Camilleri v Auto Recyclers Pty Limited t-as Pick & Pay Less Self Serve Auto Parts [2010] NSWIRComm 179 (17 December 2010)

Last Updated: 31 October 2011

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION :
Camilleri v Auto Recyclers Pty Limited t-as Pick & Pay Less Self Serve Auto Parts [2010] NSWIRComm 179
This decision has been amended. Please see the end of the judgment for a list of the amendments.


FILE NUMBER(S):
IRC984

HEARING DATE(S):
7 - 9, 16 - 17 September 2010

DATE OF JUDGMENT:
17 December 2010

PARTIES:
Michael Camilleri (Applicant)
Auto Recyclers Pty Limited t/as Pick & Pay Less Self Serve Auto Parts (Respondent)

CORAM:
Kavanagh J


CATCHWORDS: UNFAIR CONTRACT - s 106 claim for unfairness in contract of employment re underpayment for long hours worked - failure of employer to implement incentive scheme - failure to provide procedural fairness in circumstances of termination.

JURISDICTIONAL CHALLENGE - claim by respondents employee an award based employee rejected - consideration as to effect after employer joins industry association and becomes party to award on contract of employment - assertion once a party becomes a party to award a breach of terms and conditions of employment must be heard under Federal scheme rejected - assertion claim is pleaded as breach of contract case rejected - held Court has jurisdiction to hear claim under s106

UNFAIRNESS - variations made to contract - parties unequal in bargaining power - unfairness in conduct makes contract unfair - just compensation ordered

LEGAL REPRESENTATIVES
Mr J Phillips SC with Mr S A Gardiner (Applicant)
Dorrough Smart, Solicitors
Mr A R Moses SC with Mr J C Thompson of counsel (Respondent)
Lander & Lander, Solicitors

CASES CITED:
Ace Business Brokers v Phillips-Treby [2000] NSWIRComm 163; (2000) 100 IR 420
Brown v Rezitis [1970] HCA 56; (1970) 127 CLR 157
Burgess v Mount Thorley Operations Pty Ltd [2003] NSWIRComm 432; (2003) 132 IR 400
Byrne v Australian Airlines [1995] HCA 24; (1995) 185 CLR 410
Camilleri v Auto Recyclers Pty Limited [2008] NSWIRComm 84
Federated Miscellaneous Workers' Union of Australia New South Wales Branch v Wilson Parking (NSW) Pty Ltd 1980 AR 352
Lipman v A G Lifestyle Management Pty Limited [2003] NSWIRComm 160
Myer Stores Limited t/as Grace Bros v Stowart (1994) 55 IR 21
Sydney Water Corporation Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661
Toll Transport Pty Ltd v Transport Workers' Union of New South Wales [2010] NSWIRComm 58; (2010) 194 IR 144
Walker v Industrial Court of NSW (1993) 53 IR 121

LEGISLATION CITED:
Annual Holidays Act 1944
Industrial Relations Act 1996 s 105, s 106
Long Service Leave Act 1955


TEXTS CITED:




JUDGMENT:

- 47 -

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: Kavanagh J

Friday 17 December 2010

Matter No IRC 984 of 2006

MICHAEL CAMILLERI v AUTO RECYCLERS PTY LIMITED t/as PICK & PAY LESS SELF SERVE AUTO PARTS AND ANOTHER

Application under s 106 of the Industrial Relations Act 1996

JUDGMENT

[2010] NSWIRComm 179

1 Michael John Camilleri ("the applicant" or "Mr Camilleri") by way of a Further Amended Summons (filed with the leave of the Court on 9 August 2010) seeks an order his contract of employment was, under s 106 of the Industrial Relations Act 1996 (the Act), unfair, harsh and unconscionable in its terms and/or operation and asks for consequential orders, just in the circumstances.

2 Mr Camilleri contends under his contract of employment the respondents did not pay him fairly for the hours he was required to work and failed to pay him under an agreed performance incentive scheme. He also contends he was, under the contract, unfairly terminated. He is, therefore, entitled to consequential just compensation.

3 The respondents contend the Industrial Court of NSW lacks jurisdiction to hear and determine this matter as the applicant's employment was covered under a Federal award, which award determined the terms and conditions of the employment. In the alternative, the respondents contend after joining the Motor Traders Association the employer became party to the Federal award and from that date the State court has no jurisdiction to hear the claim. It is the respondents' contention otherwise that the contract was a fair contract of employment and there has been no conduct by either of the respondents, as pleaded by the applicant, which was unfair conduct within the meaning of s 106 of the Industrial Relations Act 1996.

4 The second respondent independently contends there is no liability carried by him (Mr Rush) as he was not a party to the contract of employment. At all relevant times, Mr Rush contends he was acting only in his capacity as the director of the first respondent and therefore he should not be held liable.

5 Mr Jeffery Phillips SC with Mr Stephen Gardiner, of counsel, appeared for the applicant. Mr Arthur Moses SC with Mr John Thompson, of counsel, appeared for the respondent. The applicant and the second respondent gave evidence and were cross examined. The parties have tendered much documentary evidence and the respondents called three witnesses who were cross examined.

The Contract of Employment

6 In any consideration under s 106 of the Act, the first issue to be determined is what was the contract of employment. The Full Bench in Toll Transport Pty Ltd v Transport Workers' Union of New South Wales [2010] NSWIRComm 58; (2010) 194 IR 144 conveniently recited the applicable test as follows at [55]:

[55] It is settled law, in the consideration of an application to void or vary an unfair contract under s 106 of the Act, the precise terms of the contract must first be identified: Fish v Solution 6 Holdings Ltd [2006] HCA 22; (2006) 225 CLR 180; (2006) 151 IR 256 at [19] and [43]; TD Preece & Co Pty Ltd v Murton [2007] NSWIRComm 130; (2007) 164 IR 396 at [18]. It is only upon this basis that one can address "the critical issue: was the actual contract unfair?": TD Preece & Co Pty Ltd v Industrial Court of New South Wales [2008] NSWCA 285; (2008) 177 IR 172 (at [14]) per Spigelman CJ. . . .

7 Two preliminary points have been raised that must be addressed before the Court can consider the evidence to determine what was the contract of employment. The first relates to the credit of the applicant and the second relates to the identity of the first respondent.

Credit

8 The respondents contend Mr Camilleri is a liar and a thief and, therefore, not to be believed on his oath. The respondents submit the applicant, in giving his evidence, was:

Quick to express answers in a manner favourable to his case; continued scenarios in support of his case and advanced propositions which were inherently unbelievable and or inconsistent with other witnesses who had no motive to lie.

It was submitted the applicant's evidence was inconsistent and unbelievable. Doubt was also cast on Mr Camilleri's motive for the litigation. It was contended his claim was motivated by vengeance due to being terminated for stealing and that only after the termination has he claimed he was not paid fairly for the hours he worked. As to the latter contention, I do not accept a question as to motivation should affect a determination as to whether an employee was fairly paid for his hours of work.

9 I accept Mr Camilleri's evidence was sometimes vague. For example, as to his hours of work he said he worked from "7am to 6pm"; and on a different occasion "79 hours per week from 2001-2002"; "11 hours per day with no break". Mr Rush's evidence on this issue was Mr Camilleri worked 47.5 hours per week. The documents of the employer show he was paid for working 38 hours per week and the early employment documentation also revealed he was required to work a maximum of six days a week on both days of the weekend.

10 I do not accept, having seen Mr Camilleri in the witness box and hearing his answers under rigorous cross examination, that Mr Camilleri is a "liar". I find he, as best he could from his recollection, told the truth. Where there is doubt as to the accuracy of his recollection (for example, his hours of work), I will seek guidance from the documentary material available to assist in determining the issue.

11 I am also of the view that generally when Mr Rush was vague in both giving his evidence and in reply to questions in cross examination, it was because he was avoiding providing a direct answer to a question rather than being forgetful. Mr Rush gave evidence which contradicted that of Mr Camilleri. However, his evidence was often equivocal. He replied to questions in an evasive manner: for example, "there was a lot of things I don't remember", "I don't recall any of that"; and "I'm very vague on how all that took place".

12 Therefore, in determining facts in contention, where there is no documented evidence to support resolution of an issue, I will generally give weight to that said by Mr Camilleri.

The Employer

13 There was some early confusion (given the letterhead on some documents tendered by both parties) as to what was the correct identity of the employer. Mr Rush said:

On 24 February 1995 the Auto Recyclers was incorporated under the name Sims Rush Pty Limited. It then changed its name to Autorecyclers Pty Limited. At the time of incorporation Simsmetal Limited held 51% of the shares in Auto Recyclers and the other 49% of the shares were held by G & K Rush Pty Limited, of which Mr Rush's wife Kay Lorraine Rush and Mr Rush were and have remained the sole shareholders and directors.

In about October 2001 Simsmetal Limited sold its shares in the Auto Recyclers to G & K Rush Pty Limited. Through the period Simsmetal Limited was a shareholder in Auto Recyclers, all employment procedures and relevant records were operated and maintained by Simsmetal Limited at its Milperra office. When Simsmetal Limited terminated its involvement in Auto Recyclers it retained all of those employment and other business records. The employment records presently held by Auto Recyclers are mainly those which came into existence after Simsmetal Limited terminated its involvement in Auto Recyclers.

14 From this evidence, Mr Moses then submitted:

The evidence is that on 31 October 2001 there was the sale of the 51 per cent shareholding with Sims Metal to Mr Rush, to his interests. That company then became on 5 November 2001, Auto Recyclers. They changed their name. The records of Auto Recyclers have been produced to the Court. The only one that have not are those documents held in the custody of Sims Metal and at the time they were the majority shareholder in respect of the period of employment of Mr Camilleri prior to 31 October 2001.

15 The early documents tendered by Mr Camilleri related to his employment are under the letterhead "Sims Rush" not the named respondent. I accept documents headed "Sims Rush" and then later documents headed "Autorecyclers" and "Auto Recyclers" also are all relevant to the employment of Mr Camilleri and, given the evidence of Mr Rush on this issue, I accept each named enterprise was, at the relevant time, an entity to which Mr Rush had a connection. It appears Auto Recyclers became Sims Rush Pty Ltd which then became known as Autorecyclers which then became known as Auto Recyclers t/as Pick and Pay Less. Mr Rush is a director and major shareholder of Auto Recyclers. Mr Camilleri, I am satisfied, was employed by Auto Recyclers at the same site performing the same tasks throughout the employment.

The Employment Duties

16 Mr Camilleri left school at 15. He first worked for his father in a Caltex Service Station and then did a number of odd jobs including that of shop salesman. He returned to work for his father for the next 20 years in his father's then car wrecking business. He was approached to work at 57-69 Tattersall Rd, Kings Park where Sims Rush operated a spare parts sales yard. Mr Camilleri explains his employment as follows:

. . . The business operated whereby customers would enter the premises by paying a small entry fee ($2.00) but would then have access to in excess of 2500 car wrecks on the premises and, using their own tools, were at liberty to remove and purchase parts of their choosing. Customers would then carry those parts to the sales office (where I worked) when leaving the premises, at which time they would be informed of the price of the parts by me or one of the staff members I supervised. Sometimes a bargaining process took place in order to complete the sale of the parts to the customer by way of negotiation. ...

17 Three months after Mr Camilleri commenced work he was moved to the Sales Office by Mr Rush. Mr Rush agreed Mr Camilleri was a very good sales person as he had knowledge as to the value of each part of a motor vehicle and, therefore, could assist the clients searching for particular motor vehicle models. Mr Camilleri also contributed to the efficient operation of the sales office, for example, he introduced a "board" costing system for parts that simplified the quotation system for sales persons and clients.

18 Mr Camilleri after joining the Sales Office would start, he says, at about 7am. He stated after he began working in sales he quickly assumed responsibility for setting up the day's operation for the sales staff. He turned on the computers in the sales office, arranged the money floats and unlocked the office. At 7:55am he would open the gates. He says he would work until approximately 6pm usually finishing the day by discussing the day's operations with Mr Rush, if he was on the premises. Mr Camilleri contends he was practically managing the sales section. He contends that it was a very busy operation and that he was the key-holder for the business, holding the keys of the yard, the sales office and the safe. Each evening if he had not seen Mr Rush during the day he would telephone to report the day's sales records and speak with him generally concerning the running of the business.

19 Mr Rush does not challenge the duties Mr Camilleri performed but does contend Mr Camilleri did not need to open the gates as, Mr Rush contended, the yard staff came to work earlier and opened the gates. However, I accept Mr Camilleri performed all the duties necessary to open and close the sales office each day and to report to Mr Rush at the end of each day.

The hours worked

20 The hours the applicant worked was a significant area of dispute between the parties. The applicant contends he worked 66 hours per week arriving at 7am and leaving at 6pm (11 hours a day, seven days a week). His evidence was he always worked Saturday and Sunday. The respondents conceded "he worked a maximum of 47.5 hours a week".

21 The respondents contended as the yard gates were closed at 5pm each day on Mr Rush's calculation the applicant worked from 7.30-8am to 5pm. Mr Rush was of the view no sales staff arrived before 7.30am. It was, however, evident Mr Rush did not himself arrive at work during weekdays before 9am and often performed other duties before arriving at work. On weekends he was not on site until 10am on Saturday and never on site on Sundays. Mr Rush, therefore, could only give an estimate of Mr Camilleri's starting time and was unable to give direct evidence.

22 The applicant, I accept, started work at 7am. This was his practice and such attendance was necessary as he assumed responsibilities in the sales office, opening the sales office and preparing for the day's work where there were three sales counters active during the week and five on weekends.

23 As to the finishing time given the evidence of the applicant's tasks included closing sales stations; putting takings (which on weekends were up to $18,000) in the safe, report to Mr Rush each day, ensure the gates closed at 5pm, check the perimeter of the area of some 15 acres to ensure persons taking out spare parts from wrecked vehicles had all left the premises, I am satisfied the applicant worked to 6pm each evening.

24 Importantly, in reaching this conclusion, and not withstanding the evidence of the applicant on this issue was unreliable, there were no time or wages books produced by the employer during any period of the employment which would have provided documentary evidence as to Mr Camilleri's starting and finishing times throughout the employment. These documents are required to be kept by the employer under industrial/employment law, be it the law of the State or the Commonwealth. Such documentary evidence may even have been useful in supporting Mr Rush's estimates of Mr Camilleri's starting and finishing times.

25 The applicant, Mr Rush conceded, always worked during the busiest times (weekends) even during the period (due to the illness of his wife and after a catastrophic car accident involving a brother) when he was only working four days a week for a period of six to seven months in 2001. Therefore, even when Mr Camilleri cut down his hours he worked Thursday to Sunday. Generally, I accept the applicant only had one day off each week.

26 I am satisfied the applicant generally worked six days a week. Mr Rush simply denied this. However, one of the earlier documents produced by Mr Camilleri dated 24 March 1998 stated his working "conditions" would require him for a maximum of six days a week. Other documents in the form of pay advices (which advices will be detailed later in the judgment) have in them a persistent notation that the applicant was paid for an 38 hour week. The company records do not even support Mr Rush's contention as to the hours worked.

27 I accept Mr Camilleri worked six days a week, 11 hours per day and each week he worked Saturday and Sunday. Further, there were only five public holidays, as conceded by Mr Rush, where Mr Camilleri was not required to work.

Wages

28 To assist in determining what Mr Camilleri received during his employment, a number of documents are before the Court. Mr Camilleri's evidence is he began work being paid $1000-$1100 a week, $800.00 (net) for five days a week and 38 hours of work. He contends Mr Rush then reduced his wage and moved him to sales and required him to work weekends. Mr Rush's evidence was he would never lower an employee's wage.

29 The first documentary evidence as to Mr Camilleri's contract of employment is a "Salary Agreement" document dated 24 March 1998. The document is in the following form:

SIMS RUSH PTY LTD - SALARIES AGREEMENT

24th March 1998

Michael Camilleri - Sales

Conditions: maximum 6 days a week, days will depend on the availability of yourself and other staff members.

Gross wage: $675 per week

Signed Michael Camilleri and Garry Rush.

This agreement was confirmed by a further document called "Notification of Individual Pay Rate Changed" which document, dated the same day as the above agreement dated 24 March 1998, was signed by Mr Rush as Mr Camilleri's "Supervisor" and "General Manager." Further, this document confirms Mr Camilleri's contention that three months after the employment began his wage rate changed. The document also confirms Mr Camilleri could be required to work six days a week. I, therefore, accept Mr Camilleri's contention his wage was lowered after three months. I further accept he was required to work increased hours including weekend work. The effect of the above agreement is Mr Camilleri's wage was lowered from $1000 gross and $800 (net) to $675 gross and $514 (net). It is difficult to understand why Mr Camilleri agreed to this arrangement.

30 The next document - Salaries Agreement produced is dated 12 September 2000 as follows:

SIMS RUSH PTY LTD - SALARIES AGREEMENT

12 SEPTEMBER 2000

MICHAEL CAMILLERI - SALESPERSON

Conditions: To work Saturday and Sunday weekly.

Gross Wage: Saturday - $15-05 per hour plus $9-80 loading

Sunday - $22 per hour

(signed: Michael Camilleri, Garry Rush)

This document confirms Mr Camilleri was required to work on both Saturdays and Sundays. It suggests he was given a one off loading on Saturday and on Sunday he was paid a special hourly rate. However, it does not reveal what was the rate paid during the week.

31 The next document was dated 13 February 2001 and states:

SIMS RUSH PTY LIMITED - SALARIES AGREEMENT

13 February 2001

Michael Camilleri - Salesperson

Conditions: To work Thursday, Friday, Saturday and Sunday weekly.

GROSS WAGE:

Thursday: $15-05 per hour plus $9-80 loading

Friday: $15-05 per hour plus $9-80 loading

Saturday: $15-05 per hour plus $9-80 loading

Sunday: $15-05 per hour plus $9-80 loading

This document suggests it was in early 2001 that the applicant worked four days a week. What it also reveals is Mr Camilleri was to receive the same rate in that period for work during the week and on Saturday and Sunday with a one off loading for each day of the weekend and each week day worked. The same loading, therefore, applied to weekday work and weekend work.

32 The last document is notification of pay rate change and states:

PICK'N

PAYLESS

SELF SERVE AUTO PARTS

NOTIFICATION OF INDIVIDUAL PAY RATE CHANGE

DETAILS OF PERSON FOR RATE CHANGE:

NAME: Michael Camilleri

CURRENT POSITION: salesperson

NEW POSITION:

DETAILS OF RATE CHANGE:

AGREED NEW WEEKLY WAGE: $865.38 Per week

DATE OF CHANGE EFFECTIVE: 17/2/04 (w/c)

SUPERVISOR'S COMMENTS:

EMPLOYEES SIGNATURE: (signed by Mr Camilleri) DATE: 18/02/04

SUPERVISOR'S NAME:

SUPERVISOR'S SIGNATURE: DATE:

GENERAL MANAGERS SIGNATURE: (signed by Mr Rush) DATE:

33 Some early group certificates were placed before the Court. They show as follows:

Employer Year Income Tax Gross Net

Sims Rush 98-99 35383 8462.40 680.00 514.24

Sims Rush 99-00 37135 9116.75 714.00 538.81

Sims Rush 00-01 28337 5664 544.00 436.01

Auto Recyclers 01-02 32978 7239 634.00 494.00

34 In a comparison of the group certificate evidence with that of the written employment agreement, I am satisfied Mr Camilleri earned in the year 1998/1999 $675 gross per week (although the tax return suggests $680) or $514.24 net. In 1999/2000, his wage went up to $714 and $538.81 (net). In 2000 and 2001, his wage went down to $634 and $494 (net) because he chose to work four days a week due to his wife's illness and his brother's catastrophic accident.

35 The first document produced by the employer "AutoRecyclers" is an individual's Payroll Advice sheet of Mr Camilleri's wage in September 2000. It shows Mr Camilleri grossed $700 and received $675 net. In 2001/2002/2003 no pay advices were available. In February 2004, his gross wage shows as $865.38 and net $840.38. One has to wonder as to the tax liability given the gross and net pay recorded which suggests only $25 in tax. He was paid the same figure from February 2004 - May 2005.

36 The records produced by the respondents are entirely unsatisfactory. No matter what the net pay was from January 2000 to May 2005, the annual salary is shown on the Company's Payroll Advice sheets as $43,700 and the recorded hourly rate on each advice never changed from $22.11. Further the hours of work are always listed as 38 hours per week. Salary sacrifice amounts are added at $25 and then subtracted, a strange accounting feature.

37 The records produced reveal the applicant was never paid overtime for weekend work except perhaps for a one off loading in the period he worked four days in 2001. Even when the first respondent joined the Motor Traders Association in May 2004, the pay records (that were made available) indicated there were no payments made in accordance with the award provisions.

38 Mr Rush's evidence was as follows:

Q. However, would it be correct to say that, when you looked at what you paid him when he was working there, from the time you were members of the Motor Traders’ Association, you did not pay him with any regard to the Federal Award’s Terms?

A. There is not one employee that works for me that is paid under the award. Every employee I have is paid well and truly over the award.

Q. So all the employees you have got are not paid under the award?

A. Not one.

Q. Because, let me just take you to the award?

A. Never has been.

Q. Never has been.

A. Never has been.

39 I accept Mr Camilleri, as part of his contract of employment, was put on a fixed wage (varied from time to time) and no matter how many hours he worked he received a set rate wage each week. Mr Rush agreed saying:

Running a seven day a week business is not easy and finding someone that is willing to work Saturdays and Sundays is a blessing to me, a real blessing.

40 For the Court's assistance as to the wage paid to the applicant, the applicant relies upon evidence from an expert forensic accountant. She examined documents and determined she was satisfied that two award rates of pay (as estimates) could be used to fairly cover the wage earned by Mr Camilleri during the full employment period. She based her estimate of his earnings up until January 2004 at $675 (net) on average and after that $840 (net) until termination. Ms Bateman did the best she could by calculating her estimates from an overview of the first respondent's limited financial records produced. I am persuaded Ms Bateman presents as an expert. She is a qualified accountant specialising as a forensic accountant. I have examined the wage material produced by both parties and the average wage she used for the identified periods appear fair especially in a circumstance where unsatisfactory wage records were kept by the first respondent. Further, from my independent examination of the documents produced by the first respondent compared with the limited records retained and tendered by the applicant, I am of the view that if the two estimate wage rates struck advantage any party, that party is the first respondent. For example, in the period from 2000 - 2001, there was a six to seven month break where the applicant only earned $475 yet $675 is allowed as the estimate. I, therefore, accept the fair estimate of the applicant's wage for 11 hours work per day (including Saturday and Sunday) was, up until January 2004, $674 (net) per week and thereafter $840.40 (net) per week.

The Incentive Scheme

41 The applicant, I am satisfied, complained regularly as to his salary from the time Mr Rush lowered it in 1998. After Mr Camilleri continued, I accept, to complain (as it appears did other employees), Mr Rush then promised a sales incentive payment. On 4 August 1999, under the heading Pick 'N Payless, Mr Rush sent Mr Camilleri a letter which states as follows:

PICK 'N

PAYLESS

SELF SERVE AUTO PARTS

4th August 1999

Attention: Michael Camilleri

From: Garry Rush

Sales Incentive System - Blacktown

Spare Parts Sales Figures 200K 205K 210K 215K 220K

Percentage of Weekly Wages 25% 30% 40% 50% 60%

Benefit to Michael $169 $203 $270 $338 $405

Tax is payable on the incentive system at your normal rate.

Effective from August 1999.

If any further information is required please don't hesitate ask (sic).

Thank you for your continued support.

(Signed)

Garry Rush

42 The respondents place much emphasis on the evidence of Mr Camilleri that there was an objection from all staff and a walk out when this promise for payments under the incentive scheme was not adhered to. Mr Camilleri said he did not walk out but Mr Rush said to him:

They are a bunch of morons. I don't expect that from you. I know you are a lot smarter than that. Between you and I we can start all over again. We'll start by fixing your wages. You can have the company ute and if the sales figures continue as they are I will honour the sales incentive system but I want you to keep this between you and I only. Do not mention it to any future staff members.

43 This evidence, I accept. How many employees walked out and left is, on the evidence, open to conjecture. Given the state of the evidence, with no records produced by the respondents during this period, the applicant was unable, except as to his own oral evidence to prove the allegation. Other staff neither confirmed nor denied the walk out incident. It does not change the fact, however, that Mr Camilleri was never paid under the scheme.

44 Mr Camilleri was never informed whether he reached the sales targets as outlined in the document. He was not given the sales figures at the end of each month. Mr Rush says he knew the target figures were difficult to obtain but they were designed to encourage sales staff to increase sales. After three months the scheme came to an end. Mr Rush contended the scheme had "faded away". However, Mr Rush failed to tell the applicant of that decision and the applicant says it was always an issue between them.

Resignation

45 It was initially submitted by the respondents that the applicant resigned on 28 August 2000. The resignation was to be effective on 5 September 2000. The applicant denies the resignation. The applicant confirmed his signature was on a resignation form but denied all particulars on the form particularly those related to the dates which dates, he contended, are not in his handwriting.

46 It is asserted by the respondents that when the applicant resigned he was then re-engaged (after eight days) but was employed on different terms and conditions, specifically on a wage rate minus the incentive system. Such an assertion was contradicted by Mr Rush himself when he gave evidence that the incentive system had "faded away" after three months in operation. There is no evidence at all that even if Mr Camilleri was re-engaged he was told the incentive scheme did not apply to his new employment. The second respondent could not recall what was said on the alleged re-engagement as to the terms and conditions of the agreed re-employment. Mr Rush had no recollection of the circumstance on which he relies to contend that Mr Camilleri resigned and was then rehired.

47 The first respondent produces no records for the period 1 July 2000 to 28 August 2000. The records produced for 2000 inexplicably commence on 9 September 2000. Further while the asserted resignation form suggests Mr Camilleri's last day of work was 5 September 2000 and he was allegedly fired eight days later. The group certificate from the employer, Sims Rush Pty Ltd, is dated from 9 September 2000 for the year to 30 July 2001. That suggests only a three day hiatus in the employment.

48 When asked why there were no payments made to Mr Camilleri under the incentive scheme, Mr Rush replied as follows:

Q. And the explanation you give after August of 2000 is you say that Michael was - Mr Camilleri resigned from the business on 28 August 2000?

A. If that's what the records say, yeah, yes.

Q. No, no, that's what you say in your affidavit?

A. Yeah.

Q. In paragraph 14?

A. Yes.

Q. And then you say he re-applied for work on 9 September that same year?

A. Mm.

Q. And then you say this, "The terms of such new employment did not include..." - well, you don't give any terms - when you are asked questions yesterday as to what you said to him in relation to this so-called - the new job, you said nothing about what you said to him because you couldn't remember?

A. Yeah, there's a lot of things I don't remember.

Q. Yeah, but in terms of this you don't recall having a conversation with him, rehiring him?

A. No, no, I don't recall any of that, no.

Q. You don't recall having a conversation with him saying what the terms of the new job's going to be?

A. If he - if he - if he's re-employed obviously he'll come back on a new agreement. Whatever that agreement is, I don't recall.

Q. It would be reasonable to expect that he would come back on the agreement that he was on?

A. I'm not sure. I - I - I'm very vague on how all that took place.

Q. And at no stage did you say to him in September 2000, "Oh, by the way, there's no incentive scheme"?

A. I don't recall that.

49 I do not accept there was any break in the employment of Mr Camilleri. It appears the company was changing its systems given the change in the status of Mr Rush's ownership to full ownership of the various corporations. The records are unreliable and contradictory. I reject these records as confirming Mr Camilleri's employment was terminated but then rehired on different terms and conditions.

50 I am therefore persuaded, taking into account the contradictory documentary evidence and Mr Rush's failure to recall the circumstances surrounding the asserted resignation and rehiring, that the employment of Mr Camilleri was continuous from November 1997 to May 2005. I am further persuaded Mr Camilleri was never told the incentive scheme promise for a bonus from the sale of spare car parts had come to an end.

51 There is one outstanding issue related to the incentive scheme. The applicant contends at one stage, with Mr Rush, he bought and restored some used cars and on-sold them. The evidence was that occasionally Mr Rush did send the applicant to auctions and he authorised Mr Camilleri to purchase vehicles a few of which both intended to restore. However, that evidence does not go as far as to establish there was an agreement between them that Mr Camilleri would receive a commission on the sales of used cars.

52 Mr Phillips SC for Mr Camilleri urges upon the Court the proposition that all sales persons receive commission. That may be so but in this employment relationship I see no agreement for a commission to be paid to Mr Camilleri for used cars which were on-sold. The arrangement is denied by Mr Rush. While he agreed he sometimes sent Mr Camilleri to buy cars he contends this was only for a short period of time. I am satisfied there was no agreement between the parties that Mr Camilleri would receive an incentive payment bonus on the selling of used cars. There is no documentary evidence in support of this proposition. Mr Camilleri agrees he did it only for a short period of time. I do not accept there was an agreement between Mr Camilleri and Mr Rush for a payment of commission for the restoration of used cars which were then on sold.

Title

53 The respondents deny the applicant's title was "Senior Sales Manager" which title was contained in a reference to Mr Camilleri for the purpose of obtaining a mortgage loan (from another a staff member). Mr Rush contends Mr Camilleri was never the manager of the sales department. From the evidence of the duties performed by Mr Camilleri - duties not denied - I accept the applicant, while he may not have held the title "Senior Sales Manager", performed the duties of such a position: he set up and counted the computer registers; collected each day's takings and put them in a safe; opened and locked up the premises. While unqualified as to any formal training I accept Mr Camilleri was the senior sales staff member in the sales section of Auto Recyclers during his employment in the sales office.

Jurisdiction

54 It is necessary before determining whether this was an unfair contract and/or whether the conduct of the respondents made the contract unfair to consider a number of objections raised by the respondents in support of their basic objection to the claim, namely: there is a jurisdictional bar to the NSW Industrial Court hearing this claim under s106.

55 Firstly, it was contended that the applicant's employment was subject to the Federal award which dictated all the terms and conditions of the applicant's employment. The applicant, in pleadings and in evidence, made reference to an asserted relevant State award, namely the Vehicle Industry - Repair Services and Retail (State) Award. The applicant noted the claim for underpayment, described as a fair wage for the hours worked (by a comparison with a wage calculated with overtime and penalty rates), would be established by reference to that award. The forensic financial expert relied upon by the applicant chose the State award, having researched a number of awards to determine which could be an applicable guide to what an award employee doing similar work would earn. However, the applicant has also always pressed that he was performing his work under a contract of employment and was never an employee under award provisions. He was, it was contended by the applicant, award free.

56 The Federal award, however, is relied upon by the respondents as providing coverage of this employee's terms and condition of employment over the whole period of employment. That award is the Vehicle Industry - Repair Services and Retail - Award 1983 which award underwent a title change to the Vehicle Industry - Repair, Services and Retail Award in 2002 ("the award").

57 If Mr Camilleri was always a Federal award employee, as contended by the respondents, Mr Camilleri would have been classified, the respondents contend, as a Level 5 R5 "Automotive parts salesperson - experienced" in accordance with the definitions of that classification (cl 38(g):

38(g) "Automotive parts salesman (experienced)" means an employee who has had three or more years adult experience in the automotive parts industry and who is required by his employer to perform the duties related to automotive parts sales and distribution and who in the performance of such duties is required to utilise knowledge of the workings of vehicles and the component parts thereof, or;

I accept the Federal award could have provided coverage for this employee at that level.

58 The applicable principles applied to address the question as to what is a "contract of employment" and the issue of the relationship of an employment contract to a relevant award were considered in Byrne v Australian Airlines [1995] HCA 24; (1995) 185 CLR 410, where Brennan CJ with Dawson and Toohey JJ agreeing considered a matter where a group of employees were seeking to import a term of an award into their contract of employment. Relevantly the Court held (at 420):

A right to the payment of award rates is imported by statute into the employment relationship, which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract. But award rates are imported as a statutory right imposing a statutory obligation to pay them. The importation of the statutory right into the employment relationship does not change the character of the right. As Latham CJ points out in his judgment in Amalgamated Collieries of WA Ltd v True [1938] HCA 19; (1938) 59 CLR 417 at 423, the legal relations between the parties are in that situation determined in part by the contract and in part by the award. And as the judgment of the Privy Council in that case suggests, a provision in an award may also be made a term of the contract by agreement between the parties, but that is only to emphasise the distinction between an obligation imported by statute and one arising by agreement.

59 Therefore, there are in fact two relevant features to an employment, namely, a "contract of employment" and "attached" or "attracted" to the contract of employment is a relevant Award (see Burgess v Mount Thorley Operations Pty Ltd [2003] NSWIRComm 432; (2003) 132 IR 400;). The minimum terms and conditions of an employment under an award can be in certain circumstances incorporated by agreement into the contract of employment. Other better terms and conditions of employment can be agreed to between the parties. However, as Schmidt J commented in Lipman v A G Lifestyle Management Pty Limited [2003] NSWIRComm 160 at [110]:

[110] . . .In the absence of such award regulation, parties are free to agree on other terms. As was observed by Dey J in F.M.W.U. v Wilson Parking (1980) AR 352 at 363, it may not necessarily be unfair, that a person is willing to sell his labour cheaply.

60 I am satisfied on the evidence that Mr Camilleri entered into an employment relationship with Auto Recyclers and was happy with a wage of $1,000-$1,100 for a 38 hour week. Then Mr Rush varied his terms and conditions. There was no agreement reached between Mr Rush and Mr Camilleri that either the relevant State award or a relevant Federal award would be the basis for the variation of the "contract of employment" or that any term of any award would be implied into the contract of employment. An award recites the minimum terms and conditions of the employment. The "contract of employment" sits independently from the award provisions unless there is evidence that either the award or a particular clause in the award was "by agreement" incorporated into the contract of employment. There must be that agreement between the parties. The agreement can be in documentary form or it can be inferred. As awards have statutory force there is no need to convert statutory rights and obligations into contractual rights and obligations (Byrne v Australian Airlines; Burgess).

61 No document has been placed before the Court to persuade there was agreement reached between the parties that either award or even a clause of either award was incorporated into Mr Camilleri's contract of employment. There was no evidence of a conversation between Mr Rush and Mr Camilleri evidencing that agreement. The respondents only evidence referencing any award was Mr Rush's opinion in evidence that all his employees were always paid "above award rates". He did not identify any particular award. One document was produced late in the hearing referring to a Federal award. It was prepared, it appears, for the application to join the Motor Traders Association. It does not match up with the wage records.

62 Mr Rush agreed that Mr Camilleri received no payment for overtime; that he had no regard to the award when discussing employment matters with Mr Camilleri. Mr Camilleri had never received training in accordance with the any award provision; he was never paid for call backs (for example, to reset the alarm); he never received time and a half for Saturday work; he never received double time for working on Sunday. No award provisions related to an incentive scheme were known to Mr Rush.

63 I do not accept that, where there is no regard or even knowledge of the relevant provision of an award by an employer, the employer could positively assert the Federal award was incorporated into the contract. Mr Rush in evidence only pressed what was his own view, namely: the terms of employment were as agreed between them and Mr Camilleri was always paid above the award. The relevant award was never identified by Mr Rush. No employee of the employer, no payroll clerk nor accounts clerk was called by the respondents to explain the payroll advice sheets or to verify under what award Mr Camilleri was paid. One clerical officer opined that in the office, and available to staff, were some sheets reciting award rates. She could not identify which award was applicable or even confirm which award rates were available. I can find no evidence of an agreement that any award provision was at any time by agreement incorporated into this contract of employment.

64 The respondents' further contention is that if Mr Camilleri was an employee but under a State award in the particular circumstances there is still no jurisdiction to hear the claim. Section 105 of the Industrial Relations Act 1996 relevantly provides:

105 Definitions

In this Part:

"contract" means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument.

65 It is a fact that if the applicant had been paid solely under the identified relevant State award and held no separate benefits under a contract of employment there is under s 105 a statutory bar to hearing a claim. The Court could never, under s 106, vary award provisions. However, no such case has been pressed by the applicant.

66 Two further matters were raised by the respondents as to the jurisdictional bar to considering this claim under s 106 of the NSW Act.

67 Firstly, Mr Moses SC contended that at least when the employer joined the Motor Trades Association on 31 May 2004, which association (and therefore its members) became party to the award, that the Federal award became applicable by way of becoming "attached" to Mr Camilleri's employment from that date. Therefore, it was contended from that date there could be no jurisdiction for the court to consider a claim for unfairness especially one based upon the underpayment of wages and bonuses which are at a minimum those recited in the Federal award and any breach must be dealt with under the Federal scheme.

68 Secondly, it was contended that the claim is mounted as a breach case: that is, in its form, the case pleaded is a breach of the contract by the employer in not properly paying Mr Camilleri.

69 As to the pleadings identifying this is a breach of an award claim, reliance is placed by the respondents on cl 4 of the Federal award. The following clause of the Federal award is relevant:

4 - PARTIES BOUND

(a) Except as provided in subclause (b) hereof and in subclause 15(j) of this award, this award shall be binding upon:

(i) the organizations of employees set out in schedule “A” hereto and on the members thereof;

(ii) the organisations of employers set out in Schedule B hereto and on the members thereof in respect of the employment by them of employees whether members of the said organisations of employees set out in Schedule A hereto or not employed on work to which this award applies.

70 On joining the relevant Association, Mr Rush contends he was therefore a party to the award. However, even when he became a party to the Federal award, Mr Rush never ensured the implementation of the terms and conditions of the Federal award. Mr Rush never approached Mr Camilleri to see if those terms and conditions would be acceptable to Mr Camilleri as his terms and conditions of employment. It cannot even be inferred, on joining the Motor Traders Association that Mr Rush, intended for the award provisions to be "attached" or "attracted" to this contract of employment as he never implemented those terms and conditions. It can be concluded rather, from the evidence, the employer never applied the terms and conditions under any award throughout Mr Camilleri's employment. Therefore, I reject the proposition the Court has no jurisdiction to hear the claim especially since the applicant has never pleaded the case as a breach case and where there is no evidence the Federal award attached to the contract of employment.

71 Reliance is also placed by the respondents (in contending this was an award employee) on evidence before Boland J (as he was then) in Camilleri v Auto Recyclers Pty Limited [2008] NSWIRComm 84, an early application by the respondents, to strike out the claim. Boland J dismissed the application, commenting at [15]-[16]:

[15] . . . That is to say, having regard to the orders sought in the amended summons, I do have reservations about whether the Court could make orders in this matter that did not conflict with the relevant federal law. However, based on the reasoning in Construction, Forestry, Mining and Energy Union (New South Wales Branch) v Port Kembla Coal Terminal Limited [2007] NSWIRComm 296, at this stage of the proceedings I cannot be satisfied to the extent necessary that the respondents have demonstrated that no conceivable order could be made that would be within jurisdiction.

[16] Accordingly, I do not propose to dismiss the applicant's amended summons for relief.

72 While his Honour did reference provisions of the Federal award and their possible applicability, I see no evidence in perusing the transcript of that hearing or in reading the judgment of Boland J that there was either a finding by his Honour nor any concession made by the applicant (in the hearing) as to the applicability of the Federal award. I find his Honour made, in his comment, no determination the Federal award was applicable. The evidence persuades no award, terms and conditions applied to Mr Camilleri's employment.

73 The respondents second "breach" proposition relies, in the alternative, on the Court finding this was an employee under a contract of employment and not an award employee. The respondents rely upon the view expressed by the NSW Court of Appeal in Sydney Water Corporation Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661 at [34]:

[34] If contractually prohibited conduct occurs, the innocent party is armed with a quiver of remedies under the general law. These include remedies for the payment of money due and for compensatory damages that are available as of right. If the guilty party's conduct is repudiatory or involves a breach of a substantial nature, the innocent party may elect to be discharged from further performance. Discretionary remedies such as injunction and orders for specific performance may be available in particular circumstances. Restitutionary orders may follow. The remedies involve regard for the position of the guilty party as well, including rights of counter-restitution for value conferred.

74 The respondents contend the Court does not have jurisdiction to find that a contract is unfair due to one party denying the other a "contractual right". The applicant, however, has not pleaded such a case. What the applicant contends is the contract was unfair in that it did not allow a fair day's pay for a long day's work and also, it was unfair, by conduct, in allowing the termination of the applicant by way of summary dismissal for misconduct thereby denying the applicant procedural fairness. I reject the respondents' contention that the applicant has pleaded a breach of contract case.

75 I reject the claim the Industrial Court of NSW has no jurisdiction to hear this claim. I find Mr Camilleri was employed under a contract of employment and I accept while there may have been both a State award which could have applied to his employment and a Federal award which could have applied after May 2004, there was no agreement between the parties of those terms and conditions becoming, by agreement, a part of the contract of employment, nor was there by the employer an implementation of any of the terms and conditions of either of the awards. Mr Camilleri was an award free employee.

The Contract of Employment

76 I am, therefore, satisfied Mr Camilleri was an employee on a contract of employment. I am satisfied the terms and conditions of that employment were the applicant agreed to be paid a wage, varied by the respondents from time to time, requiring the applicant to perform the work of a senior sales assistant in a car wrecking yard selling used spare parts for vehicles. I am satisfied Mr Camilleri carried out the responsibilities of the senior person on the sales desk for his employer. I am further satisfied under the contract of employment Mr Camilleri was required to work some 11 hours each day and he worked six days a week and those days always included Saturdays, Sundays and most public holidays. I am further satisfied the respondents agreed to pay the applicant an incentive payment calculated on the spare parts sales turnover. I am persuaded the written contract of employment was silent as to any other terms and conditions of the employment.

77 However, I am of the view there were also a number of implied terms in this contract of employment which terms ensured the effective operation of the contract during its term and up to its termination. Brennan CJ with Dawson and Toohey JJ in Byrne v Australian Airlines as to terms being implied into the contract of employment held (at 422):

. . . a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test to be then applied was in a later case formulated by Deane J in these terms (Hawkins v Clayton (1988) 164 CLR 539 at 573):

The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.

And further (at 422-423):

... In the absence of any provision in the award and of any express provision in the contract of employment the law would regard it as a legal incident of the contract that it should be terminable upon reasonable notice or summarily for serious breach. ...

78 The contention of the applicant is such terms, in content if implied should reflect the applicable State award provision. (By his actions in summarily terminating Mr Camilleri, Mr Rush acknowledged the latter term was to be inferred into the contract). The respondents contend, if Mr Camilleri held such a term in the contract any terms should reflect the relevant provisions of the applicable Federal award. I reject these submissions.

79 I have accepted this was an award free employee employed under a contract of employment. The contract of employment was entered into in NSW. To be fair to both parties the inferred terms of the contract should be in accordance with the law in the State in which the contract was entered, that is, New South Wales.

80 I find to ensure this employment contract's effective and reasonable operation terms allowing for annual holiday pay, long service leave and termination on reasonable notice or summary dismissal for misconduct should be inferred. Therefore, the provisions of the NSW Annual Holidays Act 1944 are to be inferred as a term of the contract. The term allowing Long Service Leave should be inferred in terms of the NSW Long Service Leave Act 1955. The Notice term inferred into the contract is employment can be terminated on reasonable notice or summarily for any serious breach or misconduct.

Termination

81 The respondents alternatively contend there should be no consideration of the claim as to the unfairness of the contract in its terms and/or because of conduct in a circumstance where the applicant was terminated for misconduct. However, the termination of Mr Camilleri must be examined in context. The applicant contends he had been given an assurance over many years he would be "looked after" especially when he regularly complained to Mr Rush about his earnings. On hearing of the possible sale of the business, Mr Camilleri was concerned and approached Mr Rush requiring an assurance from Mr Rush that he would be "looked after". Then came the allegation of stealing.

82 Mr Rush explained the circumstances of the termination. He contends he received a complaint from another employee, Ms Cheverton, that she had seen Mr Camilleri stealing monies. He called Mr Camilleri in and said:

GR: "Michael, I want you to leave now. This is the hardest thing I have had to do. A staff member has told me that they have seen you stealing money from me. You can sit here and argue and I'll call the police or you can just go now."

MC: "This is a absurd! What? He actually saw me put it in my pocket?"

GR: "I believe what I have been told."

83 On 27 May, 2009 the applicant contends:

... I arrived at work at the usual time and entered the main sales office at the First Respondents premises. The Second Respondent (Mr Rush) arrive shortly thereafter and entered the office and indicated that he wanted to speak with me alone. A conversation then ensured to the following effect:

GR: "Michael, I'm letting you go, I want you to leave quietly. This is the hardest thing I have had to do. A staff member has told me that they have seen you serving a customer when the customer said to you "no receipt" whilst handing you the money, and you put the money in your pocket. You can either leave quietly or if you persist I will call the police."

MC: "This is a absurd! What? He actually saw me put it in my pocket?"

GR: "Yes, I've actually got proof to the last cent."

MC: "Are you crazy? You don't think somebody told you this for their own personal gain? You know a lot of the staff have their nose out of joint because of the relationship you and I have "

GR: "The person who told me definitely has nothing to gain."

MC: "Despite the eight (8) years of trust and loyalty I have given to you, you haven't given me even the benefit of the doubt. You just assume its true. Don't you think that many customers say to all sales staff, every day, "no receipt" for the purpose of getting something cheaper? It happens at least 20 times a day, every day, to all sales staff. "

84 The applicant denies the allegations. Mr Rush denied he ever used the expression "no receipt" but from both party's evidence the allegation on the day of termination was Mr Camilleri was seen stealing money. As to Mr Camilleri's version of the confrontation he contends the applicant said very little to him. He argues Mr Camilleri did not deny nor did he admit the truth of the allegations as to his conduct.

85 Mr Rush's act to terminate Mr Camilleri, a long term, senior employee, arose from a report to him by Ms Cheverton, the company's cleaner. The allegation Ms Cheverton made was most serious. Ms Cheverton's evidence was that she had been employed for 19 years by Mr Rush, firstly as a cleaner. Her original duties required her to go to the separated sales office to clean. Originally she asserted she worked in the sales office for six hours but later she conceded it was for three to four hours a day. Ms Cheverton revealed she cleaned the sales office, the administration office toilets, lunch room, corridors of a "big building" and office toilets for over six hours a day.

86 Ms Cheverton gave evidence that she reported to Mr Rush in 2000, as follows:

I knew Michael was taking money from the register because he is doing no sales.

No action was taken by Mr Rush and Mr Rush did not recollect her reporting this to him in 2000.

She then deposed:

7. At different times between 1999 and 2006 I observed the Applicant appear to not correctly register a sale on his cash register when dealing with a customer. This was because he would only press one button on the register rather than a number of buttons. I believe that he was registering "no sale" on his cash register.

8. On another occasion in approximately 2000 I remember one customer in particular who purchased 4 tyres. He appeared to make a number of trips to the premises and always went to the Applicant to pay when leaving. On these occasions the Applicant would either operate only one button on the cash register and sometimes nothing at all. I also observed the Applicant receive an amount of money which was clearly inadequate for the particular part purchased by the customer.

9. I am unable to remember the precise dates but I say that on at least 3 occasions prior to March 2005 I saw the Applicant take money which had been proffered to him by customers. I observed him failing to ring up a sale in the cash register and saw him leave the cashier area with money in his hand. He would walk out of the sales area with his hands in his pockets and then return empty handed a few minutes later.

10. In about March 2005 a new cashier system was installed in the sales office. This was known as a Pinnacle system. There were significant teething problems with the system. The Applicant had difficulty understanding how this system worked.

11. After such installation of the Pinnacle system I observed the Applicant fail to open the till in this new system automatically. Instead he would open the till manually. On a number of occasions I saw him take money from the till and put it in his pocket. ...

13. ... I was suspicious of the Applicant's behaviour from about 1999. Between 1999 and 2005 I had a continuing sense of discomfort and unease about what I perceived to be dishonest behaviour on the part of the Applicant.

87 Ms Cheverton in cross examination conceded she had no idea how the cash registers operated. When further questioned she said "No, but I'm not silly". The new pinnacle cash register system was introduced around March 2005. She confirmed her later allegations were made after its introduction, however, she then said:

It was all happening all through those periods. . . even the old system too.

88 Counsel for the applicant challenged Ms Cheverton's motivation as to her allegations. She gave evidence she had been "very very friendly" with Mr Camilleri but was then asked:

Q. You don't like him now do you

A. Because of what he's doing to Garry, now.

Q. Because you are very loyal to Garry aren't you?

A. Yeah

Q. You have been employed with him for 19 years and you are angry with Michael because he is suing him

A. Yeah

She agreed she had recently been given a much better position doing sales and delivery.

89 Ms Cheverton in answering questions as to the allegations she made against Mr Camilleri, as contained in her affidavit, did, in her evidence, embellish her answers. I am persuaded, when counsel cross examined her, she did try to add details to make particular allegations against Mr Camilleri appear more serious. For example, Ms Cheverton in cross examination as to the allegation in para 9 of her affidavit claimed to have seen Mr Camilleri, not on three occasions, as deposed, but on at least 20 occasions ring up a "no sale", and then leave the cashier area with money in his hand.

90 In cross examination as to the sale of four tyres (as deposed in her affidavit at para 8 above re purchase of tyres) her evidence changed. She said at first that she saw the applicant in 2000 (with the old cash register) only press one button - inferring a "no sale" button. She saw the buyer give Mr Camilleri money but was of the view that the money given to Mr Camilleri was not sufficient for the purchase of four tyres. Then, in cross examination on this allegation she said:

Q. So are you now telling the court that he charged $80 and pocketed the lot?

A. Sorry, sorry, well see, can I tell you my part, the no sale is the $80, you understand?

Q. So you saw the witness take $80?

A. No, I didn't see him take $80 no, probably do that at the end of the day but I have seen a no sale for the register to open up and the money go into the register and then you can take the money out. I have seen at different times but that particular tyre business, no I didn't see him do it.

91 Given her answers in cross examination, her oral evidence, as I understand it, is when the old register was in use on this occasion she saw the applicant press a "no sale" button on a cash register but put an amount of money which she thought to be inadequate into the register. She presumed he took the money out at the end of the day. She did not see the act of removing money, she then added the amount was $80. She formed the view the $80 was too small an amount for the sale of four used tyres. She therefore embellished her deposed evidence on this point which was simply that she did not think the purchaser paid enough and that an insufficient amount went into the cash register. She clearly did not see Mr Camilleri take money from the register and she gave no particular evidence of when she alleged he "put money in his pocket" returning empty handed.

92 Mr Rush's evidence was Ms Cheverton reported she had seen Mr Camilleri pocket money and he accepted this allegation as a statement of truth. But Ms Cheverton did not give this evidence. She, in fact, gave no direct evidence as to what she saw in May 2005, on which the termination was based, or why she reported suddenly in May 2005 her suspicion he had always been stealing.

93 I found Ms Cheverton's evidence unsatisfactory. She recanted from many of the matters to which she deposed. She exaggerated all that to which she initially deposed (for example, saying she saw Mr Camilleri thieving on up to 20 occasions) over six years but only deposed it was on three occasions. In oral evidence she added she did not see Mr Camilleri take out the $80 for tyres but that she thought it was $80. She also revealed she suspected others in the sales section of stealing at other times under the old system but when it was explained the sales procedure was to wait until a sale added up to $20 before it was put through the till, she was satisfied. She then made allegations against another employee, saying:

Q. . . .You said you suspected Noel of stealing, did you raise it with Noel?

A. No.

Q. Did you tell Garry?

A. Yes.

Q. What did Garry say?

A. I'm no sure, I told him and he said leave it with me.

Q. Did you tell Michael you thought Noel was stealing?

A. No.

Q. Why wouldn't you have told him?

A. I didn't tell him because I knew Michael was doing it as well.

94 Mr Rush agreed he determined to terminate Mr Camilleri without asking for an explanation. He gave Mr Camilleri no opportunity to answer the allegations. On Mr Rush's evidence he did not give any real information as to what Mr Camilleri was accused of actually doing. Mr Rush did not call the Police. He did not make any further inquiries to substantiate any allegations. He failed to even try to substantiate the allegations. He had an opportunity to connect his existing surveillance camera in the sales section. He did not do so. Given the evidence, I am not satisfied the allegations are sustained.

95 Further, there was no procedural fairness given to Mr Camilleri in a circumstance where he had given seven and a half years of good service to his employer and where as an employee he was trusted with large takings over the years; where as an employee he worked long hours for little financial remuneration; where no other person in sales was approached for confirmation of the alleged practice of pocketing money or using the "no sale" button to put monies into the cash register (taking those monies out later). Procedural fairness, I find, required Mr Camilleri be given an opportunity to reply to the allegations.

96 I cannot be persuaded the evidence establishes Mr Camilleri is a thief. I do not accept the circumstances surrounding the termination of the applicant are such as to establish the truth of the allegations. I do not accept the summary termination for Mr Camilleri was, in the circumstances, fair.

97 There is, therefore, no ground for the Court to accept the proposition Mr Camilleri is a thief and a liar and hence the Court will hear his claim brought under s 106 of the Act.

Consideration as to Unfairness

98 The Court of Appeal in Walker v Industrial Court of NSW (1993) 53 IR 121 held (at 133):

In determining whether "unfairness" in the contract or arrangement has been established, regard may be had not merely to the terms of the contract or arrangement, as originally negotiated, but also to the manner in which the contract or arrangement has ultimately worked out and operates as between the parties to it ...

99 In this regard Mason P, with whom McColl JA agreed, held in Sydney Water Corporation Ltd v Industrial Relations Commission of NSW [2004] NSWCA 436; (2004) 61 NSWLR 661 at [25] that:

[25] Section 106(2) states in the plainest of terms that a contract may become unfair, so as to attract the jurisdiction of the Commission, because of post-contract conduct of the parties. But it is the “contract” that is to be held unfair, and not the conduct, in the final analysis. . . .

and Mason P went on to conclude at [47]:

[47] . . . the relief which s 106 contemplates is (in the words of Glynn J and Schmidt J (at 605 [176])) “relief flowing from the contract found unfair on the evidence and not merely any unfair conduct, which may or may not demonstrate the unfairness of the contract under review”.

100 Hungerford J in a separate judgment agreeing with Fisher CJ and Peterson J in Myer Stores Limited t/as Grace Bros v Stowart (1994) 55 IR 21, observed as to the nature of the protection provided to employees under s 106 (at 38-39):

... It is worth repeating, I think, the words of Sheldon J as to s 88F of the repealed Industrial Arbitration Act 1940 as the statutory predecessor of s 275, in Davies v General Transport Development Pty Ltd [1968] AR NSW (371) at 374: "it is a plain matter of morals not law." To a like effect, Beattie J said of s 88F in Agius v Arrow Frankways Pty Ltd [1965] AR (NSW) 77 at 88: "... it is plainly designed to protect citizens from unfair and harsh dealing".

Fairness: Submissions from Respondents

101 At all times, the respondents contend they acted in good faith and transparently, dealing with the applicant in a fair, just and conscionable manner. It was contended at no time did Mr Camilleri act under constraint or inequality. The respondents contend:

The Applicant's case ignores the fundamental principle that the fairness of any contract which comes before the Court under section 106 of the Industrial Relations Act 1996 (NSW), must be assessed from the point of view of all parties to the contract, having regard to all of its features, rather than just from the point of view of the Applicant, who now seeks to fundamentally alter the contract so as to change his rights and obligations in a manner neither agreed to nor anticipated by the Respondents.

The Contract of employment was not unfair within the meaning of section 106 of the Industrial Relations Act 1996 (NSW).

102 The respondents directly challenge the asserted unfairness in the way the applicant was paid under the contract. In considering fairness in this arrangement, it is necessary first to consider the issue of equality in bargaining power. As to the equality in the negotiations for this contract of employment, I am satisfied the circumstances reveal Mr Rush was in a superior negotiating position to Mr Camilleri. Mr Camilleri first agreed to work a 38 hour week for a wage between $1000 - $1100 gross per week. There is no evidence Mr Rush personally struck this contract. However, it was a contract struck with Auto Recyclers in which he was a major shareholder and, it appears, within three months Mr Rush became the controlling mind of the corporation.

103 The first contract was one Mr Camilleri was pleased with. However, three months later, Mr Rush moved Mr Camilleri to sales and he also reduced Mr Camilleri's wage. Then Mr Camilleri was required to work longer hours over six days a week and then on the weekends. Mr Camilleri was not in agreement with the wage struck for the hours he was required to work. He complained and in response to his continuing complaints he was then promised an incentive sales payment, a promise which was not implemented. Mr Camilleri, I accept, continued to complain about the pay he received for the hours he worked. I accept the various documents signed by him reveal he was willing to work on weekends, however, I accept he objected to the wage he received for the long hours he worked. Acknowledged by Mr Rush is that Mr Camilleri's wife also wrote a complaint. I accept Mr Camilleri was continually offered assurances by Mr Rush that he would be "looked after" by Mr Rush. It is a curious coincidence that the allegations of misconduct arose in the context of Mr Camilleri expressing his serious concern as to how he was going to be "looked after" in the knowledge Mr Rush was considering selling the business for a potential sale of some millions of dollars (allegedly $33 million).

104 I am persuaded, however, that Mr Camilleri enjoyed his trusted position within Mr Rush's operation. He enjoyed carrying responsibility for the sales office and, except for his wage, he was not disgruntled. I accept that not only did Mr Rush give Mr Camilleri responsibility he continued to encourage Mr Camilleri with little sweeteners such as a possible boat holiday (a boat owned by the company) kept at Hamilton Island. Mr Rush, of course, could not but appreciate the endeavours of Mr Camilleri and in evidence said:

Running a seven day a week business is not easy and finding someone that is willing to work Saturdays and Sundays is a blessing to me, a real blessing.

105 The circumstances before the court makes the words of Dey J in F.M.W.U. v Wilson Parking (1980) AR 352 (at 363) applicable:

The argument that it is not against the industrial system to conduct one's business in a way that reduces costs even if it gives a competitive advantage, is met by the observation of Sheldon J. in Davies v. General Transport Development Pty Limited 1967 A.R. 371 at 373 with which I respectfully agree, that the protection of the arbitration system which the section is designed to achieve includes protection against those who seek to avoid the regulation of wages and conditions of employment by award, by getting their work done for them in a way which gives them "a business advantage over competitors so bound".

It has long been accepted that the prescription of minimum rates of pay not only protects employees from exploitation by unscrupulous employers, but also protects fair employers from inequitable competition from employers who pay less then just wages. Intervention upon this basis, in my view, in no way involves the Commission becoming an economic regulator. ...

... the fact remains that the arrangement enables the company to obtain the kind of labour it requires more cheaply and enables it to circumvent obligations which would otherwise arise under the award. The transaction therefore is inimical to the purposes of the Act and defeats the industrial objectives of the Act. The intervention of the Commission is therefore justified as part of the "industrial policing" of the Act.

106 The question remains, do the circumstances reveal Mr Camilleri was willing to sell his labour cheaply? I reject this proposition. Mr Camilleri's consistent complaints against his wage rate do not reflect any such willingness. What the employment circumstance here reveals is Mr Rush was grateful for Mr Camilleri's agreement to work the long hours and take responsibility. Mr Camilleri enjoyed having the responsibility and, except for his wage, was happy in that industry but he did not ever agree, I find, to work for the long hours for such a low wage.

107 Further as Dey J reasons, Mr Rush was, in paying an employee such a low wage, in fact gaining a great advantage over his competitors. The records reveal he randomly raised wage rates and, in accepting him at his word, he only tried to ensure such a rate was above an award minimum basic rate. His financial records (produced very late in the hearing) as to income were meticulous. His wage records, however, show no such care. What Mr Rush did was simply pay as low a wage as he could to a willing employee without any reference to employment law. Mr Rush is a most successful self-made businessman. He conducts a most successful business. The way he administered this contract of employment was not only unfair, but, within his industry, also anti-competitive. This is particularly so after he joined the Motor Traders Association in March 2004. While before that date at best, the Court may accept, he was simply trying to be a hard headed employer. After that date he was an employer in breach of most aspects of employment law.

108 I find the contract of employment was therefore initially fair but it became unfair, firstly when it permitted the respondents to reduce the applicant's wage without the applicant's agreement. By conduct it also became unfair given there was an agreement between the parties to add a term allowing the payment to the applicant of an incentive payment and there was a failure to honour the promised sales incentive scheme. The contract by conduct also became unfair in the failure of the respondents to act with procedural fairness in the termination of the applicant.

Compensation

109 Having found the contract unfair, the Court must consider whether to vary the contract and whether it will grant relief for the particularised and established unfairness and, if so, what compensation would be just in the circumstance.

110 There was a suggestion in submissions by the respondents that it was not on notice as to any overtime claim. In Schedule One of the First Amended Summons it was pleaded in the summary of facts and law as follows:

7. The Applicant was paid $675.00 per week before tax and was responsible for managing the office of the business and for all sales of cars and car parts in the car yard. The Applicant was responsible for the pricing and buying of vehicles from customers and for providing a valuation of vehicles. The Applicant was also responsible for the security and would often be called upon for checking the premises after hours concerning security breaches.

8. Although employed to work a 38 hour week, it was the case that for the majority of the time the Applicant was in the employ of the first respondent the Applicant worked in excess of 60 hours per week.

111 Further, the applicant pleaded for relief in the following manner as to "just compensation" (further clarifying Schedule Two of the Further Amended Summons):

Amount

Unpaid overtime and penalty rates $379,795

Payment of incentive scheme commission $84,627

Payment in lieu of notice (12 months) $119,459

Unpaid long service leave $8,728

Unpaid superannuation $9,345

Anxiety and distress $15,000

Call backs $398.80

TOTAL $617,352.80

I am satisfied the respondents were clearly on notice as to this claim, it was pleaded and the respondents did not object to evidence in chief led on the issue and offered evidence in reply.

112 The above claim as to just compensation is exclusive of interest. The applicant also seeks costs. The respondents ask for the right to submit further arguments as to the claims for interest and costs.

113 In the circumstance the contract should be varied and, as to just compensation, each claimed relief related to the unfairness found will be given consideration.

Underpayment

114 The applicant relies upon Ms Bateman's expert report for calculations as to his underpayment claim which calculations are based on an identified relevant State award for console operators in the vehicle industry. The respondents challenge all her calculations saying that was not a relevant award. The State award cannot be a useful guide because Ms Bateman failed to identify exactly the level at which Mr Camilleri worked, the respondents contend. Given the way Mr Camilleri was employed Ms Bateman's task was difficult. She identified an award that could cover console operators in the vehicle industry. She then matched the rate in that award to the wage rate earned by Mr Camilleri at a particular time. Having identified a relevant level under the award, she then used it as a guide. I accept the basis for her calculations can be used as a guide for what an award employee performing a similar task would earn.

115 I have already held this employee is award-free. I have found he was not under the contract, as varied, paid a fair wage for his hours worked. Ms Bateman's report dated 29 January 2009 is most comprehensive and I accept and adopt it as a guide to my consideration of the underpayment claim. She accepted Mr Camilleri's base rate of pay to January 2004 was $675 net per week increased thereafter to $840.40 net. I have accepted these figures as fair in the balancing exercise, given the unreliability of the financial documents. I accept these figures provide a fair basis from which to calculate the under-payment claim and, if anything, on looking at the documentary evidence, the two rates struck advantage the respondents. Ms Bateman also assumed a 66 hour working week which I have accepted has been established on the evidence.

116 However, some comment needs to be made as to the other detail in Ms Bateman's calculations. Ms Bateman acknowledges there was a four day working week for Mr Camilleri in 2000/2001 for personal reasons (as the group certificate confirms) but she does not allow for the significant reduction in pay to Mr Camilleri. Further Ms Bateman reveals she took instruction the hours of work for Mr Camilleri increased to 77 hours per week in one period. I have not accepted this proposition from the evidence. Further, Ms Bateman was instructed Mr Camilleri's hours were reduced to 55 hours a week (including weekends) from January 2004. There was no evidence to support this proposition. So from January 2004 to May 2005, the hours for the calculations should be increased from 55 to 66 hours. Generally there needs to be some adjustment to the calculations of Ms Bateman.

117 Ms Bateman calculated the applicant should have been paid, had he been an award employee under the State award (based on award rates) for the hours he worked overtime and with penalty rates for Saturday and Sunday work, a further amount of $379,795.

118 However, for the following reasons, I do not accept this calculation. The evidence reveals the applicant was prepared, by agreement with Mr Rush, to work for a weekly rate of pay and to include in his working hours work both on a Saturday and Sunday. That was always the agreement between the parties. He struck an agreement without requiring statutory (read award) overtime rates. In such a circumstance, but where it is accepted he continued to complain about his level of pay, I take guidance from Ms Bateman's calculation (as to the earnings of an award employee with similar duties) but determine, taking into account the necessary adjustments to Ms Bateman's report and acknowledging Mr Camilleri was prepared to work for a weekly rate of pay, that a fair order of just compensation for the hours he worked, including work on Saturdays and Sundays, would be a further amount, not of $379,795.00 as calculated by Ms Bateman, but $200,000. This $200,000 covers the period April 1998 to May 2005, some seven years. I, therefore, allow on average a further payment of $549 per week over the seven years of employment in the sales of spare parts.

119 Mr Camilleri was willing to work in late 1997 for between $1000 - $1100 per week for a 38 hour week. He worked 66 hours a week including Saturday and Sunday over a seven year period. I take into consideration the above rate and discount the period he was happy in his employment (up to the beginning of April 1998). But from April 1998, he was not happy. There was, I have accepted, no agreed wage rate not withstanding the documentation signed by Mr Camilleri. He should have been paid a further $549 per week from April 1998 to his termination in May 2005. Therefore, his wage would be $675 (as earned) and $549 to January 2004 and from then $840.40 (as earned) $549 to May 2005, that is, $1,224.00 a week to January 2004 and $1,389.40 to May 2005. These figures are after tax earnings.

Call Backs

120 The applicant makes claim for "call backs". The second respondent in evidence agreed occasionally Mr Camilleri was called back to the worksite and he was required to attend when the site alarm went off. Ms Bateman's calculations for these call backs were based on a formula of 12 times per year. Mr Rush did concede that occasionally this was a work requirement placed upon Mr Camilleri although it was his view that he himself generally attended at the site.

121 The evidence did not establish the contended number of demands made on Mr Camilleri. I allow a one off payment of $398 in accordance with the applicant's Amended Schedule 2 as to the compensation claimed. The contract should be varied to include this payment.

The Incentive Scheme

122 It is necessary to consider in the circumstance whether Mr Camilleri is entitled to both a payment for his long hours of work and the incentive payment scheme payment given both parties have agreed the incentive scheme payment was introduced in reaction to complaints from Mr Camilleri regarding the underpayment of wages. Mr Phillips SC contends, on behalf of the applicant, that sales people, as a matter of custom and practice, are given a commission on sales. Both the State and the Federal awards contain an acknowledgment of this custom and practice. One of the complaints as to the incentive scheme was it was so restrictive as to not attract any return to the sales employee. Over the period August 1999 to May 2005, some 5 ¾ years, the calculations of Ms Bateman reveal Mr Camilleri, working 66 hours a week, would only have earned in commission $65,143 on an average, a further $218 a week extra under the scheme.

123 The calculations of Ms Bateman were challenged by the respondents. Ms Bateman wrote a first report which revealed estimated losses under the proposed incentive scheme for both the sale of spare parts and the sale of used cars. Mr Rush, in evidence, revealed he held further records of daily and monthly breakdown of sales. Ms Bateman was asked to return to the company and examine the daily and monthly documentation held by the respondents and to prepare from them a second report to address the application of the proposed incentive scheme but based only on the sale of spare parts. She was provided with a copy of the scheme as devised by Mr Rush and her calculations were done by her and her colleague. Mr Camilleri had received throughout the course of his employment, from its introduction, no payment under the scheme and this has been found to be unfair conduct such as to make the contract unfair.

124 The respondents submitted that Ms Bateman's additional report should be given no weight because Ms Bateman had not prepared the entirety of the calculations for the report and could not therefore verify the calculations contained within the report, some of which had been completed by her partner. Her evidence, therefore, could only be evaluated based on the applicant's pleaded case and facts proven. When seen in that light, Ms Bateman's additional evidence was irrelevant, the respondents contend.

125 I do not accept in seeking help with the calculations that Ms Bateman had to verify all the calculations she received from her qualified partner (who did the calculations under her instruction and sitting beside her in the offices of Mr Rush's work place). It was as a result of the volume of material to which she had access, Ms Bateman said, as well as the urgency of a request from the Court, that she sought and was assisted in this task by her partner who works at her office. That other person did not separately provide an expert's report. Instead Ms Bateman sought to adopt the calculations of the other person within the additional report submitted by her. I find this was a proper modus operandi by Ms Batemen in the circumstance.

126 The respondents were given leave by the Court at the conclusion of the hearing to provide, within seven days, an alternative expert's report in reply to Ms Bateman's additional report. The respondents did not file any report in reply to Ms Bateman's additional report. They have provided no alternatives to the figures found as to the calculation contained in the additional report of Ms Bateman.

127 The applicant contends that as a result of the respondents' failure to file a reply, Ms Bateman's additional report should be accepted by the Court as not being contradicted as to its accuracy by any evidence in reply by the respondents. The respondents dispute this submission. In essence, the respondents continue to contend that there is no evidence within the additional report required to be answered and Ms Bateman's additional report was not based on facts proven by the applicant nor was it relevant to the case advanced by the applicant.

128 Ms Bateman reassessed her calculations from her original report to distinguish the spare parts sales (from company records) from the sale of used cars. The respondents gave access to detailed monthly and then daily data. Much of this information was not originally provided. It is ironic, I find, that such detailed and meticulous records have been kept as to the breakdown of all income from sales but the employment records were so inaccurate and unreliable. Ms Bateman's amended report established the sales incentive would have returned Mr Camilleri the sum of $65,143. I accept this figure is a fair calculation of Mr Camilleri's entitlement over the years from the date he was promised a sales incentive scheme in August 1999 to his termination in 2005.

129 Having accepted the payment of $65,143 is a fair estimate of the sales commission achieved by Mr Camilleri and, not withstanding the amount ordered for the underpayment of his wage, I believe it is fair he receive the commission he earned on sales. This figure averaged from August 99 to May 2005, being 5¾ years is $218 per week.

130 I accept as to the unfairness in the contract of employment by the respondents' failure to honour its commitment to Mr Camilleri under the promised incentive scheme that the applicant should be paid compensation for that unfairness in the sum of $65,143.

Notice

131 The termination of Mr Camilleri by conduct has been found to be unfair such as to make the contract unfair. Termination under the contract of employment had to be conducted fairly. On termination, the applicant under his contract had an inferred term for the payment of reasonable notice. I have found the summary termination for misconduct was unfair such as to make the contract unfair. The evidence is the applicant was out of work after termination for a period of time and, on one occasion having gained employment, an inference was cast that Mr Rush sought to interfere in that employer/employee relationship. The applicant gave seven and a half years of loyal and trusted service to Mr Rush personally and to the business of Auto Recyclers. It was unfair he was not paid a reasonable notice payment on termination. The applicant should be paid six months notice. Such a payment should be calculated on the following formula:

Including -

Base Pay at $1389.40 per week

Sales Incentive for six months at $218 per week

Superannuation on Sales Incentive

Superannuation on Base Pay

Long Service Leave

132 I have inferred into the contract of employment a reasonable term of the contract is a payment for long service leave under NSW law. The applicant, on termination, was unfairly denied by the conduct of the respondents at termination of his entitlement. The applicant should be paid that leave as just compensation calculated on the following formula:

· employment commenced in November 1997 to 27 May 2005

· on the rate of pay of $1389.40 per week.

· the incentive payment at $218 per week from August 1999

· based on the period of employment 6.492 weeks of paid leave.

Unpaid Superannuation

133 Given the under-payment of wages to Mr Camilleri there would be consequently and as a matter of fairness just compensation by way of a further superannuation payment under the Act by the respondents. I have calculated that Mr Camilleri over the period 2002 - 2005 was entitled to an additional $549 per week. The respondents should calculate his further entitlement based on his earnings of a further $549 from April 2002 to May 2005. The appropriate outstanding superannuation payment should be paid to the applicant's superannuation fund.

Anxiety and Distress

134 This claim was not pressed by the applicant.

The Second Respondent: Mr Rush

135 The applicant pleads there was a contract of employment between himself and the first respondent. From the oral evidence and the documentary evidence I am satisfied the second respondent is the general manger of the first respondent and is also a director and shareholder of the first respondent and as evidence revealed by his actions, the controlling mind of the business Auto Recyclers. I am also satisfied he was the supervisor of Mr Camilleri. The respondents contends as the second respondent was not a party to the first contract, it follows that the second respondent is only liable to the extent that he was culpably involved in or benefited from the contract between the applicant and the first respondent. In Brown v Rezitis [1970] HCA 56; (1970) 127 CLR 157, Barwick CJ held (at 167-168) that:

Assuming that the Commission was entitled to go behind the incorporation of the company and to include its managers and shareholders in the orders for payment of money made in the case - and, as at present advised, I see no reason why under a section such as s. 88F the Commission should not do so - it seems to me that persons who were not beneficial shareholders could not be included in an order for the payment of money made in connexion with the varied or avoided contract or arrangement merely because they held shares in the company on trust for some known person, even if that person had been connected with the making or operation of the contract or arrangement.

The only other basis for an order for payment of money against these appellants in this case [not parties to the contract] could be that they had received the proceeds of the contract or arrangement or were in some way culpably associated with its making or operation.

136 Reliance is placed by the respondents on the reasoning in Ace Business Brokers v Phillips-Treby [2000] NSWIRComm 163; (2000) 100 IR 420 as follows:

48 ... In any event, to be “culpable” means to be “blameworthy”. If an agent in dealings with a principal's customer was blameworthy in some respect, such as here by making unsupported representations the truth of which was not ascertained thereby inducing that person to make a contract found to be unfair, then, we would have thought, the necessary connection or association with the contract had been established. Indeed, in dealing with the true measure of the extent of the restitution which an agent may be required to make, Asprey JA in Ashfield Brokers and Consultants Pty Ltd; Re Witek (Court of Appeal, 29 June 1972, unreported at p 7) expressed it in terms as being “the nature and the degree or depth of his association with the acts which brought the innocent party into the transaction subsequently invalidated”. We respectfully agree.

137 I reject the proposition there was no evidence of the second respondent receiving any benefit under the contract. The evidence reveals Mr Rush was the controlling mind of the corporation. He and his family are the sole beneficiaries after he absorbed the interests of Sims Rush into his operation. Mr Rush was involved as a party in determining each variation made to the contract of employment. The contract was varied regularly by Mr Rush. He was a party to the contract as both Director and General Manager and Mr Camilleri's supervisor. Signed documents establish Mr Rush, within three months, took control of the employment contract and varied it to Mr Camilleri's detriment. He was in total control of Mr Camilleri's employment. Mr Camilleri reported to him and any variation to the contract of employment after the first three months were made by Mr Rush. Mr Rush and his family receive the benefits gained through their ownership of the first respondent. It was the acts of Mr Rush in reducing the applicant's payment and increasing his hours of work and then summarily terminating him in an unfair manner, which acts caused the contract of employment to become unfair.

138 The first respondent will be jointly and severally liable for the orders of the Court. The second respondent shall be jointly and severally liable for the orders of the court.

139 The parties are to settle Short Minutes of Order in accordance with the above reasoning. The parties will be heard as to any further orders related to interest and costs.

AMENDMENTS:


31/03/2011 - Each use of the word "net" at para 119 be deleted - Paragraph(s) 119


LAST UPDATED:
11 April 2011