6.2 Analysis
31 The competing submissions of the parties about the status of Mr Murphy from January 2011 as an employee and not an employee simultaneously or as an independent contractor miss the essential point that, unless some law provides otherwise, parties are free to contract as they see fit.
32 In this case, Mr Murphy was an employee of Astute from 1 July 2010 to January 2011 on the basis that he was required to be paid $9174.31 per month in salary and superannuation contributions of $825.69 per month ($6630.30 to Mr Murphy's personal bank account, with $2544.01 withheld as PAYG withholding tax, and $825.69 in superannuation contributions in respect of each monthly salary payment).
33 In part on the basis of the primary judge's unchallenged (or, given their credit basis, unchallengeable) factual findings, by January 2011 Mr Murphy and Astute had orally agreed to vary this contract of employment.
34 The primary judge characterised that oral variation at [22] as Mr Murphy remaining an employee but only for the specific purpose of being the required employee licence holder under the QBCC Act and Mr Murphy otherwise performing all work as an independent contractor.
35 This characterisation reflects the subjective view of Mr McDonald about the legal effect of the arrangements which, from the primary judge's findings, it is apparent that both Mr Murphy and Astute accepted.
36 Even if Mr Murphy is correct and he could not simultaneously be an independent contractor and an employee in respect of the same work (to our minds, a sound proposition), that does not undermine the substance of the primary judge's conclusions.
37 First, it is obvious from the primary judge's findings that the oral variation from January 2011 to which Mr Murphy and Astute agreed was that while Mr Murphy's overall monthly remuneration would remain the same ($10,000), Astute would pay that amount, in accordance with Mr Murphy's directions enabling him to minimise his tax, by paying $9415 to the trust on account of Mr Murphy's services as an independent contractor, and $536.70 to Mr Murphy's personal bank account, and $48.30 in superannuation contributions for Mr Murphy (9 per cent calculated on the $536.70) in salary on account of Mr Murphy's employment for the limited purpose of continuing to hold the licence required under the QBCC Act.
38 In these circumstances, where Astute paid the trust in accordance with Mr Murphy's requirements, Mr Murphy cannot suggest that the trust was paid other than as Mr Murphy's agent for the purpose of the receipt of payment (irrespective of Mr Murphy's status as an independent contractor or employee or both). This is clear from the fact that the primary judge's unchallengeable findings expose that:
(1) Mr Murphy established the trust for the purpose of receiving money payable to him so that he could minimise his income tax;
(2) Astute in fact paid the trust in accordance with Mr Murphy's requirements (leaving aside the minor instances of under-payment as found by the primary judge); and
(3) before the termination of his employment by Astute Mr Murphy did not suggest that Astute paying the trust was other than in accordance with his requirements.
39 It necessarily follows that, if Mr Murphy is right and he continued only to be an employee after January 2011 and did not take any additional status as an independent contractor, Mr Murphy required that his wages be paid in part to the trust. Astute put the legal consequence of this in these terms:
… Mr Murphy's choice to interpose the Trust between him and Astute deprived him of his personal capacity to seek relief under s 323 of the FW Act for claimed monthly underpayments of sums said to have been owing to the Trust…
…
Given that Mr Murphy has sought to renew his primary claim that all payments made to his personal account and to the Trust account related to ordinary time earnings for the purposes of calculating his various claimed accrued entitlements, he cannot, as part of his alternative claim, set aside the Trust account payments as being for something other than the performance of work by him. To do so would be to allow Mr Murphy to approbate and reprobate.
40 The key proposition underlying these contentions, however, is that unless the law says otherwise, a person (including an employee) is free to contract with another person (including the person's employer) as they mutually see fit.
41 Section 323 of the FW Act provides that an employer "must pay an employee amounts payable to the employee in relation to the performance of work: (a) in full (except as provided by s 324); and (b) in money by one, or a combination, of the methods referred to in subsection (2); and (c) at least monthly". This section, as with the other provisions of the FW Act, operates against the background of the fundamental doctrines of the common law. One of those doctrines is freedom to contract. Another is the doctrine that one person (the principal) can authorise another person (the agent) to act on the principal's behalf. Whatever else might be said, it is incontrovertible that, on the primary judge's unchallengeable findings of credit and fact, Mr Murphy required Astute to pay the majority of the money payable to him to the trust so that Mr Murphy could minimise the income tax payable by him. On this basis, the trust was Mr Murphy's agent for the purpose of the receipt of money. In paying the trust as Mr Murphy required, Astute was also paying Mr Murphy as its employee in accordance with s 323 of the FW Act (if he was, indeed, an employee in respect of that obligation of payment which, as discussed below, he was not).
42 For its part, Astute was not bound to agree to pay any part of money owed to Mr Murphy to the trust in accordance with Mr Murphy's requirements. But Astute plainly agreed to do so and did so. In so doing, Astute was entitled to accept that the trust had authority from Mr Murphy to be the recipient of payment of that money. Indeed, the trust manifestly did have Mr Murphy's authority in this regard.
43 For these reasons, even if Mr Murphy is right that the only thing that changed in January 2011 is that his contract of employment was varied in respect only of the method of payment such that part of his wages would be paid to the trust (which he is not), Mr Murphy cannot maintain that payments to the trust were not payments to him as Astute's employee. Mr Murphy was entitled to request payment of his wages into whatever bank account he wished. By directing (implicitly and inferentially on the primary judge's findings) that part of his wages should be paid into the bank account of the trust Mr Murphy must be taken to have authorised the trust to act as his agent for receipt of those wages.
44 Numerous legal doctrines now prevent Mr Murphy from turning around and alleging that he was not paid wages as required by s 323 of the FW Act. For example: (a) as Astute submitted, he cannot approbate and reprobate the legal arrangement he sought, enacted and took the benefit of, (b) putting it another way, he is bound by his own conduct and the conduct of the trust as recipient of part of his wages as the disclosed principal of the trust as his agent for that purpose, (c) as a result, he would be estopped from denying and acting inconsistently with the legal relationship he sought, enacted and took the benefit of as against Astute, and (d) he would be denied relief against Astute as a matter of discretion to the extent it depended on non-payment of that part of his wages to him that was required to be paid to the trust under the legal relationship he sought, enacted and took the benefit of.
45 Second, the primary judge did not find (as the grounds of appeal contend) that on 43 monthly occasions, Astute paid Mr Murphy less than the full amount payable. Rather, the primary judge found that the contract of employment between Astute and Mr Murphy was varied so that Mr Murphy would be an employee for the limited purpose of holding the required licence and would otherwise become an independent contractor so that money on account of his work as an independent contractor could be paid to the trust, as Mr Murphy wanted. As discussed, whatever mode of legal analysis is adopted, Mr Murphy cannot now escape the consequences of the legal relationship he sought, enacted and took the benefit of. It follows that the primary judge was not wrong to reject the alleged contraventions of s 323 of the FW Act. In accordance with s 323(1), Astute paid Mr Murphy by its payments in accordance with his direction to the trust.
46 Third, the primary judge did not find that Mr Murphy was simultaneously employed and not employed by Astute. We would accept the legal impossibility of a person being both an employee and an independent contractor of the same company for the same work at the same time. But that is not what the primary judge found. Rather, the primary judge found that Mr Murphy continued as an employee of Astute for one limited purpose only - to make available to Astute Mr Murphy's building licence: [14], [18], [22]. Accordingly, the primary judge did not find that, as an employee, Mr Murphy continued to perform the work he had always performed for Astute. Rather, the primary judge found that Mr Murphy continued to perform the work he had always performed for Astute, other than "making himself available as a nominee supervisor" to Astute as the holder of the licence required by the QBCC Act, as an independent contractor: [22]. It follows that Mr Murphy's complaints about inconsistency in the primary judge's findings are all misplaced.
47 The primary judge's finding that Mr Murphy continued to perform the work he had always performed for Astute as an independent contractor, other than being the holder of the licence required by the QBCC Act, is consistent with the primary judge's approach to the other issues. The assumption implicit within Mr Murphy's inconsistency complaints is that Mr Murphy was working the same hours and doing the same work for Astute as an employee at all times. But that is not what the primary judge found. According to the primary judge, the hours worked and the work done were done under the contract for services between Astute and Mr Murphy as an independent contractor, not as an employee. All Mr Murphy had to do as an employee was continue to hold the licence required under the QBCC Act. This involved no hours and no work, and was subject to the payment of the small amount of wages to Mr Murphy directly, rather than to the trust as he otherwise required.
48 We have explained above that even if Mr Murphy is right that he continued to work as an employee for all purposes, he cannot maintain any claim for unpaid wages to the extent that the wages were paid to the trust. Nor can he maintain any claim against Astute for contravention of s 323(1) of the FW Act to that extent. For the same reasons, he cannot maintain that he was not paid in accordance with any National Minimum Wage Order made under s 285 of the FW Act and in contravention of s 293 of that Act. For completeness, we note that there is no appeal against the primary judge's finding at [40] that Mr Murphy was not covered by the Building and Construction General On-site Award 2010.
49 But the correct characterisation of the legal relationship between Mr Murphy and Astute is relevant to other issues such as the calculation of annual leave. Mr Murphy maintains that he was and remained only an employee. Astute maintains that Mr Murphy was an employee but became only an independent contractor in January 2011.
50 Contrary to Mr Murphy's submissions, it is not the case that Mr Murphy and Astute were always and only parties to a wholly written contract. That is manifestly incorrect, as by January 2011 it is obvious on the primary judge's unchallengeable findings that the parties had orally agreed to a different legal relationship between themselves. The primary judge's statement at [25] that the written contract of employment was varied on two occasions to vary the rates of pay needs to be understood in context. The primary judge was recording only what was "uncontroversial". He was not suggesting that the oral variations he found related only to the required payment under the contract of employment. That is irreconcilable with all of his other findings that Mr Murphy remained an employee for one limited purpose only (holding the required licence) and otherwise performed all work under a contract for services as an independent contractor. The necessary and obvious consequences of these findings are that: (a) the written contract of employment was subject to a substantial oral variation, the terms of which need not be specified other than to say that Mr Murphy performed no work under that contract from January 2011 other than continuing to hold the licence, and (b) there came into existence a new and wholly oral contract for services under which Mr Murphy provided Astute with services as an independent contractor.
51 Contrary to Mr Murphy's submissions, the primary judge did find at [22] that this contract for services existed and the evidence enabled him to do so. It enabled his Honour to do so because the contract of employment between Mr Murphy and Astute was (at the least) varied by oral agreement by January 2011 as the primary judge found at [22].
52 Mr Murphy's complaints that the primary judge merely found some other "arrangement", did not find "any separately identifiable work which [Mr] Murphy had to perform under the other "arrangement", in addition to the 40 hours' work he was already performing each week as an employee, as consideration for the "other payments"", and "could not find that Astute and Murphy entered a contract for services because the evidence did not demonstrate that they did so" are all hollow. The primary judge's reasons are concise but it is clear enough what his Honour found and why he found it.
53 The primary judge found that all work which Mr Murphy performed (other than continuing to hold the required licence) was performed by him as an independent contractor and no work, other than continuing to hold the required licence, was performed by Mr Murphy as an employee. Accordingly, it is wrong for Mr Murphy to submit, as he did, that the "terms of the contract were varied on two occasions, but, as the primary judge found, those variations only had the effect of altering the remuneration payable under the contract".
54 We accept from the primary judge's unchallengeable findings that the subjective common intention of Mr Murphy and Astute was as the primary judge found - Mr Murphy would continue to be Astute's employee solely for the limited purpose of continuing to hold the licence required under the QBCC Act and would otherwise be an independent contractor for the purpose of all other work performed on behalf of Astute.
55 The real issue therefore is not that the primary judge erred in finding that all work which Mr Murphy performed other than continuing to hold the required licence was performed as an independent contractor and no work other than continuing to hold the required licence was performed by Mr Murphy as an employee. This finding precisely reflected the common subjective intention of Mr Murphy and Astute. The real issue in this regard is whether Astute is right that from January 2011 Mr Murphy was nothing but an independent contractor - that is, by oral agreement in January 2011 Mr Murphy's contract of employment ceased and was replaced by an oral contract for services under which Mr Murphy would continue to hold the required licence and would continue to perform the same work as he performed when an employee for the same overall pay to be paid in accordance with Mr Murphy's request as found by the primary judge at [19].
56 Astute made this argument below. Astute can make this argument because, as we have already noted, the existence and terms of any contract are for objective, not subjective, determination: Personnel Contracting at [66].
57 The fact that Astute (but not apparently Mr Murphy) signed a proposed contract of employment of Mr Murphy on 1 February 2011 is immaterial. In his further amended statement of claim Mr Murphy alleged only that, in the alternative and as part of his alleged misrepresentation case, Astute "purportedly" engaged Mr Murphy under a nominal employment contract. Given this pleading, Mr Murphy cannot rely on the 1 February 2011 letter from Astute as supporting the inconsistent proposition that "[a]t the least, there was continued employment under a written contract of employment dated 1 February 2011".
58 Further, and again contrary to Mr Murphy's submissions,:
(1) it does not matter that there "was no evidence that either party gave notice of termination in accordance with clause 16 until 22 June 2018, and no evidence of payment in lieu until 29 June 2018". The parties were free to orally agree that the contract of employment ceased in January 2011 without any such notice or such payment;
(2) there is evidence capable of supporting the conclusion that the contract of employment was abandoned by mutual oral assent by January 2011. The evidence is the subsequent conduct of the parties by which Astute paid the trust and Mr Murphy must be inferred to have directed and acquiesced in that payment; and
(3) the primary judge's statement at [22] that the "work that he [Murphy] did and the way he did it did not change" does not support Mr Murphy's case. This is because it is also clear from [22] that the primary judge considered that the legal relationship had changed so that all of the work Mr Murphy did was under a contract for services as an independent contractor from January 2011 and not under a contract of services as an employee. The only thing he did under an employment relationship was continue to hold the required licence under the QBCC Act.
59 For these reasons, this aspect of Mr Murphy's case is untenable and provides no cogent answer to Astute's contention that the primary judge erred by not finding that from January 2011 Mr Murphy was solely an independent contractor.
60 Considered in accordance with the principles we have set out above, the primary judge's findings about the objective circumstances support his conclusions that the initial contract of employment was varied but did not cease as at January 2011. In circumstances where no party suggested to the primary judge that the contracts involved a sham, we are satisfied that the oral variation to the initial contract of employment was as found by the primary judge (described above).
61 The necessary consequences of the findings the primary judge made were that, under the continuing varied contract of employment (partly in writing and partly oral), Mr Murphy would be bound to do nothing other than continue to hold the required licence under the QBCC Act for which he would be paid the modest remuneration of $536.70 per month (and $48.30 in superannuation contributions). That is, it follows from what the primary judge did find (again, noting the lack of any argument that the contract of employment was a mere sham), Mr Murphy performed no other work under this contract of employment. He had no required hours under this contract of employment. No doubt there would be implied terms in this contract of employment (the scope of which need not be precisely identified) to the effect that he would continue to hold the required licence and to perform his separate contract for services by which he provided services to Astute as an independent contractor. But all of the work that he performed for Astute other than continuing to hold the required licence under the QBCC Act was work he performed under this separate contract for services as an independent contractor. It also follows from the primary judge's findings that another wholly oral contract came into existence by January 2011, the contract for services under which Mr Murphy agreed to provide services to Astute as an independent contractor. So much is apparent from the primary judge's findings irrespective of any brevity of expression in his Honour's reasoning.
62 This characterisation of the legal relationships, effectively as found by the primary judge (and, again, given the lack of any contention of a sham), accords with the objective circumstances also as found by the primary judge and the subsequent conduct of the parties (relevant to the variation of the contract of employment and the formation of the new contract for services which the primary judge also, implicitly at least, found). It is also consistent with:
(1) Mr Murphy's status as the holder of the required licence under the QBCC Act;
(2) Mr Murphy's obligation under s 30A(1)(a)(i) of the QBCC Act to "provide supervisory services for building work carried out", which involves the application of Mr Murphy's own skill, experience and expertise, and was always required to be performed other than under the control and direction of Astute (see s 30A(1)(b) of the QBCC Act);
(3) Mr Murphy's establishment of the trust; and
(4) Mr Murphy directing payments for his services to be paid to the trust.
63 This does not mean, however, that Mr Murphy was not also an employee of Astute for the limited purpose of continuing to hold the licence required by the QBCC Act. The circumstances (particularly the direct payment to Mr Murphy and the payment of superannuation on his behalf) demonstrate the common objectively determinable intention of Astute and Mr Murphy that he continue as an employee albeit for this limited purpose and not for the purpose of performing work. This is where ground 1 of the cross-appeal goes wrong. In this regard, it does not matter if the QBCC Act did or did not require Mr Murphy to be employed by Astute. What is relevant is that the common objectively determinable intention of Astute and Mr Murphy is that he continue to be an employee for that limited purpose only. For these reasons, the appeal and cross-appeal must be rejected to the extent they depend on the allegations of error by the primary judge in characterising the legal relationships from January 2011 as other than that described above.
64 We would also note that the contracts between the parties from January 2011 were fraught with potential legal difficulties (as this matter exposes). While we consider the primary judge was right to give effect to the objective contractual intentions of the parties, it is possible that the circumstances raise other potential issues which the parties have not put in issue in this case and which we need not explore.