Akmeemana v Murray & ors [2009] NSWSC 979 (29 September 2009)

Last Updated: 30 September 2009

NEW SOUTH WALES SUPREME COURT

CITATION:
Akmeemana v Murray & ors [2009] NSWSC 979


JURISDICTION:


FILE NUMBER(S):
10656/09

HEARING DATE(S):
17 August 2009

JUDGMENT DATE:
29 September 2009

PARTIES:
Chaminda Akmeemana (Plaintiff)
Craig Murray (First Defendant)
Geller & Associates Pty Ltd (Second Defendant)
Joshua Abraham Geller (Third Defendant)
Trevor Jones (Fourth Defendant)

JUDGMENT OF:
Davies J

LOWER COURT JURISDICTION:
Local Court

LOWER COURT FILE NUMBER(S):
11318/07

LOWER COURT JUDICIAL OFFICER:
Magistrate Bradd

LOWER COURT DATE OF DECISION:
05/12/2008


COUNSEL:
J Sleight (Plaintiff)
First Defendant - no appearance
T Saunders (Second, Third and Fourth Defendants)

SOLICITORS:
Neville & Hourn Legal (Plaintiff)
Harmers Workplace Lawyers (Second, Third and Fourth Defendants)


CATCHWORDS:
EMPLOYMENT LAW - the contract of service and rights, duties and liabilities as between employer and employee - remedies upon breach - whether commissions could be withheld for particular breach of employment contract - whether terms implied into employment contract linking acts of performance to payment of commission - obligation of employer to make superannuation contributions - whether a term of the contract of employment - whether a failure by the employer to make contributions results in damage to employee for which damages are payable. PROCEDURE- appeal from Local Court - extension of time for bringing appeal - principles involved.

LEGISLATION CITED:
Supreme Court Rules
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules

CATEGORY:
Principal judgment

CASES CITED:
Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528
Amalgamated Collieries of WA Limited v True [1938] HCA 19; (1938) 59 CLR 417
Anthony v Chris Savage Pty Ltd [2003] NSWSC 698
Appleby v Pursell [1975] 2 NSLWR 879
Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410
Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Currabubula v State Bank of NSW [2000] NSWSC 232
Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889

TEXTS CITED:


DECISION:
The parties should bring in Short Minutes of Order to reflect these reasons.



JUDGMENT:

- 1 -

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

DAVIES J

29 SEPTEMER 2009

10656/09 CHAMINDA AKMEEMANA v CRAIG MURRAY & ORS

JUDGMENT

1 This is an appeal from the decision of the Local Court constituted by Magistrate Bradd sitting at the Downing Centre given on 5 December 2008. As the proceedings in this Court were not commenced until 3 February 2009 the Plaintiff seeks also an extension of time for the bringing of the appeal.

Background

2 Pursuant to an Employment Contract dated 26 February 2007 the Plaintiff was employed from 1 March 2007 to 1 November 2007 as a recruitment consultant by Geller & Associates Pty Ltd, the Defendant on this appeal (“Geller & Associates”). Geller & Associates recruits high value, niche and skilled specialists in corporate performance management and business intelligence. It employs recruitment consultants to recruit across a number of specified areas rather than to recruit for a specific account or client. At the time of the engagement of the Plaintiff, Geller & Associates had a vacancy for a recruitment consultant to recruit in the 3 areas of Datastage, Terradata, and Business Objects.

3 The Employment Contract relevantly provided:

“3. Probation Period

From your employment Commencement Date, you will be subject to a 4 month probation period ...

4. Renumeration

Your base is AUD $60,000 (gross) per annum ... Additional to your base salary is the superannuation component of 9%, equivalent to approx AUD $5,400 per annum.

Probation Period Commission – Payable on Invoices that have been Paid

[there was then set out the commission for months 1, 2, 3 and then month 4 and beyond]

Any changes to compensation package will be added as an appendix to this contract after being agreed and signed by both parties.

Geller will deduct all applicable PAYE tax from your base salary and pay it to the Australian Taxation Office on your behalf.

...

8. Superannuation

Geller will make the minimum superannuation contributions (currently 9%) to your nominated Superannuation Fund in accordance with applicable superannuation legislation.

9. Role and Responsibilities

Your specific role and responsibilities are set out in the Position Description. However, you must also:

(a) follow all lawful directions at your supervisor/s and/or Geller’s officers and management;

...

(c) comply with Geller’s policies and guidelines, as varied or issued from time to time, including, without limitation to, security, workplace discrimination, harassment, alcohol and drugs, and acceptable uses of online services;

...

14. Termination

Geller may, at any time, give you written notice terminating this Employment Contract if you:

...

(g) fail to comply with any provisions of Geller’s policies and/or procedures;

...” (underlining added)

4 At the time of the Plaintiff’s employment, Geller & Associates appears not to have had any policies and guidelines (at least in written form) but such a manual entitled “Policies and Procedures Manual” was published in June 2007. In the section headed “JOINING OR LEAVING GELLER” a paragraph headed “FINAL PAY” relevantly provided:

“Employees will receive their final pay in their account, via EFT, on their last working day... . No payment will be made for commission on invoices not settled prior to your last day. ...”

5 Disputes arose between the Plaintiff and one of the Directors, Joshua Geller, the details of which do not matter for the issues on this appeal. The dispute ultimately led to the Plaintiff ceasing to work for Geller & Associates on 1 November 2007.

The proceedings in the Local Court

6 The Plaintiff brought proceedings against Geller & Associates and three of its Directors, Craig Murray, Joshua Geller and Trevor Jones, alleging breaches of his Employment Contract as well as claims under ss 52 and 53B of the Trade Practices Act 1974 with a claim under s 75B of that Act alleging that the Directors aided, abetted, counselled or procured the breaches of the Trade Practices Act and were directly or knowingly concerned in the contraventions.

7 The breaches of contract were said to be failures to pay superannuation in respect of the Plaintiff’s employment from May to December 2007 and a failure to pay all of the commissions due to the Plaintiff from August to December 2007. The Plaintiff also claimed that Geller & Associates repudiated his contract of employment on 12 October 2007 and when the FPlaintiff accepted the repudiation of contract Geller & Associates did not give him 4 weeks notice in breach of contract.

8 The learned Magistrate found that neither Geller & Associates nor any of the Directors breached the Trade Practices Act and found that Geller & Associates did not repudiate the employment contract. No appeal is brought from those determinations.

9 The learned Magistrate found that Geller & Associates had a liability to pay superannuation with respect to commissions earned by the Plaintiff but he said the Court could not award damages to the Plaintiff in respect of that failure. The first ground of appeal relates to that determination.

10 The learned Magistrate also found that Geller & Associates did not pay certain commissions to the Plaintiff because the Plaintiff had failed to complete placement folders as he was required to do in accordance with the terms of his employment and that in those circumstances Geller & Associates had no liability to pay the commissions. The second ground of appeal in these proceedings concerns that determination.

Grounds of appeal

11 The Plaintiff identifies the grounds of appeal as these:

(1) The Magistrate erred in law in finding that where the Plaintiff is found to be entitled to payment of superannuation pursuant to a term of a contract of employment it has no jurisdiction to make a finding that the Plaintiff has suffered damage in an amount equivalent to the entitlement to superannuation and make such an award.

(2) The Magistrate erred in law in holding that the Defendant was not liable to the Plaintiff to pay commissions in respect of various placements of candidates that the Plaintiff had brought about on the grounds of:

(a) his finding that the Plaintiff had not completed the folders in relation to the placement prior to the termination of the Plaintiff’s employment contract; or

(b) holding that the policy and procedures manual was incorporated into the Plaintiff’s employment contract so as to exclude liability for the payment of commission in respect of placements where the invoice had not been settled prior to the Plaintiff’s last day of employment.”

12 The preliminary matter to be determined, however, is whether the Plaintiff should be granted an extension of time to bring the appeal.

Extension of time

13 As I have noted, the judgment of the Magistrate was given on 5 December 2008. Under Rule 50.3 Uniform Civil Procedure Rules a summons commencing an appeal must be filed within 28 days after the material date. Material date is defined in Rule 50.2 as being (relevantly) the date on which the decision is given. Accordingly, the summons ought to have been filed by 2 January 2009. It was not filed until 4 February 2009.

14 The Plaintiff swore an affidavit in support of his application to extend time. In that affidavit he said that he received a copy of the judgment attached to an email from Jayne King of his solicitors at 11:43am on 5 December 2008.

15 He attached copies of correspondence to the affidavits which disclosed that on 19 December 2008, the Plaintiff’s barrister, Mr Sleight, wrote a letter of advice to Clinch Long Leatherbarrow, the Plaintiff’s then solicitors, identifying what he said were 2 errors of law which, in his view, gave an appeal reasonable prospects of success. Those 2 grounds are in fact the grounds pursued on this appeal now. The letter concluded by saying in bold type:

“The time in which to institute and appeal will expire on the 28^th day after the 5^th December 2008... .”

16 Whether by reason of the intervention of Christmas or for some other reason, Clinch, Long, Leatherbarrow did not send a copy of this letter of advice to the Plaintiff until 29 December 2008. The covering letter said that if the Plaintiff wished to appeal the solicitors would need to ensure that all their fees were paid in full. The Plaintiff said in his affidavit that he did not see this letter until the second week of January 2009 on his return from holiday leave.

17 There were then a series of emails commencing 8 January 2009 between the solicitors and the Plaintiff concerning the payment by the Plaintiff of the solicitor’s fees to enable an application for an extension of time to be made. It seems some arrangement was entered into for the Plaintiff to pay by instalments but the Plaintiff did not make the payments. In this regard, Ms King sent him an email at 10:49am on 21 January 2009 asking him to say when her firm would receive the $1500 that was due on 15 January under the instalment agreement, and it asked if he could provide instructions in relation to whether he required them to lodge an application for an extension of time to appeal.

18 Rather than respond to that, the Plaintiff sent an email at 10:53am to his present solicitor Matt Hourn saying (inter alia):

“Can you help me with the case? Let me know please?

I am supposed to pay $1500 today and also transfer $5k on the 23^rd (I was going to transfer $10K) to CNL. However I’d rather you work on it, and I can put this money aside into a separate account and pay you. Hopefully we win and Josh pays you, but IF things don’t go well, you can trust me to have the money.

...”

19 Thereafter, it appears that Mr Hourn (a principal of Neville & Hourn Legal) commenced to act for the Plaintiff although there is no explanation given for the further delay until the summons was filed on 3 February 2009.

20 The Plaintiff was cross-examined on his affidavit evidence concerning the failure to file the appeal within time. He said that although he spoke to Ms King on 5 December after the judgment was handed down and she informed him that there were grounds to appeal (which he understood had been discussed with Mr Sleight) the Plaintiff did not read the email attaching the judgment until some days after he returned from holidays in Tasmania in about the second week of January. He said that Ms King did not explain to him that an appeal had to be lodged within 28 days but, nevertheless, he expected or assumed there would be time limits for filing the appeal.

21 The Plaintiff said that it was not possible to access his emails in Latrobe, which was the town in Tasmania where he was staying. After his return he did not even read the judgment for a few days.

22 I found the Plaintiff to be an unsatisfactory witness. He changed his evidence a number of times about the period of his holidays and when, in particular, he returned. Ultimately, he appeared to accept that he returned to Victoria in the 2^nd week of January, around 8 January 2009. This would appear to be consistent with an email from Ms King to the Plaintiff of 8 January 2009 that suggests (and the Plaintiff appeared to accept this) there had been some contact prior to the sending of that email between him and Ms King concerning the matters referred to in the email.

23 Neither in his evidence nor in the contemporaneous material was there any suggestion of concern by the Plaintiff about the need to lodge an appeal although he had been advised promptly by his solicitor that he had lost the case in the Local Court and that there were grounds of appeal. That impression is reinforced when regard is had to what the Plaintiff did or failed to do after his return from holidays in the 2^nd week of January. He agreed that when he read Mr Sleight’s letter and particularly the part concerning the deadline for lodging the appeal he thought it was a disaster that he had missed the deadline. He agreed that when he spoke to Ms King she told him he had to act quickly to seek an extension.

24 It is clear that he owed money to his solicitors in respect of the case they had conducted for him, and they required him to pay fees in respect of the filing of an appeal. It seems that he made an arrangement with those solicitors to pay off the fees but instead of keeping it he engaged a new firm of solicitors and assured them of payment from an amount of $10,000 which, despite his earlier denials of having any money, he said he had obtained from starting a part time job and from borrowing the balance from his family.

25 Again, I found the Plaintiff’s evidence concerning his having funds to pay for legal costs to be very unsatisfactory. He claimed that he could not pay the instalments due to his existing solicitors because he did not have any money but subsequently said that he had the $10,000 which he promised to pay to his new solicitors if they would act for him. Further, as I have noted, there is no explanation for the delay between 21 January (the date he promised his new solicitors he had the funds) and 3 February 2009 when the summons was filed.

26 Geller & Associates also point to the procedural failures of the Plaintiff since the proceedings began. Amongst other things, it draws attention to the fact that at the first Directions hearing there was no appearance on behalf of the Plaintiff, that he failed to comply by 3 days with Directions given at the 2^nd Directions Hearing to file affidavits, that he failed to comply with a Notice to Produce served on him by Geller & Associates for some 4½ months, that he subsequently failed to file and serve affidavits on time and that ultimately he failed to file and serve written submissions by the date directed.

27 In Currabubula v State Bank of NSW [2000] NSWSC 232 Einstein J was considering the earlier equivalent provision to Rule 50.3 UCPR found in Part 51A Rule 3(1) Supreme Court Rules, and said at [87]:

“An extension of time in which to appeal is not granted automatically or as of right: the Rules of Court governing time steps for pursuing an appeal are to be complied with. However, those Rules of Court are not to be used to effect an injustice: the object of the power of the Court to extend time is to do justice as between the parties. The Court will extend time where not to do so would work an injustice. Relevant considerations in exercising the discretion include the history of the proceedings, the conduct of the parties, the nature of the litigation, the consequences to the parties of the grant or refusal of the extension of time, the prospects of the appeal’s success and any prejudice caused to the respondent by extending the time. The trend of recent authorities is towards a growing liberality in granting extensions of time in which an appeal can be lodged: Moulieux v Girvan NSW Pty Ltd (unreported, Court of Appeal, 20 September 1991), Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479 at 480-481, Jess v Scott (1986) 12 FCR 187 at 194-195, Morris v Public Transport Commission of NSW (unreported, Court of Appeal, 28 May 1984).”

28 In Anthony v Chris Savage Pty Ltd [2003] NSWSC 698 Sperling J, also dealing with Part 51A Rule 3 Supreme Court Rules, was considering an extension of time where the Notice of Appeal was filed 10 months out of time. His Honour said:

“[35] Counsel for [the Respondent] has referred the court to two decisions at first instance by McHugh J, where applications to extend time for appeal after lengths of time similar to that involved in the present case had occurred: Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479; Re Commonwealth of Australia; Ex Parte Marks [2000] HCA 67; (2000) 75 ALJR 470. His Honour was of the view that, where there is delay of that order, the circumstances would have to be exceptional to warrant an extension of time. However, the over-arching consideration is whether the strict application of the time limitation will or may occasion injustice: Gallo (supra); Re Manchester Economic Building Society (1883) 24 Ch D 488 per Bowen LJ; Outboard Marine Australia Pty Ltd v Byrnes [1974] 1 NSWLR 27; Moulieux v Girvan NSW Pty Ltd (rec and mgr apptd) (NSWCA, 20 September 1991, unreported, Kirby P, Priestley and Handley JJA).”

29 Despite the inconsistent and unsatisfactory evidence given by the Plaintiff, and despite his somewhat cavalier approach both to the commencement of the proceedings and to their conduct, it seems to me that an extension of time should be granted to bring the present appeal for the following reasons. First, the delay in commencing was relatively short. Secondly, it is relevant that the delay took place in December and January, a time when it is well known that much of the legal profession is on vacation and there was some evidence in the present case that not only was the Plaintiff on vacation but his solicitor Jane King was also on vacation for part of the time. Thirdly, the Defendant in the appeal concedes that there is no special prejudice to it but that it simply suffers the general prejudice involved in the delay of the appeal being filed. Given that the delay is in the vicinity of 1 month it does not seem to me that that general prejudice weighs very heavily in the balance. Fourthly, the appeal is not so lacking in merit that it would be appropriate to reject it by a determination of the extension question against the Plaintiff. In fact, as I have ultimately found, the appeal should largely be upheld.

Ground 1 - Superannuation

30 The Plaintiff claimed that Geller & Associates did not pay the superannuation due on commission or, if it was paid, deducted it from the commissions paid to the Plaintiff. It particularises this by saying that for the months of May to December 2007 there was unpaid superannuation of varying amounts totalling $8,175.83. However, it is also asserted that in July 2007 what was said to be the unpaid superannuation for that month of $1,758.06 was deducted from the Plaintiff’s commission.

31 The position was more particularly explained in submissions. In May and June it appears that superannuation was not paid at all and the Plaintiff makes a claim for those amounts. It was then said that from July Geller & Associates realised it had an obligation to pay the superannuation but deducted the amount from the commission, and a claim for that amount is made.

32 The Magistrate dealt with superannuation in his judgment as follows:

“[16] Mr Akmeemana has not been paid superannuation on commissions earned. Geller & Associates Pty Ltd were not aware that superannuation was payable on commissions when Mr Akmeemana commenced employment. When Mr Geller became aware of the requirements, he decided to make commissions inclusive of superannuation.

[17] The employment contract between Mr Akmeemana and Geller & Associates Pty Ltd provides that the employer will make minimum superannuation contributions in accordance with legislation.

[18] Mr Saunders asserts that the court is without jurisdiction with respect to the claim for superannuation. Mr Sleight asserts that Mr Akmeemana has suffered damages due to the non-payment of monies that should have been paid into his superannuation fund.

[19] The court can determine liability for breach of the contract with respect to superannuation. It cannot order Geller & Associates Pty Ltd to pay Mr Akmeemana a certain sum in damages as a consequence of a breach of the contract with respect to superannuation.

[20] Mr Saunders asserts that Geller & Associates Pty Ltd can stipulate that a commission is to be inclusive of superannuation. An employment contract can provide that certain monies payable are inclusive of superannuation, however Geller & Associates Pty Ltd is purporting to arbitrarily change a term of a contract after its execution by the parties.

[21] I find that Geller & Associates Pty Ltd has a liability to pay superannuation with respect to commissions earned by Mr Akmeemana.”

33 In the case of the superannuation from May and June 2007, Geller & Associates simply did not pay into the Plaintiff’s superannuation fund the superannuation due for those 2 months. The evidence discloses that this was because the directors did not understand at that stage that they had to do that. They thought that Commission payments did not attract superannuation.

34 It is to be noted that, although the Employment Contract made specific provision with regard to superannuation in relation to the base salary (clauses 4 and 8) the Contract was silent in relation to superannuation in respect of commission. The explanation would appear to be, as I have said, that until the directors of Geller & Associates saw their accountant in mid to late September 2007 and were advised that superannuation was payable by them on commissions, they thought the Company had no obligation in that regard.

35 Although there was a failure to pay superannuation on the commission expressed in clause 4 of the Agreement to be payable for the months of May and June 2007 it does not seem to me that the Plaintiff is entitled to damages for that failure. The obligation on the employer to pay contributions to the superannuation fund was an obligation imposed by law. In that way, a breach of the obligation did not give rise to a claim for damages on the part of the Plaintiff: Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410 at 421-422. Nor does the fact that the obligation imposed by law was reproduced as clause 8 of the contract convert the obligation as one arising by agreement rather than retaining its character as a right imposed by law: Byrne at 420; Amalgamated Collieries of WA Limited v True [1938] HCA 19; (1938) 59 CLR 417 at 423.

36 Further, the Plaintiff suffers no loss for which compensation is payable now as a result of any failure to make the contribution to the superannuation fund. The Plaintiff has not identified any basis on which he would currently be able to access his superannuation. I was informed by Mr Saunders for Geller & Associates, and without any dissent from Mr Sleight, that if an employer fails to make a superannuation contribution at the appropriate level the Australian Taxation Office administers or imposes a superannuation guarantee charge on the employer. That charge is collected from the employer and paid into the employee’s superannuation fund. This might happen simply through random auditing on the Australian Taxation Office’s part or might happen as a result of a complaint made by an employee who ascertains that an employer has not made the appropriate superannuation contribution. If this happens in the present case, the Plaintiff will receive the full benefit from the superannuation contributions exacted under this scheme.

37 If the Plaintiff were to be awarded damages in respect of the failure to make the May and June 2007 payments he would, first, receive more than his entitlements because the money would be paid now rather than when he legitimately became entitled to his superannuation and, secondly, might result in him being compensated twice if the employer was obliged under the superannuation guarantee charge to make the contribution at any time between now and when the Plaintiff became entitled to access his superannuation.

38 In my opinion, the Magistrate was correct in saying (in para [19]) that he could not order Geller & Associates to pay a certain sum in damages in respect of that superannuation. The Magistrate expressed it in terms of its being a consequence of a breach of contract, but for the reasons I have given, that explanation was not correct.

39 Geller & Associates also argues that the Plaintiff might already have been overpaid in relation to the May and June contributions on the basis that the amount of commission paid to him in those months ought to have been reduced by the 9% contribution required to be made by the employer. This argument relates to the principal argument put by Geller & Associates in relation to the remainder of the claim for superannuation. The argument is that as a matter of proper construction of the Employment Contract the Plaintiff was only entitled to net commission after deduction of any superannuation which in fact was payable on the commission. Geller & Associates points to the difference in the first part of clause 4 where it is said that superannuation was payable “additional to your base salary” but no such term was stipulated in relation to commission.

40 Mr Saunders disavowed any approach that required the Plaintiff himself to make his own contribution to superannuation out of the commission he received. He said it was always the employer’s obligation to make the contributions to the superannuation fund. His argument was that as a matter of construction of the Contract, the promise to pay the commission set out in clause 4 must be taken to include the obligation of the employer to make the superannuation contribution. On the other hand, the Plaintiff submitted that there was an implied term in the Employment Contract that the employer would pay the superannuation contributions.

41 For the reasons I have earlier given, derived from Byrne, the Plaintiff’s assertion that there is an implied term for the making of the superannuation contributions should not be accepted. However, neither do I accept the argument of Geller & Associates that as a matter of construction of the Employment Contract, the commissions were to be regarded as gross commissions including the superannuation contribution.

42 It is clear from the evidence given by Mr Joshua Geller in his affidavit of 17 June 2008 that the Employment Contract was drawn up by Geller & Associates at a time when it believed it had no obligation to make contributions for superannuation in respect of submissions. It is clear also that when Geller & Associates was advised it was obliged to make superannuation contributions in respect of commission, it was forced into a position of unilaterally altering the terms of the Employment Contract for commercial reasons. In his affidavit Mr Geller said this:

“[74] Up until about mid to late September 2007, Geller & Associates made superannuation contributions on base salary only. Up until this time, it was my understanding that, in accordance with the superannuation legislation, commission payments did not attract superannuation. Therefore, Geller & Associates did not make superannuation contributions on the basis of the commissions received by the employees.

[75] In or about mid to late September 2007 and after the Promotion, Trevor and I, on behalf of Geller & Associates, had a meeting with the Company accountants ... about superannuation... . The advice received from the accountants was that the amount of any commission payable had to be included in calculating an employee’s superannuation contribution.

[76] After considering this new advice, the only viable option was to make any commission payments to employees inclusive of superannuation. To make superannuation contributions on top of commission payments would not be a commercially viable option.

...

[78] I spoke with the Plaintiff individually first on or about 19 September 2007. We had a conversation to the following effect:

‘I said: ‘Chami, we need to talk about how your super is being paid.’

Chami said” ‘Really what up (sic)?’

I said: ‘Well we seem to have made an error with your pay in that we have to pay super on your bonus.’

Chami said: ‘Hmm really?’

I said: ‘Yep. Now, that’s obviously not what we agreed or what you were expecting, is it?’

Chami said: ‘No, I thought super was just paid on base right? That’s how we’ve always worked stuff out so far.”

I said: ‘Sure. The issue right now is that I’ve just had some advice from the accountants that by law every cent attracts super, base and bonus.’

Chami said: ‘So what does that mean?’

I said: ‘It means that we need to pay a percentage of your bonus towards your super fund.’

Chami said: ‘I’m not happy with that.’

I said: ‘Me neither – death and taxes hey.’

Chami said: ‘What about my contract?’

I said: ‘What do you mean?’

Chami said: ‘It says you pay super.’

I said: ‘We do and will at the minimum required by law. We’ve just been advised by law. We’ve just been advised that this means that your comms will attract super and having just given you a 20% pay rise and with the best commission scheme in town, the business can’t give you a 9% pay rise on your bonus.’

...” (emphasis added)

43 In those circumstances, the Magistrate’s conclusion (in para [20]) that Geller & Associates was purporting arbitrarily to change a term of a contract after its execution was correct. It seems to me that that evidence is admissible in construing the terms of the Employment Contract even if there is no ambiguity but certainly if there is. This is evidence of the surrounding circumstances at the time of making the Contract: Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528 at 531; Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348; Appleby v Pursell [1975] 2 NSLWR 879 at 890-891 and 896.

44 In the light of the evidence of Mr Geller, the Contract cannot properly be construed as having been intended to make a distinction between base salary and commission for the payment of superannuation contributions. So far from Geller & Associates believing that commission was inclusive of superannuation, it in fact believed that superannuation was not payable on commission at all. It was for that reason that the employment contract was silent about superannuation on commission.

45 If, on the other hand, the employment contract is thought to be ambiguous, it ought to be construed against Geller & Associates who prepared it and presented it to the Plaintiff for signature. It is not necessary for the Plaintiff to succeed on this point that a term needs to be implied into the contract that the employer would make superannuation contributions on the commission. That was an obligation imposed by law.

46 What, in my opinion, the employment contract contained was an agreement to pay to the Plaintiff the commission set out in clause 4 without deduction. Accordingly, Geller & Associates has breached the employment contract in respect of the months July to November 2007 by not paying the Plaintiff the commission to which he was entitled. The amount of the underpayment for those months totals $5,957.40, the amount paid as superannuation contributions.

Commission for uncompleted placements

47 The Plaintiff claims that Geller & Associates failed to pay commission in respect of the months August, October, November and December 2007 totalling $52,616.70.

48 The Magistrate dealt with this claim as follows:

“[22] Mr Akmeemana has not been paid all commissions with respect to candidates he says were placed by him. Geller & Associates Pty Ltd has not paid the commissions because Mr Akmeemana did not complete the files with respect to the work relating to the commissions, or because the candidates were unsuccessful.

[23] The employment contract provides that Mr Akmeemana is to follow all lawful directions; paragraph 9a; and comply with policies and guidelines as varied or issued from time to time; paragraph 9c. In June 2007, Mr Geller published a “policies and procedures manual”. In a section titled “Final Pay” the following is stated “No payment will be made for commission on invoices not settled prior to your last day.”

[24] Mr Saunders asserts that since certain invoices had not been paid when Mr Akmeemana finished working with Geller & Associates Pty Ltd, Mr Akmeemana had no accrued right at the date of the termination of the employment contract.

[25] On 24/05/2007 Mr Akmeemana inquired about commission. Mr Geller replied that he wanted to see up to date placement files. In an email later that day Mr Geller sent an email to Mr Akmeemana setting out the requirements in relation to placement folders. On 04/06/2007, Mr Geller sent an email to Mr Akmeemana reminding him that “commission is only payable on candidate deals that are finalised (i.e. admin done) prior to start date.”

[26] The question about whether Geller & Associates Pty Ltd has a liability to pay the disputed commissions depends on the agreement of the parties as interpreted from the contract of employment. Geller & Associates Pty Ltd does not have a liability if Mr Akmeemana was required to complete placement folders before such liability arose: Westralian Farmers Ltd v Commonwealth Agricultural Service Engineers Ltd [1936] HCA 6; [1935-1936] 54 CLR 361 at 379 and 380.

[27] The employment contract incorporated the policies and procedures manual by virtue of paragraph 9c of the contract: Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889; 177 ALR 193. The direction about completing the placement folder prior to the candidate starting was a lawful direction relating to the operation of Geller & Associates Pty Ltd. Since Mr Akmeemana had not completed the folders in relation to some placements prior to the termination of the contract no liability arose for Geller & Associates Pty Ltd to pay those commissions to Mr Akmeemana.”

49 The Magistrate found against the Plaintiff on the basis of his finding that he failed to complete the placement folders. That, the Magistrate said, was a lawful direction and that entitled Geller & Associates not to pay commissions to him. Although the Magistrate does not find as an alternative ground that no commission was payable if the client did not pay the invoice prior to the Plaintiff’s termination of employment, Geller & Associates has, by Notice of Contention, submitted that that was another basis upon which the Magistrate could have reached his decision that no commission was payable.

50 Geller & Associates submits that the paragraph headed “FINAL PAY” (et out in para 4 above) was incorporated into the Employment Contract by virtue of what was contained in paragraph 9(c) and the subsequent publication of the Policy and Procedures Manual. Geller & Associates submits alternatively, that it is implied in that part of clause 4 of the Employment Contract that stipulates that commission is payable on invoices that have been paid, first, that the placement folders had to be completed with all the necessary documentation and secondly, that the invoice had to be paid to Geller & Associates prior to the termination.

51 Geller & Associates supports its first submission relying on what was said by the Full Federal Court in Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889.

52 Geller & Associates says that the Magistrate correctly determined that the direction to complete the placement folders was a lawful direction. It says further that in failing to complete them, the Plaintiff did not perform the work necessary to earn and therefore become entitled to the commission payments in respect of those placements. The Plaintiff does not disagree that the direction to complete the placement folders was a lawful direction nor that he was obliged to follow all lawful directions pursuant to his employment contract.

53 I do not consider that Geller & Associates is entitled to alter the basis of the Employment Contract by means of the Policies and Procedures Manual formulated some months after the employment contract was entered into. In Riverwood Mansfield J said at [152]:

“... [The employer’s] power to change its policies, or to introduce new policies, from time to time would be constrained by an implied term that it would act with due regard for the purposes of the contract of employment: eg Hospital Products Ltd v United States Surgical Corp [1984] HCA 64; (1984) 156 CLR 41 at 63, 137 – 138; [1984] HCA 64; 55 ALR 417, so it could not act capriciously, and arguably could not act unfairly towards the [employee]: cf. Ansett Transport Industries (Operations)Pty Ltd v Commonwealth [1977] HCA 71; (1977) 139 CLR 54 at 61; [1977] HCA 71; 17 ALR 513. It might also be a power which, by implication, must be exercised reasonably having regard to the nature of the contract and the entitlements which exist under it: Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 28 NSWLR 234 at 279-280 per Handley JA.”

54 It does not seem to me that Geller & Associates is entitled to alter the Employment Contract by means of the promulgation of the Policies and Procedures Manual except insofar as the matters contained in that Manual can be incorporated consistently with clause 9(c) of the employment contract. That clause requires employees to comply with policies and guidelines which, although it uses the words “without limitation to” are, by the matters listed, directed to the way employees are bound to behave in the working environment. I do not think the words “without limitation to” can be read in an unqualified way.

55 Apart from anything else what clause 9(c) requires is compliance with the policies and guidelines. It is difficult to see how a change to the terms of employment relating to an entitlement to commission can be said to fall within clause 9(c) because such a change does not require compliance. Compliance suggests that the other party must do a positive act or refrain from doing a positive act. What is contained in that part of the manual under the heading “FINAL PAY” does not require any act or behaviour on the part of the employee. It merely states what Geller & Associates intends to do or will do in relation to commission. It amounts to a change in the Employment Contract because no such limitation was contained within the Employment Contract. To impose that change would not be to “act with due regard for the purposes of the contract of employment” and would be to “act unfairly towards the” employee, it would be to act “capriciously” and would not be exercising the power in clause 9(c) to implement policies and guidelines in a reasonable fashion.

56 Nor do I accept that the right to withhold the payment of commission on invoices not settled prior to the employee’s last day can be said to be implied in clause 4 of the Employment Contract. Clause 4 simply says that the commission is payable on invoices that have been paid. Nothing is said about whether they must be paid prior to the employee leaving employment with Geller & Associates. The implication of such a term does not satisfy any of the tests set out in the authorities and which are usefully collected in the judgment of Lindgren J in Riverwood at [67].

57 Further, although clause 4 contemplates changes to what is described as the “compensation package” it says that those changes will be added to the contract “after being agreed and signed by both parties”. There was no agreement by the Plaintiff to the change effected to the compensation package by the inclusion of the paragraph headed “FINAL PAY” in the Policies and Procedures manual.

58 Nor is it any answer to these matters for Geller & Associates to point, as it does, to ongoing work which it says is required after the initial placement of the employee with the client. Nothing in the Employment Contract spells out the thinking behind the earning of commission and the actual tasks vis-à-vis the client that might be required. In any event, such detail is not to the point. The Employment Contract simply provides for the payment of commission relating to the value of invoices at the rates and in the manner set out. If there were to be conditions other than those contained in clause 4 concerning when and in what circumstances commission should be paid, those matters needed to be set out and agreed in the Employment Contract.

59 Nor, in my opinion, did the failure on the part of the Plaintiff to complete the placement folders disentitle him to commission. Certainly, his failure to complete the placement folders was a failure, as he accepts, to comply with a lawful direction of Geller & Associates contrary to clause 9(a) of the Employment Contract. However, nothing in the employment contract links that failure to the entitlement to commission. The failure might, after appropriate warnings were given, have entitled the termination of his employment. Indeed, Clause 14(g) expressly contemplates that a failure to comply with any provision of the policies and procedures could result in a termination of employment. The failure might lead to some other modification of the Plaintiff’s employment including, perhaps, placing him again on a probationary period including the effect that that might have on his levels of earning commission. However, in the absence of some provision in the employment contract, Geller & Associates is not entitled to withhold the payment of commission for a particular breach of the employment contract.

60 Geller & Associates points to a series of emails in May and June 2007 which arose from a request the Plaintiff made about his commission. One email in particular is relied upon by Geller & Associates being an email of 4 June 2007 at 17:36 from Mr Josh Geller to the Plaintiff as follows:

“Its (sic) essential that all the relevant Admin is organised prior to the candidate starting for various reason.

...

Please be aware that Commission is only payable on candidate deals that are finalised (i.e. Admin done) prior to start date.

...”

It is to be noted that that email is dated 4 June 2007, some 3 months after the Employment Contract was signed and employment commenced. It does not seem to me that that statement in the email formed part of the Employment Contract. Rather, like the Policies and Procedures Manual, it was a purported unilateral variation of the Employment Contract by Geller & Associates.

61 Geller & Associates also pointed to evidence given by Mr Josh Geller before the Magistrate where he said that he had told the Plaintiff “it was such an important part of the business if he wasn’t able to complete the paperwork then we wouldn’t be paying commission” (at T65 on 23/07/08). However, an examination of the transcript discloses that that discussion was held after the Employment Contract was signed during the Plaintiff’s initial training “within his first day of joining the firm” (T65.3). It cannot be said, in those circumstances, that the requirement that paperwork had to be completed before commission would be paid was a term of the Employment Contract. It was, again, an attempt to impose a unilateral amendment to the Contract by Geller & Associates. Geller & Associates themselves had provided for changes to be made to the compensation package in clause 4, but, as I have noted, that would only be done after those changes were “agreed and signed by both parties”.

62 In my opinion, the link between the payment of commission and the completion of the placement folders was not a term of the Employment Contract. The failure by the Plaintiff to complete the placement folders was, as I have said, a failure to follow a lawful direction but its consequence was not a deprivation of commission which clause 4 provided he was entitled to earn on invoices that had been paid.

Parties to the appeal

63 The Summons commencing the appeal which was filed on 3 February 2009 named the 4 Defendants who had been sued in the Local Court. On 23 March 2009, the Plaintiff filed an Amended Summons which not only amended the 2^nd appeal ground but omitted as Defendants the 3 individuals who had previously been named as Defendants.

64 It is not clear on what basis the Amended Summons was filed. In the ordinary course, there would need to be consent by the Defendants or leave given by the Court. The amendment does not fall within Rule 19.1 UCPR but even if it had, Rule 19.2 provides that an amendment that would have the effect of removing a party from the proceedings may not be made unless that party consents to being removed from the proceedings. One obvious reason for that requirement concerns costs.

65 Mr Sleight, who appeared for the Plaintiff, accepted that the Plaintiff should pay the costs of those other Defendants up to the date of the Amended Summons.

Conclusion

66 I propose to grant an extension of time for the Plaintiff to file the Summons, to allow the appeal and to set aside the judgment of the Magistrate. I propose that Geller & Associates pay the Plaintiff’s costs of these proceedings except that the Plaintiff is to pay the costs thrown away by reason of the filing of the Amended Summons, which costs include the costs of the 1^st, 3^rd and 4^th Defendants named in the Summons which commenced these proceedings. The parties should bring in Short Minutes of Order to reflect these reasons.

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LAST UPDATED:
29 September 2009