Yi-Hsien Chou v Steadfast Shareholding Pty Ltd - [2025] FWC 769

[2025] FWC 769

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.394 – Application for unfair dismissal remedy

Yi-Hsien Chou

Steadfast Shareholding Pty Ltd

(U2024/10265)

DEPUTY PRESIDENT BUTLER

BRISBANE, 18 MARCH 2025

Application for relief from unfair dismissal – jurisidictional objections – objection that the Applicant was not an employee – objection that the dismissal was consistent with the Small Business Fair Dismissal Code – jurisdictional objections dismissed – matter adjourned to allow parties to be heard on procedural issue.

Yi-Hsien ‘Sen’ Chou and Amy Hsueh were long-time friends. Ms Hsueh and her husband John Ang had a business. Mr Chou began working in the business in 2021 as a resident manager. The engagement ended on 13 August when Ms Hsueh and Mr Ang hand-delivered a notice of termination to Mr Chou, and changed the locks so that he could not enter the manager’s office, which had previously been accessible from the manager’s residence, on site.

The parties are in dispute as to the nature of their arrangement. The Respondent, Steadfast Shareholding Pty Ltd (Shareholding) asserts Mr Chou was employed by Fresh First Pty Ltd (Fresh First), and that there was a contract between Steadfast and Fresh First, for the latter to provide services. Mr Chou says he was an employee of Steadfast, and that Fresh First was just a vehicle through which his remuneration was paid.

It is not in dispute that there was no written contract between the parties, or between Steadfast and Fresh First. It was not disputed that Fresh First invoiced Steadfast for work performed by Mr Chou and that payment of the invoices was made to Fresh First’s bank account.

On 2 September 2024, Mr Chou applied to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (Fair Work Act) for an unfair dismissal remedy. Steadfast filed its response on 18 September 2024, opposing the application and objecting on the basis that the Applicant was not an employee of Steadfast. It has also since objected on the basis that the dismissal, if there was one, was consistent with the Small Business Fair Dismissal Code.

For the reasons set out below I have found among other things that Mr Chou was at all material times an employee, that he was dismissed, and that the dismissal was not consistent with the Small Business Fair Dismissal Code. I have also decided to allow the parties further time to deal with a discrete point raised by the Respondent in its closing submissions as to whether findings of fact about Mr Chou’s conduct should be made, while District Court proceedings relating to the same underlying facts are on foot.

Legislative framework

In unfair dismissal cases the two main questions are:[1]

· Was the Applicant “protected from unfair dismissal” at the time their employment ended?[2]

· Was the Applicant unfairly dismissed?[3]

These questions are generally considered in that order, as protection from unfair dismissal is one of the initial matters that has to be decided first, discussed briefly below.[4]

The Commission can then consider whether the dismissal was harsh, unjust, or unreasonable, and, if so, whether to order a remedy.[5]

When is a person protected from unfair dismissal?

Section 382 of the Fair Work Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

When has a person been unfairly dismissed?

Section 385 of the Fair Work Act provides that a person has been unfairly dismissed if the Commission is satisfied that:

(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.

What initial matters must be decided first?

The initial matters that must be decided first, under section 396 of the Fair Work Act, are:

(a) whether the application was made within the relevant time period;
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.

This requirement to decide issues in a certain order of priority does not mean the initial matters have to be the subject of a separate, preliminary hearing.[6]

Whether Mr Chou was an employee

As stated above the parties were in dispute as to whether Mr Chou was an employee of the Respondent. If Mr Chou was not an employee he was not protected from unfair dismissal,[7] and cannot have been “dismissed” within the meaning of that term for the purposes of the relevant provisions.[8] If he was not an employee the Commission cannot order a remedy for unfair dismissal.[9]

Section 380 provides that in the relevant Part of the Act, Part 3-2 – Unfair Dismissal, “employee” means a national system employee, and “employer” means a national system employer. Those terms are defined in Part 1-2– Definitions, in ss 12, 13 and 14 by reference to what makes the employer a “national system employer.” In general terms these definitions relate to the qualifying phrase “national system,” necessary for constitutional reasons that need not be discussed here, while the terms “employee” and “employer” have their ordinary meaning.[10]

Determining whether Mr Chou was an employee will, relevantly, turn on whether he was an employee within the ordinary meaning of that term. Deciding this question is not necessarily straight-forward. There is a long history of decisions in this tribunal and the courts in relation to deciding whether a person is an employee. To the extent appropriate I will consider these decisions below.

The ordinary meanings of “employee” and “employer” for the purposes of the Fair Work Act are also affected by section 15AA of that Act. That section took effect from 26 August 2024, after the engagement came to an end, but before Mr Chou filed his application. Section 15AA relevantly provides:

15AA Determining the ordinary meanings of employee and employer
(1) For the purposes of this Act, whether an individual is an employee of a person within the ordinary meaning of that expression, or whether a person is an employer of an individual within the ordinary meaning of that expression, is to be determined by ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person.
(2) For the purposes of ascertaining the real substance, practical reality and true nature of the relationship between the individual and the person:
(a) the totality of the relationship between the individual and the person must be considered; and
(b) in considering the totality of the relationship between the individual and the person, regard must be had not only to the terms of the contract governing the relationship, but also to other factors relating to the totality of the relationship including, but not limited to, how the contract is performed in practice.

Note: This section was enacted as a response to the decisions of the High Court of Australia in CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2.
…

This provision was added by the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (Cth). The relevant transitional provisions are in Part 17 of Schedule 1 of the Fair Work Act. I will discuss these below.

The Small Business Fair Dismissal Code

Section 388 of the Fair Work Act provides for the Minister to declare a Small Business Fair Dismissal Code (“the Code”). Subsection 388(2) provides that a person’s dismissal was consistent with the Code if the employer was a small business employer, and complied with the Code in relation to the dismissal. The Code is as follows:

Commencement
The Small Business Fair Dismissal Code comes into operation on 1 July 2009.
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

Regulation 1.07 of the Fair Work Regulations 2009 (Cth) (the Fair Work Regulations) deals with serious misconduct and relevantly provides that “serious misconduct” has its ordinary meaning and includes “wilful or deliberate behaviour that is inconsistent with the continuation of the contract of employment.”

This application

The application was filed on 2 September 2024. The parties did not resolve their dispute by conciliation, and so this application is now being determined.

If there are contested facts the Commission has to hold a conference or hearing when determining the application.[11] I invited the parties to provide their views, if any, as to whether this application should be determined in what is referred to as a “determinative conference,” or at a hearing.[12] The parties did not provide any views either way. I considered the absence of a preference from the parties and whether a hearing would be the most effective and efficient way to resolve the matter. After doing so I decided to hold a hearing. That hearing was held on 19 November 2024. The parties were unrepresented.

Witnesses

The Applicant gave evidence on his own behalf and also called Mr Michael Culleton as a witness. Ms Amy Chu-Hsin Hsueh and her husband Mr John Yueh Han Ang gave evidence on behalf of the Respondent.

Mr Chou’s evidence

Mr Chou’s evidence included the following.[13]

In May 2021, Mr Ang, Ms Hsueh, and Ms Hsueh’s mother contacted him with an offer to participate in a new management rights business venture as an onsite manager. He was in a different industry at the time as a General Manager.

In June 2021, he inspected a management business located in Sunnybank Hills, along with Mr Ang and Mr Hsueh. Later that day Mr Ang and Ms Hsueh made an offer to purchase the business.

In July 2021, Ms Hsueh and her mother formally offered him the role of Resident Manager for the new business they were acquiring. He says they were acquiring it “under the name Steadfast Shareholding Pty Ltd.”

In August 2021 he prepared for an interview with the body corporate at Sunnybank Heights. He said the interview was to be held between 3 September and 15 October 2021. He says that as part of the preparation for the interview he obtained a police check which he forwarded to Ms Hsueh for the body corporate committee to review. He says the requirement to obtain a police check was applied personally to him, and that a police check would not be required for a contractor. He also provided a resume, to be provided to the body corporate committee.

In his reply statement Mr Chou says that during the interview Mr Ang introduced him as part of Steadfast with a background in management. Mr Chou also says the committee explicitly asked Mr Ang “Do you mean you are hiring Sen as an employee to manage the complex and perform the duties?” and that Mr Ang confirmed the arrangement affirmatively.[14] Mr Ang repeated this when giving his evidence.

Mr Chou says that he commenced onsite manager training with Ms Hsueh and Mr Ang on 5 October 2021 (in his reply statement he says the date was 4 October 2021, but nothing turns on this). He says he received a floor plan for Unit 1 at Sunnybank Heights (which was the manager’s residence) on 7 October.

Mr Chou says that on 8 October Ms Hsueh forwarded him an email from their accountant attaching a tax file number declaration form, super choice form, and employee information form. In his reply statement he says that he filled out the forms but accepts that he did not return them. He says that Ms Hsueh “explicitly advised me that submitting the forms was unnecessary and assured me that I would still receive all employee entitlements and benefits, such as paid leave, superannuation contributions, and an annual bonus.”[15]

Mr Chou says he entered into his “final employment agreement” from 12 October 2021, but he does not say this is how it was characterised by Steadfast, Ms Hsueh, or Mr Ang at the time. He says there was no formal written contract.

Mr Chou says that throughout his time with Steadfast, his remuneration was structured as a salary, and his package included the following components:

· Role: Resident Manager

· Base Salary: $110,000 annually, paid monthly.

· Superannuation: Calculated at the oﬃcial superannuation rate, starting at 10%, then 10.5%, and later adjusted to 11% based on legislative changes. This was calculated as part of his remuneration package and paid quarterly.

· Leave entitlements: paid sick leave and holiday leave.

· Annual Bonus: 2021 to 2022 $5,000; 2022 to 2023 $5,500.

As part of his employment, he was required to live on-site at Sunnybank Heights. He paid $1,600 per month in rent for Unit 1, which was part of the overall employment agreement.

Mr Chou accepts that his remuneration was paid through Fresh First, and says this arrangement was simply a vehicle for processing his wages. He accepted under cross-examination that amounts for superannuation were paid to Fresh First not to him directly. He also accepts that Steadfast paid Fresh First, and Fresh First reported this to the tax office as company income. He says that Fresh First then paid him.

While cross-examining Mr Chou, Mr Ang asked him how many people Fresh First engaged while fulfilling onsite manager duties at Sunnybank Heights. Mr Chou said that sometimes his wife would help him to do some gardening work as well, as well as doing some administrative work. He also said under cross-examination that Fresh First held workers’ compensation insurance, though he said Ms Hsueh instructed him to arrange that. The Respondent tendered a copy of the verification of cover.[16]

Appendix YC2 to Mr Chou’s statement[17] lists various events throughout the course of his engagement, showing that he performed a range of duties in relation to the units at the property, as well as assisting with Steadfast’s business including the recruitment of staff. It also sets out matters relevant to the conditions of the engagement, including in relation to Mr Chou taking leave and providing handovers when doing so.

Mr Chou said that when he took holidays from 1st December to 23rd December 2021, Steadfast supplied labour to perform the garden work, yard work, and lease renewal tasks that he would normally have handled. It was not a requirement for Fresh First to provide this work; instead, Steadfast handled it themselves.

Mr Chou’s material also refers to exchanges Mr Chou and Ms Hsueh had in relation to superannuation.

On 5 February 2024 Ms Hsueh scheduled a meeting with her mother and Mr Chou to discuss the sale of the business. Mr Chou provided a copy of her message to him, stating “Do you have time for a meeting with mom and I tomorrow? Regarding the selling of the business.”

On 22 February 2024 Mr Chou informed Ms Hsueh that he wanted to discuss a redundancy package before “meeting the broker,” though it is not clear what broker he is referring to. Ms Hsueh asked him to email her his requests, so that she could discuss with her mother.

On 26 February 2024 Mr Chou messaged Ms Hsueh, scheduling a meeting with her and her mother. Mr Chou did not say whether the meeting occurred or, if so, what transpired at it.

On 16 March 2024 Ms Hsueh advised Mr Chou that the business sale was in progress pending the body corporate’s consent. On 19 March, she scheduled a meeting for 9.30 am on 21 March to discuss further details. Mr Chou’s witness statement did not say whether that meeting occurred, or what transpired.

On 4 April 2024 Ms Hsueh asked Mr Chou to review the redundancy package and rent log, which she sent to him by email.[18] The email attached three documents: a spreadsheet named “Sen’s package,” another spreadsheet named “Sen Rent log” and a document named “240404 email corresponds Rent log.” The “Sen’s package” spreadsheet contains text reproduced by the Applicant in his materials and not contested by the Respondent. That text is headed “Employment started 4/10/2021 and ends on 31/07/2024”. The text goes on to refer to annual leave, sick leave, redundancy payment, bonus, rent waiver, super, and GST, and gives various dollar figures.

Mr Chou does not say whether he responded to Ms Chou’s email of 4 April. He says that on 8 April Ms Hsueh asked him if he had any questions about the remuneration discussed. Again, he does not say whether he responded.

On 7 May 2024 Ms Hsueh advised Mr Chou that the buyer’s agent wanted access to Unit 1, the manager’s residence on 9 May.

The body corporate held its annual general meeting on 5 July 2024. Mr Chou says the caretaker’s salary was discussed at the AGM, with members concerned about affordability and deciding not to grant any future “top up” in that regard. On the same day Mr Chou and Ms Hsueh discussed the excel sheet that had previously been provided regarding the redundancy package and rent log. Mr Chou’s annexure to his statement says that on this date “Amy confirmed $37103.12 is all good which including Super and GST.”

On 9 July 2024, Ms Hsueh messaged Mr Chou saying she would attend to his “annual leave settlement” that day. She subsequently messaged to say that the excel sheet had not taken into consideration the annual leave he had taken in December 2022, and to ask him to confirm the dates so she could calculate the balance. She also asked him to check the rent ledger. At 6.44 pm Mr Chou responded “Hi Amy, This doesn’t sound right. You were the one done the calculation and advise me the amount. Date was provided so you could get the correct figure. Seriously, how can a smart person like you will make a simple mistake in calculation.” There was a subsequent message, which was obscured in the annexure Mr Chou provided. Ms Hsueh subsequently responded to Mr Chou’s message of 6.44 pm with “Alls good,” and then “$37103.12 including super and gst. Outstanding rent is $2012.90 if I am not mistaken – pls check the rent log.”[19]

On 12 July 2024 the figure was revised to $35090.22 to account for deducting rent. Ms Hsueh wrote “$35090.22 – if you have verified the ledger, I’m keen to pay this to you today. If I have been mistaken, please just let me know and I’ll pay this back to you. Looking forward to hear from you.”[20]

On 15 July 2024 Mr Chou sent a payment receipt for $2,012.90 for rent to Steadfast Shareholding.[21] He says he asked Ms Hsueh to pay $37,103.12 in full. He says Ms Hsueh also inquired about Mr Culleton’s health and said she would like to visit him if he felt better.

On 19 July 2024 Mr Chou and Ms Hsueh communicated about details for a new business credit card, and Mr Chou provided contact details for a committee member. In subsequent days Ms Hsueh asked for the access code to enter the complex, and also sought contact information for committee members.

On 25 July 2024 Ms Hsueh asked Mr Chou to provide her with an invoice for $5112.25 for additional payment for April to June 2024, recalculated to reflect the 11% superannuation rate effective from 1 July 2023.

Mr Chou says that on 2 August 2024 Ms Hsueh asked him to invoice $5112.25, which was paid, and an additional $10,083.33, which was to be paid on the same day. The documents show the former request, but not the latter, that day. Ms Hsueh’s message containing the request stated “Pls invoice me for $5112.25 for the additional payment April to June 2024 (super is 11% from 1 July 2023 to 30 June 2024) so I recalculated the amount.”[22] On 2 August Ms Hsueh sent the following messages:[23]

Pls invoice for $5112.25 (paid) and $10083.33 (paid today)
Invoice 24010 $5112.25
Invoice 24011 $10083.33
$35090.22 invoice 24012 please

The copy of the messages provided does not show any response from Mr Chou.[24]

On 8 August 2024 Ms Hsueh visited Mr Chou for a short meeting before the interview with the body corporate buyer. Mr Chou does not state what transpired in that meeting.

On 9 August 2024 the company phone number was disconnected without prior notice from Ms Hsueh or Mr Ang. Mr Chou’s company email and online drive access was removed. He says he contacted Mr Ang and Ms Hsueh and was told it was a technical issue with the telecommunications provider.

Later on 9 August, Ms Hsueh emailed a Notice to Leave to Mr Chou. The following day, 10 August, she sent a further email attaching a finalised Notice to Leave, and indicating the previous day’s had been a draft.[25]

On 12 August 2024 Mr Chou contacted Mr Ang to follow up about regaining access to company emails and the online drive needed to finalise lease renewals. He says Mr Ang said he was unwell and could not provide Mr Chou with a new sim card.

On 13 August 2024 Mr Chou contacted Mr Ang again asking him to restore Mr Chou’s online access. Mr Chou says Mr Ang and Ms Hsueh then arrived at the property, Sunnybank Heights, with a locksmith, who began changing the locks. He says this happened in front of his ten-year-old daughter. He says Ms Hsueh asked him about his work schedule and the status of a project. He says after they obtained the information they needed, Ms Hsueh and Mr Ang handed him a termination letter. He provided a copy of this document as part of his evidence.[26] Ms Hsueh also referred to this letter in her evidence. I have described its contents below.

The termination of the engagement was accompanied by a rental dispute, with Steadfast claiming Mr Chou owed them a debt for failure to pay rent, and Mr Chou claiming that rental waiver had formed part of his redundancy package.

In his materials Mr Chou stated his belief that Steadfast terminated his engagement with them because they needed to provide a vacant position for the buyer.

Mr Chou also provided some information about events after the date of termination. It is not necessary to refer to them here.

Mr Chou says resident agents are required by law to hold a real estate license. Steadfast required him to obtain and hold a Real Estate license, and he did so. Fresh First Pty Ltd did not hold a Real Estate license. The requirement that he hold this license personally meant he was fulfilling a role under Steadfast’s direction not acting independently.

Mr Chou was not required to supply any of his own equipment or materials for his role. All resources were provided or managed by Steadfast.

Mr Chou says he worked under the supervision and direct control of Ms Hsueh and Mr Ang. He says they dictated his day-to-day tasks, schedules, and priorities. He says his duties involved managing the Sunnybank Heights complex, overseeing rental agreements, and attending committee meetings. Additionally, he was required to live onsite and remain on-call “24/7.”[27] Throughout his engagement, he considers he was regarded and treated as an employee.

He provided more than a hundred pages of WhatsApp messages and emails, demonstrating that he was in constant contact with Ms Hsueh and Mr Ang, taking direction from them, advising them when he was sick, helping them recruit workers for their business and providing information about the managed properties. The exchanges also include some references to his remuneration,[28] including to his ‘salary package’[29] and to his request for a ‘redundancy package’ when the business was being sold.[30]

Mr Chou also provided material from after the termination, including a copy of the claim and statement of claim in the District Court proceedings,[31] a letter from the Respondent’s lawyer of 29 August 2024,[32] and a medical certificate of 15 October 2024.[33] He also provided a print out from a Queensland government website regarding licensing requirements for residential managers.[34] Under cross-examination he conceded he had also applied for a real estate licence for Fresh First, but said he had done so after the engagement with Steadfast had ended.

Mr Culleton’s evidence

Mr Chou filed and read an affidavit of Mr Michael Patrick Culleton sworn 22 October 2024 in the course of the District Court proceedings.[35] Mr Culleton says he was the chair of the body corporate at the premises for which Mr Chou was the Resident Manager. Mr Culleton gave evidence about, among other things, how Steadfast had represented Mr Chou’s engagement to the body corporate. Mr Chou tendered two documents provided and identified by Mr Culleton: a copy of correspondence from Steadfast,[36] and an email dated 14 November 2021, said to have been from another committee member.[37]

Ms Hsueh’s evidence

Ms Hsueh’s evidence included the following.[38]

Her husband Mr Ang was the sole director of Steadfast; she was not a director but was a joint shareholder. Both she and Mr Ang were actively involved in Steadfast’s business operations.

In 2021 Steadfast purchased the management rights business of the complex known as Sunnybank Heights. That purchase settled on 26 November 2021.

At the time of purchasing the management rights for Sunnybank Heights, she and Mr Ang were already operating two other management rights business at two separate complexes. She was also pregnant. They were not in a position to move to Sunnybank Heights and act as onsite managers. As a result, they sought to engage a third party as the onsite manager for Sunnybank Heights.

She had met Mr Chou about 15 years before, when they were both studying at university. They had become close friends, and Mr Chou had also become known to and friendly with several of her family members, including her mother, who would often help me with the businesses that she and Mr Ang operated.

Around mid-2021, Mr Chou was looking for a career change. One of the options that he considered was becoming an onsite manager for residential complexes.

As Steadfast was going through the purchase of the Sunnybank Heights management rights at the time, she and Mr Ang invited Mr Chou to come with them the first time that they visited the site in person. This first visit would have been around July 2021.

Mr Chou was interested in moving in and being paid to act as the onsite manager of Sunnybank Heights. He and they therefore began negotiating as to how the arrangement was to work, including in relation to remuneration and the means of engagement.

She and Mr Ang originally proposed that Mr Chou would be employed by Steadfast under a salary plus bonus arrangement. The bonus was $5,500 payable at the end of the year if she and Mr Ang were satisfied with Mr Chou’s performance. She had their accountant prepare the relevant employee forms, including TFN declaration form, Super form and employee detail forms, and send them by email to Mr Chou. However, as far as she was aware, Mr Chou never completed, returned or lodged those forms.

She says this was because Mr Chou indicated to them that he did not want to be an employee. Rather, he already had an existing company – which was Fresh First – which he preferred to use as the subcontracted manager / caretaker for Steadfast. Ms Hsueh provided a company extract for Fresh First dated 17 September 2024. The extract shows that Fresh First had been registered on 19 October 2020, and that Mr Chou was the sole director from that date until 22 March 2024, and the sole secretary from that date until 19 August 2024. It also shows that Mr Chou had been, and remained, the only shareholder of Fresh First.[39]

Ms Hsueh says that one of the reasons Mr Chou gave for using this arrangement was that he wanted to be able to purchase a car for work purposes under his company. She believed that he did later purchase a car through Fresh First. In his reply statement Mr Chou addressed this and said he had proposed a salary sacrifice, and Ms Hsueh had suggested processing this “through the company rather than as a direct salary sacrifice agreement with me.” He says this suggestion “effectively changed the structure of how the purchase would be managed.”[40]

Ms Hsueh said that under the company arrangement that Mr Chou proposed, Steadfast was to engage Fresh First, and all payments from Steadfast would be made pursuant to invoices issued by Fresh First based on the fee as agreed between Steadfast and Fresh First.

Mr Chou cross-examined Ms Hsueh about the amount that he was paid, and whether the amount paid was different to the amount represented to the body corporate. Ms Hsueh said that Steadfast had paid GST on the amounts paid to Fresh First.

Ms Hsueh says the fee to be paid was still calculated with reference to Mr Chou’s remuneration (including bonus, the payment of which is still conditional on their satisfaction with Fresh First and/or Mr Chou’s performance) and employee benefits per Steadfast’s original proposal to directly employ Mr Chou. However, as Mr Chou was engaged by Fresh First and not Steadfast, this effectively amounted to Steadfast reimbursing to Fresh First Mr Chou’s remuneration and employee benefits (including superannuation) payable by Fresh First.

Ms Hsueh says Steadfast had no direct relationship with Mr Chou under this amended arrangement. She says that because of this, to keep track of Steadfast’s reimbursement obligations, Steadfast still maintained records as to Mr Chou’s leave and superannuation entitlements.

During cross-examination Mr Chou asked Ms Hsueh why she asked him to invoice for additional amounts when the superannuation rate changed by regulation. She said the arrangement was for Steadfast to reimburse Fresh First in payment of the amount of super for Mr Chou or another staff member.

Mr Chou also cross-examined Ms Hsueh about the payment of a bonus, and why Steadfast would pay a bonus to a contractor. Ms Hsueh stated the bonus was for Fresh First’s performance to the satisfaction of Steadfast.

Ms Hsueh also says that a part of the arrangement with Fresh First, Mr Chou was to live onsite as the onsite manager at Sunnybank Heights, and be allowed to rent out Unit 1, which is the onsite manager’s unit with an annexed office, for $1,600 per month. She said in order to act as onsite manager and deal with lettings within Sunnybank Heights, Mr Chou had to meet several requirements, including maintaining an adequate real estate license and passing a Police check. She says these requirements would have been no different if they had hired any other arms-length third party company to subcontract an onsite manager for them.

Ms Hsueh said under cross-examination that she did not know whether it had been Mr Chou or Fresh First that paid the rent for Unit 1.

The real estate licence that Mr Chou personally held had no connection to Steadfast’s real estate licence, which is a full licence that allows it to do things such as operate a trust account for property letting.

She says that as Mr Chou was also the director and primary person operating Fresh First, sometimes the distinction between Fresh First and Mr Chou became blurred when she and Mr Ang spoke or wrote to Mr Chou in connection with Sunnybank Heights. Together with the fact that Steadfast maintained records of Mr Chou’s employee benefits with Fresh First, this meant that Steadfast would often refer to things such as Mr Chou’s annual leave or superannuation payments even though he was not Steadfast’s employee.

Ms Hsueh says that Steadfast had never paid any money to Mr Chou or his superannuation fund. The arrangement was that Fresh First was to issue invoices amounting to the reimbursement of Mr Chou’s remuneration and employee benefits (including superannuation) payable by Fresh First, and Steadfast’s only payment obligation was to Fresh First with respect to those invoices. Ms Hsueh provided copies of several invoices from Fresh First to Steadfast. Notably, the invoices are in the name of Fresh First, require payment by bank transfer to Fresh First, relate only to Mr Chou’s labour (other than some invoices for “additional payments” which related to additional amounts for superannuation), and generally include amounts for GST. Ms Hsueh also includes bank records showing payments made to Fresh First.[41]

Under cross-examination Ms Hsueh continued to maintain that the payments from Steadfast to Fresh First were reimbursements.

Ms Hsueh said that the arrangements with Mr Chou were made all made orally over various meetings. No written agreements were entered into, because Mr Chou was a close family friend, and she and Mr Ang did not think they needed a written agreement.

When Mr Chou commenced in October 2021 the purchase of the management rights business at Sunnybank Heights had not yet settled. As Mr Chou required training Ms Hsueh said she and Mr Ang arranged for him to work with them at their other management rights business, which was operated by Steadfast Support Pty Ltd. This arrangement was through Fresh First. Fresh First invoiced Steadfast Support Pty Ltd for the month of October and November 2021 in relation to the work that Mr Chou completed while training.

She accepts that she and Mr Ang liaised directly with Mr Chou in relation to anything that needed to be done, and anything they need to know. She says that was because he was the sole director and shareholder of Fresh First.

Mr Chou asked Ms Hsueh about who undertook his duties when he was on holidays. Ms Hsueh said she did, because Steadfast had an obligation to the body corporate to do the work. Mr Chou asked whether he was paid the same while he was on holidays. Ms Hsueh conceded that Fresh First still made out invoices for the same amount during Mr Chou’s absence. She said that was the arrangement that Steadfast and Fresh First had.

Ms Hsueh says that in early 2024 Mr Ang and she made the decision to sell the management rights business at Sunnybank Heights. She says that on 6 February 2024, she and her mother visited Mr Chou at his office and informed him that Steadfast was looking to sell the management rights business. That would also mean the sale of Unit 1, which is the manager’s unit.

She says she offered Mr Chou an opportunity to purchase the management rights business. She says she told him that they needed to put the business on the market if he was not interested. Mr Chou requested two weeks to consider.

Ms Hsueh sent Mr Chou a text message on 21 February 2024 telling him that since they had received no response from him, they would assume he was not interested and would appoint a selling agent. She says she did not receive a reply to that text message.

Ms Hsueh says Steadfast entered into a contract to sell its management rights business to a third-party buyer on 21 March 2024. She says that as the directors of the buyer indicated that they did not require a third-party onsite manager, they informed Mr Chou that Fresh First’s engagement with Steadfast would be terminated once the contract is settled, and that Mr Chou would need to provide vacant possession of Unit 1. The settlement date was initially set for 1 August 2024.

Ms Hsueh says that between late February 2024 and July 2024, Mr Chou and she had multiple meetings and discussions in relation to how they were going to wrap up the commercial relationship. She says that until around July or August 2024, they still had a good and friendly relationship. Mr Chou continued his duties as onsite manager as usual, although occasionally Mr Chou would express frustration or generally be unhappy about having to leave once the sale of the management rights business was settled.

Ms Hsueh says that through those meetings and discussions, they discussed the terms of how Fresh First’s engagement with Steadfast would terminate. She says she and Mr Ang offered Mr Chou what was referred to as a “redundancy package” because they were still friends and wanted to look after his interests. She says they told Mr Chou early on that he was not actually entitled to any redundancy payments since he was not an employee. She says they told him that because Steadfast had been reimbursing all of his employee benefits, they were happy to reimburse to Fresh First a payout of Mr Chou’s leave entitlements and 3 weeks’ redundancy, which they considered to be what he would have been entitled to had he been a full-time employee of Steadfast.

She says that any documents referring to Mr Chou’s payout on termination in fact set out the calculation of the employee benefits that Fresh First owed to him, which Steadfast had agreed to reimburse to Fresh First.

Ms Hsueh says around March or April 2024 she and Mr Ang encouraged Mr Chou to begin looking for an alternative property to rent. She says they initially said that they would waive his rent at unit 1 of Sunnybank Heights as soon as he signed a lease elsewhere. She says that later, to help him further and because he was a friend, they offered him free rent up to settlement of the contract. This was assuming that the contract did not “crash,” and that Mr Chou co-operated with them to ensure a smooth transition (including moving out of unit 1 before the settlement date).

When the sale contract became unconditional in July 2024, Ms Hsueh called Mr Chou to let him know, and to remind him again of the settlement date, 1 August 2024. At that point, Mr Chou requested an extension of his vacant possession date to 15 August 2024. Ms Hsueh asked him if he had somewhere to move to or if he needed any help in that regard, and he said that he had it all sorted out and just needed a bit more time. She did not object to the extension because the sale was tracking behind schedule and was likely not going to make the settlement date in any event. There was a 45-day sunset clause in the contract that meant that the buyer could not terminate the contract for failure to settle until after 15 September 2024, but Ms Hsueh says she did not want to tell Mr Chou this in case it caused him to lose motivation to move faster.

Ms Hsueh says Mr Chou was not cooperative with the sale and was slow to provide paperwork or respond to requests.

She says that in July 2024 she and Mr Ang met with Mr Culleton, as the chairperson of the body corporate committee at Sunnybank Heights, to let him know about the business sale. She says that he was disappointed that Mr Chou would no longer be continuing as the onsite manager. She says Mr Culleton told them, and they were aware from past interactions, that Mr Culleton considered Mr Chou a close personal friend. She considers that after that time the body corporate became hostile to the sale of the business and tried to hinder it. Ms Hsueh also provided further information regarding the body corporate’s actions but it is not necessary to set that out in detail here. It suffices to say that Ms Hsueh says she and Mr Ang became suspicious that Mr Chou was trying to sabotage their business sale with the body corporate’s assistance.

Ms Hsueh says the body corporate committee met with the buyer’s “key persons” on 8 August 2024 (‘the buyer’s interview’). She makes some adverse comments about the body corporate’s conduct at that meeting which, again, need not be set out in detail.

While the buyer’s interview was happening, she had a meeting with Mr Chou at his home in Unit 1. She told him that she had met with the buyer the other day and had again highly recommended Mr Chou’s services. However, the buyer had said that they had made their decision, had their own arrangements, and would like to “start fresh”. They want to have their new nominated onsite manager move in from day 1 after settlement, and as a result Mr Chou would need to provide vacant possession. She says he had already known this was the most likely possibility. She says that since March 2024 they had agreed Mr Chou was to prepare to move out by the original settlement date of 1 August 2024, and this latest response from the buyer was just confirmation of that.

She says she told Mr Chou at this meeting that the whole thing would potentially settle in seven days. Mr Chou said that his daughter had an exam at the end of the month, and asked to extend the move out date to September. Ms Hsueh says she pointed out that they had initially agreed for him to move out by 1 August 2024, but he pushed it back to 15 August, and now he wanted sometime in September, and that it just seemed to keep getting delayed. She says she asked if he really did have somewhere to move to and have everything prepared, and he said that he did – he really just wanted his daughter to be able to finish her exam before they moved.

Ms Hsueh says she told Ms Chou that perhaps settlement would not happen so quickly, and they could see how it goes, but for the sake of formality they would provide him with a notice to move out. He would have two months to comply with the notice, so there should be plenty of time. She says the notice was sent on 10 August 2024, and she provided a copy of the notice as an exhibit to the statutory declaration she filed in these proceedings.[42] The notice gave Mr Chou until 10 October 2024 to move out.

After the buyer’s interview, Ms Hsueh and Mr Ang had a discussion about what happened at the buyer’s interview, and what they needed to do to protect Steadfast’s interests. They decided that they had to terminate their business relationship with Fresh First and remove Mr Chou’s access to things that could potentially be used to jeopardise the business sale.

She says they immediately sought legal advice. In the meantime, they believed that they had to act fast to remove Mr Chou’s access to his business phone and onsite manager email account in order to prevent further potential damage. Mr Ang had access to these because Steadfast set up and paid for them.

Ms Hsueh says that on 13 August 2024, after receiving legal advice on how to formally terminate the arrangement, she and Mr Ang attended the office attached to the manager’s unit at Sunnybank Heights with a locksmith. They took a hard copy of the termination notice with them, and handed it to Mr Chou. Ms Hsueh agreed that the copy of the termination notice provided as part of Mr Chou’s evidence[43] was a true copy of the document they provided to him (‘the termination letter’).

She says they wanted to give Mr Chou notice of termination in person and immediately take control of the office and books, because they were concerned giving him prior notice may give him time to engage in more foul play and sabotage, such as removing files or keys.

She says the locksmith that they brought with them changed only the locks on the office’s external door and another internal door that gave the manager’s unit access to the attached office. She says they did not want to, nor did they in fact, otherwise intrude on the manager’s unit itself, which Mr Chou and his family lived in at the time. She says they went there only to take control of the office and the books. She says they noticed that the office had some of Mr Chou’s personal items in it, so they allowed him the following day, and the following Ekka Day holiday, to tidy up the office and remove his personal items, despite the locks having been changed.

She says they took the books for Steadfast that same day, 13 August. However, Mr Chou insisted on keeping a few of the letting files because the letting agreement had been terminated or because he still needed to do something on the file. She says she did not think much of it at the time and let him take them back. She says the files included one for a unit which Mr Chou has since moved into. She says she and Mr Ang still have not received those files back.

Ms Hsueh says Steadfast took full control of the office, and she immediately took up duties as the onsite manager and was onsite at the manager’s office almost every day, including weekends. She says this continued for several weeks before things eased somewhat, although either Mr Ang or she would still be onsite most days of the week. This continued until the business sale finally settled on 15 October 2024, after they negotiated an extension with the buyer.

She says that after the termination they also discovered that Mr Chou appeared to have, without their knowledge, directed several letting appointments away from Steadfast to a friend of his who has his own real estate license.[44]

She and Mr Ang, along with Steadfast, issued proceedings in the District Court against Fresh First and Mr Chou on 2 October 2024. She says the copy of the Claim and Statement of Claim that they filed appears as annexure YC1 to Mr Chou’s witness statement.

Though Ms Hsueh says there was no relationship between Mr Chou and Steadfast, the statement of claim alleges there was an oral agreement between Ms Hsueh on behalf of Steadfast and Mr Ang and herself, and Mr Chou on behalf of Fresh First and himself. It asserts breach of contract by both Fresh First and Mr Chou. It also makes other claims of wrongdoing (under statute, in tort, and in equity).

Mr Ang’s evidence

Mr Ang’s evidence was as follows.[45]

He was the sole director of Steadfast, and that he and his wife Ms Hsueh were joint shareholders. He said Ms Hsueh helped him run Steadfast’s business operations.

He said that because Ms Hsueh and Mr Chou were close friends, she would generally deal with Mr Chou more than he did. He says the more important interactions that they had had with Mr Chou generally involved him and Ms Hsueh together, Ms Hsueh by herself, or sometimes Ms Hsueh with her mother, who also helps with the business. He said he and Ms Hsueh I would always discuss things and agree on a course of conduct beforehand.

He said he had read Ms Hsueh’s statutory declaration filed in these proceedings and agreed with its contents.

Under cross-examination, Mr Ang accepted that he provided training to Mr Chou, and described the training. Mr Ang said that during the time of that training, the invoices were made out to a different entity. Steadfast Support.

Mr Ang stated they commissioned business cards for Mr Chou. He said he did not remember what was on the card, but thought that the business referred to on the card would have been “one of the Steadfast companies,” not Fresh First. He said Mr Chou was representing Steadfast and conducting the work, and that it was Mr Ang’s understanding that Mr Chou could do so and still be a contractor.

Mr Ang says all relevant notices in relation to inspections were sent out by Steadfast, not Fresh First. He said they were signed either by Mr Chou or by him and Ms Hsueh, to represent Steadfast.

Asked whether he would ever give full time training to contractors, Mr Ang said under cross examination that contractors need instructions as to how to do the work. Mr Chou asked why his training had been for two months. Mr Ang said that was “because we were wanting you to be able to meet the caretaking agreement, which is more than what a standard contractor off the street would be required to do.”

The termination letter

The termination letter[46] provides notice of termination of “the contract arrangements between Steadfast Shareholding Pty Ltd and Fresh First Pty Ltd (Yi-Sen Chou) effective from that date which is 2 weeks from the date of this notice.” However, it is also drafted so as to constitute a proposed deed, with three parties, namely Steadfast, Fresh First, and Mr Chou. The termination notice provides, at its conclusion, for each of Fresh First and Mr Chou to sign, seal and deliver it as a deed.

To the extent the document goes beyond giving notice to propose an agreement to be recorded in a deed, it is an agreement for Mr Chou and/or Fresh First to give various commitments in return for being paid in lieu of the two weeks’ notice, and a further amount “equivalent to two months’ redundancy (Redundancy Amount) inclusive of any GST” to be paid to Mr Chou. Under the terms the “Redundancy Amount” is payable only if certain deeds are signed and vacant possession is provided by 2 September 2024.

Ms Hsueh says that she and Mr Ang included an offer to pay to Fresh First two weeks’ notice (in lieu of the actual notice since they were terminating on the day), plus an additional amount equivalent to two months’ redundancy pay for Mr Chou. She says this offer was made voluntarily to obtain a restraint from Mr Chou that safeguarded Steadfast’s business. The termination notice contains restraints in relation to the use of confidential information and soliciting business from the body corporate, owners, or tenants at Sunnybank Heights.[47]

Ms Hsueh says Mr Chou was initially happy but ultimately did not accept the offer.

Submissions

Mr Chou filed a document titled “claim statement” on 23 October 2024. His witness statement filed the same day[48] also contained argument. This is not unusual when people are unrepresented. Steadfast filed written submissions on 6 November 2024. In reply, Mr Chou filed a single document on 13 November 2024 that contained both statements of fact and submissions.

As stated above Mr Chou’s statement contained both assertions of fact and argument. Mr Chou submitted that the following demonstrated that he was an employee, not a contractor:[49]

· Steadfast required him to personally hold a real estate licence;

· Steadfast required that he provide a police check;

· his remuneration was structured as a salary;

· Steadfast paid for superannuation;

· he was entitled to sick and annual leave;

· he was not required to supply equipment or materials;

· he was under supervision and direct control of Ms Hsueh and Mr Ang;

· there was no written contract classifying him as an independent contractor;

· he was required to live on site;

· he was provided with a redundancy package;

· Steadfast provided replacement labour during his leave.

Mr Chou’s other document, entitled “claim statement,” went to the compensation he was claiming, and the grounds for each head of compensation.[50] The directions of 9 October 2024 expressly invited Mr Chou to address any steps he has taken to mitigate his loss since his dismissal. This was not addressed.

Steadfast submitted that Steadfast subcontracted Fresh First to comply with Steadfast’s caretaking and letting management duties, and Fresh First employed Mr Chou to carry out the work. It submitted that the following demonstrated Mr Chou was not an employee of Steadfast:

· there was a contract between Steadfast and Fresh First, and no direct relationship between Steadfast and Mr Chou;

· a company cannot be an employee;

· Fresh First invoiced Steadfast, and Steadfast paid Fresh First, in relation to work completed by Mr Chou;

· Steadfast has never made payments to Mr Chou personally or to his superannuation fund;

· Steadfast kept track of Mr Chou’s employee benefits only because there was an arrangement between Steadfast and Fresh First that Steadfast would reimburse Fresh First for those benefits;

· Mr Chou wanted Fresh First to be the entity that Steadfast engaged, so he could buy a car;

· Mr Chou had not submitted his and Fresh First’s tax returns or evidence made to his superannuation fund, and that it could be inferred that those documents would show Mr Chou was employed by Fresh First.

Steadfast submitted that the nature of its contract with the body corporate required it to direct and maintain control over how the duties were carried out, regardless of who the work was subcontracted to, and so the level of control did not mean Mr Chou was an employee.

In the alternative Steadfast made submissions in response to Mr Chou’s claim statement, addressing each head of compensation claimed. Steadfast submitted the termination was not for redundancy, and that the onsite manager duties at the property still needed to be fulfilled until the settlement of the business sale, which did not occur until more than two months later.[51]

In reply,[52] Mr Chou referred to various matters as further demonstrating the relationship was one of direct employment, including:

· the training he had received;

· the level of direct supervision and control;

· being represented to the body corporate as an employee of Steadfast;

· being required to physically reside at the property, to work full time, and to be available 24/7;

· the absence of a written contract, which, in Mr Chou’s submission, meant there was no contract, and no contract that was capable of being amended;

· being required to personally hold a licence.

Mr Chou submitted that using a corporate entity to buy a car was Ms Hsueh’s suggestion and that doing so was not inconsistent with an employment relationship.

Mr Chou also made submissions about his performance in the role, and some submissions generally going to the unfairness of the dismissal process and the effect on him and his family.

At the conclusion of the hearing, I issued directions allowing for closing submissions in writing. I indicated parties should address the effect of section 15AA of the Fair Work Act, in their closing submissions. Mr Chou filed his closing submissions on 27 November 2024, and Steadfast filed its closing submissions on 4 December 2024. Mr Chou provided closing submissions in reply on 11 December 2024.

Mr Chou’s closing submissions went to the jurisdictional objection that he was not an employee and also went to the merits of the case including whether the dismissal was harsh, unjust, or unreasonable.

As to the jurisdictional objection he submitted that he had been headhunted to join Steadfast’s business, had been engaged as an employee, and had received a full induction. He was subsequently engaged using his company to facilitate the purchase of a motor vehicle not because it was agreed that he or his company would be an independent contractor. He had been provided with employment forms to complete, but was told it was not necessary to return them.

Mr Chou points to the following as demonstrating he was an employee:

· operational control and direction;

· integration of this role into the Respondent’s business;

· his employee entitlements and the use of his personal real estate licence;

· the requirement to use his personal real estate licence and the requirement to provide a police check;

· his access to Steadfast’s business credit card;

· signing documents on behalf of Steadfast.

Mr Chou also refers to the information he says was provided to the body corporate regarding his duties and responsibilities. This was a reference to evidence provided by Mr Culleton. For the reasons set out in this decision I have decided to give little weight to Mr Culleton’s evidence.

He also referred to section 15AA of the Fair Work Act by addressing the same or similar issues, as those canvassed in his closing submissions, or in his earlier submissions.

As to the merits of the case Mr Chou submitted:

· the Respondent provided no valid reason for the termination;

· the Respondent failed to afford him procedural fairness, in that it failed to provide him any notice of termination or an opportunity to respond to any allegations or concerns;

· the dismissal was abrupt and unjustified, causing significant financial and emotional harm.

The submissions also address the loss Mr Chou says he suffered, but do not address mitigation. Mr Chou had not adduced evidence as to mitigation.

In his closing submissions Mr Chou raised a new claim, of sham contracting having regard to section 359 of the Fair Work Act.

In its closing submissions Steadfast asserted that section 15AA of the Fair Work Act did not apply given its commencement date. But, if it did apply, the effect of that section is simply that the totality and true nature of a relationship between an individual and a person engaging the individual is to be considered in determining whether the individual was an employee. It submitted that taking all of that into account the Applicant was not an employee of the Respondent.

The closing submissions address the issue of at whose initiative the arrangement with Fresh First had been made. The Respondent argues Ms Hsueh’s evidence should be preferred to Mr Chou’s. The Respondent points out that Ms Hsueh’s witness statement was a statutory declaration and Mr Chou’s was not, and that Mr Chou’s submissions and statements were not in separate documents.

The Respondent argues that Mr Chou’s version of events has no credibility, because there was no plausible reason for it to insist on an arrangement with a company when it still provided for paid leave and paid an amount equivalent to what it would have paid an employee. In contrast it submitted the arrangement benefited Mr Chou. It goes on to submit that whoever suggested the arrangement, Mr Chou accepted it and took full advantage of it.

The Respondent relies on its earlier submissions as to whether Mr Chou was an employee. It argues that the question of whether a person is an employee or an independent contractor “typically” arises where an individual obtains an ABN and invoices for work under their personal name, not through a corporate entity. It points to various considerations showing Mr Chou was an employee of Fresh First, including:

· Fresh First paid Mr Chou;

· Mr Chou admitted under cross-examination that he declared his income from Fresh First as wages on his tax returns;

· Fresh First held WorkCover insurance for Mr Chou and for his wife during the period when he was onsite manager at Sunnybank Heights;

· Mr Chou’s wife helped him with his onsite management duties, and the fact that Steadfast did not know or consent to this showed that Mr Chou considered Fresh First to be the entity that was engaged, “because no employee would have the liberty to outsource or subcontract their duties in this manner.”

The closing submissions also address Mr Culleton’s evidence. For the reasons below I have decided to afford very little weight to his evidence so I will not summarise those submissions here.

In the alternative to the objection on the basis that Mr Chou was not an employee, the Respondent addressed the merits of the matter and submitted that Mr Chou was not unfairly dismissed. As to the reason for termination Steadfast refers to Ms Hsueh’s evidence about Mr Chou’s conduct in the lead up to the sale of the business. It also refers to the Small Business Fair Dismissal Code in relation to dismissal without notice, though it had not raised compliance with the Small Business Fair Dismissal Code in its Employer Response.

Steadfast also submitted that it genuinely believed Mr Chou engaged in serious misconduct that caused serious harm to its business. It submitted that it did not have to establish the factual accuracy of the grounds on which it dismissed Mr Chou, and that it was sufficient that its beliefs were genuinely held.

Steadfast also submitted that given the ongoing District Court proceeding, the unfair dismissal proceeding is not the appropriate forum to determine the issue of whether or not Mr Chou in fact engaged in the conduct alleged in the court proceeding. It submitted that the parties had not been provided with a proper opportunity to fully address the alleged conduct in their evidence.

In the alternative Steadfast submitted Mr Chou was not entitled to any compensation because he had been provided with ample notice of the sale of the business and that the buyer did not require his continued involvement as onsite manager. Further in the alternative, if the dismissal was unfair, Steadfast would have dismissed Mr Chou on two weeks’ notice, and that was his only loss. It also relies on its earlier submissions in relation to the heads of compensation claimed.

In reply, Mr Chou reiterated his claim as to sham contracting, referred to material from the District Court matter that is not before the Commission, and reiterated the submission as to the effect of section 15AA of the Fair Work Act. He replied to the Respondent’s submission regarding the provision of statutory declarations, pointing out that Mr Chou and Mr Culleton’s evidence was given on oath and stood equally with Mr Ang and Ms Hsueh’s evidence. Mr Chou also pointed to evidence against Steadfast’s argument that it was he who wanted the arrangement to be with his company. He also reiterated arguments regarding matters demonstrating the relationship was one of employment, and added that his role was full time and prevented him from working for other entities. He made further submissions about Mr Culleton’s evidence. He replied to the Respondent’s submissions about the Small Business Fair Dismissal Code, in part referring to factual matters not in evidence. He also made submissions as to his loss.

Submissions as to Mr Culleton’s evidence

In the course of making this decision I had cause to invite the parties to provide further submissions on a discrete issue. During the course of Mr Culleton’s evidence I had cause to stand the matter down, briefly. Mr Culleton had brought along a document that he wanted considered. In standing the matter down, I explicitly instructed him not to speak to either party as he was still under oath. The audio revealed that Mr Culleton flouted this direction around two minutes later. I generally do not hear audio recorded during adjournments and nor is such audio generally transcribed. But having heard this portion of the audio in the course of reviewing the evidence, and being unable to unhear it, I allowed the parties an opportunity to provide submissions as to this issue, including as to whether it should affect the weight to be given to Mr Culleton’s evidence. Steadfast provided supplementary submissions on 5 March 2025. Mr Chou provided supplementary submissions on 6 March 2025.

Steadfast submitted that Mr Culleton had directly contravened a direction from the Commission. It submitted given his disregard for the Commission Mr Culleton’s evidence should considered unreliable and afforded no weight.

Mr Chou sought a copy of the full audio but before receiving it filed supplementary submissions that asserted that namely that neither he nor Mr Culleton could recall any discussion during the adjournment. In fairness, some time had passed since the hearing.

After Mr Chou received the full audio he withdrew his supplementary submissions and filed fresh supplementary submissions. The supplementary submissions accepted that the breach had occurred, and conveyed apologies on behalf of Mr Chou and Mr Culleton. Mr Chou sought to excuse the behaviour on the basis that Mr Culleton was comforting him during a stressful and unfamiliar time, and that the exchange was brief. He argued that the value and relevance of Mr Culleton’s evidence was not diminished by the brief exchange. He argued that the two documents that Mr Culleton brought along with him to the hearing, and that Mr Chou tendered, were accurate or valid, and relevant, and that the discussion between Mr Chou and Mr Culleton did not diminish that.

Consideration – Culleton’s evidence

Mr Culleton was not an impressive witness. He took documents including handwritten notes into the witness box. He sought to put two documents before the Commission. Both parties indicated they had not had notice of those documents. Once sworn in, Mr Culleton asked if he could ask a question, but then tried to use the opportunity to attempt to make an additional statement, about accusations he said had been made against him. At one point while Mr Ang was cross-examining him, Mr Culleton tried to ask Mr Ang questions instead.

Mr Culleton is a wheelchair user and also had limited use of his hands. He indicated that he was continuously in discomfort. He was assisted throughout by an allied health provider.

I consider that Mr Culleton understood my clear and direct instruction not to speak to the parties during the adjournment as he was under oath. Yet he instigated and carried on conversation with Mr Chou, including about at least one of the documents that he had brought along and was attempting to have put before the Commission.

Taking a generous view, Mr Culleton may have been distracted by the unfamiliarity of the hearing process and his discomfort when he disregarded my instruction. However, even if this generous view is taken, his conduct does not inspire confidence that his evidence was reliable. Taking that into account and having considered the parties’ submissions, I have decided to give little weight to Mr Culleton’s evidence and to the documents tendered in the course of it.

Effect of Culleton’s conduct on the Commission’s consideration of Chou’s evidence

Mr Chou appeared nervous. I attribute this to the unfamiliarity and seriousness of the process. He did not strike me as untruthful.

The audio reveals that Mr Culleton was the instigator of the communication between him and Mr Chou during the adjournment. My instruction had been to Mr Culleton, not Mr Chou. I have considered the Respondent’s submissions as to whether I should attribute less weight to Mr Chou’s evidence in light of the exchange between him and Mr Culleton during the adjournment. I decline to adopt that approach.

Consideration – initial matters

Having dealt with that issue, the first task is to consider the initial matters as required by section 396 of the Fair Work Act.

Section 394(2) requires an application to be made within 21 days after the dismissal took effect. It is not disputed and I find that the application was made within the period required in subsection 394(2).

The Respondent did not defend the application on the basis of genuine redundancy.

The remaining initial matters to be determined, having regard to section 396 of the Fair Work Act, are whether Mr Chou was protected from unfair dismissal when the engagement came to an end, and if so whether the dismissal was consistent with the Small Business Dismissal Code.

Protected from unfair dismissal – whether employee

I have set out above when a person is protected from unfair dismissal. The Respondent did not defend the claim on the basis that Mr Chou was above the high income threshold. The live issue between the parties was whether Mr Chou was an employee. If he was not an employee he would not have reached the minimum employment period.

It is therefore necessary to make a finding as to the nature of the engagement and of any relationship between Mr Chou and Steadfast.

To have been protected from unfair dismissal, Mr Chou had to, among other things, have been an employee and have completed a period of employment with his employer of at least the minimum employment period.[53]

Despite the date given in the initiating application, I find that the engagement came to an end on 13 August 2024. The application was made on 2 September 2024.

Having regard to the provisions of the Fair Work Act, the issue of whether Mr Chou was an employee is determined according to the ordinary meaning of that term. From 26 August 2024, the ordinary meaning, for the purposes of the Fair Work Act, is affected by the operation of section 15AA of that Act.

The transitional provisions for section 15AA[54] include items 116, 118, and 119 of the relevant schedule to the Fair Work Act.[55] In my view the effect of item 116 is, relevantly, that section 15AA applies to a relationship in existence as at the provision’s commencement on 26 August 2024, but the enactment of the provision does not cancel any accrued right from prior to that date. The effect of item 118 is, relevantly, that where a right – such as a right to be protected from unfair dismissal – is contingent on the person having completed a minimum employment period, then the nature of the relationship between the applicant and the respondent, for the period up until 26 August 2024, is to be ascertained under the Act as it was before section 15AA was added.[56] The effect of item 119 is that if proceedings had already been on foot prior to 26 August 2024, the Act as it was prior to the addition of section 15AA applies.

Taken together, these items mean that I do not accept the Respondent’s submission that section 15AA has no retrospective effect. Section 15AA applies to applications made on or after 26 August, regardless of whether the termination date fell before 26 August 2024. However, section 15AA does not apply to any part of the minimum employment period that fell prior to that date.

So, whether or not Mr Chou was an employee on the termination date, to have been protected from unfair dismissal he also needs to have been an employee for sufficient time prior to the termination date to have completed the minimum employment period, without any reliance on section 15AA.

Steadfast claimed to have had only one employee during the period in which Mr Chou was engaged. Other than arguing that he himself was an employee Mr Chou did not contest this. Steadfast was at all relevant times a small business employer.[57] The minimum employment period was one year ending at the termination date (which was the same date on which Mr Chou received notice of termination, given the termination was effective immediately).[58]

To have completed a period of employment with his employer of at least one year,[59] Mr Chou needed to have completed a year’s continuous service.[60] Some periods of employment do not count towards continuous service.[61]

Did Mr Chou have a year’s continuous service as an employee prior to the date on which the engagement ended? There is nothing before me to indicate, all else being equal, that if Mr Chou was an employee, his continuity of service was broken, or there were any periods that did not count as service, in the twelve months to 13 August 2024. That being the case the question is whether he was an employee throughout that period.

For the reasons set out above this is to be considered disregarding section 15AA of the Fair Work Act. This means that it is unambiguous that the High Court of Australia authorities CFMMEU v Personnel Contracting [2022] HCA 1 (which I will refer to as “Personnel”) and ZG Operations v Jamsek [2022] HCA 2 (which I will refer to as “Jamsek”) apply undisturbed by the enactment of that new provision. A Full Bench has summarised the approach under Personnel:[62]

(1) When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties.

(2) The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms.

(3) The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract.

(4) It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer.

(5) Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship.

(6) The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker”, or at least it is not determinative.

(references omitted)

A different Full Bench has dealt with the application of Personnel and Jamsek in the case of a contract that is not wholly in writing. In Gang Ma v Yan Massage Wynnum West Pty Ltd[63] the Full Bench said:[64]

The task becomes more complex in circumstances in which there is no written contract at all, or the contract is partly written and partly oral. In either of those circumstances, it is likely to be necessary for a court or tribunal adjudicating the question to consider the conduct of the parties for the purpose of ascertaining the nature of the legal rights and obligations that the parties have taken on. That is likely to be required where the evidence as to the nature of any oral agreement is scant and it is necessary to infer the substance of the agreement between the parties from their conduct.

The Full Bench then considered the judgement in EFEX Group Pty Ltd v Bennett,[65] before going on to say:[66]

However, that does not mean the approach adopted prior to Personnel Contracting and Jamsek is revived where there is no comprehensive written contract. Although it may be necessary in such a case to have regard to the conduct of the parties, the focus of the analysis is different. Even where there is a purely oral contract, the nature of the relationship between the parties is determined by the legal rights and obligations created by the contract. The parties’ conduct, including the way in which the contract is performed, is only relevant to the extent that it assists in ascertaining the terms of the contract, express or implied. The conduct of the parties is irrelevant if it does not touch upon, or provide a basis for inferring, their legal rights and obligations.

The Full Bench then described the task once the terms had been identified:[67]
Once the terms of the contract have been ascertained, it is necessary to characterise the relationship created by the contract. Two considerations will often be critical in the task of characterisation: the extent to which the putative employer has the right to control how, when and where the putative employee performs the work; and the extent to which the putative employee can be seen to be working in their own business as distinct from the putative employer’s business. The way that the contractual terms address the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the delegation of work, and where the right to exercise direction and control resides may also be relevant to whether the relationship is one of employer and employee.
(references in all excerpts omitted)
Following Personnel and Jamsek I will first observe that it was common ground that there was no written contract between the parties, or between Steadfast and Fresh First. Contrary to Mr Chou’s submissions that does not mean there was no contract. It is incompatible with his argument that he was an employee to argue that there was no contract, as there is no employment without a contract.[68]

In this case Mr Chou, Mr Ang and Ms Hsueh, on their own behalf and/or on behalf of their respective companies, agreed that Mr Chou would carry out the work of the residential manager. Though Mr Chou admitted his wife helped him with the work, and though the Respondent tried to argue that Mr Chou could outsource or subcontract the work, that was not the reality of the situation. Both parties accepted that the manager had to be vetted by the body corporate committee, including through the provision of a police check, and it is not plausible to suggest that it was open to Mr Chou to arrange for someone else do the work.

As stated above during cross-examination Mr Chou asked Ms Hsueh why she asked him to invoice for additional amounts when the superannuation rate changed by regulation. She said the arrangement was for Steadfast to reimburse Fresh First in payment of the amount of super for Mr Chou “or another staff member.” This seems disingenuous as though Mr Chou’s wife had provided some help, there was no suggestion that Mr Chou had engaged or could engage another staff member to undertake the residential manager work, and the arrangement was specifically for that work.

The parties to the contract agreed on remuneration. Remuneration was calculated by reference to salary, bonus, and superannuation. They agreed that Fresh First would invoice Steadfast, and that Steadfast would pay Fresh First.

It can be discerned from the various persons’ conduct that the parties to the contract also agreed that Steadfast would provide business cards, a credit card, work email, and access to an online drive to Mr Chou. They agreed that Mr Chou would obtain the necessary licence, would live on the premises, and would pay rent.

What is not clear is who the parties to the contract were. In the District Court proceedings, the statement of claim asserted that there was an oral contract to which both of the companies and all three of the natural persons were party.[69] This seems unlikely. It was not in dispute that it was Steadfast, not Ms Hsueh and Mr Ang, who had the contract with the body corporate to provide the management services. There is nothing on the material suggesting that either Ms Hsueh or Mr Ang personally provided any guarantees or would have any liability to either the body corporate or to Steadfast’s employees or contractors, or were to receive any consideration for same. The agreed terms are consistent with there being either:\

(a) a contract between Steadfast and Mr Chou, with Fresh First rendering invoices and receiving monies on Mr Chou’s behalf; or

(b) a contract between Steadfast and Fresh First, with the latter having an obligation to have Mr Chou, as the key personnel, provide the services.

As I have indicated elsewhere in this decision, the Respondent submitted that the involvement of Fresh First indicated Mr Chou was not an employee of Steadfast. In Mutch v ISG Management Pty Ltd,[70] Bromberg J stated:[71]

It will not necessarily be the case that the interposition of a corporation between a worker providing personal services and an entity receiving those services will deny the existence of a contract of employment between the worker and the recipient of the work: Ace Insurance Ltd v Trifunovski (2013) 209 FCR 146 at [150]-[153] (Buchanan J with Lander and Robertson JJ in agreement); Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 at [43] (Keane CJ, Sundberg and Kenny JJ). A relevant consideration is the function served by the corporation in the relationship created by the contract which, as the authorities just referred to show, requires an examination of a range of relevant circumstances beyond the terms of the contract in question.

A different paragraph of the decision in Mutch is referred to in Personnel, as an example of a court treating earlier decisions relating to the primacy of the contract as authoritative. The judgement in Ace Insurance Ltd v Trifunovski[72] (“Ace Insurance”) was criticised in Personnel for the manner of the application of the multifactorial test, but not in relation to this issue. On the other hand, paragraph 95 of the judgement in Ace Insurance, which refers to the ability to incorporate being of little weight when the corporate vehicle featured only as the recipient of fees that would otherwise have been paid to the worker, is cited in Jamsek[73] as authority for the proposition that questions of scale can be important and even determinative. The judgement in Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 is not referred to in Personnel or Jamsek.

Given the authorities referred to above I do not accept the Respondent’s submissions to the extent they seek to characterise the interposition of Fresh First between Mr Chou and Steadfast as being determinative.

Mr Chou sought to demonstrate that Steadfast represented him as part of its business. As stated above, in his reply statement Mr Chou says that during the interview in 2021 Mr Ang introduced him as part of Steadfast with a background in management. Mr Chou also says the committee explicitly asked Mr Ang “Do you mean you are hiring Sen as an employee to manage the complex and perform the duties?” and that Mr Ang confirmed the arrangement affirmatively.[74] This claim stands out as being the only direct quote in the reply statement and seems both overly convenient and implausible given there had been no mention of this in the initial statement, despite the nature of the relationship being squarely in issue. Under cross-examination Mr Culleton also said that Mr Ang had represented Mr Chou as part of Steadfast and that he would be employed to do the onsite management role. Mr Culleton said this had been three years ago and he could not remember word for word what had been said, but that he had interpreted it to mean that Mr Chou would be an employee. He reiterated Mr Chou had been presented as an employee.

Despite conceding that he could not recall the specific words used, and that it was open to Steadfast to subcontract Mr Culleton insisted the representation was capable of only one interpretation, employment, and that it was the interpretation he in fact made at the time. It is also implausible that Mr Culleton, at the time of the interview in 2021, was focused on whether Mr Chou was an employee or a contractor. There may be good reasons why a body corporate would prefer that an onsite manager be a direct employee of the firm with which it had its onsite management contract, but if so then there would have been some evidence that they sought and obtained confirmation of the manager’s status at that time. They required a resume and a police check but there was nothing on the evidence showing that they sought, or were provided with, any explicit assurance that Mr Chou would be an employee and not a subcontractor.

Mr Culleton did provide, and Mr Chou tendered, a copy of an email dated 14 November 2021 from a Mr Colin Mitford, but signed by an Amy Chiang.[75] Neither of those persons was called as a witness. The email includes a reference to Mr Chou as being “technically” Mr Ang’s employee. This document is hearsay twice over; it was not identified or proved by the person who made it and nor is any source cited for the assertion that Mr Chou was Mr Ang’s employee. Also, Mr Chou was clearly not, on anyone’s case, Mr Ang’s employee. And this document was tendered in the course of Mr Culleton’s evidence, to which, for the reasons above, I attach little weight.

Under cross-examination, Mr Ang conceded that Mr Chou’s business cards, which Steadfast provided, would have referred either to Steadfast or another entity, Steadfast Support, not Fresh First.

Whatever image might have been projected to the body corporate committee or the world at large, that does not alter the contractual terms. Displaying the principal’s branding is consistent with an independent contractor relationship, not only an employment relationship.[76]

On the evidence, Mr Chou’s work was so subordinate to Steadfast’s business that it can be seen to have been performed as an employee of that business, rather than as part of an independent enterprise. It is not plausible to assert that Mr Chou was running his own independent enterprise, Fresh First, when that company was only providing Mr Chou’s labour as a residential manager who lived on-site and had made a full-time commitment to that job. Mr Chou was working in Steadfast’s enterprise, not his own.

It can be discerned from the parties’ evidence, and particularly the messages between Mr Chou on the one hand and Ms Hsueh and Mr Ang on the other, over the years of his engagement, that all three of them took for granted that Steadfast had a contractual right to control Mr Chou’s activities (including how, where and when the work was done).

The Respondent conceded it had referred to the engagement as employment from time to time but argued that this was just imprecision in language. I accept that the parties’ use of the language of employment is irrelevant or at the least not determinative.

Having regard to the matters set out above and following the decisions in Personnel and Jamsek I find that Mr Chou was an employee of Steadfast at all material times, and that he completed the minimum employment period.

Small Business Fair Dismissal Code

The Respondent did not raise an objection on the basis of consistency with the Code in its Employer response filed 18 September 2024. Nonetheless it is a small business and the question of consistency with the Code must be considered.[77]

The Respondent did raise this objection in its closing written submissions. In his reply submission Mr Chou did not raise any claim of unfairness in relation to the Respondent raising this issue at a late stage, and he made submissions in relation to the Code.

The Respondent relies on the summary dismissal provision of the Code.[78] This involves considering whether, among other things, the employer had reasonable grounds to believe that Mr Chou engaged in misconduct serious enough to warrant summary dismissal.

The Respondent’s submissions point to paragraphs 35 to 59 of Ms Hsueh’s statutory declaration as setting out the circumstances leading up to the termination of the engagement, and why she and Mr Ang believed termination was necessary in order to protect Steadfast’s legitimate business interests, and to the fact that the Respondent commenced proceedings in the District Court. The Respondent submits that it genuinely believed that Mr Chou engaged in serious misconduct that caused deliberate harm to Mr Chou’s business.[79]

To the extent paragraphs 57 to 59 of Ms Hsueh’s statutory declaration deal with matters that came to her attention after the termination, they are not relevant to Steadfast’s genuine belief at the time of termination.[80]

Ms Hsueh’s evidence was that around late July or August 2024 she and Mr Ang became suspicious of Mr Chou.[81] She refers to the following as the basis for her suspicion.

· Mr Chou had a closer relationship with the body corporate, and residents and owners, than she and Mr Ang did, because he was the onsite manager.

· She and Mr Ang met with Mr Culleton in July 2024, and he seemed friendly but expressed disappointment that Mr Chou would not be continuing as site manager, and also said he considered Mr Chou a close personal friend.

· Soon after, the body corporate wanted to renegotiate the remuneration it paid to Steadfast. This formed part of the management rights being sold. The body corporate took a stance that it would not renew its management rights agreement with Steadfast (i.e., would not ‘top up’ the term of the agreement to twenty years, which Ms Hsueh says is generally done every few years). Ms Hsueh took this as hostility to, and an attempt to hinder, the sale of Steadfast’s business.

· Mr Culleton told her and Mr Ang that if Mr Chou were allowed to continue as onsite manager he would convince the body corporate committee not to try to renegotiate Steadfast’s remuneration.

· The body corporate committee held its interview with the prospective buyer on 8 August 2024. Ms Hsueh says the purpose of such interviews is to reassure the body corporate committee that the buyer is capable of taking on the duties of the caretaker and letting manager for the complex. She says the committee opened the meeting by saying that it had a policy of not allowing top-ups, and asking the buyer if it wanted to continue. She said the buyer took a break to consider and decided to continue the interview. She says the committee then spent most of the interview alleging that Mr Ang and she had engaged in unethical conduct including misrepresenting their financial circumstances to the body corporate and mistreating or underpaying Mr Chou. She says the committee suggested to the buyer that Steadfast was selling the management rights because she and Mr Ang had bought an expensive new home. She says that the only person at the complex who knew about their home purchase was Mr Chou. She says the committee requested a formal assessment of each of the three key personnel as to their suitability to manage the complex, and that this delayed settlement.

· The events at the buyer’s interview nearly derailed the sale, and the buyer told Ms Hsueh and Mr Ang that they had come close to terminating the sale contract because of the body corporate’s hostility.

For the Code the Respondent does not have to prove that Mr Chou in fact engaged in the conduct, but it does have to prove that it had reasonable grounds on which to form a genuine belief that he had.

In this case, Ms Hsueh and Mr Ang inferred from the committee’s conduct that Mr Chou had engaged in serious misconduct. To have had reasonable grounds to believe that Mr Chou engaged in the serious misconduct, they must also have had reasonable grounds to believe that the committee had engaged in the conduct from which Mr Chou’s misconduct had been inferred.

Steadfast had reasonable grounds to believe that Mr Chou had a closer relationship with the committee, the owners, and the residents than Ms Hsueh and Mr Ang did, given he was the onsite manager.

Mr Chou did not file any reply statement of Mr Culleton denying that at his meeting with Mr Ang and Ms Hsueh in July, he had described Mr Chou as a close personal friend. Steadfast’s materials did not directly contradict Mr Culleton’s earlier statement in his affidavit that at a meeting at Mr Culleton’s home on 20 July 2024, and again at a meeting with the body corporate committee on 29 July 2024, Ms Hsueh said they were under extreme financial pressure and were selling their home to make ends meet. However, Ms Hsueh did say that Mr Chou was the only person at the complex who knew of their purchase of a new home.

Steadfast’s materials also do not contradict Mr Culleton’s affidavit in respect of the claim that at the meeting of 29 July 2024 with the committee, they attributed financial pressure to interest rates and labour costs. Similarly its materials do not contradict his claim that another committee member asked Mr Ang and Ms Hsueh how they could possibly claim financial hardship when they received an annual increase of 5% or inflation (whichever is greater).

As stated there was no reply statement of Mr Culleton filed with Mr Chou’s reply materials, so there was no reply statement contradicting Ms Hsueh’s assertion that Mr Culleton had told her and Mr Ang that if Mr Chou were allowed to continue as onsite manager he would convince the body corporate committee not to try to renegotiate Steadfast’s remuneration.

It seems clear that the buyer’s interview was the catalyst for the termination of Mr Chou’s engagement. Ms Hsueh’s statutory declaration says:

After the buyer’s interview, John and I had a discussion about what happened and what we needed to do to protect Steadfast’s interests. We decide that we had to terminate our business relationship with Fresh First and remove Sen’s access to things that could potentially be used to jeopardise the business sale.

She goes on to refer to then seeking legal advice as to termination, and removing Mr Chou’s access to his business phone and email. The latter occurred on 9 August, the day after the buyer interview.

What were the reasonable grounds to believe that at the buyers interview the committee had been hostile, had accused Steadfast of misrepresenting its financial situation, had raised with the buyer Ms Hsueh and Mr Ang’s purchase of a house, and/or had accused Steadfast of mistreating and/or underpaying Mr Chou?

Ms Hsueh and Mr Ang were not at the buyer interview on 8 August 2024, and nor was Mr Chou. The Respondent did not call any witness who was present at the buyer’s interview on 8 August 2024, or seek an order for any such witness to attend.

The Respondent did not deal explicitly state the source of its knowledge and the basis for its belief about what had happened at the buyer interview. But Ms Hsueh’s statutory declaration says that it was the buyer who told her that they had come close to terminating the contract because of the body corporate’s hostility. Read in context in the statutory declaration it appears this was conveyed after the buyer interview but before Mr Chou’s online access was revoked the following day.

Mr Chou asked Ms Hsueh whether there was any evidence of him expressing anything to anyone in the complex about their financial hardship or house purchase. Mr Ang objected to the question and Mr Chou did not respond to the objection or press the question.

Mr Culleton’s affidavit relevantly stated:[82]

I have reviewed the statement of claim in relation to paragraph 23, where it is knowingly and falsely claimed that Yi-Hsien Chou, on behalf of Fresh First, made the following misrepresentations to members of the complex, including myself:
• (a) Steadfast, or Ang and Hsueh, or both, were mistreating Chou;
• (b) Steadfast had been dishonest and lied about its financial position, and its financial trouble was due to its directors purchasing an expensive house;
• (c) Chou was being underpaid;
• (d) Steadfast was refusing to pay Chou any redundancy or exit payments.

Steadfast claim that on a date unknown, but before 8th August, Mr Chou allegedly made statements to members of the complex regarding certain matters. However, this claim itself is bizarre. How can they assert that a statement was made without knowing the date, but still be certain that it was before 8th August? This makes no sense.

And later it stated:[83]

I can confirm that at no point during this meeting of 8^th August 2024 did anyone in the committee express hostility toward to the buyers who were present to be assessed by us. It begs the question as why would we destroy the business relationship that we hoped to foster with the buyer. Within 2 minutes or so Fiona and her business partners became extremely upset and angry. Fiona told me that they had not been informed of the body corporate’s strong decision to refuse all future increases in that contract duration. This was quite odd. The committee instructed our body corporate manager, Aleksandra to instruct (on our behalf) our solicitor, Mark Merlick, to write to Steadfast’s legal representative to ensure that they notify the buyer of the committee’s intention not to increase the duration of the contract. I was stunned.

The reference to “Fiona” is a reference to a representative of the buyer. Notably this affidavit does not deny that the issues of the house purchase, claims of mistreatment or underpayment of Mr Chou, or claims that Ms Hsueh or Mr Ang had mispresented their financial situation, were discussed at the buyer interview.

The Respondent did not cross-examine Mr Culleton in relation to what happened in the buyer interview. But Ms Hsueh’s statutory declaration, filed after the Applicant had filed Mr Culleton’s affidavit, had made assertions about the events of the buyer interview. This means Mr Chou was on notice of her evidence before filing his reply materials. He could have filed a statement in reply from Mr Culleton addressing the assertions in the Respondent’s material, when he filed his other reply materials on 13 November 2024.

Though various of these matters were not put to the relevant witness in cross-examination, the parties had been on notice of them because of the exchange of witness statements in advance of the hearing and therefore had an opportunity to put on evidence to the contrary.

Though I have expressed caution about relying on Mr Culleton’s evidence and have determined to give his evidence little weight, it is nonetheless relevant to consider matters that he has raised in his affidavit which Steadfast could have contradicted in its filed materials, but did not.

What conclusions can be drawn from the witnesses’ testimony, and from the various incidences in which they did not contradict each other’s accounts?

As stated above Ms Hsueh did not give the source of her knowledge as to the other matters she says were discussed at the meeting – the allegations that they had misrepresented their finances, had mistreated or underpaid Mr Chou, or that they were selling the business because they had purchased an expensive home. On one view it could be inferred that she was implicitly indicating that the buyer was also the source of this information; on the other hand, may venture beyond inference into speculation. There was no reason why the Respondent could not have put into evidence the source of its knowledge about the events it says occurred at the meeting, and given direct evidence of the means by which it says it obtained this information. In those circumstances I do not consider the Respondent has established it had reasonable grounds to believe that these matters were discussed at the buyer interview.

On the other hand, at the least it can be accepted that:

(a) Mr Chou and Mr Culleton were close and that Mr Chou had a closer relationship with the committee, owners and residents than Mr Ang and Ms Hsueh did;

(b) Mr Culleton told Ms Hsueh and Mr Ang that he considered Mr Chou a close personal friend, and that he was disappointed that Mr Chou would not be continuing as site manager;

(c) the body corporate sought to renegotiate the remuneration payable to Steadfast and told Steadfast it would not top up the management contract;

(d) Ms Hsueh and/or Mr Ang told Mr Culleton and/or the committee that they were under financial pressure and were selling their home;

(e) after the buyer interview of 8 August 2024, but before the termination date of 13 August, the buyer conveyed to Ms Hsueh and/or Mr Ang that the committee had been hostile, and that the hostility had come close to terminating the sale contract as a consequence.

I need not consider the truth of any of these assertions, just whether they provided reasonable grounds for Steadfast to form a genuine belief as to serious misconduct on Mr Chou’s part.

Deliberately attempting to sabotage the sale of the business would be serious misconduct for the purposes of the Code and also having regard to regulation 1.07 of the Fair Work Regulations.

I accept that Mr Hsueh and Mr Ang’s selling agent had previously warned them that their onsite manager may be uncooperative or event attempt to sabotage the sale process.[84] This would have primed them to be suspicious, even though there is no suggestion that this agent had any direct knowledge of Mr Chou or his attitude to the sale.

Ms Hsueh and Mr Ang inferred from the events described above that it was likely that Mr Chou was seeking to influence the body corporate committee to sabotage the sale. They say they moved quickly to terminate the engagement so he would not have an opportunity for further foul play or sabotage.

Steadfast does not suggest that Ms Hsueh and Mr Ang confronted Mr Chou about their apprehensions. It does not suggest that they considered any other explanations, such as commercial considerations, for the committee’s conduct in refusing to top up the contract and trying to renegotiate the remuneration requirements.

In the circumstances I am satisfied that Ms Hsueh and Mr Ang, and therefore Steadfast, genuinely believed that Mr Chou may have been or was likely to have been trying to sabotage the sale. Whether or not this falls short of a genuine belief that he had (definitely, as opposed to likely) engaged in serious misconduct, Steadfast has not established that it had reasonable grounds on which to form this genuine belief.

It follows that the requirements of the summary dismissal part of the Code are not met.

It is not in dispute that no warning, or opportunity to respond, was given. It follows that the dismissal was not consistent with the Code.

In light of those findings, I dismiss the Respondent’s objection that the dismissal was consistent with the Small Business Fair Dismissal Code.

The next question that arises is whether the dismissal was harsh, unjust, or unreasonable. However, for the reasons below I have decided to adjourn this application, before deciding that question, to deal with a discrete issue that the Respondent raised in its closing submissions.

Whether findings of fact should be made about Chou’s conduct

In addition to submitting that the dismissal was consistent with the Code, the Respondent also submitted that given there is an ongoing District Court proceeding, this unfair dismissal proceeding is not the appropriate forum to determine the issue of whether or not Mr Chou in fact engaged in the conduct alleged in the court proceeding. In addition, it submitted that the parties have not been provided with a proper opportunity to fully address the alleged conduct in their evidence.

I do not accept the latter submission. As indicated above, and as the Respondent points out, the question, under this part of the Code, is whether it genuinely believed on reasonable grounds that Mr Chou had engaged in serious misconduct. The objective part of this question is whether the employer had reasonable grounds. The question of consistency with the Code does not turn on whether Mr Chou in fact engaged in the serious misconduct. However, the Respondent has not been successful in this objection and I have found that the dismissal was not consistent with the Code. Accordingly, the next question is whether the dismissal was harsh, unjust, or unreasonable.[85] Findings as to Mr Chou’s actual conduct will be relevant to considering whether there was a valid reason for the dismissal.[86] The question of whether there was a valid reason is a consideration informing whether the dismissal was harsh, unjust, or unreasonable.[87]

The parties were squarely on notice of the provisions that they needed to consider in producing witness statements and submissions in preparation for the hearing. The Directions issued on 9 October 2024 referred to the substantive application and the Respondent’s objection that Mr Chou was not an employee. The notes appended to the directions drew the parties’ attention to sections 385 and 387 of the Fair Work Act. The Directions also explicitly reminded the Applicant to deal with loss and mitigation in his materials. The parties knew that the hearing would deal with the objection, the merits, and remedy. The parties also attended a case management conference on 16 October 2024, at which I took them through the directions that had been issued on 9 December. Both parties filed witness statements, some in the form of statutory declarations, and one in the form of an affidavit, going not only to the question of whether Mr Chou was an employee but to the events leading up to the end of his engagement, and beyond. Ms Hsueh provided an account of the Respondent’s reasons for terminating the engagement, dealing with the events leading to the termination, and her and Mr Ang’s suspicions that Mr Chou was sabotaging the sale of its business.[88] So, the materials filed are consistent with the parties understanding that Mr Chou’s conduct would be in issue in these proceedings. They had every opportunity to prepare witness statements and submissions, and seek orders for production and attendance, in advance of the hearing. I do not accept there was no proper opportunity to fully address the alleged conduct.

As to the former submission, that findings of fact regarding Mr Chou’s actual conduct should not be made while the District Court proceedings are underway, I would first observe that the Respondent has not applied for an order in the nature of a stay pending the determination of those District Court proceedings. However, though the Respondent has had that assistance of lawyers in relation to that other proceeding, it is unrepresented in this proceeding.

I would next observe that this specific issue, as to whether this tribunal should make such findings while other civil proceedings are on foot elsewhere, was not raised prior to the Respondent raising it in their closing submissions. Mr Chou’s closing submissions in reply did not deal with it. Mr Chou is also unrepresented.

In the circumstances I do not consider this issue to have been fully ventilated. I will allow time for the Respondent to make an application for an order in the nature of a stay, and, if such an application is made, for the Applicant to respond to it. In that case the Commission can be properly assisted by the parties’ submissions on this issue. If no application is made in the time allowed I will proceed to decide the overall merits of this matter, and, if necessary, the question of remedy.

In the meantime, if parties wish to avail themselves of a further opportunity for conciliation, they should advise my chambers so that inquiries can be made as to the availability of another Member of this Commission for that purpose.

Conclusion

I have found that the application was made in time, that Mr Chou was an employee, and had completed the minimum employment period. I have found that he was protected from unfair dismissal within the meaning of that term for the purposes of the Fair Work Act.

I have found that Mr Chou was dismissed. I have found that the dismissal was not consistent with the Small Business Fair Dismissal Code, and was not because of genuine redundancy.

The Respondent’s objections that the applicant was not an employee, and that if he was, the dismissal was consistent with the Small Business Fair Dismissal Code, are dismissed.

The matter is adjourned to allow time for any application for an order in the nature of a stay, by reference to the District Court proceedings, to be made, and, if made, determined. Directions will be issued for that purpose.

DEPUTY PRESIDENT

Appearances:

Y Hsien-Chou, the Applicant.
J Ang of the Respondent.

Hearing details:

2024
Brisbane:
19 November

[1] Fair Work Act 2009 (Cth) s 390.

[2] Fair Work Act 2009 (Cth) s 382.

[3] Fair Work Act 2009 (Cth) ss 385 and 390(1).

[4] Fair Work Act 2009 (Cth) s 396.

[5] Fair Work Act 2009 (Cth) s 390.

[6] McKerlie v RateIt Australia Pty Ltd (t/a RateIt)[2020] FWCFB 5131, [58].

[7] Fair Work Act 2009 (Cth) s 382(a).

[8] Fair Work Act 2009 (Cth) s 386.

[9] Fair Work Act 2009 s 390(1)(a).

[10] See also Fair Work Act 2009 (Cth) s 11.

[11] Fair Work Act 2009 (Cth) s 397

[12] Directions issued 9 October 2024.

[13] Unless otherwise indicated the source for each of the following paragraphs is Exhibit A1, Mr Chou’s unfair dismissal statement, filed 23 October 2024, and appendix YC2 to that statement, which is Mr Chou’s timeline of events and various annexed documents.

[14] Exhibit A2, reply statement of Mr Chou filed 13 November 2024, [4].

[15] Exhibit A2, reply statement of Mr Chou filed 13 November 2024, [2].

[16] Incorrectly marked as exhibit R1; I will refer to it as exhibit R1A.

[17] Exhibit A1, Mr Chou’s unfair dismissal statement, filed 23 October 2024.

[18] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 111.

[19] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 122.

[20] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 123.

[21] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 123.

[22] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 126.

[23] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 126.

[24] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 126.

[25] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 125.

[26] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC4, termination letter.

[27] Exhibit A2, reply statement of Mr Chou filed 13 November 2024, [3].

[28] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 94.

[29] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 78.

[30] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC2, timeline of events and annexed documents, 108.

[31] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC1, District Court claim and statement of claim.

[32] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC5, letter from CREO lawyer.

[33] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC6, medical certificate.

[34] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC3, Queensland government website excerpt.

[35] Exhibit A3, affidavit of Michael Patrick Culleton filed 23 October 2024.

[36] Exhibit A4.

[37] Exhibit A5.

[38] Unless otherwise indicated the source for each of the following paragraphs is Exhibit R1, statutory declaration of Amy Chu-Hsin Hsueh, filed 6 November 2024.

[39] Exhibit R1, statutory declaration of Ms Hsueh, filed 6 November 2024, exhibit ACCH-1.

[40] Exhibit A2, reply statement of Mr Chou filed 13 November 2024, [11].

[41] Exhibit R1, statutory declaration of Ms Hsueh, filed 6 November 2024, exhibit ACCH-3.

[42] Exhibit R1, statutory declaration of Ms Hsueh, filed 6 November 2024, exhibit ACCH-4, the notice sent on 10 August.

[43] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC4, termination letter.

[44] Exhibit R1, statutory declaration of Ms Hsueh, filed 6 November 2024, [58].

[45] Unless otherwise indicated the source for each of the following paragraphs is Exhibit R2, Mr Ang’s statutory declaration, filed 6 November 2024.

[46] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC4, termination letter.

[47] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC4, termination letter.

[48] Exhibit A1, statement of Mr Chou filed 23 October 2024.

[49] Exhibit A1, statement of Mr Chou filed 23 October 2024.

[50] Claim statement filed 23 October 2024.

[51] Respondent’s submissions filed 6 November 2024, relying on Exhibit R1, statutory declaration of Ms Hsueh filed 6 November 2024, [10].

[52] Exhibit A2, reply statement of Mr Chou, filed 13 November 2024.

[53] Fair Work Act 2009 (Cth) s 382.

[54] Fair Work Act 2009 (Cth) sch 1 pt 17.

[55] Ibid.

[56] Ibid, it 118(2).

[57] Fair Work Act 2009 (Cth) subs 23(1).

[58] Fair Work Act 2009 (Cth) s 383.

[59] Fair Work Act 2009 (Cth) s 382.

[60] Fair Work Act 2009 (Cth) subs 384(1).

[61] Fair Work Act 2009 (Cth) s 22 and subs 384(2).

[62] Chambers and O’Brien v Broadway Homes Pty Ltd [2022] FWCFB 129, [74].

[63] [2024] FWCFB 419; 335 IR 57.

[64] Ibid, [20].

[65] [2024] FCAFC 35; (2024) 330 IR 171.

[66] Gang Ma v Yan Massage Wynnum West Pty Ltd, [2024] FWCFB 419; 335 IR 57, [23].

[67] Gang Ma v Yan Massage Wynnum West Pty Ltd, [2024] FWCFB 419; 335 IR 57, [26].

[68] Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555, 587.

[69] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC1, Statement of Claim, [13].

[70] [2020] FCA 362.

[71] Ibid, [67].

[72] (2013) 209 FCR 146.

[73] ZG Operations v Jamsek [2022] HCA 2, [88] (Gageler and Gleeson JJ).

[74] Exhibit A2, reply statement of Mr Chou filed 13 November 2024, [4].

[75] Exhibit A5.

[76] ZG Operations v Jamsek [2022] HCA 2, [52]-[53] (Kiefel CJ, Keane and Edelman JJ).

[77] Pecker Maroo Verano Pty Ltd v Linda Margaret Stevens, Matthew Kenneth Stevens[2024] FWCFB 147, [88].

[78] Respondent’s closing submissions filed 4 December 2024, [18].

[79] Respondent’s closing submissions filed 4 December 2024, [17]-[20].

[80] Pecker Maroo Verano Pty Ltd v Linda Margaret Stevens, Matthew Kenneth Stevens[2024] FWCFB 147, [94].

[81] Exhibit R1, statutory declaration of Ms Hsueh filed 6 November 2024, [35].

[82] Exhibit A3, affidavit of Michael Patrick Culleton filed 23 October 2024, 1.

[83] Exhibit A3, affidavit of Michael Patrick Culleton filed 23 October 2024, 3.

[84] wExhibit R1, statutory declaration of Ms Hsueh filed 6 November 2024, [41].

[85] Fair Work Act 2009 (Cth) s 385.

[86] TIOBE Pty Ltd T/A TIOBE v Cathy (Yaqin) Chen[2018] FWCFB 5726, [30].

[87] Fair Work Act 2009 (Cth), s 387(a).

[88] Exhibit R1, Statutory declaration of Ms Hsueh filed 6 November 2024, [35]-[56].

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