Consideration
78 The appeal concerns whether Mr Bhagwandas's entitlement under the Employment Contract to the balance of commission payable upon settlement in relation to properties he sold during the wages entitlement period, where settlement had not occurred as at the end of the wages entitlement period, constitutes a "debt" or "debts" wholly or partly attributable to a "wages entitlement" (and therefore an "employment entitlement") being "a wages amount … for work done … in the wages entitlement period" as required by ss 6(6) and 10(1)(d) of the Act.
79 To answer that question it is necessary, first, to focus on the terms of the Employment Contract. It is uncontroversial that the terms of the Employment Contract are to be construed objectively, by reference to what a reasonable person in that situation would have understood the terms to mean, rather than by reference to the subjective intention of the parties. This objective approach requires reference to the text of the agreement, in its ordinary meaning, the textual context (being the entire agreement and any documents or statutory provisions referred to in the text), and its purpose: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; 256 CLR 104 at [46]-[52] (French CJ, Nettle and Gordon JJ); Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
80 Because the appeal is only in relation to commission payable on settlement in respect of property sales which Mr Bhagwandas made in the 13 week wages entitlement period from 14 February 2019 to 15 May 2019, the relevant part of Item 14 of the Employment Contract is the part headed "Sales made on or after 1 January 2017".
81 That part of Item 14 contains only two sentences:
(a) The first sentence states:
25% of Steller Residential 2% sales contract commission.
Although expressed in shorthand, it provides the amount of Mr Bhagwandas's entitlement to commission for property sales he made on or after 1 January 2017. Upon making a property sale Mr Bhagwandas is entitled to commission comprising 25% of Steller's commission for the sale, which is itself 2% of the property price on the sale contract. The Secretary does not contend otherwise.
(b) The second sentence is central in the appeal. It states:
Where a deposit of 10% is secured against the sale, 50% of the commission will be paid upfront and balance on settlement.
In my view, this provides a condition, being the securing of a 10% deposit on the property sale. Upon satisfaction of that condition the commission (the amount of which is provided in the first sentence) is to be paid to Mr Bhagwandas in two stages. The first 50% upfront (that is, upon entry into the sale contract) and the balance upon settlement occurring.
82 The Secretary submits that Mr Bhagwandas's right to the balance of commission on settlement is contingent upon two conditions being met: first, a deposit of 10% being secured against the sale; and second, settlement of the sale occurring. That submission is not without a basis, but I have reached a different conclusion.
83 The second sentence of the relevant part of Item 14 states that if Mr Bhagwandas secures a property sale with a 10% deposit, he is entitled to "the commission" (indicating a single entitlement) which will be paid in two stages or tranches: first, 50% upfront; and second, the balance on settlement. There is only one commission to which Mr Bhagwandas is entitled to under Item 14, not two different or separate commissions. The fact that the commisssion is payable in two tranches does not change the nature of the entitlement from being a single entitlement. The term "balance" also suggests the payment of the remainder of an existing, single entitlement, and the expression "on settlement" describes the timing or staging of the payment. In my view, Item 14 does not provide an entitlement to two different types or kinds of commission. I do not accept the Secretary's contention that this construction of Item 14 operates to render the words "balance on settlement" otiose. In my view, those words still have work to do by describing the timing of the payment of the second tranche of "the commission".
84 It was common ground before the Tribunal that Mr Bhagwandas's entitlement to commission under cl 12.6 and Item 14 fell within the definition of "wages" in s 7 of the Act. Notwithstanding the parties' agreement on the issue, the Tribunal still considered it necessary to determine the question. The Tribunal concluded (at [24]) that Mr Bhagwandas's entitlement to commission under the Employment Contract fell within the definition of "wages", and there is no challenge that finding. Therefore, strictly speaking, the question as to whether Mr Bhagwandas's entitlement to commission under the Employment Contract was "wages" within the meaning of s 7 of the Act does not arise e.
85 There is, however, an elephant in the room to which the Tribunal made no reference, and which neither party addressed in their submissions. The unacknowledged issue is that cl 12.6 of the Employment Contract provides:
The Employer may pay an incentive or offer an initiative. Any such incentive or initiative is at the discretion of the Employer and is set out in Item 14 of Schedule 1.
Item 14 provides:
Incentives and Initiatives Sales made prior to 1 January 2017:
20% of Steller Residential 2% sales contract commission
Sales made on or after 1 January 2017:
25% of Steller Residential 2% sales contract commission. Where a deposit of 10% is secured against the sale, 50% of the commission will be paid upfront and balance on settlement.
86 Thus, the Employment Contract provides that Mr Bhagwandas's entitlement to commission was at Steller's discretion. That is important because s 7(2)(a) of the Act provides that "discretionary payments" are not "wages". If the balance of the commission payable upon settlement to Mr Bhagwandas under the Employment Contract does not constitute "wages" it cannot constitute a "wages entitlement" under s 6(6) of the Act.
87 The parties' failure to address this issue is most likely because there was a body of unchallenged evidence before the Tribunal that showed that Mr Bhagwandas's entitlement to commission was not, in fact, discretionary. That evidence may be summarised as follows:
(a) Mr Bhagwandas gave unchallenged evidence, which the Tribunal accepted, that his fortnightly "pay" was a repayable retainer, which was deducted from any commission he was paid, which meant that his income was largely dependent upon commission. That points strongly away from a conclusion that his entitlement to commission was discretionary;
(b) a witness statement by Mr Jack Roberts, a former sales and marketing executive employed by Steller, dated 3 June 2021 and a letter from Steller to Mr Roberts dated 21 November 2016 notifying him of the termination of his employment, were in evidence. They showed that Mr Roberts was only employed by Steller for a six-month probationary period and his employment was terminated for allegedly "low sales and inappropriate conduct". Notwithstanding that he had been dismissed by Steller for those reasons and was no longer employed, he was paid the commission payable on settlement over the course of the next three years upon the occurrence of settlement of each property he sold. He said that all other sales agents operated under the same arrangements;
(c) an email from Ms Lauren Collins, a former financial controller of Steller, to Mr Bhagwandas dated 27 May 2021. Ms Collins said that based on prior practice with at least two Steller employees who left during her time at the company, sales personnel who were no longer employed by Steller were still entitled to the commission payable on settlement, which would be paid to them approximately seven days into the month after each property sale settled; and
(d) an email from Mr James Cirelli, a director of Steller from 2010 to 2019, to Mr Bhagwandas dated 28 May 2021. Mr Cirelli said that if Mr Bhagwandas (or any other salesperson) sold a property and then resigned or otherwise was no longer employed by Steller at the time that settlement occurred, he or she would still receive the commission payable on settlement.
88 It is sufficiently clear from the Tribunal's reasons that it understood that:
(a) discretionary entitlements are not "wages" within the meaning of that word in the Act. The Tribunal expressly said so (at [22]);
(b) Mr Bhagwandas's fortnightly "pay" was merely a repayable retainer, and his income was effectively commission based such that his entitlements to commission and pay were interchangeable (at [11] and [24]); and
(c) commissions were earned upon sale, and it was Steller's practice to pass on to former employees the commissions that were payable upon settlement occurring (at [15]).
89 On a fair reading of the Tribunal's reasons, it is appropriate to infer that the Tribunal concluded that having regard to the totality of the evidence, Mr Bhagwandas's entitlement to commission under the Employment Contract was not discretionary. Indeed, when it is kept in mind that his "pay" was just a refundable retainer, the commission was likely to make up the bulk of his remuneration. I am satisfied that conclusion was open to the Tribunal, and I proceed on that basis.
90 Second, the question is whether Mr Bhagwandas's entitlement under the Employment Contract to the balance of commission payable upon settlement, in relation to property sales he made with a 10% deposit during the wages entitlement period, but where settlement had not occurred by the end of the wages entitlement period, is a debt or debts wholly or partly attributable to a "wages entitlement" (and therefore an "employment entitlement"), being "a wages amount … for work done … in the wages entitlement period", as required by ss 6(6) and 10(1)(d) of the Act
91 Answering this question involves construing the provisions of the Act and then applying that construction having regard to the evidence, particularly the terms of the Employment Contract. The task of construing the Act requires consideration of the text of the relevant provisions having regard to context and purpose: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; 239 CLR 27 at [47]; Talacko v Bennet [2017] HCA 15; 260 CLR 124 at [65]; Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69]-[71].
92 I commence by noting that the proper construction of ss 6(6) and 10(1)(d) of the Act, and the application of those provisions in the factual circumstances of the case, is not straightforward. There is some uncertainty in the construction and application of the provisions in circumstances where an entitlement to commission is "for work done … in the wages entitlement period" is earned during that period, but where the relevant commission is not to be paid until a date after the wages entitlement period, and may not be paid at all for reasons unrelated to the "work done" in the wages entitlement period.
93 Having regard to this uncertainty in the proper construction of the provisions, and in light of the Act's remedial purpose, it is appropriate to construe the relevant provisions in a "fair, large and liberal" manner rather than in a manner which is "literal or technical": I W at 12 (Brennan CJ and McHugh J), and so as to give the fullest relief to which the fair meaning of the language will allow. A construction which promotes the provision of financial assistance to employees whose employment comes to an end due to the insolvency of their employer and who are not paid their employment entitlements, is to be preferred to a construction which does not.
94 In my view, the Tribunal's construction of ss 6(6) and 10(1)(d) of the Act is available on a "fair, large and liberal" interpretation. That construction better effectuates the central purpose of the Act and should be preferred to the construction proposed by the Secretary. Taking that approach, I commence by noting that there are a number of concepts bound up in ss 6(6) and 10(1)(d) of the Act, most of which are not in dispute. They are as follows:
(a) to be eligible for an advance under s 10(1)(d) the person must be owed, or apart from the discharge of the bankruptcy of the employer, would be owed, "debts". The word "debts" connotes amounts that are owed or obliged to be paid. There is no dispute between the parties that Steller has or had an obligation to Mr Bhagwandas to pay commission to him upon settlement occurring.
(b) the debt or debts must be wholly or partly attributable to an "employment entitlement",
which is defined in s 5 to include a "wages entitlement".
(c) "wages entitlement" (as defined in s 6(6)) means "the amount of wages the person is entitled to under the governing instrument from the employer for work done … in the wages entitlement period". Thus:
(i) if under the governing instrument the person is entitled to "wages" within the meaning of s 7;
(ii) "for work done … in the wages entitlement period" (s 6(6)); then
(iii) the person will have a "wages entitlement", and thus an "employment entitlement" under s 5.
The person will therefore satisfy the conditions of eligibility for an advance as set out in s 10(1)(d) if they are owed one or more debts wholly or partly attributable to that entitlement.
(d) it is uncontentious that:
(i) the "governing instrument" is the Employment Contract;
(ii) Mr Bhagwandas's entitlement to commission under the Employment Contract falls within the definition of "wages" as defined in s 7 of the Act; and
(iii) the "wages entitlement period" is the 13 week period up to when Mr Bhagwandas's employment ended on 15 May 2019, being the period from 14 February to 15 May 2019.
95 The focus must be on 6(6) and 10(1)(d) of the Act, and it should be kept in mind that:
(a) it is uncontroversial that Mr Bhagwandas satisfies the conditions of eligibility for an advance under s 10(1)(a) to (c) and (1)(e) to (h) of the Act. Under subs10(1)(d), being the only remaining condition, he is eligible for an advance under the Act if he "is (or would, apart from the discharge of the bankruptcy of the employer, be) owed one or more debts wholly or partly attributable to all or part of one or more employment entitlements", in the present case a "wages entitlement"; and
(b) under s 6(6) a "wages entitlement" is "the amount of wages the person is entitled to under the governing instrument from the employer for work done … in the wages entitlement period".
96 In my view, Mr Bhagwandas, by operation of Item 14 accrued an entitlement to the balance of the commission payable upon settlement in relation to property sales he made with a 10% deposit during the 13 week wages entitlement period up to 15 May 2019. That is a "wages entitlement" for the purposes of s 6(6) of the Act, being an "amount of wages [Mr Bhagwandas] is entitled to under the governing instrument from the employer for work done … in the wages entitlement period". A "wages entitlement" is one of the five kinds of "employment entitlement" identified in s 5, and Mr Bhagwandas is therefore "owed one or more debts wholly or partly attributable to all or part of his employment entitlements" as required by subs 10(1)(d).
97 Against that, the Secretary submits that as a matter of ordinary language it is "unnatural" to describe an amount of wages that has not accrued or to which the person does not have a crystallised or vested right by reason of work done in the wages entitlement period, as an "amount of wages the person is entitled to under the governing instrument … for work done … in the wages entitlement period" as required by s 6(6).
98 But I have said, Item 14 provides a single entitlement to "the commission" for particular "work done", being securing the sale of a property with a 10% deposit, which commission "will" be paid in two stages. Section 6(6) of the Act defines a "wages entitlement" as the amount of wages the person is entitled to "for work done … in the wages entitlement period." Mr Bhagwandas's entitlement to "the commission" was earned by his securing property sales during that period with a 10% deposit. As that work was done during the wages entitlement period, it is a "wages entitlement" for the purposes of s 6(6).
99 The Secretary seeks to characterise Mr Bhagwandas's entitlement to the "balance [of the commission] on settlement" as being "conditional", "contingent" or subject to a "contingency". I accept that Item 14 provides that the balance of the commission payable on settlement is payable on the occurrence of settlement. But several things should be kept in mind:
(a) first, in relation to the entitlement to the balance of the commission it is inapt to describe it as "contingent". The entitlement to "the commission" arises upon Mr Bhagwandas securing a property sale with a 10% deposit. The time for payment of 50% of the commission only arises upon settlement, but that does not mean the entitlement is dependent on a "contingency";
(b) second, although payment of the second tranche is not required to be made unless or until settlement occurs, that does not operate to change the entitlement from being "for work done" in the "wages entitlement period"; and
(c) third, nothing in s 6(6) requires that the payment date of "wages" (or even an event which triggers the payment of "wages") must occur in the wages entitlement period. The section provides that a "wages entitlement" is the "amount of wages the person is entitled to … for work done … in the wages entitlement period", and thus operates by reference to when work was "done". The Secretary's construction of s 6(6) requires reading words into that definition so that it provides that a "wages entitlement" is the "amount of wages the person is entitled to under the governing instrument from the employer for work done … in the wages entitlement period where the wages are also payable in the wages entitlement period" (additional words in italics). If Parliament intended that a "wages entitlement" under the Act only include an amount of wages for work done in the wages entitlement period which wages are also payable in that period, it would have said so.
100 I do not accept that the Tribunal's construction of s 6(6) may give rise to an "unbounded period" of entitlement under the Act, as the Secretary contends. Mr Bhagwandas's case demonstrates the point. The Tribunal found that he was not entitled to an advance based on the balance of all the commissions payable upon settlement that were unpaid when Steller went into insolvency. The Tribunal found that he was only entitled to commission on the small number of property sales he made with a 10% deposit during the 13 week wages entitlement period up to 15 May 2019. It is inapt to describe an entitlement plainly assessed by reference to a 13 week wages entitlement period as "unbounded".
101 The Secretary's contention that the object of s 6(6) - the thing that must be characterised - is not an "entitlement" to wages, but rather an "amount of wages" is semantics. Section 6(6) provides that a "wages entitlement" is "the amount of wages the person is entitled to". In my view, the balance of the commission payable on settlement to which Mr Bhagwandas is entitled under the Employment Contract, in relation to property sales he made during the wages entitlement period, is "for work done" in that period.
102 I accept that, with the exception of s 6(3)(b) of the Act, the other subsections of s 6 have a similar textual structure to s 6(6). But I do not consider that the word "for" in s 6(6) indicates a legislative intention to confine a "wages entitlement" to amounts that are referrable to past or present, non-contingent events or circumstances. Having regard to text, context and purpose the word "for" in s 6(6) is clearly connected to the words "work done", and it requires there to be an entitlement to an amount of wages that is payable by reason of or in exchange for work done in the wages entitlement period. The Secretary's contention would require reading words into the section when there is no textual or contextual basis to do so. Had Parliament wished to include those words it would have done so.
103 Nor do I accept that the entitlement to the balance of the commission payable upon settlement under Item 14 should be construed as being "for a piece or body of work producing the result of settlement". The Secretary argues that unless and until that work was completed - by the result of settlement being produced - there was no entitlement to the balance of the commission. By way of example, the Secretary says that the Employment Contract does not provide for any portion of that commission to be payable by reference to any work performed in the lead up to settlement, only that it be paid for the ultimate result. And as the Tribunal decided (at [29]) the alternative would be "unworkable in practice". The Secretary argues that this construction is consistent with the evident purpose of the balance of the commission being payable on settlement, and consistent with the fact that, on Mr Bhagwandas's evidence (and as the Tribunal found), he still needed to perform work up to the time of settlement in relation to properties for which he had secured a 10% deposit.
104 I can see little merit in this submission:
(a) first, in an attempt to rely on Mr Bhagwandas's evidence so as to support the Secretary's proposed construction of the Employment Contract, the Secretary submits that his evidence went to the surrounding circumstances in which the parties entered into the contract. The Secretary described the evidence (wrongly, in my view) as concerning the "nature of [the] sales" that Mr Bhagwandas was employed to make. The transcript of the Tribunal hearing, or at least those parts which were before the Court, shows that not to be the case. Rather, Mr Bhagwandas's evidence related to the work he did for Steller after entering into the Employment Contract. It was evidence of post-contractual conduct which cannot be relied upon as an aid to construing the terms of a written contract: see Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1 at [176] (Gordon J);
(b) second, Item 14 provides that if Mr Bhagwandas secured a property sale with a 10% deposit he had an entitlement to "the commission" in the specified quantum, with payment to be made in two tranches of 50%, the first tranche upfront and the balance upon settlement. Even if it was permissible for the Secretary to rely on Mr Bhagwandas's evidence in construing the contract, his evidence could not operate to displace the plain terms of Item 14 which provide no textual basis for construing the entitlement to the "balance on settlement" as "being for a piece or body of work producing the result of settlement". And as the Tribunal found (at [29]) construing Item 14 so as to require the parties to work out which pieces of work produced the result of settlement and which pieces did not would be "unworkable in practice"; and
(c) third, the unchallenged evidence of Mr Roberts, Ms Collins and Mr Cirelli before the Tribunal showed that Steller paid the balance of the commission payable on settlement to former sales employees, upon the occurrence of settlement, even when they no longer worked for Steller. Mr Cirelli said that even if Mr Bhagwandas had no longer been employed by Steller, he would have been paid the balance of the commission payable upon settlement upon its occurrence. The evidence before the Tribunal also indicated that there were some occasions when Mr Bhagwandas performed further work to keep a settlement on track, and other occasions when he did not have to perform such work. Thus the entitlement to payment of the balance of the commission did not depend on Mr Bhagwandas's post sale contract work. That strongly points away from concluding that the entitlement under Item 14 to the balance of the commission payable on settlement should be construed as being "for a piece or body of work producing the result of settlement".
(d) The fact that the Tribunal observed (at [30]) that the payment of the commission in two tranches "appears to be a logical incentive to ensure sales do not fall through" is of little significance. It was a passing remark and it did not form part the Tribunal's dispositive reasoning.
105 Obviously, a property sale may fall through for some other reason and in that event there would be no settlement, and consequently the balance of the commission upon settlement would never be payable. Mr Bhagwandas, however, gave unchallenged evidence before the Tribunal that this was an unusual outcome, and that in the six years he worked in real estate sales, the only time he had a sale fall through was when the purchaser died and the parties decided to rescind the contract for her family. This point is not central to my view but I would be loathe to adopt a construction of the Employment Contract, and an application of the Act, dictated by an unusual outcome. Further, if a purchaser does not complete the sale that will usually constitute a breach of the contract of sale, and the Court should instead assume that persons will perform their contractual obligations.
106 It is relevant too that Mr Bhagwandas gave unchallenged evidence that all of the relevant property sales he made over the years had settled by the time the Tribunal heard his case. The Secretary's point is not that settlement had not occurred in relation to the property sales he had made with a 10% deposit (and thus his entitlement to the balance of commission upon settlement had not crystallised or vested), but rather that settlement did not occur until after the end of the wages entitlement period and thus, on the Secretary's argument, his entitlement to the balance of commission had not crystallised or vested by that point.
107 I accept that this construction of s 6(6) may result in a mismatch between the amount the employee would be able to prove as a debt in the former employer's insolvency or bankruptcy, and the amount of the employee's wages entitlement under the Act (unless the contingency in fact occurred between the end of the wages entitlement period and the relevant date on which the winding up began). That is, however the consequence of a proper construction of the Act, which must be construed having regard to its remedial purpose. If Parliament intended to apply a discount to unpaid wages which were earned during the wages entitlement period but were not payable until after that period, it could have done so.
108 Further, the fact that an employee may in certain circumstances recover more through an application under the Act that he or she would have recovered by proving the debt in the employer's bankruptcy or insolvency is not central to construing ss 6(6) and 10(1)(d). It is common that employees recover little or nothing by proving their debt in their employer's bankruptcy or insolvency as there is often insufficient funds. They will usually recover more through an application under the Act, and the manifest purpose of the Act is to improve an employee's position.
109 I accept that s 3(b) of the Act provides that one of the main objects of the Act is to allow the Commonwealth to recover advances it has paid to employees through the winding up or bankruptcy of employers, but the Act does not mandate that the Commonwealth recover all of the advances paid. Often (as in the present case) the liquidation will be without funds and the Commonwealth will either not recover anything, or suffer a significant shortfall. The Act does not require that there be a match between the amount the employee can obtain under the Act, and any sum the Commonwealth can obtain by proving in the employer's bankruptcy or insolvency. And if there is such a mismatch that does not mean that the employee is disentitled from an entitlement otherwise conferred by the Act.
110 In my view, the Tribunal decisions in Souied and Roberts provide little support for the Secretary's arguments. They are readily distinguishable, and in any event they are not binding on this Court:
(a) in Souied, a real estate agent made a claim for an advance under the Act. Under his employment contract he was entitled to receive commission for a "property transaction", which was defined in the employment contract as the "sale or commercial lease of a property from which the employer has received a payment from a client". The Exclusive Agency Agreement (under which Mr Souied sold the properties in relation to which he claimed he was entitled to commission) provided that the Agent's fee was not payable until "completion of the sale". Before the Tribunal the Secretary argued that the effect of the employment contract was that Mr Souied was not entitled to be paid commission until completion of the sale by settlement: see Souied at [17], [20]. The Tribunal concluded that the employer, as Agent, became entitled to payment only upon completion of the relevant sales by settlement, and it was only at that point that Mr Souied became entitled to payment of commission. On that basis, Mr Souied's work was not "work done" for the purposes of s 6(6) of the Act until he became entitled to payment of the commission (at [21]). Thus, the Tribunal's conclusion that the commission fell outside the terms of the Act was because the governing instrument provided that Mr Souied was entitled to commissions for a completed sale. That is different to the present case; and
(b) in Roberts, there was no contractual entitlement to commissions for the relevant property sales. The Tribunal's conclusion that that Mr Roberts was entitled to commission was based upon the employer's acknowledgement of invoices and of its obligation to pay commission. The Tribunal relied upon email correspondence in which the employer agreed to pay a commission, and said that the emails made it clear that there was no entitlement to a commission until the property had settled: see Roberts at [106]-[108], [115]. Again, that is different to the present case.
111 Thus, I am not persuaded that the Tribunal erred in finding (at [31]) that Mr Bhagwandas is entitled to an advance in respect of the balance of any commissions outstanding for properties he sold in the wages entitlement period. That is, I consider Mr Bhagwandas has a "wages entitlement" under the Act in respect of the balance of commissions to which he became entitled for property sales with a 10% deposit which he made during the "wages entitlement period". It does not matter that settlement of those property sales did not occur until after the wages entitlement period because the entitlement arose for "work done" during the wages entitlement period.