O'Brien v Australian Native Landscapes Pty Ltd

O'Brien v Australian Native Landscapes Pty Ltd - [2001] NSWIRComm 145 - NSWIRComm 2001 case summary — Zoe

[4]

THIRD RESPONDENT Sharon Atkinson (Soars) FILE NUMBER: IRC 3592 of 1998 CORAM: Hungerford J CATCHWORDS : Unfair contract - Contract of employment - Collateral arrangement as to superannuation - Claim to declare contract and arrangement void or varied - Claim for order for payment of money - Amendment sought to add to liability of a respondent for any monetary order - Whether amendment in the interests of justice - Prejudice to the respondent concerned - Delay by applicant in bringing the action - Lack of documentation - Difficulties thereby caused - Proper approach to follow - Contract avoided provisions of an industrial award - Whether employee or independent contractor - Underpayment of wages, annual leave and long service leave - Failure to pay agreed superannuation contributions - Representations as to availability of future work - Termination of employment - Redundancy - Proper level of severance/redundancy payments - Whether contract and arrangement unfair - Contract and arrangement declared void from commencement - Order for payment of money - Proper approach to award of interest - Costs. Annual Holidays Act 1944 Evidence Act 1995 s 128 Industrial Arbitration Act 1940 (repealed) s 88F LEGISLATION CITED : Industrial Relations Act 1991 (repealed) s 275 Industrial Relations Act 1996 s 105 s 106 s 109 s 170 Pt 9 Ch 2 Limitation Act 1969 s 14 Supreme Court Act 1970 s 94 Supreme Court Rules 1970 Sch J Abboud v State of New South Wales (Department of School Education) (No 2) (2000) 99 IR 299 Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420 Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australia Branch (1995) 63 IR 1 Australian Nursing Federation, Re [1989] 31 IR 375 Clerks (State) Award, Re [1976] AR (NSW) 417 Clough and Rogers v Frog (1974) 48 ALJR 481, (1974) 4 ALR 615 Cropper v Smith (1884) 26 Ch D 700 Frost v Speaker of the Legislative Assembly of New South Wales (2000) 97 IR 461 Gala v State Bank of New South Wales t/as Colonial State Bank (No 2) (1998) 84 IR 216 Government Cleaning Service (Privatisation) Award (No 3), Re (1994) 55 IR 199, (1995) 59 IR 348 Horton v Jones (No 2) [1939] 39 SR (NSW) 305 Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 CASES CITED : Howe v Teefy [1927] 27 SR (NSW) 301 Hurley v Art Printing Co Pty Ltd (Under Administration) (1994) 54 IR 254 Huskisson RSL Sub-Branch Club Ltd v Sullivan (1990) 20 NSWLR 332, [1990] 32 IR 404 Irvine v Shell Company of Australia Ltd [1969] AR (NSW) 187 Pitcher v Langford (1991) 23 NSWLR 142 Port Macquarie Golf Club Ltd v Stead (1996) 64 IR 53 Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 R v Industrial Commission of South Australia, Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6, [1977] 44 SAIR 1202 Saliba v John Hearder Pty Ltd [1986] 15 IR 36 Smith v Craig Mostyn & Co Pty Ltd [1984] 2 NSWLR 393, [1984] AR (NSW) 565, [1984] 8 IR 344 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 Swift Placements Pty Ltd v WorkCover Authority of New South Wales (Inspector May) (2000) 96 IR 69 Termination, Change and Redundancy Case [1984] 8 IR 34 Walker v Hussmann Australia Pty Ltd [1992] 44 IR 404 HEARING DATES: 11/20/2000; 11/21/2000; 11/22/2000; 12/08/2000; 03/15/2001; 04/17/2001 DATE OF JUDGMENT: 06/27/2001

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General positions of the parties 8 The quantum of the claim as calculated by Mr Lawler was not disputed by Mr O'Loughlin as to its mathematical accuracy based on the applicant's evidence of what occurred. The dispute as to the wages component essentially concerned disagreement as to the hours actually worked by the applicant when the mill commenced double shifts, including that a separate arrangement was made by the first respondent with the applicant that he perform the second shift as a contractor on an hourly rate of $20.00 plus expenses and for which he was fully paid. On this aspect, Mr O'Loughlin claimed the applicant received everything to which he was entitled and there was nothing relevantly unfair in the employment contract or in the contractor arrangement; the claims for annual holiday payment and long service leave fell with the wages claim. As to superannuation, the applicant's claim that he was to receive $2,000 per year was wrong and the agreement was for an amount of $10.00 per week ($520.00 per year). The redundancy claim had no support because the applicant in mid-1991 was not made redundant but simply the mill closed through no fault of the first respondent. In general terms, the respondents resisted the applicant's claim as being, as Mr O'Loughlin submitted, "a claim fed by Mr O'Brien's disappointment in not continuing in 1991 with the ANL contract and his post contract bad luck in relation to the garage and his subsequent bankruptcy". On the other hand, Mr Lawler described the substance of the applicant's claim as "a claim of unfairness because Mr Soars and Australian Native Landscapes failed to honour the promise made when the mill went to double shifts that he would be looked after and those promises made induced him to work extraordinary shifts without adequate remuneration and then when he is made redundant he is simply dropped without any payment whatsoever other than the trifling statutory holiday entitlements, and these were parsimonious".

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11 Mr O'Loughlin conceded, correctly in my view, the power of the Court to make any amendments to the proceedings, "necessary in the interests of justice", at any stage and on such terms as thought fit: see s 170(1) and (2) of the Industrial Relations Act. In resisting the amendment, counsel cited what was said by Jordan CJ in Horton v Jones (No 2) [1939] 39 SR (NSW) 305 at pp 309-310, as follows : It is now a commonplace that if a party to legal proceedings establishes to the satisfaction of the Court that he is genuinely desirous of amending his pleadings for the purpose of modifying or otherwise altering some existing claim or defence, or of introducing a new ground of claim or a new matter of defence, he should be permitted to do so, subject to the imposition of such terms as may be proper, unless the proposed amendment is so obviously futile that it would be struck out if it appeared in an original pleading, or unless it is one that it would be impossible to allow upon any terms without causing substantial injustice to another party to the proceedings. The question whether an amendment would cause substantial injustice must, of course, depend upon the circumstances of the particular case. Mr O'Louglin then referred to the circumstances of this case and, in particular, to the lateness of the application thereby occasioning tactical prejudice to the second respondent who had conducted the case on the basis his only exposure to liability was in respect of the superannuation claim. It was submitted that the second respondent's approach to the resolution of the claim may well have been different if he had, at the time of the s 109 conciliation conference, been aware of the possibility of being exposed to personal liability other than in respect of the superannuation claim. Importantly, counsel emphasised that the interests of the first respondent and those of the second respondent were not necessarily congruent; the second respondent may have chosen to seek separate legal representation and the course of the hearing may thereby have been different. In essence, counsel said "the point is that (the second respondent) has been deprived of the ability to choose what he would have done in the circumstances of his personal substantial liability because of the making of the application at such a late stage".

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12 Although the second respondent was not a party to either the employment contract or the contractor arrangement, it is settled that a monetary order may be made under s 106(5) of the Industrial Relations Act against a person not party to the contract declared void or varied provided the necessary "connection" with such contract be established: see Ace Business Brokers Pty Ltd v Phillips-Treby (2000) 100 IR 420 and the cases cited therein. I am satisfied in the present case that the second respondent, on any view of the evidence, had the requisite relationship with the challenged contract and arrangement and, therefore, it would have been open and proper to seek a monetary order against him either on the initiation of the proceedings or in a timely way thereafter. The real question, however, which arose here was the extreme lateness of the claim to amend the summons to relevantly join the second respondent and what I consider to be the consequent prejudice to him at a stage when the case was all but completed. In reaching this conclusion, I am mindful of the well-known passage from the judgment of Bowen LJ in Cropper v Smith (1884) 26 Ch D 700 at 710 where his Lordship said : Now, I think it is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace. The Hight Court followed that approach in Clough and Rogers v Frog (1974) 48 ALJR 481; (1974) 4 ALR 615 and affirmed it in Queensland v J L Holdings (189 CLR at pp 152-153). It will be apparent, as I have said earlier, that the primary consideration in determining whether to allow an amendment is whether any injustice would be caused to the other party.

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17 Delay was a factor which existed in Hurley v Art Printing Co and, as a consequence, the claim there for interest on monies ordered to be paid was allowed only from the date of filing the application just over five years after the events giving rise to it occurred. Here, of course, the period of the delay was seven years but in relation to events which commenced at least 13 years earlier and about which complaint was now made. Against that, however, it is to be noted the applicant commenced proceedings against the first respondent in the Supreme Court on 2 February 1992 to recover underpayments of wages said to be due to him under the relevant industrial award during the period of his employment and to recover superannuation entitlements due from the superannuation fund by reason of the first respondent's failure to make payments to that fund on his behalf - the first respondent, amongst other defences, pleaded the statutory bar in s 14 of the Limitation Act 1969 in respect of that part of the claim prior to 2 February 1986 and, in answer to the whole of the claim, pleaded "that the agreement made between the plaintiff and the defendant in July 1980 was illegal or immoral or contrary to public policy in that it was entered into with the intention on the part of the plaintiff to conceal from the Commissioner of Taxation the true income to be earned by the plaintiff as an employee of the defendant. Accordingly the agreement was entered into in order to defraud the revenue and is illegal and unenforceable by the plaintiff". I was informed by counsel that the proceedings in the Supreme Court were transferred to the District Court but have been stayed pending the determination of the s 106 claim in this Court. I should add, and as to which I will return, that the respondents here did not similarly defend the applicant's claim as being based on an agreement which was illegal and unenforceable and entered into to defraud the revenue. And neither did the respondents take any point under the Limitation Act as barring the applicant's claims; I think that was the correct course: see Frost v Speaker of the Legislative Assembly of New South Wales (2000) 97 IR 461 at pp 467-472.

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Termination of the employment contract 76 The circumstances of the termination of the relationship between the parties was also an issue. It appeared to be common ground that in mid-1991 the PGH mill, then owned by ACI, was sold to CSR Softwoods but was earmarked for closure in August 1991 because CSR operated a similar activity at its adjacent Softwoods mill. Thus, at that point, the closure of the PGH mill meant the work previously done there by the applicant was not to be performed by anyone. However, the first respondent made arrangements to obtain its supplies of wood bark from the CSR Softwoods mill and, with that knowledge, the applicant approached the second respondent to obtain the carting work for the first respondent from the Softwoods mill. The applicant maintained the second respondent was prepared to grant him the carting work, not as an employee on a wage but as a contractor, for the price of $10.00 per tonne. He was prepared to accept that, no doubt because of the contract he negotiated with CSR Softwoods to carry wood shavings for it for $6.26 per tonne. He said he ceased employment with the first respondent but, while awaiting commencement of the new contract, was advised by the second respondent he was no longer needed as another contractor, a Mr Elliot, had been engaged to do the work at a lower rate. The consequence for the applicant, on his evidence, was that he declined the CSR Softwoods contract because it was not financially viable without the contract with the first respondent. The ensuing period of unemployment suffered by the applicant until mid-1992 and his later difficulties has been referred to earlier in the review of the evidence and I do not repeat it. For the second respondent's part, he denied any agreement between the first respondent and the applicant for the carting of wood bark from the Softwoods mill and maintained he offered the contract to the applicant for $5.00 per tonne even though he had a price of $2.50 per tonne from Mr Elliot. The relationship between the parties thus came to an end.

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94 The termination of the applicant's employment was not accompanied by any period of notice, any severance payment in lieu of notice or any payment for redundancy. The contract of employment simply did not provide for such matters. The applicant, as earlier noted, had a period of employment with the first respondent of just in excess of 11 years and, in my view, the contract in failing to provide for a severance/redundancy payment was unfair. I find he is entitled to consideration in that respect. In Gala v State Bank of New South Wales Ltd t/as Colonial State Bank (No 2) (1998) 84 IR 216 at pp 225-226 a Full Bench of the Court, in determining a period of 9 months' salary as appropriate in that case, relevantly said on the assessment of such a payment : In assessing the amount of compensation in these circumstance we therefore consider what benefits an employee in the appellant's position might reasonably expect to receive if the respondent had retrenched the employee after 11 years of satisfactory service in a senior specialist professional position when, through no fault of the employee, that position had been made redundant. In the R edundancy Awards Case (1994) 53 IR 419 the Full Commission determined a scale under awards, on a "safety net" basis, of severance pay for employees whose employment is terminated by the employer for reasons arising from the introduction of major changes in production, programme, organisation or structure that are likely to have significant effects on employees. The standard award clause arising from that case (see, for example, Electrical Contracting Industry Redundancy and Technical Change (State) Award (287 IG 749)) provides for periods of notice (four weeks for employees with service of five years or more), and severance pay benefits (up to a maximum of 16 weeks' pay for employees with service of six or more years). Employees aged 45 years or over receive an additional 25 per cent. The Full Commission made clear that the scale was fixed on a "safety net" basis, and that many examples of employers having more beneficial schemes had been examined in the proceedings. One of those schemes was that applying in the New South Wales Public Service, described by the Full Commission as seeming "to be the lowest of all major examples tendered". That scheme provided for (at 425-426) : · four weeks notice or pay in lieu, plus · severance pay at the rate of two weeks per year of continuous service with a maximum of 26 weeks, plus additional payments where employees accept an offer of voluntary redundancy within two weeks of the offer being made: · less than one year service: two weeks pay. · one year and less than two years service: four weeks pay. · two years and less than three years service: six weeks pay. · three years service and over: eight weeks pay

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Monetary order - Contract of employment 96 In light of the findings I have made concerning the unfairness in the contract of employment, I consider the appropriate exercise of discretion in the circumstances of this case warrants the making of a monetary order in favour of the applicant against the first respondent. Such order should reflect the earlier findings I have made as to the hours worked, underpayment of wages, call-backs during annual leave and payment on termination of employment for long service leave and severance/redundancy. However, I propose that two qualifications be made to that assessment. First, I accept Mr O'Loughlin's submission in respect of the period of employment from 1 July 1980 to 30 June 1985, during which the applicant worked without complaint, as not requiring any adjustment for underpayment of wages or for call-backs during annual leave. I reach that view having in mind it occurred from 16 to 21 years ago and, I emphasise, the applicant made no complaint until February 1992 at the earliest and the present proceedings were not initiated until July 1998. The second qualification concerns the interest claimed by the applicant on monies found to be due to him calculated on an annual basis for each year since 1985. In my view, it is well settled that in proceedings under s 106 the awarding of an interest component is a matter of discretion to be exercised in the particular circumstances of the case: see Abboud v State of New South Wales (Department of School Education) (No 2) (2000) 99 IR 299 at pp 303, 306-307. In Hurley v Art Printing Co (54 IR at p 286), a case, as here, which involved a delay in the bringing of the action, I had occasion to comment : For the reasons set out earlier as to the delay by the applicants in bringing this action, I am not prepared to award interest on the monies due to them for any period before the summons was filed on 20 April 1993. I am prepared, however, to allow a component for interest for the period from then until the date of judgment on the monies found to be due to the applicants using as a basis the rates prescribed in Sch J to the Supreme Court Rules 1970 for interest up to judgment under s 94 of the Supreme Court Act 1970.

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