Xu Chu LiuvBrillico Pty Ltd T/A Ugg Direct

[2018] FWC 4797

[2018] FWC 4797

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.394—Unfair dismissal

Xu Chu Liu

v

Brillico Pty Ltd T/A Ugg Direct

(U2018/4694)

COMMISSIONER WILSON MELBOURNE, 17 AUGUST 2018

Application for an unfair dismissal remedy; jurisdictional question – whether Applicant an employee or independent contractor.

[1] Through an application for unfair dismissal remedy made to the Fair Work Commission on 7 May 2018, Xu Chu Liu claims both that she was employed by the Respondent, Brillico Pty Ltd, trading as Ugg Direct (Brillico or Ugg Direct) at their retail premises in South Wharf, Melbourne as well as that, being a person protected from unfair dismissal, she was unfairly dismissed by the Respondent. All such contentions are rejected by Brillico. While the Respondent does not contest that there was a relationship between the two and that, as part of that relationship, Ms Liu provided work of some kind for the store, Brillico argue that the true nature of the relationship between it and Ms Liu should not be characterised as employment and that consequently she was neither an employee or a person protected from unfair dismissal within the meaning of the Fair Work Act 2009 (Cth) (the Act).

BACKGROUND AND EVIDENCE LED BY THE PARTIES

[2] The evidence before the Commission is from the Applicant, Ms Liu herself, and from Mr Ran Hong on behalf of Brillico, as well as from the numerous documents and text messages that have been provided in the course of preparing for hearing.

[3] Ms Liu appeared for herself in the hearing conducted by me, and Ugg Direct was represented by Samuel Burt, of Counsel. Permission for legal representation of the Respondent was granted pursuant to s.596(2)(a) of the Act pertaining to the efficiency that such representation will bring to the matter taking into account its relevant complexity. Permission was not granted pursuant to s.596(2)(b), pertaining to the inability of the Respondent to represent itself, with the Commission not being persuaded that the Respondent or its directors would be unable to present their case effectively if called upon to do so.

[4] Ms Liu moved to Melbourne, Australia in 2001 when she commenced studies as an international student at RMIT, at the age of 23. Her husband Miao and she knew the operators of Brillico, Jiayi Deng and her son, Ran Hong. Following discussions between the two in 2013 a decision was made to commence a retail business at the South Wharf DFO complex. While there is disagreement between the parties as to who initiated the process or chose the name of the business there is common evidence between the two that Ugg Direct commenced trading from South Wharf in about May 2013 and has operated from those premises continuously ever since. There is also common evidence that Ms Liu has performed work of some description for the business during the period.

[5] The common matters of evidence between the parties are, (in all cases without me making a determination at this stage of the decision as to whether this was a termination of employment for a termination of contract for services):

• that Ms Liu provided work to the business since it opened in May 2013 until she was informed that the company intended to terminate her services on 17 April 2018;

• that there is no written contract between the parties about their relationship;

• that the work performed by Ms Liu is largely as set out within Ms Liu’s witness statement (with the elements not agreed struck through):

“16.1. Organising staff schedules;

16.2. Bookkeeping for our business;

16.3. Payments of rental, stock, telephone bills, wages, superannuation, BAS;

16.4. Working with supplier, accountant, and centre management;

16.5. Working a minimum of 4 days a week;

16.6. Working 7 days a week non-stop while Ran Hong or Jiayi went on holidays, at least once a year;

16.7. Serving customers;

16.8. Selling boots;

16.9. Resolving customer orders, complaints and quality issues;

16.10. Picking up stocks from factories;

16.11. Meeting with factory managers regularly.” 1

• that Ms Liu would pay herself from money in the cash register, taking out $200 for each day worked;

• in addition to performing work in and around the retail premises Ms Liu would also market Ugg boots online through the Chinese language WeChat social networking and payment app and that she was entitled to keep at least part payment for those sales, noting that there is a contest between the parties about how that relationship came about or whether it was as part of Brillico’s business or owned by Ms Liu;

• that Ms Liu was an employee for at least the period between 1 January 2017 to 30 June 2017, which admission on the part of the Respondent comes about because there is a PAYG tax certificate for at least that period. 2

[6] It is also matter of common evidence that Ms Liu’s services, whether as an employee or contractor were concluded by Brillico with a letter in the terms set out below. The evidence before the Commission includes that the letter had been authored by the company’s lawyer, Susan Dai, on Mr Hong’s instructions and was sent to Ms Liu by Mr Hong via email and by Jiayi Deng via WeChat:

“Dear Ms. Liu,

Re: BRILLICO PTY LTD

TRADING AS UGG DIRECT

We refer to the above matter.

We have discovered recently that you have registered a company named Brillianco Pty Ltd which is similar name of my company Brillico Pty Ltd.

My company has retained you to manage our business since May 2013. But your recent conduct is alarming and threatens to disadvantage my company’s ongoing operation. I do not have confidence to continue our relationship. Therefore I have to terminate my authority from the date of this letter.

I know that it is heartbreaking to see our long established friendship be ended in this fashion. Today’s situation is the result of your improper conduct in managing my business over a long time. I have endured significant financial difficulties due to your husband’s conduct which resulted in restraining actions against our shop in 2015. However, I am not in a position to tolerate your disloyal conduct by way of registering a company that appears set on competing with my business.

I request you not to embark any conduct which will interfere with my business and its operations. I also inform you that my previous authority for you to access to our company’s bank account and relevant authority have been fully withdrawn and terminated from the date of this letter.

I am sure I have made it clear why I have taken these steps and wish you to respect my decision. Any conduct which interferes with the daily operations of Brillico Pty Ltd at DFO South Wharf shall be referred to the authorities without delay, which I trust will be unnecessary.

Should you require further information in this matter or you have objection to this request, please do not hesitate to contact me directly.

Yours faithfully,

Deng Jia Yi

Director”

[7] As referred to above, the matter to be determined in this decision is whether Ms Liu was an employee of Brillico with the consequential question then being whether she had completed the minimum employment period. The overall circumstances between the two, in which work of some form was completed continuously between May 2013 and April 2018, is a finding that Ms Liu was an employee which would also lead to a finding she had completed the minimum employment period.

[8] It is instructive to the conclusions reached in this decision to refer to and consider the way that each protagonist describes their respective relationship; who motivated the commencement of the relationship; and how it progressed in its early stages:

• From Ms Liu’s witness statement

“6. Sometime around January in 2013, I had discussions with my husband Miao that if we wanted to go ahead with the Ugg boot business, I would like to invite Jiayi and her family to share my business and he agreed. Then I discussed my business plan with Ran Hong and Jia yi.

7. Ran Hong and I had agreed that we both would run the Ugg boot business (our business) together.

8. Ran Hong contacted the DFO South Wharf leasing manager, Tammy, in January 2013. Later Ran Hong and I met Tammy for the first time at DFO South Wharf and told her we were business partners and our idea was to sell Ugg boots. She was happy to accept our offer and we started our application for Shop lease.

9. On or about 31st January, 2013, I was invited to lease a shop known as shop B-111, Direct Factory Outlets South Wharf. The Invitation is was a letter dated 31st January 2013 from Colonia First State to Ran Hong signed by Tammy Schello on behalf of the landlord (Invitation).

10. After I received the Invitation, Ran Hong and I decided to name a company called Brillico Pty Ltd (Brillico), the Respondent. I chose the name “Brillico”, by combining the word “brilliant” with “co” which are the initials of my two children. I used Brillico as the applicant to this lease. Jiayi is the only director and only shareholder. The reason for this was that the jewellery shop was under her name and so she has retail experience and I did not. I considered that it would be easier for Colonial First State to approve Brillico as a tenant with her retail experience. However, Rang Hong and I would invest equally in the company. When our business started, we divided the responsibilities equally between ourselves. Ran Hong would work on Tuesday, Wednesday, Thursday, Friday and Saturday. I would work on Monday, Tuesday, Thursday, Friday Night and Sunday.

11. At the end of March 2013, a lease was entered into between Brillico and Colonial First State as landlord for the premises at Shop B-107, Direct Factory Outlets South Wharf (the shop). The lease was for a term of 5 years commencing 27th May, 2013 and expiring on 26th May, 2018. The lease was signed by Jiayi on behalf of Brillico and Ran Hong as a guarantor. Miao told me that he saw his signature there as a guarantor too. A person by the name of Jenny Ly is said to have witnessed all of the signatures. Jenny Ly is Jiayi’s daughter-in-law, Ran Hong’s wife. However, Miao told me that he did not sign as a guarantor and the signature appearing in the lease above his name, which was witnessed by Jenny Ly, was not his.

12. Miao told me that someone had forged his signature as a guarantor.

13. After Ran Hong and I were given the lease, we needed to do the shopping fittings as it was a brand new shop. At that time, Ran Hong did not have enough money. So I agreed that I would pay for the shopping fittings and other fees for the shop first, and when Brillico has the money, Brillico could pay me back.

14. Ran Hong and I would work and be paid wages on one hand and we would also be equal partners.”

• From Mr Hong’s witness statement

“6. In or about late 2012 to early 2013, I heard that DFO was extending and I was interested in leasing a shop there. I spoke with the leasing agent at South Wharf DFO, her name was Tammy.

7. On or about 31 January 2013 I received an invitation to lease a shop at DFO.

8. I discussed the proposed new lease with Linda and her husband, Miao.

9. I had an idea to sell Ugg boots from Miao. Miao is a tour guide and bus driver for Chinese tourists in Australia. He told me that many Asian tour groups come to DFO and the Ugg boots are extremely popular.

10. In or about January 2013 Linda and I both went to visit Susan Dai solicitor at 250 Queen Street, Melbourne to discuss possible partnership and business.

11. Susan suggested we use the name Brillico. Susan advised that if we were to own a business together, we should set up a partnership and each own equal shares. This would mean sharing liability and responsibility of the business. At this meeting Linda told me and Susan that she had decided she did not want to go into partnership because she did not want the liability but she wanted to help.

12. I could not afford the liability of a new business without a partner. After Linda told me that she did not want to go into partnership, my mother agreed to take the lease in her name. My mother then allowed me to work as an employee and manage the business for her.

13. I agreed with my mother that I would look after the day to day management of the business that she owned and if l worked at the shop I could pay myself $200.00 a day.

14. I agreed that the profits go to my mother but if I put money into the business I could take a share of the profits as well.

15. Linda offered to help me. Linda helped me manage the business.

16. At first Linda and I agreed that she was not to be in the store because we did not want the Chinese tour guides to know the connection between the tour groups brought in by Linda's husband and the store.

17. Linda was to assist me with behind the scenes, bookkeeping and ordering stock and Miao would bring his tour groups to the store.

18. Linda assisted me in looking for supplies of Ugg boots. Linda also assisted me in organising staff schedules, bookkeeping, payment of rental, accounts, super.

19. This arrangement was entirely Linda's decision. She did not want to own the business because of the liability and she did not want to be an employee because at the time she was still receiving Centrelink.

20. I had complete trust in Linda and let her have access to the company accounts. I gave her complete control of the books which were my responsibility. She liaised with the accountant.”

[9] Having read Mr Hong’s witness statement, Ms Liu then replied in a further witness statement:

“5. I refer to paragraph 12. This is not a statement of fact or evidence which is relevant to unfair dismissal. In any case, The respondent has not provided any document or evidence in support. It is not believable for Ran Hong to say that Jiayi could be said to allow her son Ran Hong to work as an employee and manage the business for her as if to imply that Ran Hong needed permission from his mother. Ran Hong is her only son. Of course Jiayi would allow her son to manage the business. But I was also a manager.

6. I refer to paragraph 13. Both Ran Hong and I agreed to be the managers of Brillico. Ran Hong was not capable of running the business on his own. Ran Hong, Jiayi and I went to ANZ Chinatown branch to open the accounts for Brillico on 23rd April 2013. Both Ran Hong and I were authorised to access the account as managers. Both Ran Hong and I were issued a business debit card. These were recorded in the ANZ system. It was wrote clearly my position as manager.

7. I could not be a casual employee if I was also authorised to access the business accounts of Brillico from April 2013.

8. I could not be a casual employee if I was also a manager and a key financial member of Brillico. I could not come and go as I liked and my working hour are consistently structured. As a reliable and key full time employee I was given business debit card from Brillico. No casual employee or non-employee I know of was ever given a business debit card by Brillico. Now produced and shown to me … is a copy of the business debit card given to me by Brillico.

9. I refer to paragraph 14. This is not a statement of fact or evidence which is relevant to unfair dismissal. In any case, Ran Hong’s agreement that “the profits go to my mother” is a nonsense since Brillico has only one shareholder and Jiayi is automatically entitled to all the profits of Brillico anyway without the approval of anyone. Jiayi did not need and does not need an agreement from her son to be entitled to profits of Brillico. This shows that Ran Hong and Jiayi do not understand simple company law. In any case, the respondent has not provided any document or evidence in support.

10. Ran Hong further says “but if I put money into the business I could take a share of the profits as well.” This is not correct and contradicts simple company law. If Ran Hong “put money into the business”, he could not “take a share of the profits.” He is not a shareholder and it would simply be a debt owed by Brillico. In any case, the respondent has not provided any document or evidence in support.

11. I refer to paragraph 15. I did not offer to help Ran Hong. I was employed by Brillico to co manage Brillico on a full time basis. It is unbelievable that I would offer 5 years of my life for free as if I was part of Jiayi’s family. My position is very different from Ran Hong who is the son of Jiayi.” 3

[10] Frankly, the state of evidence on both sides is unsatisfactory and more effort should have been taken by the parties to resolve some of the critical questions that need to be determined. The evidence provided by both Ms Liu and Mr Hong is, at times so diametrically opposed that it is likely neither are being completely truthful or accurate to the Commission. This is also a case in which the Commission should observe that each party likely did not bring forward the full evidence available to them from several potential witnesses on the subjects that need to be determined, for the reason that the evidence from the respective witnesses likely would not have assisted them.

[11] In Ms Liu’s case she did not bring forward her husband, Miao, who likely would have assisted the Commission with a greater understanding of the entrepreneurial activity of him and his wife, if that is its correct characterisation. The issues that Miao might have assisted the Commission with are the contentions put forward by the Respondent that the couple’s involvement in two companies called Aust. Wonderful Coach Tour Pty Ltd and Brillianco Pty Ltd is evidence of Ms Liu’s status as an independent contractor. Ms Liu puts forward that she is the sole shareholder and Director of Aust. Wonderful Coach Tour Pty Ltd because her husband is not eligible to be so and that the company in any event has not made any money. She says about the second company, Brilliandco that it has only recently started trading.

[12] Ms Liu also did not bring forward sufficient evidence about her taxation arrangements to support many of the contentions she put forward in her witness statements about her income, and in particular about the sum of earnings she received from Brillico over the years. The fact of the matter is that the Commission is left with her contentions about income but no corroborative evidence, when presumably she has such documents at hand. In particular her witness statement makes contentions about the income received over a number of years from Brillico as follows:

“21.1. For the year to 30 June 2014, I was paid $42,950.00.

21.2. For the year to 30 June 2015, I was paid $37,600.00.

21.3. For the year to 30th June, 2016, I was paid $38,450.00.

21.4. For the year to 30th June, 2017, I was paid $40,050.00.

21.5. Now produced and shown to me … is a copy of the working time and wage payment records from 3 June 2013 to 30 June 2018 and a copy of group certicate (sic) for the year ening (sic) 30th June 2017.

22. For the year to 30 June 2018, I was paid $31,500.00. At no time did Ran Hong or Jiayi make an issue about for my wages.”

[13] The sole PAYG certificate which has been provided by Ms Liu to the Commission does not even support the above contentions. The certificate purports to be one from Brillico, showing that the gross payments made by the company to Ms Liu in the period 1 July 2016 to 30 June 2017 were $20,800 with PAYG tax of $2938 being withheld. Notwithstanding that the company does not have any explanation for how the PAYG certificate came to be issued or that it is purported to have been signed by Mr Hong, a greater issue emerges that the gross payments referred to within the certificate do not even reconcile with those said by Ms Liu to have been received by her from the company in the relevant period. Taking into account the assured confidence with which Ms Liu conducted her case in the Commission, both in the prehearing stages as well as in the course of giving her evidence and her advocacy to the Commission, it is reasonable that the Commission infer that the reason the full suite of taxation documents available to Ms Liu were not provided to the Commission was that they would likely not have assisted her case.

[14] In Brillico’s case they did not bring forward the owner of the business Jiayi Deng who sat in the back of the hearing room listening to the evidence of Mr Hong and Ms Liu, assisted by a translator retained by the Commission.

[15] Given that both witnesses at times relied upon things said to have been spoken or done by Ms Deng, it can be readily inferred that had she been asked to give evidence then at least some parts of that evidence would not have assisted the Respondent. Ms Deng’s son, Ran Hong says that when Ugg Direct was being set up and after Ms Liu had declined to be a partner in the business that he could not afford to be an investor either. He says that his mother then agreed to take the lease in her name with him being allowed to work as an employee and manage the business for her, paying himself $200 a day if he worked at the shop. His evidence in relation to this matter is included in the passage set out above. Without a hint of irony Mr Hong claims that he is an employee but that Ms Liu is an independent contractor even though he appears to be remunerated by Brillico through payments taken in the same manner and in a not dissimilar arrangement as claimed by Ms Liu to have been put in place for herself.

[16] Evidence from Ms Deng on these subjects could have cast light on the subject of the relationship her company had with Ms Liu from the time the business started. It is likely she was not brought forward to give evidence because it would not have assisted the Respondent’s case.

[17] Brillico also endeavoured to rely upon things advised to it by its lawyers at the time of starting the business (not the ones involved in these proceedings), as well as matters advised by its accountant. In relation to what was said about the setting up of Brillico Mr Hong puts forward the matters set out above, including that in the course of a consultation with his lawyer and Ms Liu that in the course of Ms Dai advising on the merits of entering a partnership, Ms Liu declined because of the personal liability it would bring.

[18] Given that Mr Hong so openly refers to the advice given in the meeting with the company’s lawyers, and in particular that Ms Liu did not wish to invest since she did not want the liability that came with partnership, no question of legal professional privilege can reasonably be expected to sit over that advice, which in any event is Brillico’s privilege, when, if what Brillico says was advised is accurate, evidence on the subject from the solicitor quoted in the witness statement may well have assisted its case. If what is quoted about the meeting is accurate, Ms Dai may have been able to give evidence that Ms Liu did not want to be part of the business or contribute to it as a business person.

[19] The same may be said for those parts of Mr Hong’s witness statement referring to Brillico’s accountant, with Mr Hong saying the following about the matter of group certificates:

“27. I cannot explain why Linda has a group certificate from Brillico for the period of January to June 2017. My mother informed me that the company did not authorise this. I gave Linda full control of the bookkeeping and she reported the figures and her income to the company's accountant. I don't know why it has happened.

28. I have requested from the company's accountant details of Linda's group certificates from the company for the years 2013 to 2017. The Company's accountant has informed me that there are no group certificates for Linda for any years other than 1 January 2017 to 30 June 2017.”

[20] As part of its document list the Respondent also included correspondence from its accountants setting out the following:

“To Whom It May Concern

We act as accountants and tax agents for Brillico Pty Ltd (ABN: 98 162 458 282) since 19 February 2013.

We would like to confirm that since Brillico Pty Ltd commenced trading in 2013, we dealt with Ms Xu Cji LIU (Linda) on the bookkeeping tasks of Brillico Pty Ltd. Linda would provide us with extracts of records held for Brillico Pty Ltd (such as bank statements and tax invoices) which formed the basis of Brillico Pty Ltd’s tax returns, BAS return and other financial reports.

Based on all available financial records provided to us, other than the period between 1 January 2017 and 30 June 2017:

Linda was not recorded as an employee of Brillico Pty Ltd;

There was no record of a wage, salary or superannuation paid to Linda by Brillico Pty Ltd; and

No Annual PAYG Payment Summaries have been submitted to the ATO by Brillico Pty Ltd on her behalf.

Thank you very much.

Yours faithfully,

Sam Chiu

Principal” 4

CONSIDERATION

[21] In Part 3 – 1 of the Act,, “employee” is defined to mean a national system employee which in turn, by virtue of s.14, means “an individual so far as he or she is employed, or usually employed, as described in the definition of national system employer in section 14, by a national system employer, except on a vocational placement”. Amongst other things a national system employer includes “a constitutional corporation, so far as it employs, or usually employs, an individual”. The Full Bench held in Shen Cai trading as French Accent v Michael Anthony Do Rozario 5 (French Accent) that the Act’s definition of employee leaves to the general law the distinction of that form of relationship with an independent contractor.6

[22] In considering the essential question of whether a particular entity employs or usually employs an individual, the Commission’s approach, following the Courts on the matter, is to apply a multifactorial approach to determination of whether a person is subject to a contract of employment or contract of services. French Accent explicitly continued earlier reasoning on such determinations with its reference to Abdalla v Viewdaze Pty Ltd: 7

“[18] We endorse the proposition in sub-paragraph (1) of the Abdalla summary, based on the High Court authorities, that:

“... the ultimate question will always be whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business of his or her own behalf 8: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own9. This question is answered by considering the terms of the contract and the totality of the relationship10.””11 (references in original)

[23] In assessing this question, the Commission will take account of the nature of the work performed and the manner in which it is performed. It will consider the terms and terminology of the contract between the parties. It will also give consideration to the various indicia drawn from authorities to guide a decision. A consideration of those indicia informed by the context of the nature of the work performed and the terms of the contract may point overwhelmingly one way or another and a determination should then be in accordance with that result:

“…. However, a consideration of the indicia is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture of the relationship from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. …” 12

[24] Remaining uncertainty may then require resolution through consideration of the terms of the parties’ documented agreement, or principles of vicarious liability. 13

Nature of the work performed and the manner in which it is performed.

[25] High Court in Hollis v Vabu Pty Ltd T/A Crisis Couriers:

“In classifying the bicycle couriers as independent contractors, the Court of Appeal fell into error in making too much of the circumstances that the bicycle couriers owned their own bicycles, bore the expenses of running them and supplied many of their own accessories. Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations. A different conclusion might, for example, be appropriate where the investment in capital equipment was more significant, and greater skill and training were required to operate it. The case does not deal with situations of that character. The concern here is with the bicycle couriers engaged on Vabu’s business. A consideration of the nature of their engagement, as evidenced by the documents to which reference has been made and by the work practices imposed by Vabu, indicates that they were employees.

First, these couriers were not providing skilled labour or labour which required special qualifications. A bicycle courier is unable to make an independent career as a free-lancer or to generate any ‘‘goodwill’’ as a bicycle courier. The notion that the couriers somehow were running their own enterprise is intuitively unsound, and denied by the facts disclosed in the record.” 14

[26] The usefulness of this reasoning to resolve the contractual dichotomy was confirmed by the Full Bench of the Australian Industrial Relations Commission in Abdalla v Viewdaze Pty Ltd, which said:

“We think it particularly significant that the joint judgment endorsed the proposition that ‘‘the distinction between an employee and an independent contractor is ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own’’’. In [47] their Honours dealt with the issue in the case before them by in essence asking whether, ‘‘viewed as a practical matter’’ the workers in question were ‘‘running their own business or enterprise’’ with ‘‘independence in the conduct of their operations’’” (reference omitted)  15

[27] Further to this reasoning, French Accent highlighted the importance of attending to what it is said to constitute the business of the alleged independent contractor. 16

Terms and terminology of the contract between the parties

[28] These matters are relevant inasmuch as the enquiry to be conducted in matters such as this is a focus on the character of the contract between the parties, with it being said in French Accent that:

“[30] … (3) The terms and terminology of the contract are always important 17. However, the parties cannot alter the true nature of their relationship by putting a different label on it18. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole19: the parties cannot deem the relationship between themselves to be something it is not20. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract21.”22 (original references)

[29] This finding was informed by the Full Bench’s earlier considerations on the subject of the terms of contracts:

“[24] The benefits and protections enjoyed by employees may be seen as reflecting a social consensus, expressed in legislation, that workers who are properly characterised as employees should have the benefits and protections of superannuation, workers’ compensation insurance, sick leave, annual leave and award entitlements (and it is not to the point that other protections, for example unfair dismissal protection, have been more contentious in recent years).

[25] The FW Act imposes obligations on employers in relation to their “employees” and confers benefits and rights on “employees” without defining when a worker is an employee as distinct from an independent contractor. The definition of “employee” leaves it to the general law to supply that distinction. The nature of the established general law approach to distinguishing between employees and independent contractors may be seen as contributing to the problem precisely because the nature of the general law test is such that it does not admit a clear answer in every case. Once one adopts the position, as the general law has done, that the distinction is rooted in the objective character of the work relationship two things follow. First, the infinite variety of human affairs means that work relationships present as a spectrum, some of which are clearly relationships of employment and others of which are clearly relationships of independent contract but some of which are less clear cut. Secondly, that character of a work relationship is what it is and cannot be changed simply because the parties agree to label it differently (unless, of course, the relationship is sufficiently ambiguous that a clear determination is not possible, the situation addressed by the Massey Proposition). That is a matter clearly recognised by the courts and tribunals.

[26] Moreover, the nature of the ultimate question is such that in any given case that is not clear cut, reasonable judicial minds may differ as to the correct answer in any given case. This was explicitly recognised in Roy Morgan 23. This necessarily means that there is an area of uncertainty for businesses that wish to engage only on the basis of independent contract and not on the basis of employment. Any change to the present approach is a matter for the legislature. Our duty is to continue to apply the established general law approach until legislation or the High Court requires otherwise.”24 (reference and italics in original)

[30] In forming my views about many of the contractual indicia, and especially those which require a consideration of the actual work undertaken by Ms Liu, I rely upon the statement of duties referred to above, which other than certain for matters of objection indicated by the Respondent, frame the nature of the work undertaken.

The contractual indicia

Control

[31] The parties are diametrically opposed about whether Ms Liu was subjected to the control of the company in the performance of her work, its performance standards or when her work was to be done. best reading of the evidence before the Commission allows it to be inferred that it was more likely than not Ms Liu was expected to organise staff schedules and undertake the basic bookkeeping and stock control as well as pay relevant bills upon time.  There is little doubt from the evidence before the Commission that had she failed to do these things to the presumed standards of the respondent then, whatever the relationship between them, that relationship would not have continued. Similarly, the best reading of the evidence is that Ms Liu was largely left to do these things on her own.  It is not completely clear to me the role that Mr Hong had with the business or whether such duties as he had may have overlapped with those of Ms Liu.  It is even less clear to me the role, if any, that the owner of the business, Jia Yi had in running the store.  Neither of the witnesses called to give evidence particularly referred to the matter of the owner’s involvement in the business and I infer from that circumstance that had either thought would be in their interest to inform the Commission on the subject then they were brought forward evidence about the situation.

Ms Liu endeavoured to persuade the Commission that voluminous WeChat messages she had exchanged with others, mainly Mr Hong, showed that she was subject to control by Mr Hong in the form of being instructed to attend meetings and the like. Noting that the messages were translated by her and that they seem to be a selective take of messages exchanged over several years, I place no weight on them for the purposes of ascertaining control within the meaning of the criterion under consideration. At best, they show that she was told to be present on certain dates for certain meetings. Such is not incompatible with an independent contractor relationship. Telling my contracted shop manager and bookkeeper to be present at a meeting with my contracted accountant does not show that either is an employee. Such instruction from me would merely show that I had expectations that should reasonably be kept.

[32] In considering the matter of control, the observations by the Full Bench in French Accent are to be noted:

• “Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place or work, hours of work and the like. 25

Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of an independent contract 26. While control of this sort is a significant factor it is not by itself determinative27. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where the work involves a high degree of skill and expertise28. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee29.

“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.” 30 “[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd v Federal Commissioner of Taxation, a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”31”32 (references in original)

[33] Consideration of all the evidence before the Commission would lead to a conclusion that the overall control exercised by Brillico of Ms Liu was weak, but above the point to which it may be said that it did not exist. She was largely left to her own endeavours. As long as those endeavours brought benefit for Brillico, correction or complaint was unlikely to be made. On balance, I consider it more likely than not that this indeed is one of those circumstances in which the reservation of a right to direct or superintend the performance of a task does not transform into a contract of service what in essence is an independent contract.

Performance of work for others

[34] The consideration of this criterion is to do with whether Brillico had the exclusive services of Ms Liu, or whether she had the capacity to work for others, whether that be an actual or theoretical entitlement.

[35] The nature of Ms Liu’s work for Brillico is that she worked substantially for its South Wharf store. There is no doubt that work became all-consuming, leaving little time for her to do other things. Notwithstanding that circumstance, the evidence is that Ms Liu had a considerable entrepreneurial streak, both in assisting her husband operate a coach service, of which she was the only shareholder and Director, as well as finding time to market Brillico’s products online on WeChat and to contemplate and create another Ugg boot business, Brillianco. A further matter in contest is whether Ms Liu ran the Brillico identified WeChat site for her own benefit, or that of Brillico. The evidence on the matter is less than clear, with the only clarity being that Ms Liu was able to market stock, make sales and – for her efforts – keep the proceeds. Ultimately the contested question of whether that online marketing was under an account owned by Brillico or by Ms Liu is moot in these proceedings since the evidence in any event resolves in the direction of a finding that, notwithstanding who may own the account, Ms Liu was the one who benefited from its proceeds.

[36] Overall I consider that the evidence about this indicator is that it supports a finding Ms Liu was an independent contractor.

Separate place of work/advertising to the world

[37] There is some evidence to the effect that Ms Liu could perform at least part of her work from home, or indeed from anywhere, and that she was not required to go into Brillico store at South Wharf in order to perform her work.

[38] There is incomplete evidence before the Commission about what would occur in the event that Ms Liu did not physically attend the store for days on end. Such prospect appears incompatible with some of the duties she was required to perform, including organising staff schedules working with suppliers accountants and Centre Management and providing assistance to customers in various forms referred to in her statement and set out above. It is of course the case that the capacity to perform the work from a separate place to that of the principal may lead to a finding that the indicator resolves in favour of a finding of status as an independent contractor.

[39] In this case however it is more likely than the capacity to perform at least part of the work from home or anywhere was, in truth, not much different from an employee who might work from home for part of the time.

[40] Consideration of this indicator resolves in favour of Ms Liu being found to be an employee.

Equipment

[41] There is no evidence that Ms Liu provided or maintained significant tools or equipment as part of her arrangement with Brillico.

Delegation or subcontracting

[42] There is no evidence either that Ms Liu was able to delegate or subcontract her work to another or, in the alternative that she was prevented from doing so. While Ms Liu contends that she could not ask someone else to do her work or pay someone else from her wages to do that work 33, there is no direct evidence on the subject that would support such a proposition. Nonetheless it appears unlikely from the overall evidence that Brillico would have tolerated a completely unrelated person turning up at the shop to undertake the tasks it expected Ms Liu to perform. As a result consideration of this indicator is a neutral consideration in my decision.

Capacity to suspend or dismiss

[43] The consideration of this indicator stems from the observation in Stevens v Brodribb Sawmilling Company Pty Ltd regarding the principal’s control over who does the work:

“The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like.” 34

[44] There is no evidence that Brillico had a formal contractual right to suspend or dismiss whomsoever did the work, however such rights it may have had were most certainly exercised in its correspondence to Ms Liu on 17 April 2018.

[45] Given that one reading of that correspondence is of a termination by one business of the services of another for reason of the disadvantage it caused, I do not consider the letter to show that there was a capacity on the part of Brillico to treat Ms Liu as an employee. Consideration of this criterion is therefore a neutral factor in my assessment.

Whether an emanation of the business

[46] The evidence would suggest that to the world at large Ms Liu was considered to be someone who worked for and on behalf of Brillico rather than someone who worked for herself or another entity. Ms Liu herself puts forward that she was required to wear a staff name tag and a badge representing them and that she had a debit card from Brillico which she used for payment Brillico’s expenses. 35 While I do not think that the evidence she had to give about the debit card particularly proves her contention that she was held out to be part Brillico, I do note what she has to say about wearing a staff name tag about representing company.

[47] The finding therefore needs to be made that Ms Liu was held out to the world as a part of Brillico.

Taxation

[48] There was no taxation deducted by Brillico from the payments made to Ms Liu. However in some respects she was the engineer of that situation. By taking cash from the till as the payments due to her, she was in charge of the payments being made. At the same time as the bookkeeper, she was likely the one who would be expected to make the relevant PAYG deductions and remit them to be Australian Taxation Office.

[49] The overall taxation relationships between the two parties are at best passing strange. There is but one PAYG statement before the Commission referring to the 2016-2017 tax year, however it would appear that the payments declared within that certificate are only the payments made for half the year. Mr Hong’s name appears as the signatory on the certificate, but given that it is a computer-generated certificate, it is hardly definitive and really is only an indicator of him being the authorised signatory, rather than being the person who actually instructed the certificate to be prepared. With reference to why a PAYG certificate was issued to Ms Liu for the year in question Mr Hong says with breath-taking understatement that “I don’t know why it has happened”. 36 While this is probably so, it hardly answers the question of how the document came to be or why it only appears to deal with half a year’s wages. As a manager of the business, Mr Hong appears wholly lacking in inquisitiveness. It was not put directly to Ms Liu that she had instructed the accountant to prepare the document, when probably it should have been.

[50] The matters of taxation, had they been addressed properly in the evidence before the Commission may well have tipped the evidence firmly in one or other of the available directions.

[51] As it is, the available evidence merely indicates that for the overwhelming majority of the period between May 2013 and April 2018 Ms Liu was wholly responsible for her own tax affairs which is more consistent with the relationship being that of an independent contractor than an employee.

Mode of remuneration

[52] French Accent notes about this indicator that the consideration is “whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks. Employees tend to be paid a periodic wage or salary independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance”. 37

[53] The available evidence shows merely that Ms Liu was left to pay herself in cash on the basis of $200 per day worked with payment to be drawn at such intervals as she saw fit. While it may be tempting to see that basis and regularity of payment as an indicator of employment, such arrangement is probably far more consistent with the payment arrangements of partners or others sharing in the profits of the business (albeit with the attendant risks for taxation that may flow from the lack of documentation). The proposition that an employee may take their own wages from a cash till without supervision or record of what they may have taken is as much preposterous as it is implausible. Usually accusations of theft flow swiftly from such conduct.

[54] The conduct was likely tolerated by Brillico because that was the arrangement brokered not only with Ms Liu at the start of the business in 2013, but with Mr Hong, with the arrangement being their reward for their entrepreneurial risk.

[55] Consideration of this indicator resolves in favour of a finding that Ms Liu was not an employee of Brillico.

Provision of holidays or sick leave

[56] It is evident that there was no accrual of annual or personal leave on the part of Ms Liu. When she wanted to take either form of leave, she would simply advise Brillico of the need to do so.

[57] Consideration of this indicator is, to some extent at least, consistent with Ms Liu being an independent contractor rather than an employee.

Profession, trade or distinct calling

[58] Ms Liu did not engage in a profession trade or distinct calling and so consideration of this indicator is a neutral factor in my overall decision.

Creation of goodwill or saleable assets

[59] While Brillico endeavours to put forward an argument that Ms Liu profited from working in the business by generating details of customers which she could exploit at some later time in competition to Brillico, the evidence is that the termination of Ms Liu’s contract came about for reasons including that she was perceived to be in competition with Brillico. As a result I discount the claims made by Brillico about their willingness for her to profit from these actions. In any event there is no cogent evidence before the Commission about the benefit that would come from retention of customer details.

[60] With these matters in mind, there is insufficient evidence that Ms Liu managed to create goodwill or saleable assets from working for Brillico and so consideration of this indicator is a neutral factor in my overall decision.

Business expenses

[61] There is no particular evidence before the Commission that Ms Liu spent any of her remuneration on business expenses. Accordingly consideration of this criterion is a neutral factor in my overall decision.

[62] The need to analyse the foregoing indicia individually as well as to consider them in total is identified in French Accent, as a question of whether a person could be said to conducting a business of his or her own of which the work in question forms part needs to be assessed on the objective character of the relationship, answered by considering the terms of the contract and the totality of the relationship. 38

[63] My findings recorded above would suggest that some of the indicia fall in favour to varying degrees of Ms Liu being an employee (place of work; equipment; emanation of the business). Consideration of others of the indicia record a neutral outcome (delegation; dismissal/suspension; profession, trade or calling; goodwill; business expenses). The findings made on the remainder of the indicia suggest retention of Ms Liu as an independent contractor (control; performance of work for others; taxation; mode of remuneration; leave). The collective weight of the matters in the latter category is strongly suggestive of there being an independent contractor business relationship between Brillico and Ms Liu, rather than an employment relationship.

[64] With reference to the need to consider what constitutes Ms Liu’s business, if there is one, 39 I am satisfied that she is either in business for herself, or, more likely, in tandem with her husband, Miao. The evidence shows that Ms Liu at least searches out opportunities and nurtures them to fruition. She does so for her own profit, not solely for that of others. At the least, the evidence shows that Ms Liu’s business arrangements include the risks and rewards of building and growing the Ugg Direct business in its South Wharf shop, with an expectation that she would get something out of that work, beyond $200 per day; of doing the same for its online business; of building her husband’s coach business; and latterly of starting another company for the purposes of selling Ugg boots directly herself. The overall scale of the business or the extent of its operations is not before the Commission, and likely deliberately so. What is clear though is that Ms Liu is conducting a business, risking what may be her limited capital, but with the expectation of future rewards.

[65] After considering the overall relationship between Ms Liu and Brillico I am satisfied that the relationship commenced as essentially an entrepreneurial one where each party was endeavouring to find a means by which they could establish a new business and then profit from what was brought to them as a result of their individual labours in the business. When circumstances were against them at the start of 2013 with Mr Hong unable to find a way to invest in the business, all concerned preferred Jiayi Deng to be the only Director and shareholder, with the shop under her name because of her retail experience. Ms Liu’s own evidence is unambiguous indicating that originally there was an intention that she and Mr Hong would invest equally in the company and then both “would work and be paid wages in one hand and we would also be equal partners”. 40

[66] The relationship between the parties concerned obviously moved on after 2013 and by early 2018 had deteriorated to the point that Ms Liu was in the throes of setting up a business in competition with Brillico then terminating her services when it found out.

[67] Even though the relationship had moved on the overall evidence leads to a finding that the relationship between them was intended to be that of entrepreneurs, with Ms Liu in business for herself and her husband, taking such profits from their business as they could, with part of that business being the services rendered to Brillico.

[68]I find therefore that at the time Ms Liu’s services were terminated by Brillico she was not an employee within the meaning of the Act. As a result of her application for unfair dismissal remedy is dismissed and an order to that effect is issued at the same time as this decision.

COMMISSIONER

Appearances:

Ms Xu Chu Liu on her own behalf.

Mr Samuel Burt of Counsel instructed by GE Law Services for the Respondent.

Hearing details:

2018.

Melbourne;

10 August.

Printed by authority of the Commonwealth Government Printer

<PR609964>

1   Exhibit A1, Applicant Witness Statement, 2 July 2018.

2   Exhibit A4, Attachments to Applicants Submissions, Attachment XCL-1, pp.16.

3   Exhibit A3, Applicant Reply Witness Statement, 2 August 2018.

4   Exhibit R4, Attachments to Respondents Submissions, R2.

5   [2011] FWAFB 8307 at [10].

6   Ibid, [25].

7 (2003) 122 IR 215, [34].

8   Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 at 217 per Windeyer J approved by the majority in Hollis v Vabu (2001) 207 CLR 21 at para [40]; see also Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 (Brodribb) at 37.3 per Wilson and Dawson JJ.

9   Hollis v Vabu (2001) 207 CLR 21 at [47] and [58].

10   Brodribb esp Mason J at 29.3.

11   French Accent [2011] FWAFB 8307, [18].

12   Ibid, [30] (5).

13   Ibid, [30] (5) – (6).

14 [2001] HCA 44, 106 IR 80, [47] – [48], per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ.

15 (2003) 122 IR 215, [33].

16   [2011] FWAFB 8307, [36].

17   Brodribb per Wilson and Dawson at p.37.2.

18   “The parties cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck.” Re Porter (1989) 34 IR 179 at p. 184 per Gray J; Massey v Crown Life Insurance [1978] 2 All ER 576 at p. 579 per Lord Denning approved by the Privy Council in AMP v Chaplin (1978) 18 ALR 385 at p. 389.

19   AMP v Chaplin (1978) 18 ALR 385 at 389.

20   Hollis v Vabu (2001) 207 CLR 21 at para [58].

21   AMP v Chaplin (1978) 18 ALR 385 at p. 394.

22   [2011] FWAFB 8307, [30].

23 (2010) 184 FCR 448 at [29]-[32].

24   Ibid.

25   [2011] FWAFB 8307, [30].

26   Flows from the reasoning of Mason J in Brodribb at p 24.

27   Brodbribb esp Mason J at p 24.4.

28   Zuijs v Wirth Bros. Pty. Ltd (1955) 93 CLR 561 at p. 571.

29   Hollis v Vabu (2001) 207 CLR 21.

30   Humberstone v Northern Timber Mills (1949) 79 CLR 389 at p. 404 per Dixon J.

31   Brodribb per Wilson and Dawson JJ at p. 36.

32   [2011] FWAFB 8307, [30](4).

33   Exhibit A3, Applicant's further submissions, 10 August 2018, [1.8].

34 [1986] HCA 1; (1986) 160 CLR 16, pp.11, per Wilson and Dawson JJ.

35   Exhibit A3, [1.10].

36   Exhibit R3, Respondent Witness Statement of Ran Hong, dated 23 July 2018, [27].

37   [2011] FWAFB 8307, [30].

38   [2011] FWAFB 8307, [30](1).

39   Ibid, [36].

40   Exhibit A2, [10].