Kronen v Commercial Motor Industries Pty Ltd

The reasons for judgment of the Industrial Magistrate 8 At [7]-[9], the industrial magistrate rejected a submission that the IRCSA had no jurisdiction to deal with the appellant's claim relating to superannuation payments. He did so on the basis that the court had jurisdiction to interpret the Award in a way binding on the parties, and that this enabled him to determine what was the "appropriate gross sum to be used for calculating superannuation contributions". His Honour dealt with the provisions of the Award relating to superannuation in [48]-[51] of his reasons for judgment, and reached the conclusion at [51] that the phrase "ordinary time earnings" in those provisions meant that "superannuation contributions are to be calculated on the minimum weekly payment preserved by the Award or whatever on [sic] contractual arrangement superior to the Award that prevailed." In the case of the appellant, his Honour's view was that this amount was the amount of the retainer paid to the appellant, which was at a rate higher than the rate fixed by the Award. His Honour held that commissions are not to be included. 9 In dealing with the claim for overtime, at [15], the industrial magistrate found that the appellant had been appointed as a business manager from 14 December 1998. At [16], his Honour held that, for the whole of the period for which the limitation period permitted the appellant to claim (from 11 July 1999 until 3 November 2000), he was therefore to be considered as someone working as a business manager on a weekly retainer of $500 plus a commission of 20% on any finance and insurance business that he wrote. After summarising at [17]-[27] the evidence of the appellant and the case put by him, and the evidence of witnesses called on behalf of the respondent, the industrial magistrate said: 28 The further and better particulars of the applicant's claim appear to me to be an ambit claim which was not made out by the evidence of the applicant himself and was also rebutted by the collective evidence called by the respondent as I have referred to above. 29 Nevertheless CMI Toyota agreed that the applicant did work in excess of 38 hours per week. 30 CMI Toyota accepted that the Award applied to the applicant. Clause 24 of the Award provides for overtime payments for persons employed in the industry excluding vehicle salespersons. 31 The applicant's classification under the Award as contended for by CMI Toyota namely "Salesperson - Other" seems to be appropriate when regard is had to the duties the applicant principally performed. Furthermore the position of Business Manager in the industry and coverage by the Award with regard to that position has been considered by a full commission of the Australian Industrial Relations Commission in K Ransom v Southern Automobiles 742/99 S Print S0982 [1999] IRComm A 673 (11 June 1999). 10 After making the point again that the appellant's rate of retainer was above the Award rate (at [36]), at [39] his Honour discussed authorities relating to the appropriation of a payment by an employer to a particular obligation of the employer. At [40], his Honour held that the respondent could appropriate payments made each fortnight towards its obligation under the Award, whether those obligations arose as to ordinary time or overtime. It could not appropriate payments made for the entire period to offset any shortfall in its obligations under the Award. His Honour found that such shortfalls had occurred on 19 occasions. At [41], his Honour set out the shortfalls in the form of a table. This table had apparently been prepared by the respondent's representative, and handed to the court. It appears never to have been formally tendered and received in evidence. Nevertheless, the industrial magistrate specifically adopted the figures in it and reached the conclusion that the shortfalls totalled $5,680.62. 11 At [42]-[46], the industrial magistrate proceeded to consider whether there was a custom and practice in the motor trade industry whereby overtime was not paid. He said at [43] that cl 24 of the Award excludes vehicle salespersons from overtime payments, and pointed out that vehicle salespersons, like business managers, are remunerated by retainer plus commissions. After discussing authorities on custom and practice, his Honour found that the custom in the industry was not to pay overtime to business managers, because the ability to earn commission on top of a retainer was intended to compensate for the hours worked. As his Honour said at [45], when commissions were taken into account, the appellant's income for the relevant period was "far in excess of the corresponding Award rate." His Honour found at [46] that it was reasonable to import "into the contract" a term whereby overtime was not paid for any hours worked in excess of 38. At [47], his Honour expressed the conclusion that the appellant's claim for overtime pay failed.

The superannuation claim 12 The industrial magistrate was in error in asserting that the IRCSA had jurisdiction to interpret the Award. Section 179 of the WR Act only gave the court jurisdiction to deal with a suit for the amount of the payment that an employer was required to pay to an employee. As has been recognised by the subsequent amendment, that jurisdiction did not cover obligations to make payments on behalf of employees to the trustees of superannuation funds. Such a payment is not an amount that an employer is required to pay "to an employee". 13 Of course, the IRCSA is required to interpret federal awards, to the extent to which such interpretation is required for it to exercise the jurisdiction conferred on it by the WR Act, when that jurisdiction has been invoked in a particular case. It will often be necessary to interpret an award for the purpose of determining whether there has been a breach of a provision of it, and therefore whether a penalty should be imposed, pursuant to the provisions now found in s 719 of the WR Act. Similarly, it may be necessary for the court to interpret a federal award as a means of determining whether the relevant provision imposes a requirement that the employer pay an amount of money to an employee or to a superannuation fund, under s 720. There is no general conferment on courts other than this Court of jurisdiction to interpret awards. At the time of the institution of the proceeding in the IRCSA, s 413 of the WR Act gave to this Court (and to no other) jurisdiction to "give an interpretation of an award". The relevant provision is now found in s 848 of the WR Act. That provision now confers similar jurisdiction on the Federal Magistrates Court. The IRCSA did not have jurisdiction to interpret a federal award, aside from such interpretation as was necessary to determine a claim properly before it. In the present case, it had no jurisdiction to determine the claim for underpayment of superannuation. Whatever provisions there are in the Fair Work Act conferring jurisdiction on the IRCSA, they cannot be effective to confer on the court federal jurisdiction. Only the Parliament of the Commonwealth of Australia can confer federal jurisdiction on a State court, pursuant to s 77(iii) of the Constitution. 14 The industrial magistrate made no order reflecting the conclusions he had reached on the superannuation claim. He neither dismissed the claim (which he was bound to do, if he came to the conclusion that he had no power to order the making of payments) nor made any purported declaration reflecting the conclusion to which he had come as to the meaning and effect of the provisions of the Award relating to superannuation. His Honour seems to have thought that the expression of a conclusion in his reasons for judgment was sufficient. It was not. The whole of the application by summons before the court needed to be dealt with. Plainly, because the court lacked jurisdiction to deal with the superannuation claim, that aspect of the application was required to be dismissed. 15 The failure by the industrial magistrate to make an order in relation to the claim for superannuation might mean that the order he made does not dispose finally of the proceeding before him. This might mean that the order his Honour made is an interlocutory judgment. See Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd and Others [2008] FCAFC 60 (2008) 167 FCR 372 at [64]-[72] per Rares J, and [160] and [180]-[182] per Gordon J, and the cases cited by their Honours. The respondent did not contend that the appellant required leave to appeal, as s 24(1A) of the Federal Court of Australia Act 1976 (Cth) may require, or that the appeal was incompetent. This may have been because the respondent took the view that s 853(2) of the WR Act overrides s 24(1A). Section 853(2), provides that it is not necessary to obtain the leave of the Court, or the court appealed from, in relation to an appeal under s 853(1), (for this purpose an appeal from a judgment of a court of a State in a matter arising under the WR Act). That view would accord with the judgment of Branson J in Citigroup Pty Ltd v Mason [2008] FCA 389 (2008) 167 FCR 217, especially at [32]-[33]. In that case, her Honour held that s 853(2) prevails over s 24(1A), so that leave to appeal is unnecessary for an appeal from a court of a State under s 853(1) of the WR Act, even if the appeal is from an interlocutory judgment. It appears that neither party to that case argued the contrary proposition. The point was not dealt with in argument in the present case, and the Court did not advert to the issue at the time of the hearing of the appeal. In those circumstances, it would be unfair to dismiss the appeal in relation to the overtime pay claim on the basis that it has been brought without leave. Without deciding whether leave is necessary, the Court should proceed on the basis that the appeal is competent, and deal with it on its merits.

The overtime claim 16 Counsel for the respondent conceded in this Court that the industrial magistrate fell into error in holding that no overtime was payable because of an implied term, derived from custom and practice, in the contract of employment of the appellant, to the effect that a business manager was remunerated by means of a retainer and commission, and was not to be paid extra for overtime worked. Clearly, this concession was proper. The obligation that the appellant sought to enforce was not an obligation arising from his contract of employment, but one arising directly from the Award. An obligation under an award is a statutory obligation. It is impossible to contract out of such an obligation, even by express contract. See Kidd v Savage River Mines (1984) 6 FCR 398 at 410. It follows that no implied term in any contract between the parties could oust the statutory obligation. 17 Having found that there was error on the part of the industrial magistrate, this Court must consider whether the error affected the result, before allowing the appeal. It is therefore necessary to deal with the respondent's notice of contention. 18 By ground 1 of this notice, the respondent asserts that the Court should entertain an argument not advanced by the respondent at the trial, because all facts concerning the point have been established by the evidence beyond controversy, or the point is one of construction. Ground 2 seeks that this Court should disregard a concession, said to have been made mistakenly by the respondent at the trial, regarding the proper construction of the Award. The concession was that the appellant was not engaged in work capable of being characterised as that of a vehicle salesperson. The third ground asserts that the Court should find that the appellant was "principally employed to perform duties related to the sale of vehicles" and was therefore excluded from the provisions in the Award relating to overtime and weekend work. 19 What is described in ground 2 of the notice of contention as a concession by the respondent at the trial appears to be a reference to what the industrial magistrate said in [31] of his reasons for judgment, quoted at [9] above. From that passage, it appears that the respondent's representative at the trial advanced the contention that "Salesperson - Other" was the classification appropriate to the duties performed by the appellant, and that the industrial magistrate accepted this, relying on the authority to which his Honour referred. The industrial magistrate appears to have taken the view that, if the appellant were classified as a "Salesperson - Other", he would not be a "Vehicle Salesperson". In turn, his Honour took the view that a "Vehicle Salesperson" was excluded from the benefit of cl 24 of the Award, which made provision for overtime pay. 20 Clause 24(a) provided as follows: Exclusion of vehicle salesmen (a) This clause shall not apply to a person principally employed to perform duties related to the sale of vehicles as defined. 21 The definitions of terms used in the Award are found in cl 44. The relevant ones appear to be as follows: (b) "Agricultural vehicle salesman" means an employee employed in the sale of agricultural motor vehicles and self-propelled farming implements or units for which the agricultural motor vehicle or self-propelled farming implement provides the motive power. ... (v) "Motor vehicle salesman" means an employee employed in the sale of road and industrial vehicles, caravans, trailers and/or boats excepting persons principally employed in the sale of motor cycles. ... (am) "Vehicle salesman" means a motor vehicle salesman or saleswoman and/or an agricultural vehicle salesman or saleswoman. 22 There is no definition of "Salesperson - Other". That term appears in a list of classifications, described as Level 4, in cl 8(c) of the Award. That clause fixes a total minimum weekly rate of pay for all Level 4 employees. Another Level 4 classification is "Motor vehicle and/or agricultural vehicle salesperson - less than 6 months experience". The classification "Motor vehicle and/or agricultural vehicle salesperson - more than 6 months experience" appears in the list of classifications at Level 6, with a higher total minimum weekly rate of pay than is prescribed for Level 4. Nowhere in the Award is there a definition of "a person principally employed to perform duties related to the sale of vehicles", or of "duties related to the sale of vehicles", or of "the sale of vehicles", or even of "vehicles". It is therefore difficult to know what the words "as defined" in cl 24(a) are intended to mean. The definitions of "Agricultural vehicle salesman", "Motor vehicle salesman" and "Vehicle salesman" do not refer to "duties related to the sale of vehicles" but, in the case of the first two of those definitions, to being "employed in the sale of…vehicles". 23 For guidance on the meaning of cl 24(a), it is instructive to refer to clauses similar to cl 24(a), found in other clauses of the Award. Clause 20 relates to rates for Saturday work and cl 21 to rates for Sunday work. Clause 20(a) provides: This clause shall not apply to persons principally employed to perform duties of a driveway attendant, console operator or a roadhouse attendant as defined referred to in paragraph 6(f)(iv) of this award nor to a person employed principally to perform duties related to the sale of vehicles as defined. Clause 21(a) is identical to cl 20(a) except that in cl 21(a) a comma appears after the word "award", whereas there is no comma in cl 20(a). Clause 22 relates to rates for holiday work. Clause 22(a) simply provides "this clause shall not apply to a vehicle salesman." Clause 23 relates to conditions and rates of pay for shift work. Clause 23(a) is as follows: This clause shall not apply to a person principally employed to fit tyres as defined or a person principally employed in tyre repairing and retreading processes as defined, a person principally employed to perform duties of a driveway attendant, console operator or a roadhouse attendant as defined as referred to in paragraph 6(f)(iv) of this award, nor to a person principally employed to perform duties related to the sale of vehicles as defined. In none of cll 20, 21, 22 or 23 is there any equivalent of the heading to cl 24(a). 24 It seems clear that the words "principally employed to perform duties related to the sale of vehicles", used in cl 24(a), as well as in cll 20(a), 21(a) and 23(a), are intended to be of wider import than the words "employed in the sale of" vehicles of various kinds, used in the definitions of "Agricultural vehicle salesman" and "Motor vehicle salesman", which together make up the definition of "Vehicle salesman". In particular, the use of the words "related to" signifies application to a broader area than "in". This proposition is supported by the use of the defined term "Vehicle salesman" in cl 22(a), compared with the expression common to cll 24(a), 20(a), 21(a) and 23(a). The choice appears to have been deliberate in the drafting of the clauses of the Award, so as to ensure that the exemptions from the obligations to provide additional pay for overtime, Saturday work, Sunday work and shift work are broader than the exemption from the obligation to pay additional rates for holiday work. The specific reference to "vehicle salesmen" in the heading to cl 24(a) weighs against this conclusion. In the circumstances, however, its weight must be slight. If the person who drafted cl 24(a) had intended merely to exclude vehicle salesmen, the specific reference to the defined term, as was done in cl 22(a), would have made the task easy. It is necessary to conclude that the class of persons "principally employed to perform duties related to the sale of vehicles" is intended to be broader than the class of persons "employed in the sale of" vehicles. 25 From this, it follows that the task of the industrial magistrate was to determine whether the appellant was a person principally employed to perform duties related to the sale of vehicles. If so, cl 24(a) of the Award applied and the respondent was not obliged to pay him any money in respect of overtime worked. The answer to the question depended upon the nature of the duties performed by the appellant, and their relationship to the sale of vehicles. It did not depend upon whether the appellant was classified as a "Salesman - Other", or whether he fell into some other classification for the purpose of determining a minimum rate of pay. The concession, or contention, of the respondent at the trial that this classification was appropriate is not determinative of the answer to the question on which the appellant's claim for overtime pay depended. 26 The industrial magistrate's findings about the duties of the appellant were extremely limited. Beyond finding that the appellant was employed as a business manager, and suggesting (at [43]) that a business manager was like a vehicle salesperson, in that both were remunerated by retainer and commission, the industrial magistrate did not say anything about the appellant's duties. This raises the question whether this Court should remit the case to the IRCSA, so that the correct question can be determined. The alternative is that this Court should determine the necessary factual issues itself. 27 As it turns out, the evidence as to what the appellant was required to do in his capacity as business manager for the respondent was uncontroversial. In his evidence-in-chief, the appellant said that he was remunerated partly by a percentage of commissions that the respondent received from various finance and insurance companies in respect of the finance and insurance business that he had written. The following passage in the transcript of the cross-examination of the appellant contains his own account of his duties, with some consequential questions and answers: It was a requirement of the job of business manager to wait until any and all vehicle salespersons had finished with their customers at the end of the day before finishing up at night him or herself. This was because a customer might require advice or information on finance or insurance matters before committing to a purchase or because an order was about to be taken from a client, and the business manager was required to check the paperwork on any sales, ensure that the figures were all correct, take any deposits and provide clients with information in readiness for picking their cars up. Basically, all the money went through the business manager on the sale of a car or, like I say, when an order was taken - deposits and the like - as well as when delivery was made later, but I'll get back to that. If a salesman was out in the lot and had clinched a deal, for want of a better description, they would bring the customer into you?---Every time. And you would do the paperwork?---I would basically check the order to see that it was correct and proper, take any deposits and then seek to persuade the client to utilise our insurance facilities, finance facilities and the like and, in those instances when I was successful in persuading the customer, then basically initiate a finance application. Right. Say there was a person who wasn't interested in your finance and wasn't interested in your insurance - simply wanted to sign up on the dotted line to order the car - would you be involved in that?---Yes, I would. The salesman would have the order signed, he would then bring the client and the paperwork into me and I would check the paperwork, take a deposit from the client, which would be receipted, et cetera, because that was always the case - - - You would do the receipting?---I would do the receipting. Was there anyone else at Southside who did that?---On occasion. The only other person authorised was the general manager, but that was very rare. In your absence on Wednesday afternoons, who would do that?---The general manager. Where was I? On the other hand, a customer might not be able to take delivery of a vehicle till sort of after their work, and it was the business manager's duty to be part of that procedure - as I indicated a moment ago, to take all moneys and ensure that the company's liabilities in regard to the delivery procedure were fulfilled. Sorry, and also at delivery, if the client had wished to utilise our services in regard to finance and insurance, there were a multitude of documents to be signed off on. 28 Subsequently in his cross-examination, describing his duties at premises of the respondent known as Budget Buys, the appellant said: During this period of reduced workload I assisted the manager of Budget Buys...I assisted with various administrative functions as well as the actual sale of motor vehicles 29 A witness named Parker, called by the respondent, gave evidence about the duties of the business manager as follows: As [the appellant] described earlier today the position was required to receipt the customer's payment to the dealership and the job role basically has to ensure that the vehicle was paid for before it was delivered. That was the major function from my point of view. That the business manager, apart from the selling aspects of it - as you're probably aware if they're selling finance they're getting settlement of the customer's finance and probably giving the dealership a bit of a par for when a car can be delivered. So it goes hand in hand that the salesman will be regularly contacting the business manager to find out when they could deliver a car because he knew when the vehicle would be paid for. So, out of all those vehicles that he delivered - to finance, he still would have to receipt the customer's money and there was various paperwork checks that needed to be done as well. Quite often a transaction would involve the customer trading in a vehicle. There were what the industry calls a VSC, a vehicle security check, that that trading wasn't encumbered. We can't sell a vehicle that has an encumbrance on it. The business manager had to check that that encumbrance was removed; had to pay out finance that might have been applicable to that trade-in. It was all part of the job function and the business manager's role. So, it [sic] there was quite a deal of paperwork that the business manager had to perform with transactions that he didn't have finance, sold applicable to [sic]. 30 The respondent also called Jeffrey Brokenshire, a former general manager at one of the respondent's outlets at which the appellant had been employed. When asked what the appellant's position was, Mr Brokenshire said, "He sold our finance and insurance." He described the appellant's duties as business manager as follows: On the completion of selling a car new or used, the salesman would take me off the purchase in to [the appellant], debrief him on what he believes the client needed in the terms of financial insurance if he could, if he knew, if the salesperson knew. Then [the appellant] would receipt the deposit if there was one for that dealer's book if there was a trade-in, complete all necessary documentation and if finance was sold take the qualification questions on submission, the same comprehensive insurance, sickness and accident insurance and other items of that needed. It seems clear that the transcript reference to "financial insurance" should be read as "finance or insurance". 31 Gregory Harris was also called by the respondent to give evidence. He had preceded the appellant as business manager at one of the respondent's sales outlets. He described his duties as follows: The duties are - after the market person has seen a client they are introduced to me. I then ascertain whether they're going to finance a vehicle or pay cash for it. If they're paying cash for it I would receipt their deposit and give them an instruction list on what we need on delivery. For instance registration papers for their trade-in, spare keys, those sorts of things. I would also discuss with them whether they were interested in taking out insurance with us and also extended warranties. If they're with finance I actually do a finance application to our financiers and then discuss with them the various documents I need to be forwarded to me on delivery. 32 It is clear on this evidence that there were three important elements of the appellant's duties as business manager. The first was to deal with any money received, by way of deposit or the full purchase price, and to ensure that a receipt was given for any payment. This duty was required to be performed in relation to all sales of motor vehicles, whether or not the purchaser required finance or insurance. Second, to the extent that it was necessary, the appellant was required to attempt to sell to the purchaser of a car the finance necessary to enable the purchase to be completed. This was intended to assist the person to purchase the car, and therefore to assist the respondent to sell it. Third, the appellant was required to attempt to sell insurance policies to purchasers. This was no doubt important to the provider of finance, and again helped to ensure the completion of the purchase, and therefore the sale of the vehicle. There may have been other duties in relation to all or some of the sales of vehicles. Each of the three principal duties was clearly related to the sale of vehicles. Without the performance of the first, no sale could have been completed at all. The performance of the second and third duties was likely to be important in ensuring that sales went ahead. It is not as if the business manager was present to sell finance contracts and insurance policies to members of the public generally. They were sold to the purchasers of motor vehicles, as part of the service offered by the respondent to assist it in selling those vehicles. 33 It is clear that the appellant was "a person principally employed to perform duties related to the sale of vehicles", within the meaning of cl 24(a) of the Award. The operation of cl 24 was therefore excluded in relation to him. He was not entitled to payment in respect of overtime hours worked. The industrial magistrate would be required to dismiss his claim for overtime pay if this Court were to remit the case for determination of that question. The answer to the question is so clear that there is no point in remitting the case. The respondent must succeed on the third ground of its notice of contention.

Conclusion 34 The appellant's claim in the IRCSA in respect of superannuation payments was bound to fail, as the court lacked jurisdiction to deal with it. His claim for overtime pay was bound to fail as his duties as business manager caused him to fall within the subclause exempting the respondent from any obligation to pay additional money for overtime worked. On this basis, the industrial magistrate ought to have dismissed the whole of the appellant's application. His Honour dismissed only the claim for overtime pay. Although he did so on an erroneous basis, he was bound to do so in any event. The appeal to this Court is, and can only be, from the order dismissing the claim for overtime pay. This Court must therefore dismiss the appeal. 35 This appeal is a proceeding in a matter arising under the WR Act. By s 824(1) of the WR Act, no order for costs can be made in such a proceeding, unless it has been instituted vexatiously or without reasonable cause. The respondent has conceded error on the part of the industrial magistrate, and has been successful in resisting the appeal only on a ground raised in its notice of contention. It can hardly argue that the appeal has been instituted vexatiously or without reasonable cause. No order for costs can be made. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Gray, Branson and Lander.

Associate: Dated: 8 October 2008 Counsel for the Appellant: The appellant appeared in person