Re Australian Insurance Employees Union v WP Insurance Services Pty Limited v No8 of 1981 Industrial Law [1982] FCA 20; 1 IR 212 (2 March 1982)

FEDERAL COURT OF AUSTRALIA

Re: THE AUSTRALIAN INSURANCE EMPLOYEES UNION
And: W.P. INSURANCE SERVICES PTY. LIMITED
V. No.8 of 1981
Industrial Law
1 IR 212

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
INDUSTRIAL DIVISION
Evatt J.

CATCHWORDS

Industrial Law - Insurance Officers (Clerical Indoor Staffs) Award 1978 as varied - breach of award - question as to which company in group of companies employer where one only of such companies a respondent to award - Conciliation and Arbitration Act 1904 - ss.119(1), 119(3), 120.

HEARING

SYDNEY
2:3:1982

ORDER

1. A penalty of fifty dollars ($50.00) be imposed on W.P. Insurance Services Pty. Limited.

2. Such penalty to be paid by the respondent company to the Australian Insurance Employees Union.

3. The respondent company pay to Susan Diane Roberts the sum of one hundred and thirty-seven dollars ($137.00).

DECISION

This is an application brought by the Australian Insurance Employees Union (the organization) an organization of employees registered under the Conciliation and Arbitration Act 1904 (the Act) seeking the imposition of a penalty pursuant to s.119 of the Act against W.P. Insurance Services Pty. Limited (the respondent) in respect of an alleged breach or, alternatively, an alleged non-observance of a term of an award. The award in question is the Insurance Officers(Clerical Indoor Staffs') Award 1978 (as varied)(the Award).

The said breach or non-observance alleged was that the respondent failed to pay to one Susan Diane Roberts the renumeration payable to her in accordance with the said Award in respect of her employment by the respondent between 3 October 1978 and 29 June 1980. It was claimed that she was a stenographer employed by the respondent company, a director of which was a Mr Rivers.

The applicant also seeks an order pursuant to s.119(3) that the respondent pay to Mrs Roberts all moneys which the Court finds were not paid to her pursuant to the said Award during the said period.

The respondent denies that it employed Mrs Roberts at any relevant time and raised a further defence that, should the Court find against it in respect of the issue of employment, then, as Mrs Roberts had not been a member of the organization other than for the last two or three days of the period during which it was alleged that there had been an underpayment of salary, no order should be made for the payment to her of any underpayment found to have been made pursuant to the said Award other than for those two or three days together with moneys for pay in lieu of notice of termination and holiday and severance pay calculated under the Award.

The respondent made the following admissions:

1. The respondent is and was at all relevant times a company incorporated pursuant to the laws of the State of Queensland.

2. The organization is and was at all material times a registered

organization under the Act.

3. The organization is and was at all material times a party to the Award.

4. That between 3 October 1978 and 29 June 1980 Mrs Roberts was paid at rates less than the amount specified in cl.4 of the Award for adult employees in the sixth or seventh years of service.

5. Mrs Roberts had been a member of the organization since 27 June 1980.

Further admissions were made by the respondent in relation to the age of Mrs

Roberts and to overtime and that the hours worked by Mrs Roberts were outside the normal spread of hours referred to in the Award. These admissions went to ascertaining the actual amount (if any) which should have been paid to Mrs Roberts only if the respondent was found to have been her employer and that it was bound by the Award.

Although it was denied that the respondent was a person bound by the Award, it is clear that it appears as a respondent thereto in the copy of the Award tendered in evidence (see Sch.C of the variation to the Award made 31 October 1978 Print D7041 (part Ex A)).

The substance of the respondent's defences was that at all material times Mrs Roberts had been employed as a stenographer by Watkins Properties and Administration Pty. Limited a company which was at all material times duly incorporated under the provisions of the laws of the State of Queensland. In this respect evidence was given by a Mr Rivers who stated that he was the group insurance manager of another company known as Watkins Consolidated Limited and also by a Mr Daly the chief accountant for what has been referred to as the Watkins group of companies.

The Watkins group of companies which are primarily concerned with building and development are situated on the 27th floor of a building in Brisbane known as Watkins Place. Several companies are controlled from that building with branches in Cairns, Darwin, Papua-New Guinea and South Brisbane. Included in such companies were Watkins Consolidated Limited, Watkins Properties and Administration Pty. Limited, Watkins New South Wales Pty. Limited, Watkins Partnerships Limited, Kanana Pty. Limited, Jindaleee Hotels Pty. Limited, Mary Downs Pty. Limited and other companies, including the respondent.

Mr Rivers stated that the respondent company, W.P. Insurance Services Pty. Limited was incorporated shortly before 1 April 1977. Immediately before 1 April 1977 all insurance coverage and claims in respect of the undertakings and property of the companies within the Watkins Group had been attended to by Mr Rivers as the group insurance manager of Watkins Consolidated Limited directly with particular insurance companies without the assistance of an insurance broker. Earlier such insurance had been arranged through Ballieu Bowring as such broker. Some little time before April 1977 it was decided that in view of Mr Rivers' experience in the insurance field, (which apparently had extended over several years prior to his commencing work with the Watkins Group) a company could be formed which would qualify for the issuing to it of an insurance broker's licence. Such licences were then granted under the Insurance Act of 1960 (Queensland) which had been amended by the Insurance Amendment Act 1976 (Queensland) (No. 31 of 1976). Mr Rivers gave evidence that it was his view in early 1977 that, on the assumption that he would be able to demonstrate to the authorities appointed under the Insurance Act that he, as an experienced person, would have "a large measure of control" of the applicant company, then the company was likely to be granted a broker's licence. This of course would be an advantage to the Watkins group of companies in Queensland as it would mean that the respondent company as a licenced broker would become entitled to commission on premiums in the usual way so that overall there would be a substantial saving to the Watkins Group.

Under the provisions of the Insurance Act as amended it was provided that all licenced brokers shall (inter alia) undertake insurance business for the public generally.

The respondent company became such a licenced broker and commenced business as such on 1 April 1977. Thereafter the companies in the Watkins Group became clients of the respondent company in respect of their insurance requirements, the respondent company itself being part of the Watkins group of companies. As I understand the evidence it was because the respondent company as a licenced broker was required also to deal with the public generally that a Mr Don Tickle was employed, his main duties being brokerage duties concerning private clients (that is clients of the respondent company other than the companies of the Watkins group of companies).

Mr Rivers in cross-examination conceded that he had undertaken to the authorities appointed under the Insurance Act that he would have control of the respondent company as the holder of a broker's licence and that in fact he did keep a tight control over all insurance matters undertaken by that company both on behalf of the Watkins group of companies and all private clients.

For some time before becoming the chief accountant for the Watkins Group Mr Daly had been second in charge to the then chief accountant Mr Shelley and prior thereto the office manager of the group of companies. A Mr Allan White was a director of Watkins Consolidated Limited and it was he who instructed Mr Daly in the preparation of the accounts for the group of companies. The accounting books for the respondent company were kept by Mr Daly under the direction of a combination of Mr Shelley when he was chief accountant and Mr White who was, as Mr Daly described, "the financial controller". It would appear that all employees of the group of companies working on the 27th level of Watkins Place were paid by cheque drawn against Watkins Properties and Administration Pty. Limited and group certificates for taxation purposes were issued to those employees showing that company as the employer. This was certainly the case respecting Mrs Roberts. The Court accepts, as stated by her, that she believed that that company was "just a company for paying salaries" and that no one had ever told her that she was working for some one company other than the respondent company.

When Mrs Roberts first commenced working on the 27th floor there were some seven principal executives with offices on that level. These included Mr Douglas Watkins who was described as the managing director, a Mr Hugh McMaster, a Mr Clark and a Mr Geoff Gailey in addition to Mr White, Mr David Little, Mr Shelley and Mr Rivers. There were four secretaries employed to work for the executives other than Mr Rivers although on rare occasions Mr Rivers would dictate work to one of those four which work was stated by him to be "too confidential" to be done by Mrs Roberts. In addition Mr Don Tickle worked under Mr Rivers' supervision on insurance brokerage work. There was one main telephone switchboard situated on the 27th level which serviced all the telephones on that floor including calls from private clients of W.P. Insurance Services Pty. Limited.

Both Mr Rivers and Mr Daly each stated in evidence that at relevant times they were employed by Watkins Properties and Administration Pty. Limited.

Mrs Roberts gave evidence in respect of her work history, the circumstances of her engagement for work at Watkins Place in Brisbane and to relevant factors regarding such work. Such evidence is accepted.

Prior to 1971 she had worked for the Queensland Government Tourist Bureau for some four years. In October 1971 she commenced working with the Baillieu Bowring Group in Brisbane attached to the insurance brokerage section. She remained with that company until December 1974 when she commenced work as a stenographer in Canberra, first with the Federal Police Department and then with the Department of the Senate. In February 1977 she returned to Brisbane where she worked as a stenographer with the Taxation Department until commencing work at Watkins Place in August 1977.

A few months before August 1977 she decided to seek employment outside the Federal Public Service and registered with Drake Personnel Agency in Brisbane. That agency in or about June 1977 referred her for an interview with the Watkins group of companies at Watkins Place for a position as a private secretary. She was there interviewed by Mr Allan White who informed her that he was interviewing her on behalf of Watkins Consolidated Limited. She failed to obtain that position.

In August 1977 she was again referred by the Drake Agency to Watkins Place and was interviewed by Mr Rivers. During the interview Mr Rivers informed her that he was a director of W.P. Insurance Services Pty. Limited and that the work she would be doing involved mainly insurance work. She stated in her evidence that during the interview Mr Rivers told her that he had "two hats so to speak, first that he was a broker who traded under the name of W.P. Insurances Pty. Limited and secondly that he was looking after all the insurance for the Watkins group of companies". This interview took place on the 27th floor of Watkins Place. When she went for this interview she noticed a board in the foyer area on the 27th floor listing some 13 or 14 companies including the respondent company. During the interview Mr Rivers also told Mrs Roberts that she "would be working specifically for him - typing, insurance work, attending to filing". Also she would be "doing work regarding Watkins Consolidated Limited that involved the same type of thing. It was all insurance - typing accounts applying to Watkins Consolidated and W.P. Insurance Services". Further, Mr Rivers informed her that she would be working only for him and for no one else and that only he could tell her what to do.

Subsequent to the interview she was telephoned by Drake Agency and informed that she had been appointed to the position and that she should ring Mr Rivers. On ringing him he informed her that she had secured the position and arrangements were made as to a date on which she was to start work. She stated in her evidence-in-chief that during that conversation Mr Rivers informed her again that she would be working for W.P. Insurance Services, although in cross-examination she was not sure that the name of that company was then mentioned. At that time she was informed of the amount of salary she would be paid and that such salary would be paid each month. No mention was made that the salary was in accordance with any particular determination or award.

On commencing work she was given an office behind Mr Rivers' office. Her work consisted of typing letters dictated by him. He also instructed her to type up accounts in respect of "clients of W.P. Insurance Services and of Watkins". Letters and accounts typed up by Mrs Roberts were checked and altered from time to time by Mr Rivers. Separate filing cabinets were kept, one for outside clients of W.P. Insurance Services and the other for Watkins clients. As regards claims by private clients, Mrs Roberts was instructed by Mr Rivers exactly what she had to do, what the claim form was to contain and where it was to be sent. On receipt of a cheque from the insurance company in respect of any claim made by the respondent company Mrs Roberts was instructed by him as to whom and where the cheque was to be forwarded. The procedure in respect of any coverage for the Watkins group of companies was the same as that for private clients of the respondent company. Arrangements would be made by Mr Rivers with underwriters for the covering of various construction work being undertaken by the Watkins group. This cover would be for accidents, workers compensation and loss or damage to real and personal property both of the companies within the group and the public generally. Invoices for such cover would be prepared and typed by Mrs Roberts and forwarded as directed by Mr Rivers to the particular company within the group for payment. The only difference in this regard was that private clients would be forwarded invoices and letters on the respondent company's letterhead whilst "internal" correspondence was on unmarked paper. But letters to the underwriters in respect of insurance cover for matters concerning any of the Watkins group of companies would be on the respondent company's letterhead and signed by Mr Rivers.

Throughout the period of her employment at Watkins Place all instructions to Mrs Roberts in respect of insurance work came from Mr Rivers or Mr Tickle. On occasions when any other executive such as Mr Shelley requested Mrs Roberts to carry out any type of work she always first sought Mr Rivers' permission to perform that work. She estimated that 90% of her work was insurance work. This percentage was conceded as being correct by Mr Rivers who agreed that of that percentage her work in the financial year 1977-78 was 50% related to private clients and 50% to Watkins Group clients and that during the year 1979-80 the breakdown of the insurance work had been approximately 70% on behalf of private clients and 30% Watkins group clients.

Mr Rivers was not prepared to say that he had not stated to Mrs Roberts at the time of her engagement that she would be working for the respondent company but he thought it unlikely that he would have done so in view of his then knowledge in August 1977 of the purpose for the setting up of the respondent company and the particulars of the insurance work which had been carried out by him prior to 1 April 1977 for the Watkins Group and which at the time of her engagement were anticipated would be carried out thereafter both on behalf of that group and private clients. He claimed it was Watkins Property and Administration Pty. Limited (here-in-after referred to as W.P.A.) which requested Drake Personnel to seek a suitable person to carry out the duties which Mrs Roberts eventually performed. He agreed that it was he who made the decision that Mrs Roberts should be employed but that decision required confirmation by Mr Allan White "the financial controller" of the Watkins Group and that such confirmation was in fact sought and obtained prior to her engagement.

Mr Rivers stated that at no time had he anything to do with the making up of Mrs Roberts pay records or her personnel record, leave accumulation and the like. These matters were attended to by W.P.A..

Mr Rivers had always possessed a credit card which he used for entertainment, the card being in the name of W.P.A. Initially monthly accounts for such expenses were paid by W.P.A. but shortly after the respondent company commenced trading such accounts, after being paid by W.P.A., were re-couped by it from the respondent company. Still later the system was changed so that the monthly accounts for such expense were paid directly by the respondent company and debited to its accounts directly. Similarly accounts for travel undertaken by Mr Rivers on insurance matters were paid for by the respondent company and so accounted for.

In addition W.P.A. charged the respondent company a general administration or management fee on a monthly basis which fee included amounts agreed to by Mr Rivers and Mr White or Mr Shelley for the respondent company's use of typewriters, lighting, cost of letterheads and stationery and other office equipment including the use of the Watkins Group computer terminal situated on the 27th floor of Watkins Place together with a charge for the cost of keeping the accounts by the Group accounting section.

A further sum was included in such monthly fee to cover both Mr Rivers' and Mr Tickle's salary but not that of Mrs Roberts.

Mr Rivers explained the reason why his and Mr Tickle's salaries were made as charges against the respondent company. He stated that in his case it had been agreed at the time of the setting up of the respondent company that as soon as moneys received by the way of commission on insurance effected by it were sufficient to meet such salary then the respondent company would pay his salary. Apparently it had been part of his argument supporting the adoption of the formation of the respondent company for the purposes referred to earlier that there would be such a saving to the Group. As regards Mr Tickle's salary the position was as follows. Some time after the respondent company commenced trading the insurance work with regard to private clients increased so that a further person was required for its performance. Accordingly Mr Tickle was engaged and it was considered that his salary was a proper charge against the income of the respondent company. On the other hand Mrs Roberts was not an additional employee even though she commenced work at Watkins Place after the respondent company commenced trading. Mr Rivers stated that Mrs Roberts had replaced an employee who had been carrying out insurance work under his direction as group insurance manager for the Watkins Group prior to the respondent company commencing trading on 1 April 1977. That employee had been paid in the usual way by W.P.A. and accordingly Mrs Roberts was so paid.

Mr Rivers conceded that the respondent company had been served with the application filed by the organization in 1978 to rope-in several respondents to the Award but as he was then of the opinion that the respondent company had no employees he simply ignored such application. He also conceded that prior to commencing work with the Watkins group of companies he was aware that there was in existence a federal award covering insurance officers and employees.

Mr Daly stated in his evidence that it was he who signed the letter dismissing Mrs. Roberts. The letter, typed on the letterhead of W.P.A., was written after Mr Rivers had told him that "we have a problem and it is impossible for me to work with her (Mrs Roberts)". The problem had been taken up with Mr White whom Mr Daly described as "the boss basically at Watkins Place". Pursuant to that discussion it had been decided by Mr White and Mr Daly that Mrs Roberts should be asked to resign. On her refusing to do so, a formal letter terminating her services was written, dated 30 June 1980, and signed by Mr Daly.

Mr Daly generally confirmed the evidence given by Mr Rivers in respect to the accounting arrangements for the respondent company, the general management and administration fees charged by W.P.A., that the personnel records of Mrs Roberts and her time and wages sheets were kept by W.P.A., that such records show her employer as W.P.A. and that she was paid monthly in advance at a rate determined under the Clerks and Switchboard Attendants' Award - State (Queensland) by cheque drawn against W.P.A.

Mr Daly also confirmed that almost all companies forming the Watkins Group had interlocking directorships in the sense that there were a number of individuals who are or were directors of a considerable number of such companies and that at 27 March 1980 there were four directors (Mr G.E. Watkins, Mr G.D. Watkins, Mr Allan White and Mr Rivers) on the board of the respondent company and that he was the secretary of that company. He conceded in cross-examination that W.P.A. paid salaries of and issued group certificates for those working at head office, that is, those working on the 27th floor of Watkins Place, irrespective by which company they may have been employed. An extract of the transcript of his evidence reads:-

"The arrangement to have Watkins Properties and Administration Pty. Ltd. as the paymaster for the head office employees is one of financial convenience; is that right?--- I would presume so. It was - been done like that for many years, and it also shows - not shows - because of the people there are employed by that company it is easier - if you have six or seven different payrolls for people who are working for six or seven different companies, it makes it extremely difficult. The executives there are heads of departments for the group so that they will be doing work which will include Watkins Limited, Watkins Limited Cairns, Watkins P and A, the whole group, and so it is probably a convenience, if you like to use that

word, of paying it by one company.

But there is nothing unusual or strange about the fact that the money is in fact getting recycled through in one form or another?--- I am not sure. I do not think so.

Well, in the sense that cheques are drawn on Watkins Properties and Administration or a bank transfer is arranged for salaries of Mr Rivers and Mr Tickle, but then Watkins Properties and Administration apparently, if what Mr Rivers says is true, recoup that by way of this management fee paid by WP? ---Yes, they also recoup other amounts as well. For example, the computer that Watkins - that WP Insurance used was based at out office at South Brisbane, Watkins Limited, and part of that management fee would be the use of the terminal which was situated at Watkins Place which was owned, I presume, by WP and A, but the management fee was worked out - it was a sum worked out, probably as Mr Rivers said, to include salary but also to include office rental etcetera etcetera. Use of typewriters, office furniture and that sort of thing? ---Yes, my time as well."

I am satisfied that W.P.A. was not Mrs Roberts' employer at any time. The

fact that her salary was paid by W.P.A. and that tax group certificates issued to her showed that company as her employer is not conclusive evidence of the fact that it was the employer. I am satisfied that that arrangement was one of financial convenience to the Watkins Group and in my view those facts are what may be termed neutral indicia in determining the issue which company was her employer in the legal sense during the relevant period. (cf. R.E.S. Logging Co. Pty. Limited -v- Bridge (1969) A.R. 604 cited Australian Timber Workers Union -vMonaro Sawmills Pty. Limited 29 A.L.R. 322 @ 329.)

The question for determination in these proceedings, as I see it, is: "With whom was the contract of service of Mrs Roberts made?" I am satisfied that in all the circumstances Mrs Roberts was employed by the respondent company during all relevant periods. She was undoubtedly under the control of Mr Rivers during that period as that term is used in authorities such as Australian Mutual Provident Society -v- Chaplin and Anor. (1978) 18 A.L.R. 385, Zuijs -vWirth Bros. Pty. Limited [1955] HCA 73; (1955) 93 C.L.R. 561, Mersey Docks and Harbour Board -v- Coggins & Griffith(Liverpool) Limited [1946] UKHL 1; (1947) A.C. 1 and Century Insurance Company -vNorthern Ireland Road Transport Board [1942] UKHL 2; (1942) A.C. 509. I am satisfied on the balance of probabilities the control and direction of Mr Rivers of Mrs Roberts work covering insurance matters was as a director of the respondent company and not simply as an employee of W.P.A.. It must be remembered that he was a director of only the respondent company and of no other in the Watkins group of companies. Again, Mrs Roberts could truly be said to be part and parcel of the operations of the respondent company (cf. Denning L.J., as he then was, in Stevenson, Jordan & Harrison Limited -vMacdonald & Evans (1952) 1 T.L.R. 101 @ 111 cited in Timber Workers Union case (supra.) @ 329).

In my view all the evidence supports the view that Mr Rivers was W.P. Insurance Services Pty. Limited. He was the active director. He was the man with the technical skills. He was the man who had undertaken to the Queensland Insurance Commissioner that he had the controlling say in the company. He was the man who supervised all the insurance operations and directed Mrs Roberts work day being alert that she was not finding herself doing work for other executives in the group of companies rather than for him.

I am further satisfied that during the period from October 1977 to 30 June 1980 the respondent company was a respondent to the award and therefore bound by it as varied. It was conceded by the respondent company that Mrs Roberts was paid a salary not in accordance with the award during the relevant period so that it follows that there has been a breach thereof as alleged. But in my view it cannot be claimed that Mrs Roberts was entitled to have been paid amounts under the award within the meaning of s.119(3) of the Act at times when she was not a member of the organization (see Poultney -v- The Hydro-Electric Commission of Tasmania - judgment 17 July 1981 - A.I.L.R. Vol. 23 para. 381 applying principles in Leontiades -v- F.T. Manfield Pty. Limited [1980] FCA 49; (1980) 43 F.L.R. 193 and Burgess -v- John Connell-Mott, Hay and Anderson Pty. Limited [1979] FCA 12; (1979) 37 F.L.R. 386). Counsel for the applicant organization conceded that this was so.

This then means that the claim under s.119(3) is limited to the under-payment for two days with 1/2 hr. overtime for those two days together with amounts for accrued holiday pay plus loading and payment in lieu of notice. Counsel for the respondent company agreed that in round figures these amounts other than payment in lieu of notice were: 2 days salary $5, overtime for 2 days $5, difference for accrued holiday pay $51, difference for percentage loading $76, an amount totalling $137.00.

As regards payment in lieu of notice, Mrs Roberts was in fact paid an amount of $835.70 in respect of this item. Such amount had been calculated at the rate payable per week under the State award for a period of four weeks which period appears to be in excess of the then requirements of that award. The federal award in fact made provision for only two weeks notice. Counsel for the organization maintained that as Mrs Roberts had not been paid any moneys under the federal award for payment in lieu of notice she was entitled to an amount calculated at the appropriate rate for two weeks. This amount of course would be less than the amount she had already received under this head. I am of the view that in all the circumstances of this case the respondent company is entitled to the benefit of the payment of an amount equal to that sum which was due to her under the provisions of the federal award for this head so that no further payment in respect of moneys in lieu of notice need be paid.

As to the amount of penalty I believe that the appropriate penalty in all the circumstances should be fixed at $50, such penalty to be paid to the organization under the provisions of s.120 of the Act. Orders accordingly.