; that Ms Hodder’s clients were only paying for the equivalent of 2.95 horses. Erica Bates provided a breakdown table of horses names and shares which was not disputed. It became apparent to Erica Bates at this point that Ms Hodder would not be able to pay for so many horses on her wage. According to Erica Bates it was only upon observing her dismay that Ms Hodder offered her 50 per cent of any prize money from her horses until she could afford to pay her way; that she accepted on the basis that any prize money would be considered a contribution towards Ms Hodder’s horses feed; that acceptance of any prize money in no way retired the accruing debt being incurred in feeding and providing other services to Ms Hodder’s horses. Erica Bates asserted she was constantly discussing feed and other costs with Ms Hodder in an effort to get payment.
Ms Hodder stated the cost of feed was never discussed as it was being covered by Woodwinds Farm share of prize money earned and fees collected. Ms Hodder asserted that pursuant to the original agreement she split the first of the prize money in February 2012 allocating to Erica Bates $1,200; that then further prize money was earned, withdrawn by her from her prize money account and paid in cash to Ms Bates. She stated that Woodwinds Farm was not able to secure additional horses for training; that without additional paying owners Woodwinds Farm costs would have been difficult to recoup; that such however was not her concern; that she was only an employee.
Erica Bates stated only one $1,200 share of prize money was ever received and that was in February 2012. No cash payments were ever received. Erica Bates stated that as she felt the arrangement with Ms Hodder was not working she asked Ms Hodder in March 2012 if she would prefer to be paid as a subcontractor rather than as a PAYG employee; that this would entail paying Ms Hodder $1,100 inclusive of GST per week; that PAYG instalments held to that time could be utilised as a contribution towards feed and expenses owed by Ms Hodder; that Ms Hodder readily accepted this revised arrangement making the point that she could not claim GST as an employee for those expenses she had paid direct for her horses such as farrier and chiropractor. Erica Bates stated she reworked Ms Hodder’s engagement from day one at $1,000 per week plus GST and applied the consequent book credit towards Ms Hodder’s horses expenses; that from there she expected continued contributions from Ms Hodder to reduce her accruing debt; that no further contributions ever materialised. Erica Bates produced Westpac bank statements recording the final PAYG wage of $809 on 21 March 2012 and the initial contractor payment of $1,100 on 3 April 2012.
Erica Bates asserted she then began to receive negative reports about the condition of the stables, care of the horses, Ms Hodder’s behaviour at Beaudesert race track and her lack of presentation as a trainer; that as the situation was deteriorating, the friendship strained and financial drain unsustainable it was time to part company. On 26 April 2012 a meeting was held at the farm. Those present were Erica Bates, Julian Bates, Shannon Bates, Rebecca Bates, Ms Hodder and Megan Hodder (Ms Hodder’s daughter). It was decided at the meeting that Ms Hodder leave Benwerrin which she did on about 28 April 2012. Erica Bates stated that shortly prior she gave Ms Hodder an estimated invoice for feed and some services in the sum of $5,556 and that at the time of the meeting on 26 April 2012 Ms Hodder did not dispute that she owed money; that Ms Hodder offered to repay monies outstanding by training Little Fou, a gelding she owned 50/50 with Erica Bates free of charge. That was refused with Erica Bates offering to buy the half share from Ms Hodder to offset monies owing. That was also refused with Ms Hodder then buying out Erica Bates half share; that she pursued Ms Hodder for those monies but that when it came to compiling monies owing in detail it was found to be a good deal more.
In September 2012 Woodwinds Farm sent a letter of demand to Ms Hodder to which she replied by letter dated 20 September 2012 stating in part ‘I have never engaged you to provide the services you claim in your letter’. Erica Bates stated she employed Safeguard Collections to recover monies owing by Ms Hodder; that only a week after being contacted by Safeguard in December 2012 Ms Hodder raised an invoice dated 21 December 2012 for a sum of $9,485 and sent it to Safeguard.
The invoice was for the transport of 11 horses Kempsey to Beaudesert $2,100, transport of six horses Queensland to Grafton NSW $1,985, Beaudesert Race Club Track Fees for 14 horses (after deductions) $1,800 and Megan Hodder’s wages 16 weeks $3,600. At the foot of the invoice appeared the words ‘please pay within seven days NB all receipts can be produced within seven days on request’.
Erica Bates produced to the Tribunal email correspondence dated 6 January 2014 from the Beaudesert Race Club indicating that Ms Hodder still owed the club $1,300 for outstanding track training fees. Also produced was email correspondence from Racing Queensland dated 18 December 2013 stating that Ms Hodder was only ever granted a one month visiting trainers permit from 26 December 2011 to 26 January 2012. Though a three month permit was requested it was declined under Australian Rule AR80. No further application was made by Ms Hodder.

Evidence of Rebecca Bates

Rebecca Bates managed the staff at Benwerrin and was intimately involved in the lead up to Ms Hodder’s employment at Benwerrin. She stated there was never any agreement to pay expenses for Ms Hodder’s horses in exchange for 50/50 share of prize money; that such an arrangement was commercially illogical; that Ms Hodder’s engagement as an in-house trainer would allow for the build up of an in-house training business; that Ms Hodder was always aware that she would have to pay for her own horses; that Ms Hodder indicated that as the majority of horses she was training belonged to clients that she could well afford to pay for a couple of her own horses; that she only became aware of the true ownership of the majority of Ms Hodder’s horses in late January 2012; that in her role as farm manager hiring and managing staff there was never any agreement to employ Megan Hodder; that as far as she was aware Megan Hodder was a TAFE student; that on 13 April 2012 she and her husband Shannon Bates discussed with Ms Hodder the money she owed at least for feed for her horses; that she attended the meeting of 26 April 2012 also attended by Shannon Bates, Julian Bates, Erica Bates, Ms Hodder and Megan Hodder; that at this meeting it was decided that Ms Hodder leave Benwerrin.

Evidence of Shannon Bates

Shannon Bates was the general farm manager. He and his wife Rebecca Bates were responsible for the operation of Benwerrin. He stated that when Laurie Richardson a lessee in-house trainer at the time of purchase of Benwerrin decided to scale back an opportunity arose for Benwerrin to employ its own in-house trainer; that some 20 stables became available; that retention of young horses with an in-house trainer would value add and generate additional income. He further stated an offer of $1,000 per week plus accommodation was made to Ms Hodder who chose the farm cottage for herself and her daughter Megan; that there was never any discussion or agreement about Woodwinds Farm paying for feed and expenses for any of Ms Hodder’s horses; that such would have made the proposal unfinancial and unworkable; that staff was provided to Ms Hodder to assist her; that Megan Hodder was not employed nor was there any discussion about employing her in the original agreement; that at the time Benwerrin had six full-time staff and two-three volunteer farm stay workers. Shannon Bates was aware of an approach for Megan Hodder to be employed but it was declined.
Shannon Bates stated he first heard of the idea of a 50 per cent of prize money in late January 2012 when his distressed mother Erica Bates informed him most of the horses brought to Benwerrin were Ms Hodder’s personally owned horses; that part of Ms Hodder’s role was to source new clients and horses; that she attracted no new business at all while he managed to attract six new race horses and clients; that to a significant degree Woodwinds Farm was paying Ms Hodder to train her own horses; that the primary issue was the cost of feed for eight extra horses as well as shoeing and chiropractor bills booked up by Ms Hodder for her horses; that belatedly Ms Hodder began to pay farrier and chiropractic bills for her horses.
Shannon Bates said service provider complaints were received as well as phone calls from persons pursuing debts from Ms Hodder. He began receiving negative reports from other trainers and track riders about Ms Hodder’s behaviour at Beaudesert Race Track. Shannon Bates confirmed the changeover from PAYG wage earner to contractor thus making available the resulting credit as an offset to monies owed by Ms Hodder. He stated that on 13 April 2012 he and his wife Rebecca Bates spoke to Ms Hodder about the accrued debt and that she admitted she owed money for feed; that he attended a meeting on 26 April 2012 also attended by Erica Bates, Julian Bates, Rebecca Bates, Ms Hodder and Megan Hodder; that it was agreed that the business arrangement with Ms Hodder would cease; that Ms Hodder suggested she would pay off her debt in training fees for Little Fou a race horse she owned 50/50 with Erica Bates. He stated that Ms Hodder removed her belongings and horses from Benwerrin on 28 April 2012. Shannon Bates stated Ms Hodder was only ever the holder of a visiting trainers licence for the three month period 3 January 2012 to 3 April 2012 and that as such the whole Benwerrin operation could have been placed in jeopardy.

Statement by Suzanne Kathleen Young

Ms Young was Woodwinds Farm accountant. She provided a statement that as advisor she was involved in the decision to employ Ms Hodder; that there was never any discussion about taking on payment of expenses for Ms Hodder’s horses in return for 50 per cent prize money; that she would not have supported such an unprofitable proposal; that the business could not afford to make such a generous and illogical proposal; that the arrangement was that Ms Hodder’s personal horse outgoings were to be covered by her and that Benwerrin was to provide a stable and sawdust for her horses.

Evidence of Megan Hodder

Megan Hodder stated that she was aware of her mother’s agreement with Woodwinds Farm; that Woodwinds Farm was to pay for all her mother’s horses; that there was never any agreement to pay some $5,000 to Woodwinds Farm. She stated she never discussed her mother’s agreement with Erica Bates; that she recalled the meeting of 26 April 2012 but not any discussion about training fees and Little Fou at that meeting. She recalled that latter Rebecca Bates said words to the effect ‘Take Little Fou’.

Statements by Tina Rogers, Gordon Yorke, Amanda McLoughlin Mullins and Sherry Dean

The statements by these persons are generally highly emotive and more in the nature of character references which at the same time insinuate some sort of culpable conduct on the part of Woodwinds Farm. None of the statements disclose any direct involvement in the lead up to Ms Hodder’s engagement at Woodwinds Farm but rather appear to rely on information communicated to them.

Correspondence and Statement by Steve McMahon

The correspondence and statement produced to the Tribunal indicate that Mr McMahon was simply acting as some sort of representative for Ms Hodder by virtue of his position as CEO of New South Wales Trainers Association Limited. Nothing in that material indicates any involvement by Mr McMahon during the time of the lead up to Ms Hodder’s engagement nor during the course of Ms Hodder’s engagement.

Offset Asserted by Ms Hodder

Ms Hodder asserted an offset in the form of an invoice dated 21 December 2012 and detailed in paragraph 12 of this decision. There were four items.
Transport of 11 horses Kempsey to Beaudesert $2,100
Ms Hodder arrived at Benwerrin on 26 December 2011. According to Erica Bates in November 2011 prior to Ms Hodder’s arrival three horses had arrived at Benwerrin carried by Southern Cross Horse Transport Company. In early December 2011 the company complained that Ms Hodder’s payment cheque had bounced. Erica Bates paid the bill. She said Ms Hodder then asked her to arrange a transport company to bring up the rest of the horses. Erica Bates did that on her account with Sydney Horse Transport with Ms Hodder agreeing to pay the carriage. The transport company invoice for $2,100 came to Erica Bates who passed it onto Ms Hodder who asked if Erica Bates could pay the invoice initially and she Ms Hodder would repay by deductions of $300 per week for seven weeks from the $1,000 per week training fee to be paid to Ms Hodder. The sum of $300 was deducted each week for seven weeks commencing on Ms Hodder’s first pay on 2 January 2012. These deductions are recorded in the copy wages book pages filed in the Tribunal by Erica Bates. After payment in accordance with that agreement Ms Hodder’s wage reverted to $1,000 per week without deduction. Ms Hodder did not provide any evidence in support of her contention that transport companies invoice ought now be reimbursed to her.
Transport of 6 horses Queensland to Grafton $1,985
This claim is apparently referrable to Ms Hodder’s removal of horses from Benwerrin to Grafton at the time her engagement ceased about the end of April 2012. Ms Hodder did not produce any evidence of agreement on the part of Woodwinds Farm to pay for the removal of her horses to Grafton or elsewhere.
Beaudesert Race Club Track Fees for 14 Horses (after deductions) $1,800
No detail of how this sum was arrived at was produced to the Tribunal. Erica Bates stated she had already allowed $660 on account of Beaudesert Race Club Track Fees based on available records; that despite requests no further records have been produced to substantiate an alleged outlay of $1,800.
Megan Hodder’s wages 16 weeks $3,600
Other than a bare assertion by Ms Hodder that it was necessary for Megan to help her there was no evidence produced that any sort of employment structure was in place as between Ms Hodder and Megan Hodder or as between Megan Hodder and Woodwinds Farm. From Woodwinds Farm perspective there was no record of Megan Hodder ever being employed by Woodwinds Farm. Quite the opposite it appears Erica Bates stating that Ms Hodder proposed that Megan be employed at Benwerrin that such proposal was declined.

Conclusions

Ms Hodder commenced employment as an in-house trainer at Benwerrin on 26 December 2011 at $1,000 per week less tax plus accommodation and paid electricity. She brought with her 12 horses of which in excess of eight were personally owned or leased by her. That was never denied by Ms Hodder. Rather Ms Hodder asserted that as part of the employment agreement Woodwinds Farm would look after her horses for a 50 per cent share of prize money that might be earned in the future. Any such arrangement at the outset was denied by Erica Bates, Shannon Bates and Rebecca Bates. Woodwinds Farm accountant Ms Young who advised Erica Bates stated that in the lead up to Ms Hodder’s arrival there was never any discussion of Woodwinds Farm paying all expenses for Ms Hodder’s personally owned horses for a return of 50 per cent of prize money that might prospectively be earned; that she would not have supported any such business plan. Ms Hodder was provided with stables and sawdust for her horses. The purported gamble on Ms Hodder’s hitherto unknown horses bringing prize money in the future is totally at odds with the otherwise conservative accountants advice based approach adopted by Woodwinds Farm in employing an in-house trainer to build the business. The Tribunal finds it unlikely such a generous and illogical term was ever agreed to in the context of Woodwinds Farm primary purpose in employing Ms Hodder namely to increase the number of owners placing and keeping their horses at Benwerrin for in-house training. The Tribunal finds the terms of employment and subsequent contractor agreement were those asserted by Erica Bates; that it was always the case that Ms Hodder would pay her own way for feed and expenses for her own horses; that the debt Woodwinds Farm has pursued here is entirely outside the ambit of any employment/contractor agreement.
The Tribunal accepts based on the evidence of Erica Bates, Shannon Bates and Rebecca Bates that Woodwinds Farm was not aware of the ownership of horses brought onto Benwerrin by Ms Hodder until late January 2012; that any further agreement to accept a 50 per cent share of prize money was only ever made in late January 2012 in the context of recouping some money for the accruing costs associated with the large number of horses personally owned/leased by Ms Hodder and not as a waiver for accrued or accruing debt.
Erica Bates admitted one 50 per cent payment of prize money at $1,200. Though Ms Hodder asserted further cash withdrawals from her prize money account no records were produced in support of such withdrawals. Nor did Ms Hodder give any indication of what these sums were. The singular payment of $1,200 accords more with what must have been some desperation on the part of Woodwinds Farm in respect of continually accruing debt. That Woodwinds Farm provided feed and other expenses for Ms Hodder’s eight plus horses through to late January 2012 initially accords with Erica Bates and Woodwinds Farm generally understanding that most of the horses brought to Benwerrin by Ms Hodder would be horses owned or leased by clients of Ms Hodder and not owned by Ms Hodder personally and that feed and expenses for Ms Hodder’s horses variously described as a couple or a few would be well within Ms Hodder’s financial means she being on a wage of $1,000 per week. It was not a case of Ms Hodder never engaging Woodwinds Farm to provide the feed and services it did provide as she latterly asserted in September 2012 but rather a case of Woodwinds Farm providing feed and services in good faith for horses initially thought to have been owned/leased by Ms Hodder’s clients but which were in fact her own horses.
In late March 2012 Ms Hodder’s employment was revised to record her as an independent contractor resulting in an available credit to be utilised against accrued fees and expenses for Ms Hodder’s horses being met to that point by Woodwinds Farm. The utilisation of funds that thus became available towards feed and expenses was not challenged by Ms Hodder nor was the reasoning behind the change. This alone could be construed as an admission of debt for feed and other expenses.
Neither the detail nor the quantum of invoices making up the debt were challenged by Ms Hodder other than monies allegedly owing for Beaudesert Race Club Track Fees. That allegation has been discredited by correspondence from Beaudesert Race Club stating $1,300 as owing by Ms Hodder and Erica Bates evidence of $660 credit based on limited evidence of payment provided by Ms Hodder. Rather than challenge the debt Ms Hodder simply said she was out of pocket too.
Specific charges have been made for specific supplies (feed in particular) and specific services (shoeing, chiropractor). It is not necessary for the Tribunal to refer to any formula or schedule to assess the efficacy of the debt. Proper credit has been applied to the totality of invoices firstly PAYG retention $3,492 and secondly prize money $1,200 a total of $4,692 resulting in a net debt of $11,403.98 accrued during the course of Ms Hodder’s four month engagement.
All the sums claimed as offsets were characterised by a chronic lack of evidence from Ms Hodder and for the reasons stated in addressing the offsets as asserted by Ms Hodder the Tribunal fully dismisses those offsets.
The claim has been brought over a year post events. The hiatus was unnecessary. The Tribunal in the circumstances assesses six months interest as reasonable ie $570.19.
The Tribunal order will be that the respondent pay to the applicant the sum claimed $11,403.98, interest $570.19, application fee $275.00 service fee $41.00 and CITEC transaction fee $13.75 a total of $12,303.92.